Motion sequence numbers 001 and 002 are consolidated for disposition.

Plaintiffs Aetna Health Inc. and Aetna Life Insurance Company (together, Aetna) move (motion seq. no. 001), pursuant to CPLR 602, to consolidate this action with an action filed by defendant Shuriz Hishmeh, M.D. (Dr. Hishmeh) in Supreme Court, Nassau County, entitled Hishmeh a/a/o John and Jane Does, 1-5 v Aetna Health Inc. and Aetna Life Ins. Co., index No. 10669/2012 (the Nassau Action). Aetna also seeks to fix venue of the combined action in New York County. Defendants do not object to consolidating the actions, but maintain that the consolidated action should be heard in Nassau County Supreme Court, and cross-move for such relief.

Defendant Business Dynamics Limited (Business Dynamics) moves (motion seq. no. 002), pursuant to CPLR 3211 (a) (1) and (7) to dismiss the complaint as against it, and/or pursuant to CPLR 3016 to dismiss the fraud claim as against it. Aetna does not cross-move, but in its opposition papers requests that if Business Dynamics is successful in its motion to dismiss, that Aetna be permitted to replead its claims against Business Dynamics.

Aetna is a health insurer that has contracts with providers of health services, who agree to provide services to members of Aetna's plans for an agreed upon rate (participating providers). Aetna's policies have varying terms, depending on the policy, as to how services by nonparticipating providers are paid. Under some plans, the member pays only a co-pay to a participating provider, but when using a nonparticipating provider, Aetna will pay 80% of what it terms the "customary and reasonable" fee, after the member has reached his or her deductible, and the member is responsible for any remaining amount of the fee charged (PPOs). In other plans (generally, Health Maintenance Organizations or HMOs), no reimbursement is paid for a nonparticipating provider, unless the medical service was required on an emergency basis. If emergency care is required, Aetna must pay the out-of-network provider's reasonable and customary charges. It may negotiate those charges with the provider, but must hold the [*2]subscriber patient harmless to ensure that he or she has no resulting financial obligation. 10 NYCRR § 98-1.13 (I). Therefore, when a medical provider is a participating provider and, accordingly, has a contract with Aetna, it is required to accept the contracted-for fee. When a medical provider is a nonparticipating provider, there obviously is no such requirement.

Dr. Hishmeh is a spinal surgeon who works through his company, LI Spine Center (LISC). Business Dynamics is a medical billing company that works for many doctors and medical practices, including Dr. Hishmeh. There is no allegation that Business Dynamics is owned by, or affiliated with, Dr. Hishmeh or LISC. It is owned by nonparty Barbara Cataletto.

Prior to the commencement of this action, Aetna commenced an action against a number of defendants, including Dr. Hishmeh and LISC. That action, entitled Aetna Health Inc. & Aetna Life Ins. Co. v Rak (index No. 652819/2011) (the Rak Action), pleads causes of action for breach of contract, tortious interference, fraud, negligent misrepresentation and violations of General Business Law (GBL) § 349. It also seeks injunctive relief enjoining the defendants from submitting balance bills to members of Aetna health care plans to recover charges for services that Aetna already paid pursuant to contract rates. A TRO was entered on October 17, 2011.

In the Rak Action, Aetna alleges that the defendant, Dr. Rak, who was a participating provider, schemed to have Dr. Hishmeh assist in treating his patients in order to enable Dr. Hishmeh to bill a greater amount for the services than Dr. Rak would be able to recover pursuant to his agreement with Aetna (the Specialist Physician Agreement). However, since Dr. Hishmeh is not, and never has been, a participating provider, Dr. Hishmeh was not limited as to the fee he could charge. Thus, the claims against Dr. Hishmeh were not the same claims as Aetna alleges against Dr. Rak. For that reason, the causes against Dr. Hishmeh and LISC were voluntarily severed from the Rak Action.

