This motion by the defendant to dismiss the amended complaint pursuant to CPLR 3211(a)(7) is denied as to the first cause of action, which is based on a claim of retaliatory discharge pursuant to Labor Law § 740, and is granted as to the second cause of action for defamation.

This action stems from what the plaintiff describes as a retaliatory discharge from her position with the defendant Cardiology & Internal Medicine of L.I., PLLC (hereinafter, "CIMLI" or "the practice").Before the Court is a preanswer motion to dismiss made pursuant to CPLR 3211(a)(7), failure to state a cause of action cognizable under New York law. Accordingly, for purposes of the motion the Court will accept as true all the factual allegations asserted in the amended complaint. See, e.g., Leon v Martinez, 84 NY2d 83 (1994); Guggenheimer v Ginzburg, 43 NY2d 268 (1977).^[FN1]The Court must look to the four corners thereof, construing it liberally (CPLR 3026), and grant the plaintiff the benefit of every possible favorable inference that may be drawn from those allegations; if any cause of action is discernable therefrom the motion should fail. Leon v Martinez, supra, at 87-88; Guggenheimer v Ginzburg, supra, at 275.

Plaintiff worked for CIMLI as a Physician's Assistant (PA) from 1994 until her discharge in May 2006.For approximately one year, a physician at the practice, Dr. Grundfast, had prescribed various narcotic medications to a male patient with whom he was engaged in a consensual sexual [*2]relationship. Dr. Grundfast falsified a workers' compensation form on behalf of this patient. Plaintiff states, upon information and belief, that approximately two to three weeks before she was terminated Dr. Grundfast informed another physician in the practice, Dr. Howard Sacher, as well as the defendant's Executive Director of Operations/Admistrator/Office Manager, one Fran Dooley, that he had unlawfully prescribed meditations to this patient, and had falsified the workers' compensation form. He also told them that the only (other) person who was aware of the nature of his relationship with this patient was the plaintiff.

Shortly afterwards, Dooley directed the plaintiff to "do the right thing" and to "be a team player" if the New York State Department of Health, Office of Professional Medical Conduct, or the New York State Workers' Compensation Board, contacted her. The plaintiff interpreted this to mean that the plaintiff should lie to these agencies, and informed Dooley that she was not going to do anything that would cause her to lose her own PA license. Dooley responded that the plaintiff was not "a team player." This conversation took place approximately two weeks before the plaintiff was terminated.

Earlier that year, 2006, the plaintiff and CIMLI were sued by a former patient for medical malpractice. The medical chart had been requested by the patient's attorney as part of discovery in the case, and all staff members who had anything to do with the patient's care were prepared for depositions. Dr. Grundfast altered this patient's medical records so that the defendant would appear to be less liable. Other staff members were directed to do the same, including the plaintiff, who was also instructed to lie about any alteration of the records at her deposition. She told Dooley that she would not do so, and that the requests were illegal and unethical. Dooley responded that if plaintiff were not "going to be a team player and change the chart, then we have decided to let you go." Plaintiff was terminated at this time.

About a month later, in June of 2006, another employee of the practice, Roz (last name unknown) informed a named patient that the plaintiff had been terminated because she had a "mental breakdown." That same month, Roz told another named patient that the plaintiff left her employment "without warning or explanation" and that all anyone knew was that "it had something to do with [Plaintiff's] son."

Based on the foregoing, the plaintiff alleges two causes of action. The first is that the defendant terminated her because of her objection to and refusal to participate in violations of a law, rule or regulation, which would or did present a substantial and specific danger to the public health and/or safety, and/or which would constitute health care fraud. Although not pleaded as a specific numbered paragraph, the heading states that the claim is made under Labor Law § 740, the so-called "whistleblower" statute. On this claim the plaintiff seeks backpay, "front pay", compensatory damages, punitive damages, and attorneys' fees. The second cause of action sounds in common-law defamation, alleging humiliation and professional disparagement, and seeks damages therefor.

The Court turns first to the statutory claim. This cause of action requires an analysis of several sections of the Labor Law, and key portions are therefore set forth below.

