10/21/04
Miceli v State Farm Mutual Automobile Insurance Company
New York State Court of Appeals
Reminder: Don’t Wait (Too Long) to Make Summary
Judgment Motions, or Else!
In a triumph of form over substance, the
Court of Appeals reminds us that they mean what they say and they say what they
mean about timetables. In 1996, the Legislature amended CPLR 3212(a) to provide
that motions for summary judgment can be made at any time after an Answer is
filed but, unless the Court directs otherwise (or good cause is shown), no later
than 120 days after the case goes to the trial calendar (after the Note of Issue
and Statement of Readiness are filed). Here the Note of Issue was filed but the
motion was not made within 120 days. Even though the motion may have had merit,
the Court of Appeals ruled that the timetables must be respected and refused to
allow the motion to be considered. A meritorious motion is not “good cause.”
The timetables “are not options, they are
requirements, to be taken seriously by the parties.” Editor’s note: remember
this rule when considering summary judgment motions on “serious injury” or
liability questions. Waiting until the eve of trial to realize a motion should
be made can lead to denial of the motion and the added expense of a trial, even
where the motion has merit.
10/21/04
Hall v. Gala Trade 2000 Ltd.
Appellate Division, First Department
Conclusory Affidavit by Plaintiff’s Doc Insufficient to
Defeat Summary Judgment Motion on Serious Injury
Defendant’s motion for summary judgment on “serious injury” question
was sufficient to shift the burden to the Plaintiff to rebut it. Plaintiff’s
claim was that the injuries she allegedly sustained in the accident resulted in
a "significant limitation of use of a body function or system. However her
expert's conclusion that limitations in motion are permanent is not sufficient
absent objective evidence of the severity of the asserted physical limitations.
10/19/04
HRH Construction Corporation v. Commercial Underwriters Insurance Company
Appellate Division, First Department
Insurer That Settles Lawsuit on Behalf of Additional
Insured May Not Be Able to Recover from Another Insurer That Has Provided
Coverage to Same Additional Insured Under Contract Issued to Different Named
Insured
HRH was sued by the employee of a subcontractor for personal injuries
sustained when he allegedly fell on the job site. HRH was named as an additional
insured on the general liability policy issued by plaintiff American Casualty to
plaintiff Cochran, another subcontractor implicated in the accident. HRH, which
had contracted with defendant Atlantic Heydt to construct and install a sidewalk
bridge, was also named as an additional insured on the general liability policy
issued to Atlantic Heydt by Commercial Underwriters Insurance Company. When HRH
was sued, it didn’t sue Atlantic Heydt but successfully tendered defense to
American Casualty, settling on behalf of HRH and Cochran. American Casualty now
seeks to recover half the cost of the settlement from Atlantic Heydt and
Commercial Underwriters, claiming, inter alia, that American Casualty and
Commercial Underwriters were primary coinsurers of HRH, and the accident had
arisen from actions of both Cochran and Atlantic Heydt. Court held that under
General Obligations Law § 15-108(c), the right of HRH to seek contribution from
Atlantic terminated upon settlement of the lawsuit. In any event, it failed to
prove that the underlying accident resulted from the work of Atlantic Heydt
(which would thereby trigger coverage under the Commercial Underwriters policy).
Moreover, plaintiffs have failed to establish that the instant dispute involves
a coinsurance situation, which would entitle them to recover a ratable portion
of the settlement paid by Commercial Underwriters, regardless of § 15-108(c).
While both American Casualty and Commercial Underwriters provided primary
insurance to HRH, they did not insure the same risk. The carriers insured HRH as
to the risks associated with two separate subcontractors' individual work at the
job site. Each insurer afforded coverage to HRH only for claims arising out of
work performed by that carrier's primary named insured. Thus, the claims herein
do not involve a coinsurance situation
10/19/04
In re Application of New York Central Mutual Fire Insurance Company to Stay the
Uninsured Motorist Arbitration of Edwin Salomon
Appellate Division, First Department
An Unanswered Letter Isn’t
Enough to Establish Lack of Cooperation Under Liability Policy
This case came up in the context of a claim for uninsured motorist
benefits. UM carrier successfully took the position that the disclaimer by the
other car’s liability carrier, based on its insured lack of cooperation was
ineffective. Court held that liability carrier failed to prove a willful
failure to cooperate. Insurer sent a letter or two the insured but made no
efforts to send out an investigator to make certain insured knew his cooperation
was being sought. Insured missed one deposition, but again, there was no
indication of willful non-cooperation. Editor’s note: proving failure
to cooperate on the part of an insured has always been difficult. Insurers
must remember the so-called “Thasher Test” which requires that the insurer
demonstrate (1) that it acted diligently in seeking to bring about the insured's
cooperation, (2) that its efforts were reasonably calculated to obtain the
insured's cooperation, and (3) that the attitude of the insured was one of
"willful and avowed obstruction" (Thrasher v United States Liab. Ins. Co.,
19 NY2d 159, 168 [1967]).
10/18/04 Pawley Interior Contracting, Inc. v. Harleysville Insurance Companies
Appellate Division, Second Department
While An Unexcused Delay of Two Months May Lead to a
Waiver of the Right to Deny Coverage Based on an Exclusion, Some Delays ARE
Excusable
An insurer must give timely notice of a disclaimer "as soon as is
reasonably possible" after it first learns of the accident or the ground for the
disclaimer of liability (Insurance Law § 3420[d]) and the insurer's burden to
explain the delay in notifying the insured of its disclaimer. The
reasonableness of the delay must be determined from the time the insurer was
aware of facts sufficient to disclaim. Here, the appellant insurer received
notification of the accident on or about March 2, 2000 but inexplicably failed
to disclaim liability based on the supervision exclusion of its policy until on
or about May 12, 2000. While an unexplained two-month delay has been held
unreasonable as a matter of law, under the circumstances of this case, an issue
of fact exists as to the whether the delay in disclaiming liability was
reasonable. Also, a failure to raise the insured’s late notice waives the
carrier’s right to do so in this case.