By stipulation executed in March 2012, Aetna agreed to sever Dr. Hishmeh and LISC from the Rak Action, and the parties stipulated that the TRO would remain in place. On May 16, 2012, the parties agreed that the TRO would continue during a one-month standstill period. Dr. Hishmeh and LISC then moved to vacate the TRO in June 2012. That motion was denied in September 2012, and this court kept the TRO in place for 20 days after the entry of order, during which time Aetna could initiate an action against Dr. Hishmeh and LISC and seek a preliminary injunction against the balance billing of any Aetna members. Aetna then filed this action on October 3, 2012, challenging Dr. Hishmeh's billing with respect to both HMO and PPO members. In the meantime, on September 13, 2012, counsel for Dr. Hishmeh provided Aetna's counsel with a copy of the complaint filed in the Nassau Action, which had been filed in August 2012, while the motion to vacate the TRO was pending.

In the Nassau Action, Dr. Hishmeh seeks reimbursement for services that he provided, allegedly on an emergency basis, which, according to the Aetna plans involved, required Aetna to pay him either his full amount charged, or a negotiated amount. Aetna was supposed to reach an agreement with Dr. Hishmeh, and the Aetna members were not supposed to be responsible for any portion of the charges, since the services were provided on an emergency basis. Apparently, Aetna disputes whether those services were properly categorized as emergent, and has, on that basis, refused to compensate Dr. Hishmeh.

On this motion, Aetna seeks to consolidate the Nassau Action with this action, and have them both adjudicated before this court. Dr. Hishmeh agrees that they should be consolidated, [*3]since they both deal with Dr. Hishmeh's demands for payment for medical services and Aetna's allegations that the amounts demanded are excessive or unwarranted. However, Dr. Hishmeh contends that the two actions should be consolidated in Nassau County, because the Nassau Action was commenced prior to the instant action, and because the parties and witnesses are located in Nassau and Suffolk counties, and Nassau is, therefore, a more convenient location. Aetna maintains that the actions should be consolidated before this court because this court has been involved with the Rak Action, and is therefore familiar with the issues and facts involved, and the Rak Action was commenced before either this action or the Nassau Action.

Business Dynamics cross-moves to dismiss the complaint as against it, asserting that it is not responsible for setting fees, and that Aetna's claims cannot properly be raised against it, as it merely sends the bills and attempts to negotiate the fee paid when an insurance company does not want to pay the full amount billed.

Initially, it is noted that the complaint often phrases its allegations by saying that "defendants" acted in a particular manner. The term "defendants" obviously includes Business Dynamics. Many of the allegations, however, refer to responsibilities of doctors, such as admitting patients to hospitals, or advising patients that Dr. Hishmeh was not a participating provider before extending services. Similarly, the determination as to whether the medical care administered was emergent is not within Business Dynamics' purview. It merely transmits the information provided to it by the medical personnel. Thus, those activities could not have been performed by Business Dynamics, a billing company.

Aetna raises a specific claim against Business Dynamics for conspiring to inflate the charges for services rendered when submitting bills to Aetna. Aetna bases this claim on allegations that Business Dynamics counseled and advised Dr. Hishmeh to set inflated fees. In its opposition papers, Aetna includes an affidavit from its attorney who states that she spoke to Dr. Hishmeh prior to his retaining counsel, and he told her that he did not know anything about billing when he began his practice, and that Business Dynamics told him that he had to inflate his bills in order to get anything from insurance companies. Supposedly, Dr. Hishmeh told Business Dynamics to set his fee at 80% of the Ingenex database of fees charged by physicians for specific procedures. Dr. Hishmeh denies ever making such statements. Aetna also fails to explain how it concludes that 80% of the Ingenex amount is a vastly inflated fee.

Aetna also alleges that Business Dynamics threatened to balance bill Aetna members for the balance of Dr. Hishmeh's bills. However, Business Dynamics points out that the exhibits included as evidence of such threats are, in fact, questioning why Aetna refused to negotiate some claims, while it paid for other claims. Business Dynamics denies that there was any threat to balance bill the patients - it merely sought an explanation. It asserts that the only patients that it said could be responsible for payment are members of PPOs, who are obligated to pay whatever portion of the fee the insurance company does not pay.

