Coverage Pointers - Volume VII, No. 25

Dear Coverage Pointers Subscribers:

Greeting from the land of beautiful summers. Alright. Enough small talk. Let's get down to business. Keep this one under your hat although you may read about it in the supermarket tabloids

I don't know how to explain this to you. OK, I'll try. I cannot guarantee that this is what happened, but I can't think of too many other explanations .

There is mischief afoot in Albany, home of the New York State Court of Appeals. While the Court officers were at lunch, someone must have slipped in the back-door of that beautiful courthouse, hog-tied the judges, taken them to a secret location and slipped in imposters.

That might begin to explain the two of the insurance-related decisions handed down by New York's highest court this week.

Now don't get me started. I have given you full and complete and much-longer-than-usual summaries of New York Central Mutual Fire Insurance Company v. Aquirreand Automobile Insurance Company of Hartford v. Cook in the attached issue. Suffice it to say, in the NY Central case, the Court held that a carrier must deny a claim on failure to provide timely proof before proof has been provided and in the Automobile Insurance case, the Court held that a person who takes a gun, aims it at an individual, pulls the trigger and admits that he intended to shoot him may still get homeowners coverage for an accidental shooting.

What is the next in the wacky world of insurance? Stay tuned.

For those of you who are attending the FDCC Litigation Management College or the Litigation Management College Graduate Program at Emory, I look forward to meeting you there.

Dan

Dan D. Kohane
[email protected]

Publishers Note: While we pride ourselves in keeping these summaries brief, please accept our apologies for not doing so with respect to the first two reported cases. Sometimes, we just need to let off steam …

6/13/06 New York Central Mutual Fire Insurance Company v. Aquirre

New York Court of Appeals

New York High Court Requires Carrier to Disclaim on Late Proof of Uninsured Motorist Claim Before it Receives Proof of Claim – Where is this One Taking Us? Read and Be Amazed

Early in August of 2002 the insured has an accident, his vehicle being struck by a hit-and-run driver. He timely files a no fault claim in mid-August, with NY Central. At the same time, his attorney advises NY Central that he may be filing an Uninsured Motorists claim under the combined UM/SUM endorsement in the policy.

“Thanks for telling us,” sayeth the insurer, in a September 3, 2002. “And here’s the Notice of Intention to File Claim form we want you to fill out and return immediately.”

Did the carrier have the right to send such a form? Yes. “Condition 2” of the SUM endorsement, provides that “Proof of claim shall be made upon forms we furnish …”

The carrier also advised the insured of the requirements of coverage and the need to cooperate: "Your failure to cooperate will jeopardize any rights which you may have under this policy for us to make Supplementary Uninsured Motorists payments." The insured never returned the form, not then, not ever.

Sometime in mid-2003, the insured files his claim for UM/SUM benefits and the insurer promptly moves to stay arbitration, claiming that the insured violated the condition of coverage which required him to provide proof of claim and months had gone by without the insured filing the form. Not surprisingly to us, the lower courts determine that the insured breached the condition of coverage which required proof of claim by not returning the form and granted the application to stay.

The Court of Appeals agrees to review the matter and when it does so, it reverses, finding that despite the insured’s failure to complete the Proof of Claim forms, despite the apparent breach of the policy conditions, there was coverage. Why? Multiple choice questions: Choose of the following:

(a) This form wasn’t specifically coveraged under the policy language.

(b) The carrier knew what this claim and the injuries were about because it was also the No Fault carrier, so it wasn’t prejudiced by the insured’s failure to return the form.

(c) The earlier notice to the insurer, in August, that the insured intended to file a UM/SUM Claim was all the notice the insurer needed and was sufficient so the insured didn’t breach any requirements of the policy.

(d) Something has infiltrated the Court of Appeals’ water supply and they went off on some odd and inexplicable tangent that can lead to chaos.

Ready? The correct answer is (d).

We could have lived with (a) and (b) and perhaps even (c). But (d) was just an unacceptable reason for reversing.

