PLLC HAROON CHOUDHRI v. State of New York, Defendant. (2026)

Background & Procedural Posture

Hudson Neurosurgery, PLLC and Haroon Choudhri, M.D., (collectively claimants) filed a claim and an amended claim against the State of New York  ¹ seeking $2,963,009.00, the amount billed by claimants, for surgical procedures performed on patient C.B. The patient was insured under the Empire Plan as an employee of Dutchess Community College ("DCC"), one of the benefit plan options offered to NYSHIP enrollees. NYSHIP, which is administered by the New York State Department of Civil Service, is a self-funded plan that contracts with UnitedHealthcare to administer the program including processing and paying or denying claims.

Prior to performing surgery on the patient, Dr. Choudhri, a neurosurgeon, sought and received pre-authorization for a procedure to be performed on his patient. By letter dated October 24, 2022, UnitedHealthcare granted authorization for the procedure stating " 'we determined that the treatment is eligible for coverage[.]' " (NY St Cts Elec Filing [NYSCEF] Doc No. 3 at 1, ¶ 2.) The Empire Plan also sent similar letters on October 28, 2022 and November 2, 2022. On or about November 14, 2022, the patient fractured a surgical screw, was transported by ambulance, and required emergency procedures which were performed on November 14, 16, and 17, 2022.

Claimants state that they sought pre-authorization from the Empire Plan for another surgery on November 28, 2022, received a letter from Empire authorizing the procedure, and on December 6, 2022, performed the procedure. Before conducting the procedures for which they had received prior authorization, claimants confirmed on UnitedHealthcare's provider portal that the patient had insurance coverage. When claimants performed the procedures, they did so in reliance on the representations by defendant that the procedures had been pre-authorized by defendant.

On January 10, 2023, claimants received $123,513.28 from UnitedHealthcare, on behalf of NYSHIP, for the November 14, 2022 procedures. Three days later, on January 13, 2023, UnitedHealthcare sent another letter demanding that claimants refund the amount just paid and, for the first time, asserting that the patient did not have valid coverage on the dates of service. Defendant has refused to pay the balance for the services provided despite having represented to claimants, in writing, that claimants were authorized to perform the procedures and that the patient had valid coverage.

Whether sounding in negligence, contract, or breach of an implied covenant of good faith and fair dealing, the essence of the claim is that claimants sought out the required pre-authorizations for procedures, received authorizations to perform those procedures, confirmed patient's insurance coverage immediately prior to performing the procedures, and, in reliance on that information, performed the procedures. Claimants allege that they have been harmed by defendant's claw-back of the payment made and its refusal to pay claimants for the pre-authorized services.

In lieu of an answer, defendant moved to dismiss the claim arguing, in essence, that the Court lacked subject matter jurisdiction over the claim because claimants sought review of an agency decision.  ² The Court disagreed and denied the motion. (See NYSCEF Doc No. 26.)

Motion Seeking Dismissal

Now before the Court is defendant's motion seeking an order granting dismissal pursuant to CPLR 3212. (NYSCEF Doc Nos. 39-47.) Defendant argues that the State is immune from liability because it was acting in its governmental capacity; that claimants cannot demonstrate "a special duty or privity sufficient to sustain their claim for monetary damages"; and that the State could not be the proximate cause of the claimants' damages "because an intervening and controlling cause was" DCC's failure to timely update records. (NYSCEF Doc No. 40 at 15, ¶ 43.)

Without any explanation or motion to adjourn the return date or seek an extension of time, claimants filed their opposition to defendant's motion 35 days after it was due and 28 days after the return date assigned to the motion. Defendant urged the Court to reject the untimely opposition. The Court rejected claimants' opposition papers, explaining that while the Court has the discretion to grant an extension of time to respond to a motion, no such motion was before the Court. (NYSCEF Doc No. 51.) Claimants promptly moved pursuant to CPLR 2004 for the Court to (1) extend the deadline for claimants  ³ to serve and file responsive motion papers nunc pro tunc; (2) accept claimants' responsive motion papers filed and served on February 4, 2026; and (3) grant any other relief. (NYSCEF Doc No. 52.) The Court granted claimants' motion and allowed them to refile answering papers on or before March 13, 2026. (NYSCEF Doc No. 57.) Inexplicably, claimants filed their opposition papers on March 19, 2026 again with no explanation as to why they were not timely. (NYSCEF Doc No. 59.) The Court therefore did not consider claimants' answering papers in making its decision on this motion.