10/18/04
Tokio Marine and Fire Insurance Co., Ltd. v. Borgia
Appellate Division, Second Department
Insurer of Leased Vehicle Can Subrogate Against Lessee
and Driver to the Extent Lessee and Driver are NOT Insured By Lessor’s Policy
It is well established, under the “anti-subrogation” rule, that an insurer
cannot sue its insured (or additional insured) to recover that which was paid on
behalf of that insured. This case reminds a carrier that where it only provides
minimum limits to the driver but has a larger liability limit in place for the
owner, the carrier may subrogate against the driver and lessee to the extent the
driver and lessee are not insured under the policy. Here, there was a
multi-million dollar verdict and the driver was only accorded $25,000 in
liability coverage under the policy. Carrier was permitted to prosecute a
subrogation action against the driver for the amount in excess of $25,000.
10/14/04
Wal-Mart Stores v United States Fidelity and Guaranty Company
Appellate Division, First Department
Plaintiff Able To Rely On Six Year SOL When Shorter Period To Commence Under Insurance Law 3404 Not Referenced In Policies
Plaintiff sought damages for breach of contract in this insurance coverage dispute. The policies provided that any suit brought to recover for losses "shall not be barred if commenced within the time prescribed therefore in the statutes of the State of New York," but did not specifically mention or incorporate by reference the requirement in the standard fire insurance policy under Insurance Law § 3404[e] that any such lawsuit be commenced within 24 months after inception of the loss. As a result, plaintiff was entitled to rely on the six-year statute (CPLR 213). A prior federal ruling regarding the applicable limitations period lacked preclusive effect since the plaintiff in this case was not in functional "privity" with its additional insured (a party in the federal action), and had no incentive to participate in that action since its rights were not dependent on those of the additional insured.
10/12/04 State Farm Mutual Automobile Insurance Company v. Lisa M. Lucano
Appellate Division, Second Department
Insured Precluded From SUM Coverage Where Insured’s Consent Not Obtained Prior To Settlement Of Underlying Action
The insured failed to obtain State Farm’s written consent prior to settlement of insured’s underlying negligence action and executed a release which failed to preserve State Farm’s subrogation rights. Therefore, the Court held that the insured was precluded from asserting a claim for benefits under the supplementary underinsured motorist provision of her policy. Contrary to the her contention, a belated verification that no excess insurance was available did not obviate the prejudice to State Farm’s subrogation rights since the tortfeasors were not judgment proof.
10/12/04 Dorothy M. Houston v Peter Gajdos
Appellate Division, Second Department
Unexplained Gaps In Treatment By Plaintiffs Doctors Is Trouble When Serious Injury Is Challenged
The defendants made a prima facie showing that the plaintiff did not sustain a serious injury through the affirmations of a neurologist and an orthopedist, both of whom examined the plaintiff almost five years after the accident and found no evidence of disability or impairment. In addition, defendants' radiologist, who read the magnetic resonance imaging films of the plaintiff's cervical spine taken shortly after the accident, concluded that the films showed only pre-existing conditions. The affirmation of the plaintiff's doctor and the affidavit of the plaintiff's chiropractor submitted in opposition to the defendants' motion failed to raise a triable issue of fact as to whether the plaintiff sustained a serious injury. The plaintiff's chiropractor failed to adequately account for the almost five-year gap between the end of the plaintiff's medical treatment with the chiropractor and the chiropractor's most recent examination of the plaintiff and failed to account for the serious neck, shoulder, and back injuries sustained by the plaintiff in one or more of his three prior motor vehicle accidents. Also See a related case by the Second Department this term: Marilyn Cantanzano v Elayne B. Mei (findings of limitations in the cervical spine by expert who examined the plaintiff for the first time 3½ years after the accident successfully refuted by recent medical reports).
10/7/04
New York State Insurance Department Circular Letter 8 (2004)
New York State Insurance Department
Insurance Department Adopts Amendments to No Fault
Regulations Regarding Durable Medical Treatment and Non-Physician Employee Rates
- Establishes a fee schedule for durable medical equipment that providers of No-fault benefits are required to follow in reimbursing applicants for these items.
- Formally codifies an opinion that the Department’s Office of General Counsel has previously expressed concerning payments for health services under the New York No-Fault law. In accordance with Counsel’s position, the Regulation provides that health services performed by a non-physician employee of a physician may be billed by a medical professional corporation only at the No-fault fee schedule rate established for the licensed treating provider who actually provides the services, not at the supervising licensed physician rate.
Across Borders
Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org recently ranked among the top five legal research websites in an article published in the January 2004 issue of Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor.
10/20/04
AMCO INSURANCE v. TRI-SPUR INVESTMENTS
Idaho Supreme Court
Insurer Properly Relied On
Civil Rights Exclusion in Denying Claim
Employee filed a sexual harassment and retaliation claim against Tri-Spur
Investments based on Title VII of the Civil Rights Act. Tri-Spur tendered to its
insurer, AMCO Insurance which denied claim on basis of civil rights exclusion.
Court held the civil rights exclusion in the policy and clear and unambiguous
and denial of coverage was thus proper.