Of course, the Court didn’t admit that its water supply was tainted. In a split decision, the Court held that the insurer, having sent the Proof of Claim forms to the insured was then on notice that they were due back “immediately.” When the forms did not come back “immediately,” the insurer was on notice that the insured had breached the condition precedent to coverage which requires proof of claim forms to be returned. Ergo (who doesn’t like to use “ergo”) the insurer should have sent out a late notice disclaimer when the forms weren’t returned “immediately.” Having failed to disclaim “as soon as possible” pursuant to Insurance Law §3420(d), it has waived its right to disclaim on the breach of the notice proof of claim provision. [Do 3420(d) notice requirements apply to SUM claims? Apparently]

The carrier, of course, believed that it had no obligation or duty to deny coverage on late proof of claim until after it received the proof of claim because only then could it make a determination as to whether the insured had a justifiable reason for sending the forms in months later.

Counseling Point: Surely for SUM carriers, there is a clear counseling point – if you send out Proof of Claim forms, keep them on a tight diary. If the insured or claimants don’t return them “immediately” or (as the policy requires) “as soon as practicable,” deny coverage for a policy breach, if you are so inclined (or be forever silenced). It remains to be seen whether this requirement of denying before forms are submitted will be extended to other areas.

6/8/06 Automobile Insurance Company of Hartford v. Cook

New York Court of Appeals

I Aimed at Him. I Shot Him. I Meant to Injure Him. I Still Get Coverage (in Self-Defense Case)

Alfred Cook shot and killed Richard Barber, an estranged business associate inside the Cook home. Barber was a big guy, about three times Cook’s size and had previously attacked the smaller man. On this particular morning, Barber and another man were outside of Cook's home, hurling objects at the house. They left without further incident, but Barber returned later that day with two other companions. When Cook, who was standing outside his door, saw them approaching, he asked a person visiting him to leave because he expected trouble. He returned inside, locked the door and, anticipating a confrontation, retrieved a .25 caliber hand gun from his bedroom.

Apparently the group burst into the Cook home and Barber demanded money while pounding his fist on the table. An “alarmed” Cook, drew his gun and demanded that they leave his house. Barber apparently laughed at the small size of the pistol, at which point Cook withdrew to his bedroom for a larger weapon. He picked up a loaded, 12 gauge shotgun and stood in his living room at the end of a pool table and again ordered them to leave the house.

Barber started to head toward the door with his companions, he stopped at the opposite end of the pool table, turned to face Cook and told his companions to take anything of value, and that he would meet them outside because he had some business to attend to. When Barber menacingly started advancing toward Cook, Cook warned him that he would shoot if he came any closer. Cook aimed his gun toward the lowest part of Barber's body that was not obscured by the pool table — his navel. When Barber was about one step away from the barrel of the gun, Cook fired a shot into Barber's abdomen. Barber died later that day at a hospital. Cook was acquitted of criminal charges.

Barber's estate commenced a wrongful death action against Cook. The first cause of action alleges that "[i]njury to the decedent and the decedent's death were caused by the negligence of the defendant, Alfred S. Cook." Specifically, the complaint alleges that Cook's behavior "consisted of negligently playing with a loaded shotgun; negligently pointing that shotgun at the abdomen of the decedent; negligently discharging that shot gun into the decedent's abdomen; and engaging in unruly behavior at the Defendant's residence on February 20, 2002." In a separate cause of action, the complaint alleges that Cook intentionally shot Barber causing Barber's death. At his examination before trial, Cook testified, "I knew the [shot from the] shotgun would injure Mr. Barber because I had to stop him, but I did not anticipate it killing him."

The homeowner’s carrier disclaimed arguing that the incident was not an "occurrence" within the meaning of the policy and furthermore that the injury inflicted upon Barber fell within a policy exclusion, as it was "expected or intended" by Cook. The insurer commenced this declaratory judgment action against both Cook and Pruyn for a declaration that it was not obligated to defend or indemnify Cook in the wrongful death action.

The lower court found that insurer failed to prove that the incident was not an occurrence covered by the policy or that Cook's actions were subject to the exclusion for injuries expected or intended by the insured. The court held that the insurer had a duty to defend because the negligence allegations in the complaint could potentially be proven at trial.

The Appellate Division reversed, concluding that since Cook intentionally shot Barber, his actions could not be considered an accident or "occurrence" and, thus, were not covered by the policy. The court also noted that the acts came within the policy exclusion for bodily injury "expected or intended" by the insured.

Despite the insured’s admission that he intended to shoot and injure the plaintiff, the Court of Appeals found, at least, that the insurer had a duty to defend the claim, but included some troubling language that will need future clarification. The Court held that since the complaint alleged that Cook negligently caused Barber's death, they “would fall within the scope of the policy as a covered occurrence.” Oddly, however, the Court looked to a life insurance case for guidance.