Law & Analysis

Summary Judgment

It is well established that the party seeking summary judgment, even if unopposed, must provide sufficient admissible evidence to make a prima facie showing of an absence of material issues of fact and entitlement to judgment as a matter of law. (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986].) "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers." (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985].) If the moving party can make these showings, the burden then shifts to the opposing party to produce sufficient admissible evidence that establishes the existence of material issues of fact that would require a trial. (Alvarez, 68 NY2d at 324.)

When reviewing a summary judgment motion, the Court's role is not to resolve issues of fact, but to determine whether any triable issues of fact exist. (See Barr v County of Albany, 50 NY2d 247 [1980].) The evidence offered is viewed by the Court in the light most favorable to the non-moving party, giving the non-moving party the benefit where a conflicting inference can be drawn. (Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 [2011]; see also Open Door Foods, LLC v Pasta Machs., Inc., 136 AD3d 1002, 1004-1005 [2d Dept 2016].) Summary judgment "should only be granted where there are no material and triable issues of fact." (114 Woodbury Realty, LLC v 10 Bethpage Rd., LLC, 178 AD3d 757, 760 [2d Dept 2019] [internal quotation marks omitted].)

Governmental Capacity and Proprietary Function

It is well-established that, when a claim is raised against the State, whether sounding in negligence (Turturro v City of New York, 28 NY3d 469, 477 [2016]), in estoppel (Allen v Board of Educ. of Union Free School Dist. No. 20, 168 AD2d 403 [2d Dept 1990], appeal dismissed 77 NY2d 939 [1991]), or in contract (Matter of Karedes v Colella, 100 NY2d 45, 51 [2003]), the first issue for a Court to determine is whether the State was engaged in a proprietary function of the State or in its governmental capacity when the claim arose. (Turturro, 28 NY3d at 477, citing Applewhite v Accuhealth, Inc., 21 NY3d 420, 425 [2013].) The answer to this question will determine whether the State is subject to suit under the ordinary rules of negligence where it is performing in a proprietary role, or, if it was exercising a governmental function, whether a "special duty" of care was owed to the injured party.

Defendant argues in its motion that the administration of NYSHIP is "performed for the public good and is provided for the health of individuals who are entitled to participate in NYSHIP" (NYSCEF Doc No. 40 at 17-18, ¶ 51) and that "the administration of a large, complex public health insurance program like NYSHIP is an inherently governmental function because it is a core part of providing public benefits to state and county employees, retirees, and other public servants, a role not typically performed by private industry." (Id. at 18, ¶ 52.) Therefore, the State concludes, it was acting in its governmental capacity and not in a proprietary role and is thus immune from liability because the claimants cannot demonstrate that there was a special duty.

Courts have explained that the State or a municipality is acting in a proprietary role when "its activities essentially substitute for or supplement traditionally private enterprises" and is acting in a governmental capacity when its actions are "undertaken for the protection and safety of the public pursuant to the general police powers." (Calabrese v City of Albany, 43 NY3d 167, 178-179 [2024] [internal citations and quotation marks omitted].) Here, the State does not argue that defendant's actions were undertaken for the protection or safety of the public pursuant to general police powers, but rather that the administration of NYSHIP was "performed for the public good," and, perhaps contradictorily, "is provided for the health of individuals who are entitled to participate in NYSHIP[.]" (NYSCEF Doc No. 40 at 17-18, ¶ 51.) Indeed, Daniel Yanulavich, who is the director of employee benefits within the New York State Department of Civil Service and oversees NYSHIP, explained that NYSHIP is a benefit administered by the department of employee benefits for current employees and retirees. (NYSCEF Doc No. 46 at 10:25-12:13.) The Court therefore finds that the State's actions here fall in the proprietary realm. The State here is acting as any other employer, providing benefits to its employees, employees of participating agencies, and retirees. There is no evidence offered in the record to support the conclusion that the administration of NYSHIP is undertaken for the public and certainly not pursuant to general police powers. Rather, defendant was acting in a proprietary function and is subject to suit under the ordinary rules of negligence. It is therefore unnecessary to consider and decide whether the State's conduct was discretionary or ministerial and, if ministerial, whether there was a special duty to the claimants.

