01/30/03: SEYMOUR v ROE
New York Appellate Division, Third Department
While Mild Disc Herniation is Not Necessarily a “Serious Injury” Under New York No Fault Law, Defense Must Prove More to Obtain Summary Judgment
Court held that a disc herniation may constitute a “serious injury”, albeit a mere diagnosis of a mild disc herniation by itself will not. Among the shortcomings in defendant’s proof was the failure to address the statutory terms “significant” and “consequential” which “relate to medical significance and involve a comparative determination of the degree or qualitative nature of an injury based on the normal function, purpose and use of the body part”. Defendant’s proof failed to address whether the disc herniation was the source of pain or limitations, the degree and permanency of the condition and whether the condition was connected to this accident, so as to satisfy defendant’s burden of demonstrating that plaintiff did not sustain a serious injury.
01/28/03: HERMITAGE INS. CO. v ALOMAR
New York Appellate Division, First Department
Late Notice to Underinsured Carrier Excused
The court correctly found that claimant’s first written notice of claim under the SUM endorsement, i.e., her demand for arbitration, was given “as soon as practicable” as required by the SUM endorsement. In the underinsurance context, a policy requirement that notice be given “as soon as practicable” means notice given with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured. Here, the claimant was injured in August 2000 while a passenger on a motorcycle operated by the carrier’s insured. The carrier did not learn of the personal injury action that the claimant had brought against the motorcycle driver until January 2001, when it received a copy of a motion for a default judgment that the claimant made against him in that action. The carrier immediately sent a letter to the motorcycle driver, with a copy to the claimant, stating that it was providing “no coverage” for the accident “because of multiple breaches of the policy provisions pertaining to timely notice.” This disclaimer letter caused the claimant to seek underinsured benefits from MVAIC, but, in June 2001, MVAIC rejected the claim on the ground that the motorcycle driver’s policy provided SUM coverage that was triggered by the carrier’s disclaimer for lack of cooperation. It was only then that the claimant, who was not the owner of the policy and had no opportunity to discover its contents because of the motorcycle driver’s default in the personal injury action, could have reasonably known of the existence of the SUM coverage in that policy.
01/27/03: ELFIKY v HARRIS
New York Appellate Division, Second Department
Bulging or Herniated Disc Does Not Necessarily Qualify as Serious Injury Under No Fault Law
Although a bulging or herniated disc may constitute a “serious injury” within the meaning of Insurance Law § 5102(d), a plaintiff must provide objective evidence of the extent or degree of the alleged physical limitations resulting from the disc injury and its duration. The defendants’ medical expert examined the injured plaintiff and stated in his affirmed report that she had full range of motion of the lumbosacral spine and no muscular spasm. This proof was sufficient to establish a prima facie case that the plaintiff did not sustain a “serious injury” as a result of the accident. The medical evidence submitted in opposition to the motion was not in proper evidentiary form, and thus failed to raise a triable issue of fact.
01/23/03: MATTER OF AIU INS. CO. v CABREJA
New York Appellate Division, First Department
Where Uninsured Motorist Coverage is Claimed, a Fact Question Regarding Insured Status of Hit and Run Car is for Court, Not Arbitrator
An uninsured motorist carrier that claims the accident involved an insured vehicle has to seek a permanent stay of arbitration in New York. The party seeking a stay of arbitration has the burden of showing sufficient facts to establish justification for the stay. However, where “there is a genuine triable issue . . . the appropriate procedure is to stay arbitration pending a trial of the threshold issue.” Since there was a conflict as to whether the offending vehicle was properly identified, an issue was posed that was for judicial, not arbitral, resolution.
01/14/03: MATTER OF MERCHANTS MUT. INS. CO. v FALISI
New York Court of Appeals
Claimants Provided Insurer with Sufficient Notice of a Claim for Uninsured Motorist Coverage
Dismissing the lower court’s stay of arbitration, the Court of Appeals held that the requirement that claimants provide their insurer with timely notice of claim was met by the form given to the insurer eleven days after the accident detailing the claim. The court construed the notice of claim liberally and found that it was an appropriate vehicle for notice of a supplemental uninsured motorist claim.
Prepared by Larry P. Schiffer and Francis Hsueh of LeBoeuf, Lamb, Greene & MacRae, LLP in New York, NY
01/13/03: EAGLE INS. CO. v ZUCKERMAN
New York Appellate Division, Second Department
Late Notice Vitiates Coverage
Insured gave notice to proper auto carrier fifteen months after the accident. Since there was no excuse for the delay, notice was deemed late as a matter of law, and carrier had no obligation to defend or indemnify. Other carrier placed on notice had no obligations either because it wasn’t on the risk at the time of the loss.
AND IN DEFENSE
01/30/03: HENDRICKS v LEE’S FAMILY, INC.
New York Appellate Division, Third Department
Use the Bathroom Next Time -- Premises Owner “Relieved” From Liability
Premises liability case dismissed when intoxicated patron of bar decided to relieve himself in the bushes rather than in the women’s restroom. When plaintiff fell off the loading dock, she sued the restaurant. It simply was not forseeable that plaintiff, in a highly intoxicated state, would leave the parking area to urinate behind the bushes rather than use the establishment’s indoor facilities. Plaintiff did not set forth evidence that she was precluded from using the bar’s restrooms.
ACROSS BORDERS
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01/29/03: PALISADES SAFETY & INSURANCE ASS’N v BASTIEN
New Jersey Supreme Court
Insured’s Wife, Intentionally Left Off Husband’s Auto Policy, Not Eligible For PIP Coverage
Wife resided with husband, but husband lied to insurer and represented that there were no other persons of driving age living in household. She was injured while driving a vehicle covered under his policy. The Supreme Court affirmed the lower courts’ grant of summary judgment for the insurer, rejecting the insured’s claim that the wife was entitled to minimum PIP coverage as an innocent injured third party.