The policy defines an "occurrence" as an accident, and we have previously defined the term "accident" albeit in a life insurance policy "to pertain not only to an unintentional or unexpected event which, if it occurs, will foreseeably bring on death, but equally to an intentional or expected event which unintentionally or unexpectedly has that result" (Miller v Cont. Ins. Co., 40 NY2d 675, 678 [1976]). Thus, if Cook accidentally or negligently caused Barber's death, such event may be considered an "occurrence" within the meaning of the policy and coverage would apply.

What about the admission by the insured that he intentionally shot Barber and intended to injure him? Well, said the Court, “the fact-finder in the underlying action may indeed ultimately reject the notion that Cook negligently caused Barber's death given the evidence of intentional behavior, but that uncertain outcome is immaterial to the issue raised here — the insurer's duty to defend in an action where it is alleged that the injury was caused by the negligent conduct of the insured.” Why the Court in the declaratory judgment action couldn’t be the fact-finder is unclear.

With respect to the exclusion — as an allegation of negligence implies an unintentional or unexpected event, Hartford necessarily has failed to demonstrate that the allegations of the complaint are subject to no other interpretation than that Cook "expected or intended" the harm to Barber so the carrier was required to defend Cook in the underlying wrongful death action. The Court did not reach the question as to “whether acts of self defense are intentional acts precluding coverage under a homeowner's policy” deciding the question on the duty to defend.

Counseling Point: While this is only a “duty to defend” case, the Court of Appeals reference to the life insurance case suggesting that an “accident” can apply “equally to an intentional or expected event which unintentionally or unexpectedly has that result" harkens back to the “unexpected results from intentional acts” language which has not been used to define “accident” in the last few years. It’s troubling. We’ll watch and report.

6/8/06 Hoffend & Sons, Inc. v. Rose & Kiernan, Inc.

New York Court of Appeals

Without Specific Request for Particular Coverage or "Special Relationship," Broker Not Liable to Policyholder for Absence of Coverage for Risk
Customer gave insurance broker written proposal for property insurance coverage for domestic construction projects and for liability coverage and workers compensation coverage for foreign projects. It did not contain a request for property insurance coverage for the foreign projects. Broker noted in letter to insured that the property policy would not cover foreign projects and coverage for those should be on a case-by-case basis.

Customer and broker thereafter discussed a foreign project and customer claims project was to be "covered." Broker claims, and documents indicated, need for certain kinds of coverage for that project, but no particular contractual requirement for property coverage. Property loss on foreign project led to claim against broker when no coverage was available for loss. Broker here wins and case against it dismissed. A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage. No special relationship existed here by which broker should be held liable since it was not being compensated for insurance advice other than payment of premiums.

6/13/06 Felix v. Pinewood Builders

Appellate Division, Second Department

Seven Month Delay of Notice to Carrier by Insured Grounds for Valid Disclaimer

Insured did not notify Sirius of a construction site accident until more than seven months later, after the insured received a letter from the injured party’s attorney. Sirius promptly disclaimed coverage based on Orange's failure to notify it as soon as practicable of the accident. The Court holds that Sirius was entitled to judgment as a matter of law by demonstrating that Orange failed to notify it of the occurrence until more than seven months after it happened.

6/13/06 Allstate Insurance Company v. Cruz

Appellate Division, Second Department

When the Grounds for Disclaimer Are Known, the Disclaimer Should Issue Without Delay

CPLR article 75 to permanently stay arbitration of a UM claim regarding a December 2000 accident. State Farm first received notice of the accident on July 22, 2002, from the attorneys representing the injured parties. State Farm subsequently sent a letter to counsel for those parties, disclaiming coverage on the ground that their notice to State Farm was untimely. When a demand for uninsured motorist arbitration was served upon Allstate, it sought a permanent stay of arbitration. After conducting a hearing, the Supreme Court determined that State Farm was required to provide coverage to the injured parties because its disclaimer of coverage was invalid. The Court holds that State Farm's disclaimer – and the decision doesn’t reveal the length of delay -- was based solely upon the lack of timely notice of the loss, and all relevant facts supporting such a disclaimer were immediately apparent to State Farm upon its receipt of notice of the accident from the attorneys representing the injured parties. Therefore, State Farm's delay in issuing its disclaimer of coverage was unreasonable.

