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New Jersey Supreme Court Says State Consumer Fraud Law Does Not Apply To Advertisements For Physician Services


HLD, v. 32, n. 3 (March 2004)

New Jersey Supreme Court Says State Consumer Fraud Law Does Not Apply To Advertisements For Physician Services

Plaintiffs Joseph Macedo and Rosemary Lesky sued defendants Dr. Joseph Dello Russo, Dello Russo Laser Vision, which Russo owned, and Dr. William T. Kellogg, who worked at the laser vision clinic for Dello Russo, for violating the state Consumer Fraud Act (CFA), N.J. Stat. Ann. �� 56:8-1 to 116, by allowing Kellogg, who was not fully licensed, to treat them. Plaintiffs alleged defendants fraudulently misrepresented that Kellogg was fully licensed, and claimed damages for mental anguish. Plaintiffs did not allege that Kellogg's treatment fell below the applicable standard of care or that they suffered any injury because of the treatment. Defendants filed a motion to dismiss the CFA count, which the trial court granted on the ground the CFA does not reach claims about medical services. Plaintiffs appealed and the appellate division reversed. Defendants appealed.

The New Jersey Supreme Court reversed the appellate division's judgment. The high court noted that when the precursor to the CFA was adopted in 1960 advertising by physicians was not permitted, but with the U.S. Supreme Court's decision in Bates v. State Bar of Ariz., 433 U.S. 350 (1977), which allowed professionals to advertise, the state Attorney General determined that advertising by professionals was permissible, as long as there was reasonable regulation. However, since the enactment of the CFA it has never been amended to include advertising by professionals. The high court explained that Neveroski v. Blair, 141 N.J. Super. Ct. 365 (1976), was the first case to address the applicability of the CFA to professionals, and in that case the court held that the CFA did not apply to the misrepresentations of a real estate broker. The Neveroski court concluded that the legislature intended the CFA to apply to "the ordinary commercial seller of goods" and not to semi-professionals like real estate brokers.

The high court rejected the appellate division's reliance on Blatterfein v. Larken, 323 N.J. Super. Ct. 167 (App. Div. 1999), because the fact the defendant was an architect had no bearing on the application of the CFA to him for making misrepresentations about building materials as part of a real estate merchandising scheme. The fact the legislature has never amended the CFA to respond to the judicial determination that the CFA does not apply to professionals that are acting within their professional capacity leads to the conclusion that the legislature approved of the judicial treatment of professionals in connection with the CFA, said the high court.

Applying the holding in Neveroski to the facts in this case, the high court determined that the CFA did not apply to defendants' advertising representations that the laser surgery was being performed by licensed physicians, and the trial court did not err in dismissing the claims. Therefore, the appellate court's judgment was reversed.

Macedo v. Dello Russo, No. A-93-02 (N.J. Feb. 2, 2004).         

Health Lawyers thanks Lisa D. Taylor, of St. John & Wayne, L.L.C., in Newark, New Jersey, for sending us a copy of this decision.

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