01/27/03: GOLDEN RULE INS. CO. v SCHWARTZ
Illinois Supreme Court
Language in Insurance Application that Statements Are True to the “Best of My Knowledge and Belief” Relaxes the Rigid Statutory Standard of Accuracy
Defendant’s father obtained medical insurance for his son, a 23-year old student. The father, on Defendant’s behalf, answered the application questions over the phone. He indicated that Defendant was not covered by any other medical insurance. The father signed the application, which contained a provision that the statements in the application are “true and complete to the best of my knowledge and belief.” Subsequently, Defendant filed a claim under the policy and Golden Rule denied said claim since it was discovered that Defendant was also covered under his father’s medical policy. According to Ins. Code §154, a policy may be voided where an insured (1) makes a false statement on an application, and (2) the statement was made with an intent to deceive or materially affected the acceptance of the risk assumed by the insurer. The Supreme Court held that the “knowledge and belief” language establishes a lesser standard of accuracy than imposed under the statutory language of §154. The Court further held that the “knowledge and belief” provision shifts the focus from an inquiry into whether the facts asserted were true to whether, on the basis of what he knew, the applicant believed them to be true. As this required a credibility determination, the Court found that this was a question for the jury. Accordingly, the Court reversed the appellate court’s granting of summary judgment in favor of Golden Rule based on the misrepresentation and remanded the case for further proceedings.
Prepared by Bruce Celebrezze and Steve Bermudez of Celebrezze & Wesley in Los Angeles
01/27/03: PROVIDENT LIFE AND ACCIDENT INS. CO. v HALLUM
Georgia Supreme Court
Carpal Tunnel Syndrome is “Injury”, Not Sickness, Under Disability Policy
Defendant suffered from carpal tunnel syndrome. Provident Life and Accident Insurance Company issued defendant a disability insurance policy that provided greater coverage for disabilities arising from injuries than those caused by sickness. Defendant sued Provident Life after it refused to categorize the cause of his condition as an injury. The United States Court of Appeals for the Eleventh Circuit certified to this Court the question of whether, under Georgia law, carpal tunnel syndrome caused by repetitive hand motion should be classified as an injury or a sickness, as those terms are used in the policy. Court concludes that, under Georgia law, a person who unexpectedly suffers from carpal tunnel syndrome brought on by years of voluntary repetitive hand movements that renders him disabled has suffered an “injury,” as that term is defined in this Provident Life insurance policy.
01/24/03: HALSEY v FARM BUREAU MUT. INS. CO., INC.
Kansas Supreme Court
Statute Requires a Limits-to-Limits Comparison to Determine Whether Uninsured Motorist Coverage Exists
Plaintiff Halsey, surviving spouse of a passenger killed in an auto accident, brought suit against his insurer to collect underinsured motorist (UIM) benefits. Halsey’s spouse was one of seven passengers injured or killed in the accident. Halsey’s policy contained UIM benefits of $500,000 per person and $500,000 per occurrence. Halsey had collected approximately $103,000, his proportionate share under the other driver’s $1,000,000 policy. K.S.A. 40-284(b) provides that any uninsured motorist (UM) coverage must include UIM coverage “to the extent such coverage exceeds the limits of the bodily injury coverage carried by the owner and operator of the other motor vehicle.” The Supreme Court rejected the argument that since Halsey only collected $103,000 under the $1,000,000 policy, he should be entitled to UIM coverage under his $500,000 policy (a limits-to- recovery comparison.) The Court held that the plain and unambiguous language of the statute required a limits-to-limits comparison in determinations as to whether UIM coverage exists. Therefore, since Halsey’s UIM coverage limits were less than the limits of the other driver’s policy, no UIM coverage existed.
Prepared by Bruce Celebrezze and Steve Bermudez of Celebrezze & Wesley in Los Angeles
01/24/03: PURDY v FARMERS INSURANCE COMPANY
Idaho Supreme Court
Bad Faith Case Fails Where No Coverage Under Policy
Try as they might, insured could not find ambiguity in policy that would create underinsured motorists coverage for a loss. Accordingly, bad faith claim for failing to pay such claim could not be sustained.
01/24/03: GUILLEN v POTOMAC INS. CO. OF ILLINOIS
Illinois Supreme Court
Insurer Who Mails Notice to Insured of Material Change in Policy must Maintain Proof of Mailing on Recognized U.S. Post Office Form or Form Acceptable to Post Office or Other Commercial Delivery Service
Among the issues on appeal was whether an insurer who mails notice to its insured of a material change in an insurance policy, as required under section 143.17a(b) of the Illinois Insurance Code (215 ILCS 5/143.17a(b) (West 1992)) (“Code”), must maintain proof of the mailing on a recognized “U.S. Post Office” (“Postal Service”) form or form acceptable to the Postal Service or other commercial delivery service. The insurer in this case, Potomac Insurance Company of Illinois (“Potomac”) did not dispute the general rule of statutory construction set forth in the Code, instead, it questioned its application in the case at bar. Specifically, Potomac contended that a policy modification is a less serious transaction than a policy non- renewal and, consequently, it was reasonable to conclude that the legislature imposed less stringent notice requirements on insurers with respect to such material modifications. In that regard, Potomac contended that the term “proof of mailing” is not limited to Postal Service forms or commercial delivery forms but may also include other forms of proof such as an insurer's custom and practice with respect to mailing. The Court observed that a material alteration of an insurance policy is an important transaction that may have a serious effect on the interests of the insured. Recognizing this, the Court determined that the legislature imposed the notice requirements for material modifications to protect the insured from cancellation or reduction of certain coverage without the insured's knowledge. Given such, the Court rejected Potomac’s contention.
Prepared by Richard Traub and Bill Aumenta of Traub Eglin Lieberman & Straus in Hawthorne, NY
01/23/03: MURPHY v NATIONAL UNION FIRE INS. CO.
