Case Name: State of New York, Respondent, v. Abortion Information Agency, Inc., et al., Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1971-07-01
Citations: 37 A.D.2d 142
Docket Number: 
Parties: State of New York, Respondent, v. Abortion Information Agency, Inc., et al., Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 37
Pages: 142–150

Head Matter:
State of New York, Respondent, v. Abortion Information Agency, Inc., et al., Appellants.
First Department,
July 1, 1971.
Arthur H. Sobel of counsel (Kenneth J. Rome with him on the brief; Kimmelman, Sexier & Sobel, attorneys), for appellants.
Mark T. Walsh of counsel (Samuel A. Hirshowits, Barnett Levy, Stephen Mindell and William F. Jerome with him on the brief; Louis J. Lefkowits, Attorney-General), for respondent.

Opinion:
Per Curiam.
We would affirm on the opinion at Special Term (Asoh, J.), but would add the following. Special Term's decision was based essentially on three findings. (1) It found as a matter of law, the public policy of the State " is opposed to the practice of acting as an intermediary or broker in the sale of professional services ' ', and the Abortion Information Agency was so engaged. (2) The court found that A.I.A.'s practice amounted to fee splitting which " on its face violates " section 6514 of the Education Law and finally (3) that A.LA.'s method of operation constituted the practice of medicine in violation of subdivision 1 of section 6501 of the Education Law. These findings were overwhelmingly supported by the incontrovertible proof submitted at Special Term.
As to the finding that the ' ' public policy of the State is opposed to the practice of acting as an intermediary or broker in the sale of professional services ' ', the court relied upon the case of Matter of Co-op. Law Co. (198 N. Y. 479, 484) where the court stated, 11 A corporation can neither practice law nor hire lawyers to" carry on the business of practicing law for it any more than it can practice medicine or dentistry by hiring doctors or dentists to act for it." That case is applicable here, for the entire mode of operation so clearly established is that the defendants hire the hospital and make all arrangements with the hospital. It is the defendant corporation that is billed by the hospital, not the patient. As the record shows, the defend ant and the hospital are clearly the contracting parties, and there is not even any indication that the patient herself undertakes any responsibility pursuant to contract insofar as her obligation to pay the hospital. This is A.IÍA. 's responsibility, apparently agreed to by the hospital. While the Supreme Court in Railroad Trainmen v. Virginia Bar (377 U. S. 1) upheld a situation where a union chanelled legal employment to particular lawyers in order to advise and protect union members, such is not analogous to the situation at bar, for in that case there is no indication that the union itself hired the attorneys—thus bypassing the ordinary attorney-client relationship. In finding the practices utilized herein violative of public policy, we also take note of the opinions of the Attorney-General on the subject. (1946 Opns. Atty. Gen. 314, 315; 1963 Opns. Atty. Gen. 50.) The opinions of the Attorney-General are persuasive and entitled to consideration by this court.
With relation to the finding that the practice of the defendants on its face violates 'section 6514 (subd. 2, par. [f]) of the Education Law, constituting illegal fee splitting, that finding too must be sustained. While the provision against fee splitting is particularly aimed against members of the medical profession, nevertheless, that section of the law prohibits payments in general (as a matter of public policy) for referring a client to a physician. The participation by the defendant in any arrangement which involves fee splitting by a physician is clearly against public policy. The affidavits disclosed the behind-the-scenes arrangements between A.I.A. and the co-operating doctors and hospital. In fact, the affidavit submitted by defendant John A. Settle admits that defendants were granted a discount in hospital charges amounting to their referral fees. That the discount may not have involved an increase in cost to the patient is irrelevant. What is clear from the affidavit, is that if the hospitals were contacted directly by the patient, a different fee would of necessity have been demanded. This is the logical conclusion from the admission that a discount was granted in an amount equal to the referral fee. The discount then quite clearly is the equivalent of feé splitting.
With respect to the admission that the defendants were able to obtain discounts at hospitals, and further taking into account the entire background of dealings between the defendants and hospitals, it is quite clear that plaintiff has made out a clear and convincing case concerning,the inherent dangers to the public involved in this situation, .considering the distinct probability of domination by the agency of the institutions. Contrary to the dissent's conclusion that such created only an issue of fact, in the circumstances of this case, the record being replete with the overwhelming probability that such is the situation, a temporary injunction was not only properly granted, but was mandated for the protection of the public.
