Empire Healthchoice, Inc. v. Philip Morris USA, Inc., et al.

A health insurer sued several tobacco companies under the New York Consumer Protection Act, seeking recovery of medical costs that resulted from the companies' alleged fraudulent misrepresentations of the health effects of smoking.  The Second Circuit affirmed the trial court's opinion, holding that the plaintiff failed to assert a cognizable claim and directing the trial court to enter judgment for the defendants as to all claims.

Empire Healthchoice, Inc. v. Philip Morris USA, Inc., et al., 393 F.3d 312 (2d Cir. 2004).

  • United States
  • Dec 22, 2004
  • United States Court of Appeals, Second Circuit

Parties

Plaintiff Empire Healthchoice, Inc. (d/b/a Empire Blue Cross & Blue Shield)

Defendant

  • Brown & Williamson Tobacco Co.
  • Liggett & Myers, Inc.
  • Liggett Group, Inc.
  • Lorillard Tobacco Co.
  • Philip Morris USA, Inc.
  • R.J. Reynolds Tobacco Co.

Legislation Cited

N.Y. Gen. Bus. Law § 349

Related Documents

Type of Litigation

Tobacco Control Topics

None

Substantive Issues

Type of Tobacco Product

None

"The jury found that all defendants except British American Tobacco Company, Ltd., were liable under New York’s consumer protection statute, N.Y. Gen. Bus. Law § 349. It awarded Empire $17,782,426 on Empire’s direct claim under N.Y. Gen. Bus. Law § 349, and $11,829,784 on Empire’s subrogated claim to recover payments made on behalf of Empire’s insureds under N.Y. Gen. Bus. Law § 349. See Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris USA Inc., 344 F.3d 211, 215 n.3 (2d Cir. 2003). Judgment was entered on both claims, but because the damages for the subrogated claim were subsumed within the damages for the direct claim, Empire’s recovery was limited to $17,782,426. Id. The District Court subsequently awarded attorneys’ fees to Empire, Blue Cross III, 190 F. Supp. 2d 407. In an opinion dated September 16, 2003, we reversed the District Court’s judgment on Empire’s subrogated claim. See Blue Cross, 344 F.3d at 217-18. We also found that Empire’s direct claim “will be actionable only if: (1) the claims are not considered too remote under Section 349, and (2) Section 349 does not require individualized proof of harm to subscribers.” Id. at 229. We then certified two questions to the New York Court of Appeals: 1. Are claims by a third party payer of health care costs seeking to recover costs of services provided to subscribers as a result of those subscribers being harmed by a defendant’s or defendants’ violation of N.Y. Gen. Bus. Law §349 too remote to permit suit under that statute? 2. If such an action is not too remote to permit suit, is individualized proof of harm to subscribers required when a third party payer of health care costs seeks to recover costs of services provided to subscribers as a result of those subscribers being harmed by a defendant’s or defendants’ violation of N.Y. Gen. Bus. Law § 349? Id. We reserved judgment on the award of attorneys’ fees, pending the outcome of the certification process. Id. at 228. The New York Court of Appeals accepted certification on October 30, 2003, see Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris USA, Inc., 100 N.Y.2d 636 (2003), and has now rendered its decision, Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris USA Inc., 3 N.Y.3d 200, 2004 N.Y. LEXIS 2440 (2004). It responded to the first question in the affirmative, thereby rendering the second question academic. Id. In an order entered on November 4, 2004, we requested supplemental briefing from the parties in light of the decision of the New York Court of Appeals. Pursuant to an unopposed request from appellants, we reverse the judgment of the District Court, including the award of attorneys’ fees, and remand the case to the District Court with instructions to enter judgment with prejudice in defendants’ favor on all of Empire’s claims."