Massachusetts Supreme Judicial Court
Interest Allowed on Arbitration Award Settling Damages Dispute Between Insured and Insurer, Despite Prompt Payment by Insurer
Plaintiffs Kenneth and Donna Murphy were seriously injured in a car accident. After settling their personal injury claims against the third-party tortfeasor, Plaintiffs filed an underinsured motorist (UIM) claim with National Union, the insurance carrier for the vehicle Kenneth Murphy had been operating. The parties agreed to arbitration to resolve their dispute over the amount of damages. The arbitration panel awarded Plaintiffs damages in the amount of $1,610,000 (less $100,000 in third-party settlements). National Union paid the full amount of the arbitration award less than a month after the award was granted. Plaintiffs obtained a judgment entitling them to recover interest on the award from the date of the award through the date of payment. The Supreme Court referred to the Massachusetts rule that post-award interest runs from the date of the award in order to encourage “swift obedience.” Although the arbitration award did not mention interest, and the award was paid within thirty days, the Supreme Court held Plaintiffs were still entitled to a judgment to recover interest on the award.
Prepared by Bruce Celebrezze and Steve Bermudez of Celebrezze & Wesley in Los Angeles
01/22/03: GIUSTRA v UNUM LIFE INS. CO. OF AMERICA ET AL.
Maine Supreme Judicial Court
Doctor Is Not “Totally Disabled” Despite His Inability to Perform Major Surgery
Richard A. Giustra appeals from a summary judgment entered for UNUM Life Insurance Company of America and Paul Revere Life Insurance Company. Giustra argues that the court erred in determining that he is not totally disabled as that term is defined in one of the policies issued by Paul Revere Life Insurance Company. Although Giustra remains able to evaluate patients in his office and perform minor surgeries, he contends that he meets the policy definition for “total disability,” because he is unable to perform major surgery, the most economically important duty of his practice. The Court reasoned that because the subject policy also provided for lesser benefits for partial disability, which is defined as being unable to do “one or more” of the important regular duties of his occupation, total disability refers to something more debilitating. “The important duties” of an orthopedic surgeon must, therefore, be interpreted as meaning “all of the important duties.” If the phrase “the important duties” was construed to mean “one of the important duties,” it would mean the same as “partial disability,” which the Court concluded would yield an unreasonable interpretation. The Court, therefore, concluded that as long as Giustra was able to do one or more of the important duties of an orthopedic surgeon, he is not totally disabled under this policy.
Prepared by Richard Traub and Bill Aumenta of Traub Eglin Lieberman & Straus in Hawthorne, NY
01/21/03: LESLIE v J.C. PENNEY LIFE INS. COMPANY
Idaho Supreme Court
All Temporary Ailments Are Not “Bodily Infirmities”
Plaintiff made claims for coverage as the beneficiary of two accidental death insurance policies issued by J.C. Penney Life Insurance Company to her husband. A jury found that his death was the result of an accident, but that the injury leading to death was also from a disease or bodily infirmity or related surgical procedure. Plaintiff appealed arguing that the trial court erred by not distinguishing in the jury instruction between a “bodily infirmity” and a “temporary disorder.” The Supreme Court held that plaintiff did not provide any support for an instruction that all temporary ailments (i.e., ailments that last a short period or are treated quickly), regardless of their severity if allowed to develop, are not “bodily infirmities.”
Prepared by Richard Traub and Bill Aumenta of Traub Eglin Lieberman & Straus in Hawthorne, NY
01/21/03: EDWARDS. v PRUDENTIAL PROPERTY AND CASUALTY CO.
New Jersey Appellate Division
Insurers Do Not Have Affirmative Duty to Alert its Insureds to Right of Reimbursement under Compensation Provision When the Expenses Are Incurred
Automobile general liability policies issued by the defendant insurance companies in this case contain a Compensation Provision, under which defendants agree to reimburse their insureds for out-of- pocket expenses incurred while the insureds attended court proceedings in a personal injury action defended by the insurers. In these consolidated appeals, the central issue is whether defendants have an affirmative duty to alert the insureds to their right to reimbursement under the Compensation Provision when the expenses are incurred, and to provide them with “claim forms” in order to facilitate their reimbursement claims. In granting defendant’s motion to dismiss for failure to state a claim, the appellate court affirmed the trial court which held that defendants owe no such duty.
Prepared by Richard Traub and Bill Aumenta of Traub Eglin Lieberman & Straus in Hawthorne, NY
01/17/03: WILSON v FARMERS INSURANCE GROUP
North Dakota Supreme Court
Question Of Substantial Compliance With Cooperation Clause Inappropriate For Summary Judgment
The North Dakota Supreme Court reversed summary judgment for Farmers, finding that, when viewed in a light most favorable to the insured, the facts of the case could not lead reasoning minds to but one possible conclusion as to whether the insured substantially complied with the cooperation clause in his policy. Viewed in a light favorable to the insured, the facts showed that he attempted to cooperate “to an extent” where he sat for a recorded statement with a Farmers special claims representative but the tape recorder malfunctioned, walked out of an initial session because of its long length and his frustration with the examiner, completed an examination under oath as required, provided an explanation regarding his tax returns, provided his Social Security records, and provided other financial records. While finding that he was not fully cooperative, the court could not say as a matter of law that he did not substantially comply with the cooperation clause.
Prepared by Bruce Celebrezze and Joseph E. Pelochino of Celebrezze & Wesley in Los Angeles
01/17/03: MATCON DIAMOND v PENN NATIONAL INS.
Superior Court of Pennsylvania
Pollution Exclusion Excludes Carbon Monoxide Poisoning From Gas-Powered Concrete Saw
The Superior Court affirmed the trial court’s grant of a declaratory judgment in favor of Penn National that it did not have a duty to defend and indemnify its insured. The insured was injured when overcome by carbon monoxide fumes while cutting concrete with a gasoline powered saw in an area in a shopping mall, which had been enclosed by plastic. The court held that the pollution exclusion unambiguously excluded coverage for the injury. First, the court found that the dictionary definition of carbon monoxide as a “poisonous gas,” combined with its well-known toxic effects and its status as a regulated pollutant under state and federal law compelled the conclusion that carbon monoxide is a pollutant. Second, the court found that the insured did not specifically request or bargain for any particular pollution coverage or pollution exclusion and thus, the insured did not have any particular expectation regarding the scope of the pollution exclusion which was in the policy. And third, there was no question as to causation because the policy unambiguously excluded from coverage “‘bodily injury’ or ‘property damage’ which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.”