Additionally, the finding that A.I.A.'s procedures constituted the practice of medicine in violation of section 6501 of the Education Law was correct. Subdivision 4 of section 6501 of the Education Law defines the practice of medicine as follows: " A person practices medicine within the meaning of this article who holds himself out as being able to diagnose, treat, operate or prescribe for any human disease or who shall either offer or undertake, by any means or method to diagnose, treat, operate or prescribe for any human disease". It is quite clear under the facts developed in the record that the defendants did engage in diagnosing a human or physical condition. Defendants' Employees were specifically instructed to interrogate women making inquiries upon a variety of matters pertinent to determination of the type of operation required and to inform the prospective patient as to the type of operation for which the caller qualified. This constitutes an attempt at a diagnosis by one not qualified to act as a physician, or acting under the direction and supervision of a physician. Moreover, A.I.A. also engaged in giving preadmission directives, which is also violative of the statute.
In addition to the grounds upon which Special Term reached its conclusion, there is yet another reason which justifies affirmance of the order. The record shows that a comprehensive fee is charged and that such " is a guaranteed flat charge that covers everything . Even if minor complications require an extra stay in the hospital, blood, special laboratory work or medications, you never pay anything more All extra charges not defrayed by [the patient's] insurance coverage (if any) would be borne by the hospital and/or A.I.A." Such practice would appear to constitute the practice of the business of insurance (Insurance Law, § 41), and the defendants not being licensed to conduct an insurance business, their activities were illegal (Insurance Law, § 40, subd. 1).
Finally, we would like to add these final comments. From the beginning to end, A.I.A. 's operation has the appearance of one conceived in fraud. The certificate of incorporation for example provides that the purpose of the corporation is: " To provide general information concerning legal abortions to the public and to women with problem pregnancies. The corporation, nor its agents, shall not undertake, to diagnose pregnancy, or any other physical or mental condition of a client. The corporation shall not undertake to advise a client on the medical desirability of obtaining an abortion, nor shall it provide any information or perform any act which may constitute the practice of medicine. ' '
The appearance then was the creation of an informational agency, not a business which would engage so extensively in the procurement of hospital services and make all arrangements for abortions. This combined with the manner in which the corporation functioned .demonstrates an undisclosed intent to conceal the real nature of defendants' business.
Also to be noted is the manner of contact between the patient and defendants. The overwhelming contacts were made over the telephone. Although the defendants' advertising gives the impression of having trained counselors, they were without any real training in the field and operated without any proper supervision. Moreover, affidavits of various former employees indicate the extent to which the caller would be discouraged from seeking other aid, and encouraged to register with the appellant corporation.
We do not dispute that those women desiring abortions are entitled under the law to have them. But, that does not mean that we should countenance an operation where under the guise of providing information, women are instead solicited and encouraged to seek out abortions. That the initial inquiry concerning the abortion is made by the patient does not negate the fact the defendants' methodology once a patient contacted it was to further encourage the abortion, for the sole motive of financial gain to defendants, rather than to aid in giving objective and concerned advice to the patient. The nature of the business we are dealing with requires the court to give close scrutiny to the facts in an attempt to provide maximum assurance that those who are merely inquiring as to information concerning abortions are not improperly influenced or induced to have such abortion. This is all the more necessary when we are dealing with unlicensed people entering a field where generally, licensing and supervision are necessary.
Despite the fact that the appeal is from an order which granted drastic relief, we find as did the court below, that the evidence overwhelmingly justifies the granting of such relief. Unquestionably, defendants' operation presents a superficial aspect of legality and regularity. But it is the duty of the Attorney-General and of the courts, to penetrate below the surface and to reach the essence of what defendants are doing. When that is done, there emerges a clear picture of the practice of medicine, fee splitting, a measure of insurance and a totality of procedure which violates the public policy of the State. That conclusion cannot be dissipated by sophistical argument.
Accordingly, the order entered May 20, 1971, granting petitioner's application, should be affirmed with costs and disbursements.