6/13/06 Progressive Northeastern Insurance Company v. Barnes

Appellate Division, Second Department

Insurer’s Failure to Send Notice of Termination to DMV Renders Policy Termination Ineffective as to Third Parties

In this CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, State Farm was required, Pursuant to Vehicle and Traffic Law § 313(2)(a), to file a notice of cancellation with the Commissioner of the Department of Motor Vehicles no later than 30 days following June 17, 2002, the effective cancellation date of the policy it issued. Its failure to strictly comply with this provision results in invalid termination of coverage as to third parties. Therefore, the termination of coverage was not effective with respect to the claim made by James Barnes, Jr., arising out of the subject accident.

6/13/06 Progressive Northeastern Insurance Company v. Yeger

Appellate Division, Second Department

Failure of Injured Party to Notify Tortfeasor’s Insurer Does Not Waive UM Coverage

Yet another CPLR article 75 to permanently stay arbitration of an uninsured motorist claim. Contrary to the petitioner's contention, Insurance Law § 3420(a) (3) does not impose a duty on the injured party to provide notice to an alleged tortfeasor's insurer. Moreover, there is no exclusion from the requirement to provide compulsory uninsured motorists coverage pursuant to Insurance Law § 3420(f) (1) triggered by an injured party's failure to provide timely notice to a tortfeasor's insurer. The failure of the injured party, to timely notify the tortfeasor’s insurer, of the claim did not vitiate coverage under the uninsured motorist provision of the petitioner's policy.

6/13/06 State Farm Mutual Automobile Insurance Company v. Harkins

Appellate Division, Second Department

Absent Express Provision, No Interspousal Coverage

Defendants, residents of New York, were involved in a single-car automobile accident while traveling in Virginia. Defendant’s wife, who sustained injuries, commenced an action against the defendant husband, the driver of the vehicle, which was insured by State Farm policy that excluded interspousal claims. The plaintiff then commenced this action for a judgment declaring that it is not obligated to defend or indemnify the husband in the action brought by his wife.

In the absence of an express provision in an insured's policy, a carrier is not required to provide insurance coverage for injuries sustained by an insured's spouse (see Insurance Law § 3420[g]. Insurance Law § 5103(e), which requires a carrier to provide the coverage minimally required by the state where the loss occurred, applies solely to the amount and type of coverage required by another state.

6/9/06 Lawley Service Inc, v. Progressive Weatherproofing Inc.

Appellate Division, Fourth Department

In a 3-2 Decision, Appellate Division Finds Question of Fact as to Whether Agency Wrongfully Interfered with Contract

The insured/Progressive, obtained insurance through Lawley for many years, however in 2002 Progressive obtained its insurance through a different insurance agency. That agency obtained a quote from an insurer that was considerably less than the quote from Lawley. The insurer issued a policy for Progressive, but, after a loss control inspection, cancelled the policy.

The Majority holds that the record established that the insurer did not rescind the policy based upon any alleged material misrepresentations but, after conducting a loss control inspection. There was evidence in the record that, after the insurer issued the policy, Lawley discussed defendant's account with an underwriter for defendant's insurer. That underwriter in turn expressed his concerns with the account to the underwriter who approved the policy. Thereafter, the insurer conducted a loss control inspection and cancelled the policy. Based on that evidence, the Court holds that a trier of fact could reasonably infer that a loss control inspection would not have been conducted, nor would the policy have been cancelled, had plaintiff's agent not discussed defendant's contract with an underwriter for defendant's insurer.

The Dissent takes the position that there was not a triable issue of fact with respect to Lawley’s alleged tortious interference with contract. They agree with the Majority that there was a valid insurance contract between Progressive and its insurer and that plaintiff knew of the existence of the contract. But they disagree that a triable issue of fact exists with respect to Lawley’s alleged tortious interference with the contract, resulting in the insurer's breach" of that contract. The Dissent finds that the record establishes that the insurer timely conducted an investigation of Progressive’s business and cancelled the policy on the grounds that Progressive’s business did not fit within the insurer's underwriting guidelines and thus that the policy of insurance would not have been issued in the first instance. Because there was no breach, Lawley could not be said to have intentionally procured a breach.