Negligent Misrepresentation and Estoppel

Defendant insists that, to the extent claimants are arguing negligent misrepresentation, that argument fails as a matter of law. (NYSCEF Doc No. 40 at 22-24, ¶¶ 74-80.) Citing Kimmel v Schaefer, (89 NY2d 257 [1996]), defendant accurately recites claimant's burden to demonstrate that the defendant knowingly or negligently provided false information "for the guidance of others, with a special relationship or duty, and that Claimants justifiably relied, resulting in pecuniary loss." (Id. at 22, ¶ 74.) Said another way, "A claim for negligent misrepresentation requires the plaintiff to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information[.]" (J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148 [2007].)

Since this is defendant's motion for summary judgment, it is the State's obligation to demonstrate that there are no material issues of fact. There is no dispute here that claimants received preauthorization for the services provided and that this information was incorrect. Rather, defendant's arguments center on whether claimants reasonably relied on that information and whether there was the existence of a special or privity-like relationship. Defendant argues that it was not reasonable to rely on the information because "the portal display was not a binding guarantee; even preauthorization does not prima facie guarantee ultimate payment under NYSHIP" (NYSCEF Doc No. 40 at 23, ¶ 75) and therefore claimant's reliance was not justified. However, defendant's own exhibit reflects that there is a question of fact as to whether claimants reasonably relied on the information provided. (See NYSCEF Doc No. 45 at 32:13-22 [Dr. Saima Samdani Choudhri described how providers are directed to check the portal to check for eligibility since that is where the most up-to-date information is available]; id. at 37:5-10 [Dr. Saima Samdani Choudhri explained that the portal is where she goes to look up patient eligibility "in real time(.)"].) Whether the "portal display," or, more accurately, the preauthorization creates any sort of "guarantee" also remains an outstanding question.

Turning to whether the State has demonstrated that there was no special or privity-like relationship, defendant argues that claimants "have no contractual privity" with it in that there are no "express contractual rights[,]" they are "not parties to the administrative agreement between C.B.'s employer and NYSHIP, so there is also no basis for an implied contract claim." (NYSCEF Doc No. 40 at 24, ¶ 79.) However, as set out by the Court of Appeals in Mandarin Trading Ltd. v Wildenstein, in a claim for negligent misrepresentation, "[a] special relationship may be established by persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified[.]" (16 NY3d 173, 180 [2011] [internal quotation marks and citations omitted].) Defendant's affirmation is silent on these issues. Therefore, defendant's arguments related to the absence of material facts with respect to whether a special or privity-like relationship that imposed a duty on the defendant to impart correct information to the claiamants are insufficient to shift the burden to the claimants.

Defendant also argues that "[e]stoppel against THE STATE is extremely limited in these circumstances because THE STATE generally cannot be estopped from correcting its records or from resisting claims on the basis of erroneous information." (NYSCEF Doc No. 40 at 22, ¶ 73.) Defendant maintains that equitable estoppel arguments raised by the claimants fail "as a matter of law" (id. ¶ 73) and that estoppel "is narrow and cannot be used against THE STATE to create contractual liabilities or override plan eligibility rules because THE STATE may correct errors in its records or deny payments consistent with plan terms." (Id. at 23, ¶ 78.)