Submitted by: Peter S. Doody (Higgs, Fletcher and Mack)
10/19/04
BOTT v. SHEA
Fifth Circuit Court of Appeals
General Contractor Waives Claim
Against Subcontractor for Failing to Secure Insurance
Subcontractor failed to obtain an insurance policy indemnifying the prime
contractor as agreed to in contract. In the absence of insurance, prime
contractor had to pay a construction related personal injury claim. Prime
contractor later sued subcontractor for failing to secure insurance. But, court
held prime contractor waived right to maintain suit since prime contractor was
earlier supplied with certificates of insurance which did not include prime
contractor as an additional named insured.
Submitted by: Peter S. Doody (Higgs, Fletcher and Mack)
10/14/04
HARRIS V. DRAKE
Washington Supreme Court
Personal Injury Protection
Insurer’s Independent Medical Exam Is Protected As Work Product
In a personal injury action against the tortfeasor; the plaintiff argued that
reports from an independent medical exam (“IME”) that had been required by
plaintiff’s insurer were protected as the insurer’s work product. After the
insurer refused to waive protection, the court excluded the reports as work
product. Affirming, the Supreme Court reasoned that the insured is contractually
obligated to submit to IMEs at the insurer’s request, and thus reasonably
expects that the IME will be kept confidential. The court further ruled that
work product protection applies regardless of whether the party from whom
information is requested is a party in the instant litigation.
Submitted by: Kimberly D. Baker, Todd R. Sorensen and Jennifer M. Gannon (Williams, Kastner & Gibbs PLLC)
10/13/04 MAKRIGIANNIS, et al., v. NINTENDO OF AMERICA, INC., et
al.
Massachusetts Supreme Judicial Court
Pursuant to a Vendor’s Broad
Form Endorsement, an Insurer Had a Duty to Indemnify a Vendor for Injuries
Resulting from the Vendor’s Negligence
The manufacturer of a large interactive Game Boy display unit, which was
manufactured for Nintendo of America, Inc. (Nintendo), sent one such unit to
Lechmere, Inc., a vendor. The unit was shipped in three cartons, and Lechmere
was required to assemble the unit for use in its store. After assembly, the unit
was placed on one of Lechmere’s store floors where it fell on a five year old
child, causing injuries to the child. At the time of the accident, Nintendo had
a policy of liability insurance with Sumitomo Marine and Fire Ins. Co.
(Sumitomo). The policy contained a vendor’s broad form endorsement covering
“[a]ll vendors authorized by the Named Insured,” which included Lechmere. The
court held that the vendor’s endorsement at issue covered Lechmere’s negligence
and that Sumitomo had a duty to indemnify Lechmere.
Submitted by: Bruce D. Celebrezze and Michelle M. Hancharik (Sedgwick, Detert, Moran & Arnold LLP)
10/13/04
NATIONAL GRANGE MUTUAL INS. CO. v. JOSEPH, et al.
Rhode Island Superior Court
Exception to an Insurer’s Duty
to Defend Involving Intentional, Fraudulent Claims Asserted by an Insured
Motorist Joseph was involved in an automobile accident with Motorist Sheldon.
After reporting the accident to her insurance company, National Grange Mutual
Ins. Co. (NGM), Joseph alleged that her brother was a passenger in her car at
the time of the accident. In a civil action filed by Joseph and her brother
against Sheldon for injuries sustained in the accident, Sheldon filed a
counterclaim and alleged that there were no passengers in Joseph’s car at the
time of the accident. After investigating the issue, NGM sought to deny coverage
under the Policy issued to Joseph, and filed a declaratory judgment action to
determine its obligations. In a bifurcated trial, the jury determined that
Joseph’s brother was in fact not in her car at the time of the accident. In the
declaratory relief action, the court determined that Joseph deliberately
fabricated a claim but for which there would have been no counterclaim by
Sheldon, and thus no reason for NGM to defend. As such, the court determined
that NGM had no duty to defend with regard to claims by Joseph’s brother or
Sheldon’s claim for contribution.
Submitted by: Bruce D. Celebrezze and Michelle M. Hancharik (Sedgwick, Detert, Moran & Arnold LLP)
10/12/04 PERMANENT GENERAL ASSURANCE CORP. v. ORANGE COUNTY
SUPERIOR COURT
California Court of Appeals, Fourth Appellate District, Division Three
Claims Files Which Could Lead
to the Discovery of Information Supporting a Theory of Discrimination Are
Discoverable Upon Written Authorization From Insureds Specifically Obtained in
Connection with the Current Action
During discovery, plaintiff propounded a request on defendant Permanent General
Assurance Corporation seeking to discover all claims files for all of
defendants’ insureds who had submitted a claim for vehicle theft since January
1, 1998. Defendant objected to this request, and plaintiff filed a motion to
compel the claims files. The trial court granted plaintiff’s motion to compel,
but failed to condition the order on plaintiff obtaining authorizations from the
nonparty insureds in general, and impliedly ruled that plaintiff need not obtain
authorizations specifically for files as to which her attorney had already
obtained authorizations in prior litigation involving a different plaintiff. The
appellate court held that plaintiff was allowed to discover the subject claims
files because they could lead to information supporting plaintiff’s
discrimination theory, but plaintiff was entitled to said files only after
obtaining authorizations from all of the insureds whose claims files were to be
produced, including new authorizations for those files previously discovered in
a prior litigation.
Submitted by: Bruce D. Celebrezze and Michelle M. Hancharik (Sedgwick, Detert, Moran & Arnold LLP)
Hurwitz & Fine, P.C. is a
full-service law firm
providing legal services throughout the State of New York.
