Karlin v. IVF America, Inc., 93 N.Y.2d 282 (1999)

New York’s consumer protection laws, specifically General Business Law §§ 349 and 350, apply to the advertising and marketing practices of medical service providers, such as in vitro fertilization (IVF) clinics, and are not preempted by medical malpractice or informed consent statutes when the conduct involves deceptive, consumer-oriented advertising.

Summary

This case addresses whether IVF clinics are subject to New York’s consumer protection laws regarding deceptive practices and false advertising. The plaintiffs, a couple who underwent multiple unsuccessful IVF cycles, sued the defendant IVF clinic alleging false advertising and deceptive practices concerning success rates and health risks. The New York Court of Appeals held that General Business Law §§ 349 and 350 apply to the advertising and marketing practices of medical service providers, including IVF clinics. The Court reasoned that these statutes apply broadly to all economic activity and are not limited by the existence of medical malpractice or informed consent claims, emphasizing that the claims alleged went beyond individual treatment and impacted consumers at large.

Facts

Plaintiffs, Jayne and Kenneth Karlin, sought IVF treatment from the defendant, IVF America, Inc., undergoing seven unsuccessful cycles over 2.5 years. The plaintiffs alleged that the defendants engaged in fraudulent and misleading conduct by disseminating false success rates and misrepresenting health risks associated with IVF through promotional materials, advertisements, and seminars. These representations allegedly lured the plaintiffs and others, including referring physicians, into the program. The Federal Trade Commission (FTC) and the New York City Department of Consumer Affairs had previously taken action against IVF America for similar deceptive advertising practices.

Procedural History

The Supreme Court dismissed most of the plaintiffs’ claims but allowed claims under General Business Law §§ 349 and 350 and Public Health Law § 2805-d (lack of informed consent) to proceed. The Appellate Division dismissed the General Business Law claims, holding that consumer fraud statutes do not apply to medical service providers. The remaining claim for lack of informed consent was later dismissed as time-barred. The plaintiffs appealed the dismissal of the General Business Law claims to the Court of Appeals.

Issue(s)

1. Whether General Business Law §§ 349 and 350, prohibiting deceptive practices and false advertising, apply to the marketing and advertising practices of medical service providers like IVF clinics?
2. Whether a claim under General Business Law §§ 349 and 350 is precluded by the existence of a potential claim for medical malpractice based on lack of informed consent under Public Health Law § 2805-d?

Holding

1. Yes, because General Business Law §§ 349 and 350 apply broadly to all economic activity, including the furnishing of services, and there is no explicit exemption for medical service providers.
2. No, because the claims under General Business Law §§ 349 and 350 are distinct from a claim for lack of informed consent, as they address deceptive advertising practices targeted at consumers at large, not just failures in individual patient treatment.

Court’s Reasoning

The Court of Appeals emphasized the broad language of General Business Law §§ 349 and 350, which prohibit deceptive acts and false advertising in the conduct of “any” business or service. The Court noted the legislative intent to provide broad authority to combat deceptive business practices and the historical use of these statutes by the Attorney General to challenge fraud in healthcare. The Court rejected the argument that the informed consent statute (Public Health Law § 2805-d) exclusively governs claims related to medical services, stating that the plaintiffs’ claims extended beyond the scope of that statute. Specifically, the Court stated, “By alleging that defendants have injured them with consumer-oriented conduct ‘that is deceptive or misleading in a material way,’ plaintiffs have stated claims under General Business Law §§ 349 and 350 even though the subject of the conduct was in vitro fertilization.” The Court distinguished Pennsylvania cases cited by the Appellate Division, noting that those cases involved misrepresentations during individual medical treatment, not consumer-oriented conduct directed at the public. The Court also clarified that the potential for excessive litigation is mitigated by the objective standard of a “reasonable consumer acting reasonably under the circumstances.” The Court concluded that medical providers who reach out to the public to promote their services are subject to the same standards of honesty as other businesses.