Whether a particular law provides for a private cause of action can have huge consequences for potential corporate defendants. Such a right opens the floodgates to plaintiffs, often represented on a contingency fee basis, asserting claims that may be meritless. The crushing wave of privacy class actions in recent years—made possible by the private causes of action in the underlying state privacy laws—shows what can happen.
Litigation is rarer, of course, when laws do not provide for private enforcement. Such laws typically require a governmental agency to choose to seek enforcement—usually after at least some degree of vetting and hopefully filtering out meritless claims. Important laws without private causes of action are plentiful. They include a wide range of federal laws and many state laws. Examples from the health care industry include restricting the corporate practice medicine (CPOM), any willing provider (AWP) and network access laws, and statutes requiring certain minimum reimbursement rates.