Newsletter Editor
Scott C. Billman
Insurance Coverage Team
Dan D. Kohane, Team Leader
Michael F. Perley
Scott C. Billman
Audrey A. Seeley
Fire, First-Party and Subrogation Team
James D. Gauthier, Team Leader
Andrea Schillaci
Jody E. Briandi
Philip M. Gulisano
No-Fault/SUM Arbitration Team
Dan D. Kohane, Team Leader
Audrey A. Seeley
Appellate Team
Scott C. Billman, Team Leader
Dan D. Kohane
Wal-Mart Stores, Inc. v. United States Fidelity and Guaranty Company
Order, Supreme Court, New York County (Diane A. Lebedeff, J.), entered June 26, 2003, which denied defendants' motions to dismiss the action for failure to commence within the contractual limitations period and on the ground of res judicata, and order, same court and Justice, entered on or about December 1, 2003, which, to the extent appealable, denied defendants' motions to renew, unanimously affirmed, with costs.
Plaintiff seeks damages for breach of contract in this insurance coverage dispute. The policies provided that any suit brought to recover for losses "shall not be barred if commenced within the time prescribed therefore in the statutes of the State of New York," but did not specifically mention or incorporate by reference the requirement in the standard fire insurance policy of this State (see Insurance Law § 3404[e]) that any such lawsuit be commenced within 24 months after inception of the loss. As a result, plaintiff was entitled to rely on the six-year statute (CPLR 213) (see 1303 Webster Ave. Realty Corp. v Great Am. Surplus Lines Ins. Co., 63 NY2d 227, 231 [1984]; United Tech. Corp. v American Home Assur. Co., 989 F Supp 128, 158[D Conn 1997]; Port of Seattle v Lexington Ins. Co., 111 Wash App 901, 915-919, 48 P 3d 334, 341-343 [2002]; see also Guadagno v Colonial Coop. Ins. Co., 101 AD2d 947 [1984]; Conte v Yorkshire Ins. Co., 5 Misc 2d 670 [1957]). The motion court properly declined to reach defendants' argument regarding the application of CPLR 202 on the ground that it was improperly raised for the first time in reply.
The prior federal ruling regarding the applicable limitations period lacked preclusive effect since plaintiff was not in functional "privity" with its additional insured that was a party in the federal action, and furthermore had no incentive to participate in that action (see e.g. Jeffreys v Griffin, 1 NY3d 34, 42 [2003]) since its rights were not dependent on those of the additional insured. Any doubts regarding the preclusive effect of the ruling were properly resolved in plaintiff's favor (see Buechel v Bain, 97 NY2d 295, 305 [2001], cert denied 535 US 1096 [2002]).
Renewal was properly denied in the absence of any explanation for the failure to submit the "new" materials on the original application. We have considered defendants' remaining contentions and find them unavailing.
THIS CONSTITUTES THE DECISION AND
ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: OCTOBER 14, 2004
CLERK
In the Matter of State Farm Mutual Automobile Insurance Company v. Lucano.
In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of a claim for supplementary underinsured motorist benefits, the appeal is from an order of the Supreme Court, Suffolk County (Jones, J.), dated December 22, 2003, which granted the petition and permanently stayed arbitration.
ORDERED that the order is affirmed, with costs.
The appellant failed to obtain the petitioner's written consent prior to settlement of the underlying negligence action and execution of a release which failed to preserve the petitioner's subrogation rights (see Matter of Integon Ins. Co. v Battaglia, 292 AD2d 527; Friedman v Allstate Ins. Co., 268 AD2d 558; Weinberg v Transamerica Ins. Co., 62 NY2d 379; cf. Matter of American Home Assur. Co. v Williams, 282 AD2d 674). Thus, the Supreme Court correctly determined that the appellant was precluded from asserting a claim for benefits under the supplementary underinsured motorist provision of the petitioner's insurance policy.
Contrary to the appellant's
contention, her belated verification that no excess insurance was available did
not obviate the prejudice to the petitioner's subrogation rights since the
tortfeasors were not judgment proof (see Matter of New York Cent. Mut. Ins.
Co. v Danaher, 290 AD2d 783, 785; Matter of Allstate Ins. Co. [Brown],
288 AD2d 955).
PRUDENTI, P.J., KRAUSMAN, ADAMS and SPOLZINO, JJ., concur.
ENTER:
James Edward Pelzer
Clerk of the Court
Houston v. Gajdos.
In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Richmond County (Lebowitz, J.), dated October 7, 2003, which granted that branch of the defendants' motion which was for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), and denied, as academic, his cross motion for summary judgment on the issue of liability.
ORDERED that the order is affirmed, with costs.
The defendants made a prima facie showing that the plaintiff did not sustain a serious injury through the affirmations of a neurologist and an orthopedist, both of whom examined the plaintiff almost five years after the accident and found no evidence of disability or impairment (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). In addition, the defendants' radiologist, who read the magnetic resonance imaging films of the plaintiff's cervical spine taken shortly after the accident, concluded that the films showed only pre-existing conditions.
The affirmation of the plaintiff's doctor and the affidavit of the plaintiff's chiropractor submitted in opposition to the defendants' motion failed to raise a triable issue of fact as to whether the plaintiff sustained a serious injury. The plaintiff's doctor based his opinion upon his examination of the plaintiff two days after the accident. The plaintiff's chiropractor failed to adequately account [*2]for the almost five-year gap between the end of the plaintiff's medical treatment with the chiropractor and the chiropractor's most recent examination of the plaintiff (see Jimenez v Kambli, 272 AD2d 581, 582; Smith v Askew, 264 AD2d 834), and failed to account for the serious neck, shoulder, and back injuries sustained by the plaintiff in one or more of his three prior motor vehicle accidents (see Ponce v Magliulo, AD3d [2d Dept, Sept. 13, 2004]; Mahoney v Zerillo, 6 AD3d 403; Dimenshteyn v Caruso, 262 AD2d 348).
Accordingly, the Supreme Court
properly granted that branch of the defendants' motion which was for summary
judgment dismissing the complaint, and denied, as academic, the plaintiff's
cross motion for summary judgment on the issue of liability.
