What Is Health Care Litigation in New York?

Health care litigation resolves legal disputes between medical providers, their business partners, hospitals, vendors, and payors through courts, arbitration, or administrative proceedings. Abrams Fensterman represents New York physicians, practices, and facilities in ownership disputes, credentialing challenges, and contract litigation, combining health care regulatory knowledge with trial experience to protect revenue, privileges, and long-term operations.

Why Health Care Disputes Are Not Ordinary Business Disputes

A dispute between two shareholders of a manufacturing company and a dispute between two shareholders of a medical practice look similar on paper and behave very differently in practice. Health care entities operate under licensure rules, corporate practice of medicine restrictions, and reporting obligations that constrain what remedies are available and what a settlement can actually contain. A remedy that works in a commercial case, such as transferring ownership to an outside investor, may be unavailable in a professional entity. Counsel who treat these matters as generic commercial litigation tend to discover the constraint late, after positions have hardened.

The second difference is collateral exposure. A partnership dispute can surface billing practices. A credentialing challenge can generate a report that follows a physician for the rest of their career. Litigation strategy in this field has to account for what the record being built will look like to a regulator later.

Ownership and Partnership Disputes Inside a Medical Practice

Most physician-owned practices in New York are organized as professional service corporations under Article 15 of the Business Corporation Law, and that structure shapes how ownership disputes resolve. Section 1510 requires the corporation to purchase or redeem a shareholder’s shares on death or disqualification, generally within six months, at book value determined under the corporation’s regular method of accounting.

The certificate of incorporation, the bylaws, or an agreement among the corporation and all shareholders can modify that, providing a shorter period or an alternate pricing method. Disputes usually begin exactly where those documents are silent, outdated, or inconsistent with how the owners have actually been operating.

Where a minority owner is being squeezed out, a different mechanism applies. Business Corporation Law Section 1104-a permits holders of twenty percent or more of the voting shares of a privately held corporation to petition for judicial dissolution because those in control have engaged in illegal, fraudulent, or oppressive conduct toward the complaining shareholders, or that corporate assets are being looted, wasted, or diverted.

Section 1118 then gives the corporation and the non-petitioning shareholders an absolute right to halt the dissolution proceeding by electing to purchase the petitioner’s shares at fair value on terms the court approves, which converts the case from a dissolution fight into a valuation contest.

Recognizing which track a dispute is on changes the entire economics of the case. The practical disputes we handle include compensation formula disagreements, allocation of ancillary revenue, demands to inspect books and records, disputed capital accounts, deadlock between equal owners, and the terms on which a departing physician exits. For providers structuring or restructuring a practice before a dispute arises, our practice formation and corporate structure attorneys address the governance documents that later determine the outcome.

Medical Staff Privileges and Credentialing Disputes

A hospital decision to deny, curtail, suspend, or terminate privileges reaches well past a single institution. Adverse privileging actions can generate National Practitioner Data Bank reporting and then surface in every future credentialing application, which is why these matters warrant a litigation response rather than an administrative one.

New York Public Health Law Section 2801-b makes it an improper practice for a hospital governing body to refuse to act on an application for staff membership or professional privileges, or to deny, withhold, curtail, terminate, or diminish them, without stating the reasons, or where the reasons stated are unrelated to standards of patient care, patient welfare, the objectives of the institution, or the character or competency of the applicant. That last clause is the heart of most contested cases, because it converts a vague institutional decision into a question with a legal standard attached.

A physician, dentist, podiatrist, optometrist, or licensed midwife who believes they were treated improperly may file a verified complaint with the Public Health and Health Planning Council. The council investigates, receives reports from both the hospital governing body and the complainant, and keeps that information confidential.

Records of the council proceeding are not admissible as evidence in other actions before any court, tribunal, board, or agency. If the council credits the allegations, it directs the hospital governing body to review the action it took. Section 2801-c provides a separate route to injunctive relief in court, and Section 2801-b expressly preserves other rights and remedies.

