Ackerman v. Metropolitan Life Insurance

—Order, Supreme Court, New York County (Carol H. Arber, J.), entered August 25, 1992, which denied defendant’s motion to dismiss the complaint or, in the alternative, for summary judgment, but dismissed those portions of the complaint seeking damages for emotional injuries arising from the breach of contract claim and the cause of action for fraud, modified, on the law, only to the extent of dismissing the cause of action for punitive damages and granting plaintiffs leave to replead their purported causes of action for fraud and punitive damages and, as so modified, the order is otherwise affirmed, without costs. Plaintiffs’ contention that defendant is practicing a broad based fraud on New York State government employees by using a registered nurse to decide which treatments are medically required within the meaning of its Empire Plan group medical/surgical policy was not raised below and is being raised for the first time on appeal. Thus, inasmuch as plaintiffs’ claim that defendant applies its medically necessary standard in an arbitrary and capricious manner is essentially one for breach of contract, their second cause of action for fraud was properly found inadequate. However, rather than an outright dismissal, plaintiffs should have been afforded leave to replead such cause. Likewise, inasmuch as the complaint, on its face, contains 89 no allegation that defendant engaged in "systematic behavior” as characterized by the IAS Court, their claim for punitive damages should have been dismissed inasmuch as there is no "showing of morally reprehensible conduct directed at the general public” (Samovar of Russia Jewelry Antique Corp. v Generali, 102 AD2d 279, 281). Again, however, they should be afforded leave to replead such cause. Concur—Ellerin, Rubin and Tom, JJ.