RITTER, J.P., H. MILLER, SCHMIDT, CRANE and SKELOS, JJ., concur.
ENTER:
James Edward Pelzer
Clerk of the Court
In an action to recover damages for personal injuries, the defendants appeal, as
limited by their brief, from so much of an order of the Supreme Court, Richmond
County (Minardo, J.), dated November 17, 2003, as denied their motion for
summary judgment dismissing the complaint on the ground that the plaintiff 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, the motion is granted, and the complaint is dismissed.
The defendants made a prima facie showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The affirmations of the plaintiff's physicians submitted in opposition to the defendants' motion were insufficient to raise a triable issue of fact. The findings of the physicians who treated the plaintiff immediately after the accident were vague and conclusory (see Kauderer v Penta, 261 AD2d 365; Carroll v Jennings, 264 AD2d 494). Moreover, the findings of limitations in the cervical spine by the expert who examined the plaintiff for the first time 3½ years after the accident were refuted by the medical records that showed that the plaintiff had a "good range of motion" by mid-July of 2000, three years before the expert's examination.
The plaintiff failed to submit any competent medical evidence which would have supported a claim that she was unable to perform substantially all of her daily activities for not less than 90 of the first 180 days as a result of the subject accident (see Sainte-Aime v Ho, 274 AD2d 569; Jackson v New York City Tr. Auth., 273 AD2d 200; Greene v Miranda, 272 AD2d 441; Arshad v Gomer, 268 AD2d 450; Bennett v Reed, 263 AD2d 800; DiNunzio v County of Suffolk, 256 AD2d 498, 499).
Accordingly, the defendants were
entitled to summary judgment dismissing the complaint.
KRAUSMAN, J.P., LUCIANO, MASTRO and LIFSON, JJ., concur.
ENTER:
James Edward Pelzer
Circular Letter No. 8 (2004) October 5, 2004
RE: REVISION TO THE NO-FAULT FEE SCHEDULES - ADOPTION OF THE 28th AMENDMENT TO REGULATION 83
STATUTORY REFERENCE: SECTION 5108 OF THE INSURANCE LAW
The purpose of this Circular Letter is to inform providers of No-fault benefits that the Department has promulgated the 28th Amendment to Regulation No. 83, effective October 6, 2004.
Background:
The prior fee schedule for durable medical equipment and supplies contained in Regulation 83 failed to definitively establish consistent and reasonable values for the cost of durable medical equipment and supplies, resulting in numerous disputes between providers and insurers many of which proceeded to no-fault arbitration and the courts for resolution. The adoption of an established fee schedule that is updated as necessary to reflect increased costs and to include newer products as they are developed will provide for more timely payment of health care provider charges and result in a significant reduction in litigation costs that are being incurred due to the variable nature of the current fee schedule rule used to establish these costs. Utilization of the established New York State Medicaid fee schedules for durable medical equipment, medical/surgical supplies, orthopedic footwear and orthotic and prosthetic appliances should significantly reduce the number of disputes between insurers and health care providers, resulting in more uniform, efficient and cost effective processing and payment of no-fault claims.
The Amendment:
- Establishes a fee schedule for durable medical equipment that providers of No-fault benefits are required to follow in reimbursing applicants for these items.
- Formally codifies an opinion that the Department’s Office of General Counsel has previously expressed concerning payments for health services under the New York No-Fault law. In accordance with Counsel’s position, the Regulation provides that health services performed by a non-physician employee of a physician may be billed by a medical professional corporation only at the No-fault fee schedule rate established for the licensed treating provider who actually provides the services, not at the supervising licensed physician rate. See General Counsel Opinions 4-24-2002 (#26) and 3-7-2003 (#26).
However, the Regulation includes an exception to this rule. If the Workers’ Compensation Board fee schedule contains a ground rule permitting a licensed non-physician employee to bill under the licensed health provider’s fee schedule for the services performed by a licensed non-physician employee, then the insurer is required to pay the bill using the fee schedule required by the Workers’ Compensation fee schedule ground rule.
All insurers and self-insurers must ensure that the new rules contained in the 28th Amendment to Regulation 83 will be applied properly.
If you have any questions regarding the contents of this circular letter or the 28th amendment to Regulation 83, please contact:
Debra Parris,
Senior Insurance Examiner
New York State Insurance Department
25 Beaver Street
New York, NY 10004
212-480-5665
In re Application of New York Central Mutual Fire Insurance Company To Stay the Uninsured Motorist Arbitration of Edwin Salomon
Order, Supreme Court, Bronx County (Howard Silver, J.), entered on
or about October 20, 2003, which denied the petition to permanently stay
arbitration, unanimously reversed, on the law, with costs, the petition granted
and arbitration stayed.
On March 4, 2002, respondent Edwin Salomon was injured in an accident between an automobile in which he was a passenger, and a vehicle owned by proposed additional respondent Ana Marin. The registration record indicated that the Marin vehicle was insured by General Assurance Company, of which proposed additional respondent One Beacon Insurance Company is the parent company.
Upon being informed that General Assurance had disclaimed coverage on the ground of Marin's non-cooperation, Salomon sought benefits under the uninsured motorist provisions of the policy covering the vehicle he had been in, issued by petitioner New York Central Mutual Fire Insurance Company. New York Central petitioned to stay arbitration, challenging the assertion that the Marin vehicle was uninsured. In opposition to the petition, Marin's insurer, General Assurance Company (asserting that it was incorrectly named as One Beacon), claimed that it had effectively disclaimed coverage because Marin failed to cooperate with its investigation of the accident.
Following a framed issue hearing, the motion court denied the stay, holding that the evidence supported the inference that Marin's failure to cooperate was willful. For the reasons that follow, we reverse.
