Commercial Litigation and Arbitration

Cost of Unsafe Medical Procedure ≠ RICO Injury — Fraud Claim Duplicative of Malpractice Claim Must Be Dismissed Absent Separate and Distinct Injury

Gotlin v. Lederman, 2012 U.S. App. LEXIS 8790 (2d Cir. May 1, 2012):

In this action, Gotlin asserts, inter alia, that defendants fraudulently misrepresented the efficacy of a particular form of cancer treatment, Fractionated Stereotactic Radiosurgery ("FSR"), and therefore unlawfully induced the decedents to unnecessarily undergo an ineffective and harmful form of radiation therapy. ***

[W]e first conclude that the district court did not err in dismissing on the pleadings plaintiffs' common law fraud claim. Under New York law, a plaintiff may not assert separate causes of action for fraud and medical malpractice unless "the damages sustained as a result of the fraud are distinct from the damages sustained as a result of the malpractice." Giannetto v. Knee, 82 A.D.3d 1043, 1045, 919 N.Y.S.2d 176 (N.Y. App. Div. 2011). Plaintiffs, however, do not allege a distinct injury flowing from defendants' alleged fraud, as opposed to defendants' alleged malpractice, and so the district court correctly concluded that plaintiffs could not sustain an independent claim for fraud. See Spinosa v. Weinstein, 168 A.D.2d 32, 42, 571 N.Y.S.2d 747 (N.Y. App. Div. 1991) (dismissing fraud claim where "the injuries suffered by [the plaintiff] under either [her fraud or medical malpractice theories] flow from her claim that she was induced to undergo unnecessary surgery" and are therefore "not separate and distinct" from one another).

Second, the district court did not err in dismissing on the pleadings plaintiffs' claim brought pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"). A "plaintiff only has standing [to bring a civil action under RICO] if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985). The words "'business or property' . . . refer to commercial interests or enterprises." Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 264, 92 S. Ct. 885, 31 L. Ed. 2d 184 (1972). Accordingly, "injuries [that] are personal in nature" do not constitute injury to "business or property" as those terms are used in RICO. Laborers Local 17 Health and Benefit Fund v. Philip Morris, Inc., 191 F.3d 229, 241 (2d Cir. 1999). Plaintiffs allege RICO damages equivalent to the amount they paid defendants for FSR treatment. As the district court correctly held, however, plaintiffs' monetary losses were incidental to their personal injuries, and so cannot constitute injuries to "property" as required to state a RICO claim. See id.

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