The claims that Aetna raises against Business Dynamics are tortious interference with Aetna's contract with Dr. Rak (first cause of action); tortious interference with Aetna's contract with its plan members, by submitting claims for services rendered by Dr. Hishmeh as co-surgeon for Dr. Rak (second cause of action); fraud (fourth cause of action); negligent misrepresentation [*4](fifth cause of action); and violation of GBL § 349 (sixth cause of action). Aetna maintains that the allegedly excessive billing resulted from a scheme among Dr. Rak, Dr. Hishmeh and Business Dynamics. It argues that, until discovery is completed, it will not have necessary facts to further state its case. However, since this is a pre-discovery motion to dismiss, it should be afforded the benefit of any possible favorable inference, and need not come forth with evidence. Thus, it concludes that Business Dynamics' motion to dismiss is premature.

Tortious Interference with Contract (Dr. Rak)

Aetna contends that Business Dynamics tortiously interfered with its contract with Dr. Rak by submitting claims to Aetna for services rendered by Dr. Hishmeh as co-surgeon for Dr. Rak. In its opposing papers, Aetna contends that it does not actually assert this claim against Business Dynamics.

While it is true that Aetna does not actually assert a claim against Business Dynamics for tortious interference with contract, with respect to Dr. Rak, in the first cause of action, it does seek declarative and injunctive relief against Business Dynamics, declaring that Business Dynamics threatened to improperly balance bill patients for services within the scope of the Specialist Physician Agreement, that it inflated fees for Dr. Hishmeh's services when submitting claims to Aetna, and that it improperly threatened to submit bills to patients who received benefits through Aetna in an attempt to coerce Aetna to pay unlawful and excessive fees.

Inasmuch as this action revolves around bills submitted for services rendered by Dr. Hishmeh and LISC, neither of whom are participating providers under Aetna, any claim that Business Dynamics was submitting bills for services within the scope of the Specialist Physician Agreement are spurious. All parties acknowledge that Dr. Hishmeh did not have any such agreement with Aetna. Thus, regardless of the content of those bills, they could not have been in violation of any agreement that Dr. Hishmeh had with Aetna.

Insofar as the other claims raised in the first cause of action, Business Dynamics points out that the very letters upon which Aetna relies demonstrate that it did not threaten to balance bill patients inappropriately. With respect to members of Aetna's HMOs, Business Dynamics sought explanations of Aetna's refusal to pay certain charges. With respect to members of Aetna's PPOs, a nonparticipating provider was entitled to bill the patient for the portion of the fee that the insurer did not cover.

Aetna also fails to offer any factual support for its assertion that Business Dynamics was responsible for inflated bills. Its attorney's affidavit states that Dr. Hishmeh told Business Dynamics to bill at 80% of the Igenex index. There is nothing in Aetna's papers alleging either that 80% of the Ingenex index was excessive or that Business Dynamics submitted bills in excess of those amounts. Therefore, even if Aetna could successfully argue that Business Dynamics was responsible for the amount that was billed, it has not adequately pleaded that the amount that it chose to bill was excessive. Consequently, Aetna has failed to adequately plead that Business Dynamics was responsible for threatening, or submitting, any improper billing.

Tortious Interference with Aetna's Network

The second cause of action alleges that Business Dynamics tortiously interfered with Aetna's network contracts by balance billing members of Aetna in order to collect unlawful excessive and unenforceable charges, inflicting emotional distress on Aetna members, and interfering with Aetna's relationship with plan members and sponsors. Aetna also alleges that [*5]Business Dynamics acted with malice.

To plead a claim for tortious interference with an existing contract, a plaintiff must allege that: (1) a valid contract exists between the plaintiff and a third party; (2) the defendant knows of the contract; (3) the defendant deliberately procured a breach of the contract; and (4) damages. Foster v Churchill, 87 NY2d 744, 749-750 (1996).

