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Court of Appeals Finds Statements Made During Administrative Proceeding are Not Protected by an Absolute Privilege

In New York State, a defamatory statement is defined as “a false statement that is published or made known to a third party – deliberately or with negligence – without the knowledge or consent of the subject.  Under the doctrine of defamation, an individual who makes such statement may claim a defense by proving either that (1) the statement is true; (2) that the statement was an expression of pure opinion; or (3) that the statement is protected by an absolute privilege.  In the case of Stega v. New York Downtown Hosp., the New York Court of Appeals determined that defamatory statements made during an administrative proceeding are not protected by an absolute privilege.

The Plaintiff in the case was a medical scientist who was employed by the defendant hospital and the Vice President of Research and Chairperson of the hospital’s Institutional Review Board (IRB). The Plaintiff’s work included developing materials for a clinical trial in order to treat individuals with metastatic cancer. She was later terminated from her job by the hospital for allegedly violating the hospital’s conflict of interest policy. The plaintiff filed a complaint with the FDA stating her termination was improper.

During the FDA’s investigation, the chief medical officer of the hospital made multiple negative statements about the plaintiff’s actions.  The FDA then issued an inspection report which noted “certain improprieties documented by the hospital’s management resulting in” the plaintiff’s removal.  The report included the statements made by the chief medical officer of the hospital. Following the report, the plaintiff brought a defamation action, alleging that the false and defamatory statements damaged her professional reputation.  The defendants moved to dismiss the defamation claim by claiming an absolute privilege, or at least, that the statements were of pure opinion. The trial court denied the motion to dismiss and the Appellate Division reversed and dismissed the action.  The Court of Appeals only heard the appeal in regards to the absolute privilege issue.

On appeal, the Court of Appeals reversed the Appellate Court finding that the statements are not protected by an absolute privilege.  The majority found that the absolute privilege is “generally reserved for communications made by individuals participating in public function, such as judicial, legislative or executive proceedings.”  The Court made it clear that the purpose of the privilege is to ensure that the speaker’s personal interests, including fear of a lawsuit do not have an adverse impact on the discharge of their public function.  In that regard, the Court of Appeals found that for the absolute privilege to apply, the proceeding must have attributes similar to a court hearing.

The majority found that the administrative proceeding at hand was not akin to a court proceeding. Primarily, the Court found that both parties to the statement did not have the ability to partake in the hearing, and therefore, the defamed person did not have the ability to challenge the statements.  The majority relied on the fact that the plaintiff was not able to participate in the FDA’s review and that she could not contest her reputational harm before the FDA.  In conclusion, the majority found that the absolute privilege depends on the status of the defamed person and whether they are the subject of an administrative proceeding or investigation.

However, the dissent argued that whether the absolute privilege applies in a quasi-judicial proceeding depends on the speaker’s status and “whether the communication was made during the speaker’s participation in a public function.”  The minority found that the plaintiff was participating in the FDA’s investigation and therefore the absolute privilege applied.

To read a full copy of the decision click here.

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