UPDATE: U.S. District Court Judge Michael M. Baylson on Wednesday denied Disability Rights New York's bid to dismiss Woods Services Inc.'s January defamation lawsuit against the nonprofit legal services and advocacy group.

ORIGINAL: Woods Services Inc. on Wednesday sued Disability Rights New York, alleging that the advocacy group's October critical report on Woods's services for children and adults with developmental disabilities was "rife with unfounded accusations, misleading accusations, and outright falsehoods."

The 38-page complaint in U.S. District Court for the Eastern District of Pennsylvania accuses DRNY, a nonprofit, of defamation, commercial disparagement, intentional interference with contractual relationships, and intentional interference with prospective contractual relationships.

Woods asked the court to order DRNY, formally known as Disability Advocates Inc., to retract the report, apologize, block DRNY from visiting Woods without the consent and supervision of a neutral third party, and award compensatory and punitive damages.

The publicity surrounding the DRNY report caused a potential acquisition target to "abruptly" end its talks with Woods, the complaint said. Woods estimated that it lost between two and four expected admissions from two managed-care companies in Pennsylvania. The number of referrals from New York was down 20 percent in November, compared to the previous year, the complaint said.

Much of the Woods complaint goes page-by-page through DRNY's 26-page report picking apart descriptions of alleged incidents of abuse and neglect. In one case, Woods argued that DRNY made three errors in its assessment of an incident that generated five pages of documentation. That "demonstrates either that DRNY was intentionally mischaracterizing the incident or was recklessly indifferent to the truth."

Representing Woods is Mark A. Aronchick, of Hangley Aronchick Segal Pudlin & Schiller, of Philadelphia.

DRNY did not respond to a request for comment.