Prepared by Bruce Celebrezze and Joseph E. Pelochino of Celebrezze & Wesley in Los Angeles
01/15/03: JUAREZ v 21ST CENTURY INS. CO.
California Court of Appeal
Insurer Has No Duty to Inform Insured of Statutory Time Limit for Claim
Plaintiff appellant sought review of the trial court’s grant of summary judgment for defendant in an action related to uninsured motorist insurance. California law requires a claimant to bring such an action within one year, and plaintiff here failed to do so. Plaintiff nevertheless claimed the insurer should be estopped from raising this time bar defense because it never notified plaintiff of the time limit. The court held that the insurer had no such duty, especially where the insured was represented by counsel.
Prepared by Larry P. Schiffer and Dan Paisley of LeBoeuf, Lamb, Greene & MacRae, LLP in New York, NY
01/14/03: WILLIAMS v PORT AUTHORITY OF NEW YORK AND NEW JERSEY
New Jersey Supreme Court
New Jersey Refuses to Extend Extra-Territorial Reach of Workers Comp Statute
The issue in this appeal was whether the New Jersey Division of Workers’ Compensation properly exercised subject matter jurisdiction over a claim by a Port Authority employee alleging occupational pulmonary disease based on four months of exposure to certain cleaning agents and other chemicals in New Jersey that predated twenty-one years of similar exposure in New York. Williams was employed by the Port Authority from 1969 until the time of his retirement in 1997. During the course of his employment with the Port Authority, Williams worked in New York, where he also resided. Throughout the entire course of his employment with the Port Authority, including four months in 1973 during which he worked on the New Jersey side of the George Washington Bridge, Williams used and was exposed to various cleaning agents, fumes, and other strong chemicals from which he ultimately claimed that he sustained pulmonary disease. Williams first sought medical treatment for his pulmonary problems in 1993 – some twenty years after his exposure in New Jersey. Williams retired from his position with Port Authority in 1997, based on his age. In May 1997, Williams filed an occupational workers’ compensation claim with the Division of Workers’ Compensation (Division) alleging, among other conditions, pulmonary disability related to his work exposure between September 1969 and May 1997. Although the Port Authority raised the defense of lack of subject-matter jurisdiction in its answer, the Judge of Compensation reserved decision on the jurisdictional issue until the conclusion of the trial. At the conclusion of the trial, the judge found that the Division should exercise jurisdiction and awarded Williams a partial permanent disability of twenty percent for chronic bronchitis. The Port Authority appealed, contending that the Division should not have exercised extraterritorial jurisdiction. A divided panel of the Appellate Division affirmed, concluding that Williams had sustained an injury in New Jersey during the four months of exposure in this State. In determining whether Williams’ four-month employment exposure in New Jersey was sufficient to permit the Division to exercise jurisdiction, the panel determined that New Jersey’s decisional law regarding apportionment of occupational disease disability among successive employers. The majority concluded that Williams’ exposure to the cleaning agents and other chemicals in New Jersey was not a casual, brief or insubstantial period of exposure. The majority further concluded that because it could not be determined at what point during the twenty-one year exposure the pulmonary disease process commenced, it should be deemed to have commenced simultaneously with the beginning of the exposure in New Jersey. Upon review, the New Jersey Supreme Court held that petitioner’s exposure to allegedly harmful chemicals during four months of his employment in New Jersey, while employed by the Port Authority of New York and New Jersey, could not satisfy the injury requirement for the exercise by the New Jersey Division of Workers’ Compensation of extraterritorial jurisdiction.
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Judgment, Supreme Court, New York County (Edward Lehner, J.), entered on or about March 18, 2002, which denied petitioner insurance carrier's application to stay a supplementary uninsured motorist (SUM) arbitration demanded by respondent claimant, and directed the parties to proceed to arbitration, unanimously affirmed, with costs.
The IAS court correctly found that the claimant's first written notice of claim under the SUM endorsement, i.e., her demand for arbitration, was given "as soon as practicable" as required by the SUM endorsement. In the underinsurance context, a policy requirement that notice be given "as soon as practicable" means notice given with reasonable promptness after the insured knew or should reasonably have known that the tortfeasor was underinsured (Matter of Metropolitan Prop. & Cas. Ins. Co. v Mancuso, 93 NY2d 487). Here, the claimant was injured in August 2000 while a passenger on a motorcycle operated by the carrier's insured. It appears that the carrier did not learn of the personal injury action that the claimant had brought against the motorcycle driver until January 2001, when it received a copy of the motion for a default judgment that the claimant made against him in that action. The carrier thereupon immediately sent a letter to the motorcycle driver, with a copy to the claimant, stating that it was providing "no coverage" for the accident "because of multiple breaches of the policy provisions pertaining to timely notice." This disclaimer letter caused the claimant to seek underinsured benefits from MVAIC, but, in June 2001, MVAIC rejected the claim on the ground that the motorcycle driver's policy provided SUM coverage that was triggered by the carrier's disclaimer of coverage for lack of cooperation. It was only then that the claimant, who was not the owner of the policy [*2]and had no opportunity to discover its contents because of the motorcycle driver's default in the personal injury action, could have reasonably known of the existence of the SUM coverage in that policy (cf. Eveready Ins. Co. v Schwartzberg, 203 AD2d 101; Matter of Travelers Prop. Cas. Corp. v Fusilli, 266 AD2d 48, 50). Accordingly, the claimant's service of a demand for arbitration on the carrier in June 2001, immediately after MVAIC's denial of underinsured benefits, was undertaken as soon as practicable.
