Doctor Fred L. Pasternack v. Laboratory Corporation of America Holdings

59 N.E.3d 485, 27 N.Y.3d 817
New York Court of Appeals·Decided June 30, 2016·No. 112·Published·Cited by 473 cases

Opinions

[820] OPINION OF THE COURT

Abdus-Salaam, J.

In this action sounding in, among other things, negligence and fraud, plaintiff Fred Pasternack seeks to recover damages from defendants Laboratory Corporation of America Holdings (LabCorp) and ChoicePoint, Inc., arising from defendants’ alleged misconduct in performing and evaluating a random drug test that he was required to take as an airline pilot. We have accepted two certified questions from the United States Court of Appeals for the Second Circuit, asking us to determine (1) whether drug testing regulations and guidelines promulgated by the Federal Aviation Administration (FAA) and the Department of Transportation (DOT) create a duty of care for drug testing laboratories and program administrators under New York negligence law, and (2) whether a plaintiff may establish the reliance element of a fraud claim under New York law by showing that a third party relied on a defendant’s false statements resulting in injury to the plaintiff. We answer both questions in accordance with this opinion.

I

The underlying facts and procedural history are summarized as follows:

Plaintiff is a physician and part-time Northeastern Aviation Corporation airline pilot. He was required to submit to random drug testing pursuant to FAA regulations as part of its mandate to ensure “safety in air commerce and national security” (49 USC § 44701 [a] [5] [procedures for transportation workplace drug and alcohol testing programs]; see also 49 CFR part 40). ChoicePoint entered into a contract with Northeastern where [821] it agreed to help administer Northeastern’s drug program, including performing the services of a medical review officer (MRO). LabCorp, which provides specimen collection and drug testing services for private entities, entered into a contract with ChoicePoint to perform those services for Northeastern. When performing their duties under these contracts, both ChoicePoint and LabCorp were required to comply with the DOT Regulations and the DOT’s Urine Specimen Collection Guidelines (collectively, the DOT Regulations and Guidelines). The stated purpose of the DOT Regulations “is to establish a program designed to help prevent accidents and injuries resulting from the use of prohibited drugs or the misuse of alcohol by employees who perform safety-sensitive functions in aviation” (14 CFR 120.3).

On June 1, 2007, plaintiff was notified by Northeastern that he had been selected for random drug testing. On June 5, 2007, at about 1:10 p.m., he appeared for drug testing at a LabCorp site located in Manhattan. The urine sample plaintiff first produced at the test site was an insufficient quantity for testing. This is referred to under the DOT Regulations as a “shy bladder” situation. The DOT Regulations and Guidelines set forth procedures to be followed in such a situation, which include urging the employee to drink up to 40 ounces of fluid distributed reasonably through a three-hour period, or until the employee has provided a sufficient urine specimen (49 CFR 40.193; United States Department of Transportation, Office of Drug and Alcohol Policy and Compliance, Urine Specimen Collection Guidelines [Dec. 2006]). At the time that plaintiff was tested, the DOT Guidelines provided that “[t]he collector must specifically tell the employee that he or she is not permitted to leave the collection site and if they do so, that it will be considered a refusal to test” (DOT Guidelines at 20 [Dec. 2006]).1

[822] According to the complaint, Theresa Montalvo, a Patient Services Technician for LabCorp, told plaintiff that he would need to produce another urine sample, but did not explain the shy bladder procedure to him or urge him to drink additional fluids, and instead told him to return to the waiting room. Plaintiff did return to the waiting room, but believed it was unlikely that he could produce a sufficient urine sample before needing to depart the collection site for a scheduled aviation medical examination he was performing. He told Montalvo that he needed to leave, but would return to complete the test. Montalvo did not inform him that leaving the collection site would be considered a “refusal to test.” She did tell him that she was required to notify Northeastern that he was leaving and asked when he would return. Plaintiff told her she was free to contact Northeastern and that he would return the next day. He returned to the LabCorp facility around 4:00 p.m. that same day, and Montalvo called Northeastern and obtained permission to take a second urine sample from plaintiff. She noted on the chain-of-custody form (CCF), which Northeastern had given plaintiff pursuant to the DOT Regulations, that he had left and returned and that Northeastern had approved the second collection. Upon his return, plaintiff produced an adequate sample, which tested negative for prohibited drugs.

Plaintiff’s CCF was later reviewed by an MRO at Choice-Point, who determined that because plaintiff had left the collection site before the test was completed, there had been a “refusal to test” under the DOT Regulations. ChoicePoint reported this determination to the FAA, which prompted the FAA to interview Montalvo regarding the circumstances surrounding the urine specimen collection. As alleged by plaintiff, during the interview and in her subsequent signed statement, Montalvo did not tell the FAA investigators that plaintiff had told her during the initial collection that he planned to return to complete his collection. In November 2007, by emergency order, the FAA revoked all of plaintiff’s airman certificates, finding that he had engaged in a refusal to test. It subsequently terminated plaintiff’s designation as an Aviation Medical Examiner (AME) for the FAA, which gave him the authority to conduct FAA-mandated examinations for pilots. Thus, he was unable to pilot any flights or function as an AME.

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Doctor Fred L. Pasternack v. Laboratory Corporation of America Holdings, 59 N.E.3d 485, 27 N.Y.3d 817 (N.Y. 2016).

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