6/9/06 Haines v. New York Mutual Underwriters

Appellate Division, Fourth Department

As No Cause of Action Would Exist but For the Assault, Insurer Properly Disclaimed under the Assault and Battery Exclusion

Haines was injured when he was struck with an object just outside a bar owned by Elmwood Beer Garden, Inc... Haines commenced the underlying action alleging that Elmwood Beer Garden owed a duty "to the public and especially to the plaintiff" to maintain the premises in a safe condition. Defendant disclaimed coverage under the assault and battery exclusion of its insurance policy with Elmwood Beer Garden.

The Court holds that "the language of the exclusion for suits based on Assault and Battery' is unambiguous" and, "if no cause of action would exist but for the assault, the claim is based on assault and the exclusion applies". The Court concludes in this case that because no cause of action in the underlying amended complaint would exist "but for" the assault on plaintiff, New York Mutual properly disclaimed coverage under the assault and battery exclusion in the policy at issue.

6/9/06 Schmitt v. North American Company for Life and Health

Appellate Division, Fourth Department

Failure to Disclose Lymphoma Was Material Nondisclosure and Grounds for Denial of Life Insurance Benefits

This was an action to collect benefits under policies of life insurance issued by North American to the decedent. Decedent was referred to a surgeon when it was determined that he had not responded to the antibiotics, and a biopsy performed on March 22, 2001 revealed that decedent had malignant lymphoma.

Defendant delivered the respective policies to decedent on three dates in April 2001 and, at those times; decedent paid the first premiums on the policies. Decedent did not advise defendant of the diagnosis or that there had been a change in the state of his health. Defendant disclaimed coverage upon receiving plaintiffs' claims for benefits based on decedent's failure to disclose the lymphoma diagnosis during the pendency of the applications and refunded the premiums paid. The Court holds that the failure of decedent to notify defendant of the change in the state of his health, i.e., that he was diagnosed with malignant lymphoma, constitutes a "material nondisclosure" as a matter of law.

6/8/06 Valley Psychogical v. Liberty Mutual Insurance

Appellate Division, Third Department

Allegation of Provider Fraud Required Timely Denial by No-Fault Carrier

Plaintiff alleges that it provided psychological testing and psychotherapy to a woman after her involvement in a motor vehicle accident. It is undisputed that the woman was injured in an accident involving a vehicle insured by defendant, thus invoking coverage by defendant. As assignee of the woman's no-fault insurance claims, plaintiff submitted to defendant two bills for services rendered. Defendant denied both claims, but those denials were issued more than 30 days after the claims were received. Defendant asserted a defense of provider fraud, alleging that plaintiff submitted fraudulent bills because its principal licensed psychologist did not provide active and personal supervision over the employees providing services to plaintiff's assignee as required by workers' compensation schedules. An insurer that fails to deny a claim within the 30-day period is precluded from raising most defenses. Untimely disclaimers, however, do not preclude an insurer from denying liability "on a strict lack of coverage ground". Because the defense raised here was analogous to an argument that the treatment was excessive or unnecessary, it does not implicate coverage and therefore required a timely denial.

6/8/06 LMK Psychological Services v. Liberty Mutual Insurance

Appellate Division, Third Department

Insured Meets Burden of Proof of Mailing the Claim Forms

Defendant asserts that plaintiffs failed to provide adequate proof that the claim forms were properly mailed and, thus, did not establish a prima facie case of entitlement to no-fault benefits. Plaintiffs supplied direct proof of actual mailing by producing signed and stamped mailing certificates. In addition, plaintiffs' officer provided an affidavit stating based on his review of plaintiffs' business records and his own personal knowledge that plaintiffs mailed the claim forms to defendant and that none were returned as undeliverable. This "proof of proper mailing gives rise to a presumption that the item was received by the addressee". Defendant did not submit proof to rebut this presumption; indeed, defendant does not deny receipt of the claims and, in fact, its papers in opposition include evidence that claims were received on dates which correspond to those in the mailing receipts produced by plaintiffs. The Court holds that plaintiffs met their prima facie burden of proof with regard to mailing of the claim forms.