In an action to recover damages for personal injuries, etc., the defendants appeal from so much of an order of the Supreme Court, Kings County (Douglass, J.), dated June 19, 2002, as denied that branch of their motion which was for summary judgment dismissing the complaint insofar as asserted by the [*2]plaintiffs Salem Elfiky and Hala Khalaf-Elfiky on the ground that the plaintiff Hala Khalaf-Elfiky did not sustain a serious injury within the meaning of Insurance Law § 5102(d).
ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the motion which was for summary judgment dismissing the complaint insofar as asserted by the plaintiffs Salem Elfiky and Hala Khalaf-Elfiky is granted, and the complaint is dismissed insofar as asserted by those plaintiffs.
"Although a bulging or herniated disc may constitute a serious injury within the meaning of Insurance Law § 5102(d), a plaintiff must provide objective evidence of the extent or degree of the alleged physical limitations resulting from the disc injury and its duration" (Duldulao v City of New York, 284 AD2d 296, 297). The defendants' medical expert examined the injured plaintiff Hala Khalaf-Elfiky and stated in his affirmed report that, inter alia, she had full range of motion of the lumbosacral spine and no muscular spasm. This proof was sufficient to establish a prima facie case that the plaintiff Hala Khalaf-Elfiky did not sustain a serious injury as a result of the accident (see Villalta v Schechter, 273 AD2d 299, 300).
The medical evidence submitted in opposition to the motion was not in proper evidentiary form, and thus failed to raise a triable issue of fact (see Pagano v Kingsbury, 182 AD2d 268).
FLORIO, J.P., S. MILLER, FRIEDMANN, TOWNES and MASTRO, JJ., concur.
MATTER OF AIU INS. CO. v CABREJA
Order, Supreme Court, Bronx County (Bertram Katz, J.), entered October 10, 2001, dismissing the petition to stay arbitration permanently, unanimously reversed, on the law, without costs or disbursements, the petition reinstated and the matter remanded for a framed issue hearing as to whether the offending vehicle was misidentified.
On October 10, 1998, claimant Jose Cabreja, while operating his automobile, insured by petitioner AIU Insurance Company, was struck by a motor vehicle whose driver fled the scene. As reflected in the police report, Cabreja, however, was able to record the license plate number of the fleeing vehicle, identified as owned by Magna Arroya and insured by GEICO. By letter dated April 15, 1999, GEICO advised Cabreja's attorneys that Arroyo, its insured, "denied any and all involvement in this accident" and that "[b]ecause our insured's vehicle was not involved in this accident, all claims for liability are denied." Thereafter, on July 24, 2001, Cabreja served a demand for arbitration of his uninsured motorist claim on AIU, which, within the time prescribed, moved to stay arbitration on the ground that the accident complained of did not involve an uninsured motorist since Arroyo was covered by a policy of insurance issued by GEICO. In support of its petition, AIU produced a New York Department of Motor Vehicles registration record showing GEICO as the insurance carrier for the Arroyo vehicle at the time of the accident. The IAS court dismissed the petition, describing Cabreja's claim as involving a hit-and-run accident, rather than [*2]one involving the GEICO-insured vehicle referred to in the police accident report. Resolution of the issue of whether the offending vehicle was uninsured, the court held, was for the arbitrator. AIU appeals, arguing that its proof that the Arroyo vehicle was insured was unrebutted and arbitration should have been permanently stayed. At the very least, it argues, a framed issue hearing should be held as to the identity of the offending vehicle. We reverse.
The party seeking a stay of arbitration has the burden of showing sufficient facts to establish justification for the stay (see Matter of Empire Mut. Ins. Co. [Zelin], 120 AD2d 365, 366). Where, however, "there is a genuine triable issue . . . the appropriate procedure is to stay arbitration pending a trial of the threshold issue" (id.). Since, in view of Arroyo's denial of any involvement in the accident, as reflected in the GEICO letter submitted by AIU itself, there is an obvious conflict as to whether the offending vehicle was properly identified, an issue is posed which is for judicial, not arbitral, resolution (see Matter of Allstate Ins. Co. [Jacobs], 85 AD2d 542). We remand for a framed issue hearing on that question.
MATTER OF MERCHANTS MUT. INS. CO. v FALISI
The order of the Appellate Division should be reversed, with costs, and the petition to stay arbitration dismissed.
While we agree with the Appellate Division that the insurer waived its right to deny coverage based on late notice of [*2]legal action, we disagree with the alternative ground on which the Appellate Division affirmed the stay. The requirement that claimants provide their insurer with timely notice of claim was met by the form given to the insurer eleven days after the accident detailing the claim. Claimants listed a numerical code which indicated that the other motorist was insured by the New York State Assigned Risk Plan, but also wrote "NONE" in response to the form's inquiry regarding the insurance company of the other motorist. The insurer does not contest that the form was an appropriate vehicle for notice of a supplemental uninsured motorist claim. Construing the notice liberally in claimants' favor, claimants provided their insurer with sufficient notice of a claim for uninsured motorist coverage (see Wachtel v Equitable Life Assur. Soc. of U.S., 266 NY 345, 351 [1935]).
On review of submissions pursuant to section 500.4 of the Rules, order reversed, with costs, and petition to stay arbitration dismissed, in a memorandum. Chief Judge Kaye and Judges Smith, Ciparick, Wesley, Rosenblatt and Graffeo concur.
In an action, inter alia, for a judgment declaring the rights and obligations of the parties with respect to an insurance policy, the plaintiff Eagle Insurance Company and the defendant Progressive Casualty Insurance Company separately appeal, as limited by their respective briefs, from so much of an order of the Supreme Court, Nassau County (Burke, J.), dated December 17, 2001, as denied their respective motions for summary judgment declaring that they are not obligated to defend and indemnify the defendant Joshua Zuckerman in an action entitled Sherry v Zuckerman, pending in the United States District Court for the District of Connecticut, under Index No. 398-CV-01629.