Here, Aetna has failed to allege that any of its members breached the contract with Aetna. Without a breach, there can be no tortious interference with an existing contract. Downtown Women's Ctr. v Carron, 237 AD2d 209, 210 (1st Dept 1997). Therefore, Aetna has not properly pleaded a tortious interference with contract claim against Business Dynamics.

Fraud

In order to state a claim for fraud, a plaintiff must allege that: the defendant made a statement of existing fact; at the time the statement was made, the fact represented was not true; the defendant knew that the statement was false; the plaintiff justifiably relied on the statement; and the misrepresentation resulted in injury to the plaintiff. Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 (1996).

Even if Aetna had adequately set forth factual allegations showing that Business Dynamics made a false existing statement of fact, which it knew to be false, Aetna has not set forth any factual allegations to support its contention that it reasonably relied on those statements. In its opposing papers, its contention is limited to "[f]urther, Aetna alleges that it reasonably relied on the fraudulent and inflated claims submitted by [Business Dynamics]." Plaintiff's opposing memorandum of law at 10.

In its complaint and accompanying documents, Aetna makes clear that it did not pay Dr. Hishmeh all of the claims that Dr. Hishmeh sent to it. Further, Aetna is a large, sophisticated insurer. It is well acknowledged that insurance companies have access to various indexes that reveal what physicians charge in any given area for each procedure. There is no reason to believe that Aetna relied on the bills it received in order to compensate doctors. It often paid much less than the amount billed, demonstrating that it did not rely on the amount billed. Other than its conclusory statement, Aetna does not offer any explanation of how it relied on Business Dynamics' statements, false or otherwise. Nor has it adequately alleged that it justifiably relied on such statements, considering that it had the means to ascertain charges of other physicians for the same procedures, and could also access the patients' medical records in order to ascertain the necessity for the procedures, and whether or not they were emergencies, which is relevant for coverage for members of HMOs. With respect to the question of whether they were emergencies, not only did Aetna have access to the doctors' records, but also to the hospital records, since it was also responsible for paying the hospital bills.

Consequently, Aetna failed to adequately plead a cause of action for fraud, even if one were to ignore any deficiencies in the pleading of Business Dynamics' knowingly submitting false statements.

Negligent Misrepresentation

In order to plead a cause of action for negligent misrepresentation, a plaintiff must allege facts to support a finding that there was a special or privity-like relationship between the parties which imposes a duty on the defendant to impart correct information to the plaintiff; that incorrect information was supplied; and that the plaintiff reasonably relied on that information. [*6]Parrott v Coopers & Lybrand, 95 NY2d 479, 484 (2000). As discussed above, Aetna has failed to demonstrate reasonable reliance. The court also notes that Aetna has not explained how it has a special or privity-like relationship with Business Dynamics. Aetna is not a client of Business Dynamics; Dr. Hishmeh is. Thus, if there is a privity-like relationship, it would be between Business Dynamics and Dr. Hishmeh, not Aetna. Business Dynamics was not in a special position of trust or confidence with Aetna (Kimmell v Schaefer, 89 NY2d 257, 264 [1996]), nor did it have any duty to counsel Aetna. Chase Scientific Research v NIA Group, 96 NY2d 20, 29 (2001). Its duty was directed solely to its clients, not to a party potentially adverse to its client. Thus, the claim for negligent misrepresentation is also dismissed.