When an insured deliberately
fails to cooperate with its insurer in the investigation of a covered incident
as required by the policy, the insurer may disclaim coverage. However, in an
[*2]effort to prevent innocent injured parties
from being penalized due to a complete absence of insurance coverage "for the
imprudence of the insured, over whom he or she has no control," a "very heavy
burden" is imposed upon the disclaiming insurer
(see Mount Vernon Fire Ins. Co. v 170 East 106th Street Realty Corp.,
212 AD2d 419, 420-421 [1995], lv denied 86 NY2d 707 [1995]). A
three-pronged test is applied to the insurer; it must demonstrate (1) that it
acted diligently in seeking to bring about the insured's cooperation, (2) that
its efforts were reasonably calculated to obtain the insured's cooperation, and
(3) that the attitude of the insured was one of "willful and avowed obstruction"
(Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168 [1967]).
The insured need not have openly "avowed" the intent to obstruct the insurer; however, the showing must support the inference that the insured's failure to cooperate was deliberate (Mount Vernon Fire Ins., supra at 420). Mere inaction by the insured is not enough (see Matter of Empire Mutual [Stroud], 36 NY2d 719, 721-722 [1975]).
The standard of proof necessary is illustrated by Stroud. In Stroud, the insurer's adjuster sent letters by regular and registered mail; the letters sent regular mail were not returned, but the registered mailings were returned as undelivered. An adjuster twice visited the addresses known to the insurer, and communicated with the insured's broker and the Department of Motor Vehicles. The court found the proof insufficient to support the inference that the insured had received any post-accident communications (id. at 721), explaining that "the inference of non-cooperation must be practically compelling" (id. at 722).
While other insurance happens to be available in this instance to cover respondent, we conclude that the standard must be the same in any matter of an insurer disclaiming coverage due to a non-cooperating insured. That standard has not been met here.
The disclaiming insurer in the present case does not demonstrate much more effort than the insurer used in Stroud. Upon receiving notice of the accident from an attorney for one of the passengers rather than from Marin herself, it contacted her broker. Marin's broker did not have a telephone number for her, so a "contact letter" was sent to 1460 College Avenue, the address listed on the police report. Two "reservation of rights" letters were also mailed to the College Avenue address, by regular and certified mail, as well as to 105 East 177th Street, the address for Marin in the insurer's file. The letters sent by regular mail did not come back, but the letters sent by certified mail came back unclaimed.
The file was assigned to a special investigations unit. An investigation unit manager testified that an investigator who was no longer in their employ, Sal Paliotta, was assigned. Review of the file established that a check run with the Department of Motor Vehicles revealed that the Marin vehicle had been "salvaged," and that the College Avenue address was the one listed on Marin's driver's license. Certified letters sent to Marin at the College Avenue and 177th Street addresses were returned as "unable to serve." One mailing to the College Avenue address came back with a notation that there was a forwarding address of 5 Minerva Place in the Bronx. The file indicated that Paliotta had visited the Minerva Place address, and determined that although Marin had lived there, she did not do so at the time of Paliotta's visit.
Finally, the testimony established that Marin's deposition was noticed for June 5, 2002, June 17, 2002, and July 10, 2002, and that notices were sent to the College Avenue address by certified mail. The receipt for the mailing regarding the June 17 deposition was returned with what purported to be Marin's signature, dated July 2, 2002.
The foregoing evidence is insufficient to support an inference that Marin's failure to [*3]cooperate was deliberate and willful. Indeed, the inference of non-cooperation is far from the "practically compelling" showing contemplated in Matter of Empire Mutual [Stroud] (36 NY2d 719, supra).
The insurer's efforts to locate Marin were almost entirely limited to sending letters. The assigned investigator never visited the College Avenue address or the 177th Street address, and there is no indication that on his one visit, to the Minerva Place address, he even sought to clarify when Marin had moved, or to where. These failures are troubling, particularly since the return of one of the certified letters bearing what appeared to be Marin's signature makes it appear that a visit to the location might have been illuminating.
Further, as this Court held in Mount Vernon Fire Ins. (212 AD2d at 422), "the other circumstances . . . do not clearly support an inference of willfulness." Since Marin was not present at the time of the accident, she had "no personal knowledge relevant to the defense" and could have believed that her cooperation was not required since her testimony would be useless (id.). Nor is there any indication that she had any motivation to refuse to cooperate.
Finally, Marin's apparent receipt of one notice of deposition fails to establish deliberate non-cooperation, inasmuch as the letter was received after the scheduled date had already passed, and the letter had asserted that the scheduled deposition would not be adjourned.
Ultimately, before being permitted to disclaim due to non-cooperation, the insurer had an obligation to do somewhat more than merely sending letters. It should have ascertained, by on-site visits, whether and when the insured lived in the various locations it had on file, and whether forwarding addresses were available, in order to determine whether the insured was deliberately avoiding responding to the insurer.
The failure to do so warrants a stay of the uninsured motorist arbitration here.
THIS CONSTITUTES THE DECISION AND
ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: OCTOBER 19, 2004
CLERK
HRH Construction Corporation v. Commercial Underwriters Insurance Company
Order, Supreme Court, New York County (Marcy S. Friedman, J.), entered July 11, 2003, which denied plaintiffs' motion for summary judgment declaring defendants liable to plaintiff insurer for half the cost of settlement of an underlying personal injury action, and granted defendants' cross motions for summary judgment dismissing the complaint, unanimously affirmed, with costs.
