National Insurance Crime Bureau: NY Immunity Law is Shield Against Defamation Lawsuits, Not Used as a Sword

WASHINGTON, Sept. 6 -- The National Insurance Crime Bureau issued the following news release:

New York's immunity law shields against defamation suits aimed at insurers by medical providers who are reported in good faith to the state for suspected fraud, urges an amicus brief filed by the Coalition Against Insurance Fraud and National Insurance Crime Bureau (NICB).

"A statute conferring presumptive immunity is, by its very nature, intended to function as a litigation shield, not as a litigation sword," the anti-fraud groups contend in a case before the state's highest court.

The decision could affect all states with similar immunity laws.

"Protecting good-faith immunity reporting is vital to a rigorous system of physician discipline that fights fraud and ensures consumers receive honest medical care from ethical providers," says Matthew Smith, the Coalition's director of government affairs.

"Health care fraud committed by unethical health care providers is estimated to cost consumers billions of dollars each year. The statute in question is meant to provide immunity to reporters of suspected fraud," says Andrew Sosnowski, NICB's general counsel. "This immunity is intended to act as a litigation shield, and encourage the reporting of suspected professional misconduct, deterring medical provider fraud, and saving consumers a great deal of money."

A physician alleges he has an implied private right of defamation suit after Nationwide Mutual reported him for alleged misconduct.

New York law grants insurers and others immunity from defamation suits for reporting suspected medical provider misconduct in good faith to the state medical board, the Coalition and NICB counter.

"The Legislature decided to remove what it considered to be an obstacle to reporting -- namely, fear of litigation -- by granting reporters qualified immunity; that is, presumptive immunity from any tort cause of actions that a physician who was the subject of a report might assert," the groups counter.

This immunity shield is essential to encouraging reporting of misconduct by medical providers to the state. It also defends against unwarranted suits by disgruntled providers, the groups say in the amicus.

Importantly, immunity for good-faith reporting also helps protect consumers from healthcare fraud by enabling a stronger disciplinary system for physicians.

Allowing the physician's private right of suit would violate the legislature's intention to "protect reporters and other participants in the administrative disciplinary process from disruptive and costly litigation," the Coalition and NICB say.

The brief was drafted by Susan Phillips Reed. She's a former Associate Judge of the New York State Court of Appeals -- the state's highest court -- and now Of Counsel to the law firm of Greenberg Traurig.