GBL § 349

The sixth cause of action asserts a claim for violation of General Business Law § 349. That provision makes deceptive acts or practices in the conduct of any business, trade or commerce unlawful. However, it does not apply to commercial transactions; it applies to consumer-oriented conduct that has "a broad impact on consumers at large." New York Univ. v Continental Ins. Co., 87 NY2d 308, 320-321 (1995). While section 349 can be asserted by a business (Blue Cross & Blue Shield of N.J., Inc. v Phillip Morris USA Inc., 3 NY3d 200, 207 [2004]), it is generally permissible only when the allegedly violative conduct affects consumers. Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 24-25 (1995). It must also be deceptive or misleading to a reasonable consumer, in a material way, the plaintiff must have been injured as a result, and there must be actual harm. Id. at 25-26. Thus, in Oswego, while the plaintiff was not an individual, it was making use of banking services in the same manner as any other consumer. Its complaint against the bank was, therefore, consumer oriented.

Here, despite Aetna's claims that defendants have harmed both it and the members of the health plan by submitting fraudulent claims and threatening to balance bill the members, it has not articulated any misleading or deceptive practice aimed at the consumer. It instead complains of inflated bills, which were sent to it. If defendants send inflated bills to PPO members, it could possibly result in a cause of action by those members, but would not result in harm to Aetna. Nor have any such bills been sent. Consequently, the dispute as it currently stands is basically one between an insurance company and a health care provider, and does not involve misleading material directed at consumers or harm to plaintiff. Thus, the GBL § 349 cause of action is dismissed as against Business Dynamics.

Aetna requests leave to amend the complaint as against Business Dynamics in the event that the complaint is dismissed as against it. However, Aetna has failed to cross-move for such relief, nor has it included a proposed amended complaint. Further, it has not presented any basis upon which it could revive its claims against Business Dynamics. Therefore, its request is denied.

Motion to Consolidate and Fix Venue

As all parties agree that this action and the Nassau Action should be consolidated, the question remaining is whether the consolidated action should be heard in this court or in Nassau County.

Generally, unless there are countervailing considerations, the site of the earlier commenced action is where the consolidated actions should be heard. Harrison v Harrison, 16 [*7]AD3d 206, 207 (1st Dept 2005); see also Parker v Troutman Sanders LLP, 89 AD3d 638 (1st Dept 2011). Here, the Nassau Action was commenced prior to this action.

Aetna maintains that, because these defendants were initially co-defendants in the Rak Action, which was commenced prior to the Nassau Action, the consolidated action should be heard in New York County.

The Nassau Action was commenced on August 21, 2012, by Dr. Hishmeh, as assignee of five of his patients who have health insurance with Aetna. Dr. Hishmeh contends that, in retaliation for his refusal to enter into a price-fixing agreement with Aetna regarding the fees he charges as an out-of-network provider, Aetna has withheld over $1.6 million in legitimately owed reimbursement. On October 3, 2012, Aetna commenced this action, alleging, among other things, that Dr. Hishmeh charged excessive fees to four patients, three of whom are assignor patients in the Nassau Action.

Dr. Hishmeh and LISC argue that if the court were to take into consideration any special circumstances, those circumstances would dictate hearing the consolidated action in Nassau County, not New York County. Specifically, defendants point to the fact that Dr. Hishmeh practices in Nassau County, and nearly all of his patients live in Nassau or Suffolk counties, which would make Nassau far more convenient than New York. Business Dynamics is also located in Nassau County. Thus, the actions have no real connection with New York. While Aetna has a New York office, the inspector handling this matter for Aetna is located in Hartford, Connecticut. Defendants also maintain that, since the Rak Action was in its early, pre-discovery stage, this court does not have any unique knowledge or familiarity with that case that would justify departing from the first-filed rule governing consolidated actions.

Aetna contends that defendants are attempting to forum shop because they are unhappy with prior rulings of this court, including the TRO that this court issued. Aetna reviews the procedural posture of this action and the Rak Action, in order to demonstrate that this court has taken an active part by continuing the TRO during the time allowed for Aetna to commence this action. Aetna also points out that, on September 13, 2012, the day on which this court denied defendants' motion to vacate the TRO, defendants served Aetna with the summons and complaint in the Nassau Action. Aetna further notes that the judge in the Nassau Action denied Dr. Hishmeh's motion to change venue of this action to Nassau County. The judge stated that it was his interpretation of this court's order that this court was retaining jurisdiction over the matter, and that, therefore, he could not transfer venue. Breitenbach affirmation, exhibit 1 at 18.