Labor Law §740 applies to retaliatory action such as discharge, suspension, demotion or other adverse employment action. It applies generally to all employers and employees. Labor Law §741 applies to retaliatory action by employers against employees providing health care services.

Labor Law § 740 (2) prohibits retaliatory action by an employer against an employee who:

(a) discloses, or threatens to disclose to a supervisor or to a public body an activity, policy [*3]or practice of the employer that is in violation of law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety, or which constitutes health care fraud; (emphasis added)

(b) provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any such violation of law, rule or regulation by such employer; or

(c) objects to, or refuses to participate in any such activity, policy or practice I violation of a law, rule or regulation.

"Health care fraud" is given the same meaning as the term is defined in Penal Law §177. See Labor Law §740 (1)(g).

A person is guilty of health care fraud in the fifth degree when, with intent to defraud a health plan, he or she knowingly and willfully provides materially false information or omits material information for the purpose of requesting payment from a health plan for a health care item or service and, as a result of such information or omission, he or she or another person receives payment in an amount that he, she or such other person is not entitled to under the circumstances.

Penal Law § 177.05.

The remedies given to an employee who has been the subject of retaliation in violation of the foregoing are provided or referred to in § 740(4), and provides for the initiation of suit, the limitations period, venue, and certain defenses. It also specifically incorporates Labor Law §741, which applies to health care employers and employees:

(d) Notwithstanding the provisions of paragraphs (a) and (c) of this subdivision, a health care employee who has been the subject of a retaliatory action by a health care employer in violation of [§741] of this article may institute a civil action in a court of competent jurisdiction for relief as set forth in section five of this section...

The retaliatory action referred to above is defined in Labor Law § 741(2) as an act taken against a health care employee who does any of the following:

(a) discloses, or threatens to disclose to a supervisor or to a public body an activity, policy or practice of the employer or agent that the employee, in good faith, reasonably believes constitutes improper quality of patient care; or

(b) objects to, or refuses to participate in any activity, policy or practice of the employer or agent that the employee, in good faith, reasonably believes constitutes improper quality of patient care.

The phrase "improper quality of patient care" is defined in Labor Law § 741(1) at (d) as:

...with respect to patient care, any practice, procedure, action or failure to act of an employer which violates any law, rule, regulation or declaratory ruling adopted pursuant to law, where such violation relates to matters which may present a substantial and specific danger to public health or safety or a significant threat to the health of a specific patient.

Labor Law § 741(4) refers back to Labor Law § 740(d) for enforcement of §741. [*4]

Finally, initiation of suit under both § 740 and §741 amounts to an election of

remedies and limitation of damages , as follows:

Nothing in this section shall be deemed to diminish the rights, privileges, or remedies of any employee under any other law or regulation or under any collective bargaining agreement or employment contract; except that the institution of an action in accordance with this section shall be deemed a waiver of the rights and remedies available under any other contract, collective bargaining agreement, law, rule or regulation or under the common law.

Labor Law §740(7).

The defendant asserts three separate bases for dismissal of all or parts of the statutory claim. First, by counsel it states that the conduct alleged did not pose a threat to the health or safety of the public. Second, the statute was not amended to add "health care fraud" as an underlying prohibited basis for retaliation until after the occurrences alleged, and thus cannot be utilized by the plaintiff. Finally, the defendant contends that compensatory and punitive damages and "front pay" are not available under the statute.

The amended complaint charges that the defendant's actions as set forth above violated Education Law § 6530(2) [practicing fraudulent health care fraudulently or beyond authorized scope] and Workers' Compensation Law §114 [fraudulent preparation of writing in connection with Workers' Compensation insurance]. To the extent that the plaintiff's statutory cause of action rests on violations of these statutes pursuant to Labor Law § 740(2) (a) and (c) the Court agrees with the defendant that it fails because, even if true, there is no allegation that the violations alleged affected more than two particular patients, and therefore do not amount to a "substantial and specific threat" to the health or safety of the public at large. Easterson v Long Is. Jewish Med. Center, 156 AD2d 636 [2d Dept. 1989]; Kern v DePaul Mental Health Servs., Inc., 152 AD2d 957 [4th Dept. 1989]; cf., Rodgers v Lenox Hill Hosp., 211 AD2d 248 [1st Dept. 1995].