Plaintiff HRH was sued by the employee of a subcontractor for personal injuries sustained when he allegedly fell on the job site. HRH was named as an additional insured on the general liability policy issued by plaintiff American Casualty to plaintiff Cochran, another subcontractor implicated in the accident. HRH, which had contracted with defendant Atlantic Heydt to construct and install a sidewalk bridge, was also named as an additional insured on the general liability policy issued to Atlantic Heydt by defendant Commercial Underwriters Insurance Company.
When HRH was sued for personal injuries, it never impleaded or named Atlantic Heydt or its insurer in the personal injury action. American Casualty accepted the tender from HRH's primary general liability carrier (not a party herein) to defend and indemnify HRH in the underlying personal injury action, and settled that action on behalf of HRH and Cochran. Commercial Underwriters never responded to the tender of defense, and American Casualty now seeks to recover half the cost of the settlement from Atlantic Heydt and Commercial Underwriters, claiming, inter alia, that American Casualty and Commercial Underwriters were primary coinsurers of HRH, and the accident had arisen from actions of both Cochran and Atlantic Heydt.
To the extent that American Casualty is asserting a claim for partial reimbursement of insurance funds, it seeks recovery in tort for the proportionate share of liability allegedly attributed to Atlantic Heydt, and thus the basis of this claim should properly be classified as one for contribution, not indemnification (see Wausau Underwriters Ins. Co. v Continental Cas. Co., 231 AD2d 414 [1996], lv denied 89 NY2d 812 [1997]). The right of HRH and American Casualty to seek contribution from Atlantic Heydt and its insurer terminated upon their settlement of the underlying personal injury action whereupon they obtained a release from liability pursuant to General Obligations Law § 15-108(c). Plaintiffs cannot circumvent that statutory prohibition by presenting their claim as one for indemnification (see Nielsen v Greenman Bros., 123 AD2d 850 [1986]). In any event, plaintiffs failed to prove that the underlying accident resulted from the work of Atlantic Heydt (which would thereby trigger coverage under the Commercial Underwriters policy), given the conflicting testimony adduced prior to settlement of the action as to the manner in which the accident occurred, as well as the fact that Atlantic Heydt was never implicated or named in the underlying personal injury action.
Moreover, plaintiffs have failed to establish that the instant dispute involves a coinsurance situation, which would entitle them to recover a ratable portion of the settlement paid by Commercial Underwriters, regardless of § 15-108(c). While both American Casualty and Commercial Underwriters provided primary insurance to HRH, they did not insure the same risk. The carriers insured HRH as to the risks associated with two separate subcontractors' individual work at the job site. Each insurer afforded coverage to HRH only for claims arising out of work performed by that carrier's primary named insured. Thus, the claims herein do not involve a coinsurance situation (see National Union Fire Ins. Co. v Hartford Ins. Co., 248 AD2d 78 [1998], affd 93 NY2d 983 [1999]).
Pawley Interior Contracting, Inc. v. Harleysville Insurance Companies
In an action for a judgment declaring that the defendant is obligated to defend and indemnify the plaintiff Pawley Interior Contracting, Inc., in an underlying personal injury action entitled Southerland v Pawley Interior Contr., pending in the Supreme Court, Kings County, under Index No. 48697/99, the defendant appeals from an order of the Supreme Court, Kings County (Ambrosio, J.), entered May 7, 2003, which denied its motion for summary judgment.
ORDERED that the order is affirmed, with costs.
The defendant was not entitled to summary judgment on the ground that a policy exclusion for liability arising out of the supervision of certain work [hereinafter the supervision exclusion] precluded coverage. An insurer must give timely notice of a disclaimer "as soon as is reasonably possible" after it first learns of the accident or the ground for the disclaimer of liability (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; see Mount Vernon Hous. Auth. v Public Serv. Mut. Ins. Co., 267 AD2d 285; Insurance Law § 3420[d]). It is the insurer's burden to explain the delay in notifying the insured of its disclaimer and the reasonableness of the delay must be determined from the time the insurer was aware of facts sufficient to disclaim (see Mount Vernon Hous. Auth. v Public Serv. Mut. Ins. Co., supra; Ward v Corbally, Gartland and Rappleyea, 207 AD2d 342). Here, the appellant insurer received notification of the accident on or about March 2, 2000 but inexplicably failed to disclaim liability based on the supervision exclusion of its policy until [*2]on or about May 12, 2000. While an unexplained two-month delay has been held unreasonable as a matter of law (see Hartford Ins. Co. v County of Nassau, supra; see also Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507), under the circumstances of this case, an issue of fact exists as to the whether the delay in disclaiming liability was reasonable (see Murphy v Hanover Ins. Co., 239 AD2d 323; Wilczak v Ruda & Capozzi, 203 AD2d 944).
There is also no merit to the appellant's contention that it is entitled to summary judgment because the plaintiff provided late notice of the accident. An insurer's justification for denying coverage is strictly limited to those grounds stated in its notice of disclaimer (see Abreu v Huang, 300 AD2d 420). As the appellant failed to disclaim on the ground of late notice by the plaintiff, it waived the right to disclaim liability on that ground (see General Acc. Ins. Group v Cirucci, 46 NY2d 862; Halali v Evanston Ins. Co., 8 AD3d 431).
The parties' remaining contentions need not be reached in light of the foregoing.