In arguing to transfer venue of the Nassau Action to New York, Aetna contends that Dr. Hishmeh was attempting to circumvent the May 16, 2012 stipulation among the parties by taking action during the standstill period. Aetna also maintains that, if Dr. Hishmeh wanted to change venue, he was required to move for such relief while litigating the Rak Action, and that this attempt is untimely. In presenting its arguments against fixing venue in Nassau County, Aetna discusses the standards for change of venue under CPLR 510 rather than discussing the fixing of venue when two actions in different counties are consolidated.

All parties agree that the Nassau Action and this action should be consolidated. The only question is whether the parties' earlier involvement in the Rak Action should be construed to be connected with this action so strongly as to allow this action to be viewed as the first-commenced action. [*8]

While Aetna argues that Dr. Hishmeh consented to litigate in New York, and never sought to move the Rak Action to Nassau County, that is not dispositive. Initially, it is noted that Dr. Hishmeh never filed an answer in the Rak Action, so the question of venue could still have been raised. In any event, the Rak Action involved other parties and different issues from this action. While they are, no doubt, related, they are not so intertwined that they should be litigated together, as evidenced by Dr. Hishmeh and LISC being severed from that action. Under such circumstances, it would not be appropriate to view the commencement of the Rak Action as the date upon which this action commenced. While Aetna may view defendants' commencement of the Nassau Action as devious or unsportsmanlike, it was still commenced before this action. Therefore, the rules concerning fixing venue for a consolidated action must apply. Harrison v Harrison, 16 AD3d at 207.

Further, Aetna has not demonstrated that defendants took any improper action during the standstill period. The stipulated standstill period ended well before the Nassau Action was commenced. Therefore, even if action during that time would be improper, it did not occur here.

The Nassau Action was commenced first, and the only special circumstances that Aetna brings forth are this court's familiarity with the proceedings and the fact that the Rak Action is before this court. Neither of these considerations outweighs the reasons for consolidating the action in Nassau County. The Nassau court can quickly familiarize itself with the background of the parties' litigation, and there is no specialized knowledge that this court has. Further, as pointed out by defendants, nearly all of the parties and witnesses have more connection with Nassau than New York, so any special circumstances which might weigh in favor of New York retaining the matter are overshadowed by considerations in favor of Nassau retaining its action.

Consequently, this action will be consolidated with the Nassau Action, with venue fixed in Nassau County.

Accordingly, it is

ORDERED that the motion of defendant Business Dynamics Limited (motion sequence number 002) to dismiss the complaint as against it is granted, and the complaint is severed and dismissed against said defendant with costs and disbursements as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendant; and it is further

ORDERED that plaintiffs Aetna Health Inc. and Aetna Life Insurance Company's motion (motion sequence number 001) to consolidate this action with a Nassau County action entitled Hishmeh a/a/o/ John and Jane Does, 1-5 v Aetna Health Inc. and Aetna Life Ins. Co., index No. 10669/2012 is granted; and it is further

ORDERED that the motion of Aetna Health Inc. and Aetna Life Insurance Company is denied insofar as it seeks to fix venue of the consolidated action in New York County; and it is further

ORDERED that the cross-motion of defendants to fix venue of the consolidated action in Nassau County is granted; and it is further

ORDERED that the venue of this action is changed from this court to the Supreme Court, County of Nassau, and upon service by defendants of a copy of this order with notice of entry and payment of appropriate fees, if any, the Clerk of this court is directed to transfer the papers on [*9]file in this action to the Clerk of the Supreme Court, County of Nassau; and it is further

ORDERED that the pleadings in the actions hereby consolidated shall stand as the pleadings in the consolidated action.

Dated:August 21, 2013

ENTER:

/s/Melvin L. Schweitzer

J.S.C.