Sequencing matters here more than in most litigation. The internal bylaws hearing, the council complaint, and any court proceeding can run in parallel, and the factual record built in the earliest proceeding tends to constrain every later one. Where a privilege action arises alongside a licensing or misconduct issue, we coordinate with our OPMC and OPD defense attorneys so that positions taken in one forum do not undercut the defense in another.

Contract Disputes with Vendors, Institutions, and Business Partners

Health care contract litigation rarely involves a simple failure to perform. It usually involves an agreement whose economics were built on assumptions about referral patterns, reimbursement, or regulatory posture that later changed. The disputes we handle in this category include medical supply and equipment agreements, management services organization arrangements, electronic health record and billing vendor contracts, hospital affiliation and professional services agreements, employment agreements between practices and employed physicians, and restrictive covenant enforcement or defense when a provider departs.

Restrictive covenants deserve particular attention. Enforceability in New York turns on reasonableness in duration, geography, and scope, and courts weigh patient access considerations that do not appear in ordinary commercial non compete disputes. Both the practice seeking enforcement and the departing physician resisting it are better served by an early assessment of whether the clause survives scrutiny than by a preliminary injunction fight that fixes the parties’ positions before anyone has priced the risk.

Where the counterparty is a health plan rather than a private business partner, the dispute belongs to a different practice. Contract negotiation, payor audits, recoupments, and litigation against managed care organizations are handled by our health law managed care team, and pursuit of unpaid claims and third-party coverage is handled through health care collection and reimbursement recovery.

Where Health Care Disputes Are Decided

The forum a dispute lands in often matters as much as its merits, and it is frequently determined years earlier by a clause nobody negotiated closely.

Most private party health care disputes proceed in New York Supreme Court, and commercially substantial matters may be assigned to the Commercial Division, whose monetary thresholds and assignment rules vary by county. Many vendor, MSO, and employment agreements contain arbitration clauses, which trades public court process for a private proceeding with limited appellate review.

Challenges to determinations by a state agency or a body acting in an administrative capacity generally proceed as an Article 78 proceeding under the Civil Practice Law and Rules, which is a review of the determination rather than a fresh trial and carries a short limitations period. Privileges disputes add the Public Health and Health Planning Council track described above.

Each forum trades something. Court proceedings are public but preserve full appellate rights. Arbitration is confidential and often faster but narrows the grounds for challenging an adverse result. Article 78 review is fast but limits what evidence the court will consider. Choosing among them, or contesting the choice of a contract already made, is one of the earliest decisions in a health care case and one of the most consequential.

How Health Care Litigation Connects to Regulatory and Licensing Exposure

Business disputes in health care rarely stay in one lane, and a case that begins as a contract claim can open exposure elsewhere. Where a dispute involves patient injury allegations, our medical malpractice defense division handles the claim. Where a partner dispute or a whistleblower complaint triggers allegations of improper billing or kickbacks, our health care fraud and regulatory enforcement team responds. Where a government agency initiates an audit or investigation in parallel, our government audits and investigations attorneys manage that track. Hospitals and health systems seeking ongoing institutional counsel across all of these areas are served through our hospital representation practice.

Coordinating these tracks under one firm is the point. Positions taken to win a business dispute can create admissions that a regulator later reads.

Why New York Providers Choose Abrams Fensterman

Our attorneys litigate health care disputes with working knowledge of the regulations that govern the parties, which means the analysis of what a client can lawfully demand or concede happens at the outset rather than after a settlement term sheet has circulated. We represent physicians, medical societies, ambulatory surgery centers, diagnostic and treatment centers, hospitals, imaging facilities, and other health care providers, and we also represent over 125 nursing homes and long term care facilities.

The firm has been recognized by Best Lawyers as a Tier 1 Best Law Firm in Health Care Law for Long Island for 2026. Our health care litigation attorneys work from offices in Lake Success, Brooklyn, White Plains, Rochester, and Albany, and appear in state and federal courts and before administrative bodies across New York. The broader health law practice supports every litigation matter with regulatory, licensing, and transactional capability.