The narrator uses verbal irony when referring to Dr. Sloper's increased social standing after his wife’s death. It seems his self-imposed punishment has actually only improved matters for him:
For a man whose trade was to keep people alive he had certainly done poorly in his own family; and a bright doctor who within three years loses his wife and his little boy should perhaps be prepared to see either his skill or his affection impugned. [...]
[He] bore forever the scars of a castigation to which the strongest hand he knew had treated him on the night that followed his wife’s death. The world, which, as I have said, appreciated him, pitied him too much to be ironical; his misfortune made him more interesting, and even helped him to be the fashion.
In this passage, James employs verbal irony to highlight the paradoxical nature of societal judgments on a man like Dr. Sloper who is already “appreciated” by his world. Dr. Sloper expects his self-inflicted punishment—presumably the result of guilt following the deaths of his wife and son—to lead to either social ostracism or shame. Instead, society elevates him in stature, finding him more "interesting" because of his misfortune. He's an admirable martyr, rather than a person to be avoided or pitied.
The phrase "even helped him to be the fashion" drips with irony, showcasing James's critical perspective on society's interest in other people’s tragedies. It's an observation about how New York society, rather than holding individuals accountable for their actions, often romanticizes personal tragedies. The deaths of his family members and Dr. Sloper’s noble “scars” of grief are seen as points of intrigue or admiration.
