United States

Twenty health insurers brought an action against several tobacco companies under the New York Consumer Protection Act (CPA) seeking recovery of medical costs resulting from the companies' alleged fraudulent misrepresentations of the health effects of smoking. On appeal, the Court certified two questions of law arising from the CPA for resolution by the New York Court of Appeals: (1) whether damages claimed by an insurance company that ultimately rest on harm to the company's insureds rather than to the company itself are too indirect to support legal action under the consumer protection statute; and (2) whether the consumer protection statute requires an insurance company to offer proof of harm to individual insureds to sustain an action alleging harm to the company.  The Court of Appeals held that the insurance company lacked standing to bring a claim on its own behalf under the CPA.  In deciding the standing issue, the Court found that the harm caused to the insurance company itself, as a derivative claim wholly dependent upon the harm inflicted upon its insureds, was too remote to sustain an independent action.