The Court also agrees that the plaintiff cannot rely on the addition of health care fraud as a basis for her claim, as the amendment was effective in July, 2006. L.2006, c. 442 §§ 12, 13, 14. While the defendant's actions in falsifying a patients' records for purposes of Workers' Compensation benefits, if true, would fit the definition of health care fraud, as set forth above, there is no indication that the Legislature intended any retroactive application of the new statute. See, Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577 [1998]. Retroactive application would be especially inappropriate here where the definition of "health care fraud" itself is drawn from the Penal Law, to which the Legislature simultaneously added the relevant sections. Retroactive application of a penal statute which criminalizes prior, then-innocent conduct, increases punishment for past offenses, or eliminates defenses previously available is, of course, unconstitutional as a violation of the Ex Post Facto clause. Kellogg v Travis, 100 NY2d 407, 410 (2003). Finally, it should also be noted this present suit was not commenced until 2007 and thus there was not even a pending action when the measure went into effect.

However, the plaintiff's first cause of action should be sustained to the extent that she alleges she was terminated because she refused to participate or remain silent with regard to the inappropriate prescribing of narcotics to one particular patient, or the alteration of another [*5]patient's medical records. Unlike the charges of health care fraud, these allegations implicate section 741(2) (a) and (b), as set forth above, which were added not in 2006 but in 2002. L 2002, ch 24. This statute prohibits a retaliatory action based on an employee's response to these kinds of acts.

More specifically, as a licensed Physician's Assistant of many years' experience, and in view of the liberal reading to be given the amended complaint, the Court finds that the pleading establishes that the plaintiff had a good-faith basis for believing that violations of the Public Health Law had occurred with regard to an illegal prescription of controlled substances (see, Public Health Law § 3300 et seq.), which violations would threaten to cause a "significant threat to the health of a specific patient" (i.e., the individual alleged to be sexually involved with Dr. Grundfast) and thus constituted an "improper quality of patient care." Labor Law § 741(1)(d), (2).

The pleading also establishes such a basis for believing that the alteration of a patient's records constituted an improper quality of patient care. Physicians are required to maintain accurate records reflecting evaluation and treatment of patients, and failure to do so is one definition of professional misconduct. 8 NYCRR § 29.2(a)(3); Matter of Camperlengo v Barell, 78 NY2d 674 (1991). Such alteration therefore is an act that has been held to violate proper medical procedure, and has led to professional disciplinary action. See, Catsoulis v New York State Dept. of Health, 2 AD3d 920 (3d Dept. 2003); Pearl v New York State Bd. for Professional Medical Conduct, 295 AD2d 764 (3d Dept. 2002); Ramos v DeBuono, 243 AD2d 847 (3d Dept. 1997). ^[FN2]

It cannot seriously be argued that alteration of records does not pose a "significant threat" to the health of the patient identified as the medical malpractice plaintiff, as any further treatment by a subsequent treating health professional may rest on those records.See, Kraus v New Rochelle Hosp. Med. Ctr., 216 AD2d 360 (2d Dept. 1995).^[FN3]The same obviously is true of prescribing narcotics to a patient without a sound medical basis therefor. Indeed, it is apparent from the history of Labor Law § 741 that the Legislature intended "significant threat" to the health of a specific patient to be liberally construed. The Assembly Memorandum in support of the 2002 legislation states that "When it comes to health care and the public's perception of quality, the possibility of any untoward outcome, regardless of the nature of the outcome, is [*6]significant." McKinney's 2002 Session Laws of NewYork, Vol 2, at 1667 (emphasis in original).

The first cause of action states a claim under New York law, and accordingly the motion to dismiss is denied as to such claim to the extent it is based on Labor Law § 741(2)(a) and (b) which are applied through §740 (4)(d).

However, because the remedies available to the plaintiff are exclusively those enumerated in §740 (5)(a) - (e), punitive damages cannot be recovered as part of this cause of action, and the prayer for punitive damages is thus deemed stricken. Kraus v New Rochelle Hosp. Med. Ctr., supra; see also, Hoffman v Altana, Inc., 198 AD2d 210 (2d Dept. 1993).