ORDERED that the order is reversed insofar as appealed from, on the law, with one bill of costs, the motions are granted, and the matter is remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that neither the plaintiff Eagle Insurance Company nor the defendant Progressive Casualty Insurance Company is obligated to defend or indemnify the defendant Joshua Zuckerman with respect to the action entitled Sherry v Zuckerman, pending in the United States District Court for the District of Connecticut, under Index No. 398-CV-01629.
In June 1996 the defendant Joshua Zuckerman was involved in an automobile accident with Patricia Sherry and Robert F. Sherry. Zuckerman reported the accident to his insurance broker, the defendant James McLean, who in turn notified Zuckerman's insurer, the plaintiff Eagle Insurance Company (hereinafter Eagle). In May 1997 McLean changed Zuckerman's carrier to the defendant Progressive Casualty Insurance Company (hereinafter Progressive). The Progressive policy expired in May 1998.
In August 1998 the Sherrys, residents of Connecticut, commenced an action to recover damages for personal injuries against Zuckerman in the United District Court for the District of Connecticut. Shortly thereafter, a summons was served upon Zuckerman. McLean received the summons and faxed it to Progressive. Progressive investigated the claim. In December 1998 McLean received a motion by the Sherrys to hold Zuckerman in default, and forwarded it to Progressive. In January 1999 Progressive disclaimed coverage, claiming that the policy it previously had with Zuckerman was not in effect at the time of the accident. In June 1999 a judgment was entered against Zuckerman upon his default in appearing or answering. It is undisputed that Eagle did not receive notice of the Sherry action until February 2000.
Eagle instituted this declaratory judgment action to determine the rights and obligations of the parties. Thereafter, Progressive moved and Eagle cross-moved for summary judgment, each seeking a declaration that it did not have an obligation to defend or indemnify Zuckerman in the underlying action. [*3]The Supreme Court denied the motions. Progressive and Eagle separately appeal. We reverse.
Where an insurance policy requires that notice of an occurrence be given promptly, notice must be given within a reasonable time in view of all of the facts and circumstances (see Merchants Mut. Ins. Co., v Hoffman, 56 NY2d 799, 801-802; Travelers Indem. Co. v Worthy, 281 AD2d 411). Here, while the Eagle policy in effect at the time of the accident required prompt delivery of "any notices or legal papers received in connection with the accident or loss," Eagle did not receive notice of the underlying action until approximately 18 months after it was commenced. This delay, which was admittedly caused by McLean, was unreasonable as a matter of law (see Martini v Lafayette Studio Corp., 273 AD2d 112, 113; Shaw Temple A.M.E. Zion Church v Mount Vernon Fire Ins. Co., 199 AD2d 374, 376). Thus, coverage under the Eagle policy was vitiated and Eagle has no obligation to defend or indemnify Zuckerman.
In addition, Progressive's policy with Zuckerman was not in effect at the time of the accident, and there is no evidence that it assumed Zuckerman's defense (see Martini v Lafayette Studio Corp., supra at 113-114; Nassau Ins. Co. v Manzione, 112 AD2d 408, 409; cf. Indemnity Ins. Co. of N. Am. v Charter Oak Ins. Co., 235 AD2d 521, 522). Accordingly, Eagle and Progressive were entitled to summary judgment.
Since this a declaratory judgment action, the matter must be remitted to the Supreme Court, Nassau County, for the entry of a judgment declaring that neither Eagle nor Progressive is obligated to defend or indemnify the defendant Joshua Zuckerman in the underlying action pending in the United States District Court for the District of Connecticut (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
SANTUCCI, J.P., H. MILLER, SCHMIDT and TOWNES, JJ., concur.
Appeal from an order of the Supreme Court (Dawson, J.), entered December 21, 2001 in Clinton County, which, inter alia, denied defendant's motion for summary judgment dismissing the complaint.
Plaintiffs commenced this action alleging that they sustained serious injuries in a July 8, 1998 automobile accident in which a car driven by defendant collided with the rear of a car driven by plaintiff Beverly A. Seymour in which her mother and sister, plaintiffs Sylvia N. Macey and Deborah L. Vaughan, were passengers. All three plaintiffs specified in their bills of particulars that they sustained both significant limitations of use of a body function or system and permanent consequential limitations of use of a body organ or member (see Insurance Law [*2]§ 5102 [d]). Defendant moved for summary judgment as to all three plaintiffs without submitting an affidavit, affirmation or the testimony of a medical or other expert, instead relying on plaintiffs' deposition testimony, limited medical records of some of plaintiffs' treating physicians (or letters between treating physicians), diagnostic reports of radiological tests, physical therapy progress notes and other documentary evidence related to prior workers' compensation injuries. Plaintiffs opposed defendant's motion [FN1] by submitting letters written to defendant's counsel by the orthopedic surgeon who, at defendant's behest, conducted independent medical exams of all three plaintiffs, as well as affirmations and selective medical records of their treating physicians and other documents. Supreme Court denied defendant's motion, finding that he failed to meet his burden of demonstrating, prima facie, that plaintiffs did not suffer the serious injuries alleged. On defendant's appeal, we affirm.