A review of the case law reflects that "estoppel may not be invoked against a governmental agency to prevent it from discharging its statutory duties[.]" (Matter of E.F.S. Ventures Corp. v Foster, 71 NY2d 359, 369 [1988] [emphasis added]; see also Matter of Parkview Assoc. v City of New York, 71 NY2d 274, 279 [1988] ["estoppel is not available to preclude a governmental entity from discharging its statutory duties"] [emphasis added].) The defendant does not identify any statutory duty that was being discharged. Moreover, the context in which the majority of these decisions emerge is when the State is acting in a governmental capacity. (Matter of Hamptons Hosp. & Med. Ctr. v Moore, 52 NY2d 88, 93 [1981] ["The doctrine of estoppel is not applicable to the State acting in a governmental capacity].") Here, however, the Court has already determined that defendant was not acting in a governmental capacity but rather in a proprietary role. Indeed, when acting in a proprietary role, "[a] government entity may be estopped from taking action where it is acting within the realm of its discretion rather than in accordance with a statutorily imposed mandatory duty." (57 NY Jur Estoppel, Ratification, and Waiver § 49.) Estoppel may be invoked where "a manifest injustice has resulted from actions taken in its proprietary or contractual capacity," and "the public agency's misconduct has induced justifiable reliance by a party who then changed his position to [their] detriment[.]" (Allen v Bd. of Educ. of Union Free School Dist. No. 20, 168 AD2d 403, 404 [2d Dept 1990].) The defendant has therefore failed to establish that, to the extent claimants have stated claims for negligent misrepresentation and estoppel, they fail as a matter of law.

Proximate Cause

Finally, defendant argues that even if it was negligent, claimants cannot show its actions were the proximate cause of claimant's harm because DCC's failure to properly update the records was an intervening act that broke the causal chain. (NYSCEF Doc No. 40 at 24-25, ¶¶ 81-86.) The State's affirmation offers only conclusory assertions that "Dutchess Community College's failure was an independent, intervening and superseding cause" and therefore the State was not the proximate cause of the damages. (Id. at 25, ¶ 83.) The State provides neither evidence nor authority to support its arguments that the State did not proximately cause harm and that it had no responsibility to ensure that accurate information was provided. To the extent it cites to the record, it only directs the Court's attention to the pre-authorization letters in support of its argument that claimants' reliance on the representations that C.B. had coverage was "unreasonable"—which is unrelated to establishing that the State was not the proximate cause of the claimants' damages. (Id. at 24, ¶ 82.)

Conclusion

Several questions of fact remain. The State has simply not provided sufficient admissible evidence to make out a prima facie showing of an absence of material issues of fact and entitlement to judgment as a matter of law. Therefore, the burden does not shift to the claimants and defendant's motion for summary judgment must be denied.

Therefore, based on the foregoing, it is,

ORDERED, that defendant's motion for summary judgment (M-102930) is DENIED.

June 17, 2026

New York, New York

SETH M. MARNIN

Judge of the Court of Claims

In rendering the decision, the Court read and considered the following papers:

1. Amended claim, filed April 26, 2023 (NYSCEF Doc No. 3); and

2. Defendant's notice of motion with affirmation in support and exhibits, filed October 16, 2025 (NYSCEF Doc Nos. 39-47).

FOOTNOTES

1.   The caption originally included NYSHIP, New York State Department of Civil Service, and Dutchess Community College, SUNY. The Court granted Dutchess Community College's unopposed motion to dismiss the claim against it and sua sponte amended the caption to reflect the State of New York as the only proper party. (See NYSCEF Doc No. 22.)

2.   The motion was brought pursuant to CPLR 3211 and CPLR 3212. However, CPLR 3212 permits a party to move for summary judgment after issue has been joined. Because defendant had not yet answered, it was not joined and the Court therefore only considered defendant's motion to dismiss pursuant to CPLR 3211.

3.   The motion inadvertently identified claimants as defendant throughout their papers.

Seth M. Marnin, J.