The Court does not agree with the defendant that the other forms or relief sought are necessarily beyond the scope of what is allowed by the statute, notwithstanding the authority cited above. The amended complaint seeks "back pay, front pay, compensatory damages, punitive damages, attorneys' fees, disbursements, costs and interest." In addition to punitive damages, Kraus held that Labor Law § 740 did not permit recovery of "future lost wages and future lost benefits," neither of which are specifically mentioned in the instant pleading. Under these circumstances, and given the procedural context of the present motion, the Court does not find it appropriate to interpret the prayer for relief against the plaintiff in the manner urged by the movant. Guggenheimer v Ginzburg, supra.

The second cause action for defamation is dismissed. The Court finds the issues raised by the defamation claim to be sufficiently distinct from those of the retaliatory discharge such that this cause of action should not be deemed waived by operation of Labor Law § 740(7). The defamation claim therefore should be analyzed independently. For example, in a recent case brought under Labor Law § 740 (a), a defamation claim was dismissed, not for statutory waiver, but because the claim failed to state a cause of action under the common law. Notably, the Court dismissed other claims related to the plaintiff's discharge based on the exclusiveness of the § 740 cause of action, thus making it clear that the defamation claim was not swept aside by the action for retaliation. See, Pipia v Nassau County, 34 AD3d 664 (2d Dept. 2006).

Turning to the second cause of action, whether particular words are defamatory presents a legal question for the Court to resolve in the first instance. Aronson v. Weirsma, 65 NY2d 592 (1985). It is settled that in order to make out a claim in defamation, including slander, strict pleading requirements for such a cause of action must be satisfied, or dismissal will result. See, Lesesne v Lesesne, 292 AD2d 507 (2d Dept. 2002); Siriani v Rafaloff, 284 AD2d 447 (2d Dept. 2001); Grynberg v Alexander's Inc., 133 AD2d 667 (2d Dept. 1987). A plaintiff must allege 1) the allegedly false statements made, with particularity, 2) the time, place and manner of the utterances, 3) to whom such statements were made, and 4) special damages flowing from the defamation. CPLR 3016(a); Lesesne v. Lesesne, supra; see also, Liberman v Gestein, 80 NY2d 429, 434 (1992).Special damages are not alleged here.

However, the plaintiff argues that the statements made about her constitute slander per se specifically, that the defendant's words amount to professional disparagement, i.e., a slur against her professional competence. This form of defamation does not require that the plaintiff plead and prove special damages, because damages are presumed in such a case. Liberman v Gestein, supra, at 435. Here, however, the Court finds that the statements found in the amended complaint do not constitute slander per se, and hence the absence of allegations of special damages is fatal to that cause of action. [*7]

As indicated above, the two statements alleged are that the plaintiff had a"mental breakdown" and that she left her employment "without warning or explanation" and that all anyone knew was that "it had something to do with [Plaintiff's] son." Notwithstanding the fact that at least the statement about a mental breakdown may be defamatory in certain contexts, neither it nor the other statement specifically implicates professional activities or qualifications, and thus do not qualify as slander per se. See, Zysk v Fidelity Title Ins. Co., 14 AD3d 609 (2d Dept. 2005).

It is, of course, at least arguable that stating that the plaintiff had a mental breakdown is in fact a statement about competence in her field, even though it is not a direct statement about her abilities as a Physician's Assistant. However, accepting such a premise would endorse an exception that would swallow up the rule, as it is difficult to imagine how these words would then not also qualify as slander per se in every profession. In any event, they were allegedly uttered by an employee who is not identified as a medical professional, and certainly not a mental health professional, who a reasonable person might regard as being competent to make such a statement. Coming from such an individual, the statement that the plaintiff had a "mental breakdown" is more in the nature of personal opinion and hyperbole, which is not actionable. Chernick v Rothstein, 204 AD2d 508 (2d Dept. 1994); Bryant v Kinder, 204 AD2d 377 (2d Dept. 1994).

Accordingly, the second cause of action is dismissed.

This constitutes the Decision and Order of this Court.

E N T E R

DATED: August 23, 2007_____________________________

HON. DANIEL PALMIERI

Acting Supreme Court Justice