Initially, as Supreme Court correctly recognized, a moving defendant may rely on unsworn reports of a plaintiff's treating physician and is not required to produce affidavits or affirmations of medical experts to make the requisite showing provided, of course, that the reports are sufficiently complete and, combined with the other proof, demonstrate that the plaintiff did not suffer a serious injury (see Cody v Parker, 263 AD2d 866, 867; Tankersley v Szesnat, 235 AD2d 1010, 1012 n 3; Torres v Micheletti, 208 AD2d 519; Hochlerin v Tolins, 186 AD2d 538; Pagano v Kingsbury, 182 AD2d 268, 270-271). Here, Macey's bill of particulars alleged that she sustained a permanent consequential limitation of use and a significant limitation of use of her cervical spine, consisting of a "C5-6 disc herniation which is accident related that results in considerable pain and limitation on turning and bending her head and neck." The evidence demonstrated that, after the accident, Macey was taken to the hospital, X rays were taken and she was released the same day; she thereafter received treatment from or was examined by various physicians. At the time of the accident, Macey was receiving workers' compensation benefits and had not worked since [*3]1975, when she sustained a lower back injury (L4-5) at work for which she was later determined to be "permanently partially disabled to a marked degree" by the Workers' Compensation Board. In support of his motion related to Macey, defendant submitted a radiological report of Michael Phillips indicating that X rays taken of Macey's cervical spine the day of the accident showed no evidence of fracture, no dislocation or soft tissue swelling and concluded that she had "degenerative disk disease at C5-6."[FN2] An MRI taken almost four months later, on October 26, 1998, indicated a "[r]elatively large central and leftward HNP at C5-6 causing spinal stenosis [and] [b]ilateral foraminal encroachment at this level related to spurring."
In our view, the minimal proof offered by defendant in support of his motion for summary judgment failed to demonstrate, as a matter of law, that Macey did not sustain a serious injury as alleged or that her condition was solely congenital or attributable to her 1975 work-related injury (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853; Torres v Micheletti, supra at 519; Hochlerin v Tolins, supra at 538; see also Correa v Salke, 294 AD2d 461; Taccetta v Scotto, 287 AD2d 707, 709). Notably, the portions of Macey's medical records on which defendant relied were silent on key points, including the meaning or significance of the medical terms employed and the issue of whether Macey's condition was caused by this accident and, other than diagnostic reports, failed to include medical records, affidavits, affirmations or testimony from any of the several physicians who treated or examined her following the accident (cf. Toure v Avis Rent a Car Sys., 98 NY2d 345, 351-352; Gaddy v Eyler, 79 NY2d 955, 956-957; Dabiere v Yager, 297 AD2d 831, 831-832, lv denied ___ NY2d ___ [Dec. 12, 2002]; Itkin v Devlin, 286 AD2d 477; Hines v Capital Dist. Transp. Auth., 280 AD2d 768, 769; Cruse v Berman, 276 AD2d 580; Anderson v Persell, 272 AD2d 733, 734-735; Decker v Stang, 243 AD2d 1033, 1034-1035, lv denied 91 NY2d 812; Panisse v Jrs. Truck Rental, 239 AD2d 397; Tankersley v Szesnat, supra at 1012; Melino v Lauster, 195 AD2d 653, 654-655, affd 82 NY2d 828). Thus, defendant's motion pertaining to Macey was properly denied.
With regard to Vaughan, who was a passenger in the backseat of the car, she alleged in her bill of particulars that, as a result of this accident, she sustained both permanent consequential limitation of use, as well as significant limitation of use, both of her cervical spine and brain. She claimed resulting dizziness, headaches, memory loss, slowed speech, significant muscle spasms in her trapezius muscle, a "small to moderate" C5-6 disc herniation, and restrictions in or pain with neck movement. In support of his motion, defendant submitted medical records reflecting that the day before the accident, Vaughan was seen by her general practitioner, Glenn Schroyer, complaining of shoulder and neck pain and difficulty turning her neck reportedly due to moving furniture; X rays of her shoulder and neck were negative except to note some straightening of the cervical spine, and the diagnosis of shoulder and cervical strain was made. The day after the accident she worked at her factory job and did not seek any medical treatment for 10 days thereafter, when she returned to Schroyer complaining of neck pain. Schroyer noted significant muscle spasm to the trapezius (neck) muscle and "loss of the normal cervical lordosis (straightening) consistent with significant muscle spasm," and diagnosed "[w]hiplash injury with associated muscle spasm of the cervical spinous muscles" and "[r]ight otitis media/pharyngitis." The radiological report from that initial postaccident visit reflects "no fracture or subluxation, and an "[u]nremarkable cervical spine. No significant change since 7/7/98 [i.e., the day before the accident]."
Defendant also submitted a letter from Andres Roomet, reflecting his neurological evaluation of Vaughan on August 13, 1998 in which he recorded her complaints of worsening neck pain — which had improved with physical therapy — as well as headaches and shoulder pain. Roomet indicated that the CT and radiological films were normal, that upon examination she had "mild restriction of neck motility and left paravertebral muscle tenderness" and "shoulder tenderness" but "no * * * focal deficits of any kind." Roomet concluded that Vaughan had "an improving cervical strain-post-concussion syndrome or post-traumatic syndrome with no deficit" and recommended continued physical therapy and that she remain out of work several more weeks. Medical records for a September 26, 1998 examination of Vaughan — apparently from Schroyer — reflect, with regard to her cervical spine, "full mobility. No pin point tenderness, although there's some pain in the right paraspinal region as well [*5]as the trapezius muscle. Full [range of motion]" and "[q]uestionable bulging disc C5 C6 per MRI."
Defendant's remaining proof included a letter dated over a year later from Roomet to Schroyer reflecting an October 4, 1999 examination in which Vaughan indicated that her headaches had improved, but she continued to complain of neck, right shoulder and arm pain. Roomet discerned "[n]o evidence of myelopathy," noted "right paracervical and trapezius tenderness, but no focal deficits" and, under "problem," listed "[d]iscogenic cervical pain." Vaughan thereafter had a cervical epidural block, and a letter from Roomet to Schroyer reflects that at her November 19, 1999 visit, she no longer had any shoulder pain or arm pain, had some neck pain but no neurologic deficit, and admitted not doing her physical therapy exercises. Regarding headaches, the letter indicated that she had been fine until a week earlier when she had "frequent headaches" which she treated with Tylenol and declined a prescription. Schroyer's medical records show Vaughan's December 15, 1999 office visit in which she reported improvements in her neck pain and some tenderness in the occipital area. Roomet's letter to Schroyer following a January 14, 2000 visit noted "some right occipital notch tenderness but no other findings," a negative repeat CT scan of her head and, under "assessment," listed "[p]ost-traumatic headache with component of occipital neuralgia." Defendant's only other proof in support of his motion was a February 2000 letter to Schroyer from the neurologist who treated her for cervical tenderness and headaches and concluded that she had "[c]ervicogenic and post-traumatic headache with [a] component of occipital neuralgia."