Tokio Marine and Fire Insurance Co., Ltd. v. Borgia
In an action for contractual and common-law indemnification, the
defendants Angelo Borgia and Angelo Borgia, Jr., appeal (1), as limited by their
brief, from so much of an order of the Supreme Court, Orange County (Owen, J.),
dated January 27, 2003, as granted the plaintiffs' motion for summary judgment
to the extent of awarding them judgment on the issue of liability and directing
a hearing on the issue of damages in excess of $25,000, (2) from an order of the
same court, dated June 16, 2003, which denied that branch of their motion which
was for leave to renew, but in effect, was for reargument, and, in effect,
denied that branch of their motion which was for leave to serve an amended
verified answer, and (3) from a judgment of the same court, entered June 26,
2003, which, upon the order dated January 27, 2003, upon a decision of the same
court dated April 24, 2003, and after hearing on the issue of damages, is in
favor of the plaintiffs and against them in the principal sum of $4,510,072.59,
and the plaintiffs (1) cross-appeal, as limited by their brief, from so much of
the order dated January 27, 2003, as granted their motion for summary judgment
only to the extent of directing a hearing to assess their damages in excess of
$25,000 and, on the ground of inadequacy, from the judgment, and (2) separately
appeal from the decision.
ORDERED that the appeals from the orders dated January 27, 2003, and
June 16, 2003, respectively, and the cross-appeal from the order dated January
27, 2003, are dismissed; and it is further,
ORDERED that the appeal from the decision dated April 24, 2003, is dismissed, as no appeal lies from a decision (see Schicchi v Green Constr. Corp., 100 AD2d 509); and it is further,
ORDERED that the judgment is affirmed; and it is further,
ORDERED that one bill of costs is awarded to the plaintiffs.
The appeal and the cross appeal from the intermediate order dated January 27, 2003, and the appeal from the order dated June 16, 2003, must be dismissed because the right of direct therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal and cross appeal from the subject orders are brought up for review and have been considered on the appeal and cross appeal from the judgment (see CPLR 5501[a][1]).
The branch of the appellants' motion, denominated as one for leave to renew the plaintiffs' prior motion, was not based on new evidence which was unavailable to them at the time of the original motion, and therefore the motion was, in effect, one for reargument, the denial of which is not appealable (see Ruddock v Boland Rentals, 5 AD3d 368; EMC Mtge. Corp. v Stewart, 2 AD3d 772).
The appellants, Angelo Borgia and Angelo Borgia, Jr., leased a vehicle from Bay Ridge Lexus, which, in turn, assigned the lease to Lexus Financial Services, a division of Toyota Motor Credit Corporation (hereinafter TMCC). Thereafter, Nicholas Borgia, who was permissively operating the vehicle, was involved in an accident in which he seriously injured a third party. The injured third party sued Angelo Borgia, Nicholas Borgia, and TMCC. That action was settled for $4.5 million, with TMCC's insurer, Tokio Marine and Fire Insurance Co., Ltd. (hereinafter Tokio Marine), contributing $4.4 million, and Angelo Borgia's insurer contributing $100,000, to the settlement. Tokio Marine and TMCC then commenced this action against the Borgias seeking indemnification pursuant to the vehicle lease, and the common law.
Contrary to the appellants' contention, the indemnification provision in the lease is valid and enforceable for the amount above and beyond the statutorily-required insurance, which, in this case, was $25,000 (see Vehicle & Traffic Law §§ 370[1], 388; ELRAC, Inc. v Ward, 96 NY2d 58; Morris v Snappy Car Rental, 84 NY2d 21; Ruddock v Boland Rentals, supra; Citywide Auto Leasing v City of New York, 294 AD2d 528). The anti-subrogation rule does not bar the lessor from seeking indemnification (see ELRAC, Inc. v Ward, supra; AIU Ins. Co. v ELRAC, Inc., 287 AD2d 668).
On their cross appeal, the plaintiffs contend that the $25,000 statutory minimum does not apply in this case. However, the plaintiffs may not contest this issue since they consented to its application at the hearing on the issue of damages.
Miceli v State Farm Mutual Automobile Insurance Company
MEMORANDUM:
The order of the Appellate Division should be reversed, with costs, and plaintiff's motion for summary judgment denied.
Barely five months ago, in Brill v City of New York (2 NY3d 648 [2004]), this Court reversed an award of summary judgment for defendant, without considering its merit, on the ground that the motion, made more than 120 days after Note of Issue was filed, failed to comply with the statutory requirement that "good cause" be shown for the late filing. We [*2]determined that, if the merit of the motion itself constituted good cause, the statutory deadline would be circumvented and the practice of delaying such motions until the eve of trial encouraged. As the Legislature clearly specified, summary judgment motions should be timely made, or good cause shown.
As we made clear in Brill, and underscore here, statutory time frames — like court-ordered time frames (see Kihl v Pfeffer, 94 NY2d 118 [1999]) — are not options, they are requirements, to be taken seriously by the parties. Too many pages of the Reports, and hours of the courts, are taken up with deadlines that are simply ignored.
Plaintiff does not dispute that her motion for summary judgment was made more than 120 days after Note of Issue was filed, and offers no excuse for her failure to comply with CPLR 3212 (a), arguing only that her motion is meritorious. This was precisely defendant's position before us in Brill. To countenance plaintiff's position here would require us to overturn our own recent precedent. This we refuse to do, and we therefore reverse the order of the Appellate Division awarding summary judgment to plaintiff, without considering the merit of the motion.
Order, Supreme Court, New York County (Milton A. Tingling, J.), entered July 15, 2003, which granted defendants' motion for summary judgment dismissing the complaint for lack of a serious injury as required by Insurance Law § 5102(d), unanimously affirmed, without costs.
Plaintiff failed to overcome defendants' prima facie showing of entitlement to summary judgment by providing evidence to demonstrate that the injuries she allegedly sustained in the accident resulted in a "significant limitation of use of a body function or system" (see Gaddy v Eyler, 79 NY2d 955, 957 [1992]). An expert's conclusion that limitations in motion are permanent is not sufficient absent objective evidence of the severity of the asserted physical limitations (see Arjona v Calcano, 7 AD3d 279 [2004]; Noble v Ackerman, 252 AD2d 392, 394 [1998]).