Upon review, we recognize that some of defendant's proof consisted of objective evidence (e.g., normal X rays and CT scans) and medical records which would support a finding that Vaughan did not sustain serious injuries in this accident as claimed, and that Vaughan's records largely reflect a preexisting shoulder and cervical strain, muscle spasms, tenderness, subjective complaints of pain, unquantified restrictions in movement and the like, all of which are insufficient (see Hines v Capital Dist. Trans. Auth., 280 AD2d 768, 769-770, supra; Cody v Parker, 263 AD2d 866 supra; see also Phillips v Tissotvanpatot, 280 AD2d 735). However, none of defendant's proof specifically addresses causation and some of the proffered medical records contain medical terms and assessments that may or may not support [*6]a finding of a serious injury [FN3]. In the absence of expert medical testimony, affidavits or affirmations to explain the specific medical terms and findings utilized in Vaughan's medical records (and their significance) on which defendant relies, this Court — like Supreme Court — is not in a position to conclude that defendant's proof demonstrates, as a matter of law, that Vaughan did not sustain a serious injury (see Serrano v Canton, ___ AD2d ___, ___, 749 NYS2d 591, 593-594). Thus, defendant's motion for summary judgment related to Vaughan was properly denied.
Turning to Seymour, the driver, she alleged in her bill of particulars that she sustained permanent consequential limitation of use and significant limitation of use of her low back or lumbar spine, involving the L3-4 disc with herniation causing pressure on the L3 nerve root [FN4]. She claimed that the injuries cause pain and restriction on bending, standing and carrying. She testified that 10 to 12 years earlier, she had sustained a back injury, which she described as involving her sciatic nerve and a dislocated disc, in an auto accident for which she received medical treatment, was out of work for one year and received a settlement [FN5]. Regarding this accident, she testified that upon impact her chest hit the steering wheel and her left shoulder hit the car door. She was taken to the hospital and given muscle relaxers, X rays were taken, and she was released the same night. Defendant offered the X-ray report from the day of the accident which indicated no evidence of fracture, the "[d]isc space heights [are] well maintained" and the "[a]lignment of the lumbar [*7]vertebral bodies is within normal limits."[FN6] However, the report of an MRI taken approximately 3½ weeks later noted a "far right lateral L3-4 disc herniation which slightly pushes the right L3 nerve root into fat. There is no compression of nerve roots demonstrated."[FN7] Seymour's testimony reflects that she never saw a neurologist or an orthopedic surgeon after this accident, she last saw her general practitioner in August 1998, and completed physical therapy in September 1998.
In relying upon this scant evidence, we find that defendant failed to satisfy his burden of establishing that Seymour did not, as alleged, sustain a serious injury to her lower back or lumbar spine as a result of this accident. A disc herniation may constitute a serious injury (see Boehm v Estate of Mack, 255 AD2d 749, 750; see also Anderson v Persell, 272 AD2d 733, 735, supra), albeit a mere diagnosis of a mild disc herniation by itself will not (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 353 n 4, supra). Among the shortcomings in defendant's proof is the failure to address the statutory terms "significant" and "consequential" which "relate to medical significance and involve a comparative determination of the degree or qualitative nature of an injury based on the normal function, purpose and use of the body part" (Defel v Green, 84 NY2d 795, 798; see Toure v Avis Rent A Car Sys., supra at 353). Defendant's limited proof fails to address whether Seymour's disc herniation is the source of her pain or limitations, the degree and permanency of her condition and whether her condition is connected to this accident, so as to satisfy defendant's burden of demonstrating that she did not sustain a serious injury (see Defel v Green, supra at 798; cf. Toure v Avis Rent A Car Sys., supra at 350-351; Anderson v Persell, supra at 734-735; Delaney v Lewis, supra at 897; King v Johnson, 211 AD2d 907).
Footnotes
Footnote 1:While plaintiffs cross-moved for an order to depose four physicians (see CPLR 3212 [g]), there is no support in the record for their appellate claim that they also cross-moved for summary judgment on the issue of liability. Supreme Court denied the deposition request and plaintiffs neither cross-appealed nor raised any arguments in their briefs related to that cross motion, which is not before this Court.
Footnote 2:Since Macey alleged in her bill of particulars only
cervical spine injuries related to this accident and never moved to amend the
bill of particulars, those portions of the proof discussing her lumbar sacral
and thoracic spine are not considered.
Footnote 3:While Schroyer refers to a "[q]uestionable bulging disc C5
C6 per MRI," defendant did not offer the MRI report itself or any other proof
related to it. In opposition, Vaughan submitted the MRI report reflecting "a
small to moderate right paracentral C5-6 disc herniation * * * [which] causes
borderline canal stenosis."
Footnote 4:Seymour did not allege in her complaint or bill of
particulars any claim under the 90/180 category of serious injury, and never
moved to amend her bill of particulars and, accordingly, the reference to this
category in her brief on appeal is unavailing.
Footnote 5:No other evidence related to that prior accident was
submitted.
Footnote 6:While the X-ray report noted calcifications compatible
with cholelithiasis (i.e., gall stones), an undefined diagnosis upon which
Supreme Court relied in denying defendant's motion, this is not alleged to be
related to this accident.
Footnote 7:Not considered were unsigned, unsworn progress notes
apparently from a physical therapist dated August 14, 1998 (see Pagano
v Kingsbury, 182 AD2d 268, 270, supra; see also Delaney v
Lewis, 256 AD2d 895, 897).