The Serious (Injury) Side of New York No-Fault

6/13/06 Patalano v. Curreri

Appellate Division, Second Department

Lack of Objective Testing by Defendant’s Expert Fatal to Serious Injury Motion

Defendant failed to make a prima facie showing that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as the affirmed medical report of the defendant's examining orthopedic surgeon merely noted that the injured plaintiff had a "full and nonrestricted" range of motion in her cervical, thoracic, and lumbosacral spine without setting forth the objective testing performed which supported those conclusions.

6/13/06 Yakubov v. CG Trans Corporation

Appellate Division, Second Department

Plaintiff Needs to Address Intervening Injury and Provide Evidence of Physical Limitations beyond the Mere Presence of Disc Herniation

Plaintiff failed to raise a triable issue of fact through affirmed medical reports of the plaintiff's examining neurologist. Although he observed limitations in various aspects of the range of motion of the plaintiff's cervical and lumbar spine, the only admissible evidence submitted by the plaintiff was an examination that was remote in time and failed to take into account an intervening injury. The magnetic resonance imaging reports submitted by the plaintiff in opposition to the motion did not establish that he sustained a serious injury as a result of the subject accident. The mere existence of bulging or herniated discs is not evidence of serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and their duration.

6/13/06 Campbell v. Vakili

Appellate Division, Second Department

Reports Submitted by Defendant of Plaintiff’s Treating Neuro Short Circuits its Motion

Defendants submitted reports prepared by the plaintiff's treating neurologist indicating that the plaintiff exhibited restricted range of motion in his cervical and lumbar spine, as well as his right shoulder, and that the injuries which the plaintiff sustained were the result of the subject motor vehicle accident. Accordingly, the defendants failed to make a prima facie case for judgment as a matter of law.

6/9/06 Cullen v. Treen

Appellate Division, Fourth Department

Subjective Complaints Repeated by Chiropractor Insufficient to Oppose Motion

The chiropractor's affidavit submitted by plaintiff in opposition to the motion was insufficient to raise an issue of fact because it was based solely on plaintiff's subjective complaints of pain and the affidavit otherwise failed to establish that plaintiff's limitation was "significant or consequential.” The additional medical reports submitted by plaintiff indicate that he had only a mild partial disability, which is insufficient to meet the serious injury threshold.

6/6/06 O'Neil v. GEICO

Appellate Division, Second Department

Conclusory Affidavit of Chiropractor who Treated Plaintiff 2 ½ Years after Accident Insufficient to Oppose Motion

Supreme Court providently exercised its discretion in refusing to consider the late submission of the affirmation of the plaintiff’s orthopedic surgeon, submitted after the motion had been adjourned four times at the plaintiffs' request, and marked final. Moreover, the evidence in opposition to the motion, which was accepted by the Supreme Court, including a conclusory affidavit of a chiropractor, failed to raise a triable issue of fact as to whether she sustained a serious injury as a result of the accident. Finally, since the orthopedic surgeon did not treat the plaintiff until more than 2½ years after the subject automobile accident, after she had reinjured her left ankle in a trip and fall, it was sheer speculation to conclude that the accident caused her to require surgery on the ankle.

Audrey’s Angle on No-Fault

In this feature to the newsletter, we highlight recent no-fault arbitration awards. The compilation and publication of these awards is not at the same level as traditional reported case law. There is no single source to conduct comprehensive research in the area. This feature seeks out notable current awards and judicial determinations and provides them to our subscribers.

We encourage the submission of no-fault awards, including Master Arbitration awards that address interesting issues. These can be submitted to Audrey Seeley at [email protected]. With all submissions, we ask that you forward a redacted version of the award omitting the parties’ names and that the document be in PDF format. For copies of these decisions, contact Audrey.

6/14/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Veronica K. O’Connor, Esq. (Erie County)

Applicant’s Failure To Submit Medical Records For Treatment Subsequent To IME That Refute IME Conclusions Does Not Demonstrate Prima Facie Case of Medical Necessity.

Here is the Angle: Applicant sought reimbursement for chiropractic and orthopedic care after treatment was denied based upon multiple independent medical examinations and a peer review. The Applicant failed to submit any treatment records subsequent to when the independent medical examinations were performed that refuted conclusions by the independent examiners. Accordingly, Applicant failed to demonstrate prima facie case of medical necessity.

The Analysis: Applicant sought reimbursement of chiropractic and orthopedic care which the insurer denied based upon independent medical examinations (“IME”) and a peer review.

The Applicant was involved in a December 9, 2001, motor vehicle accident where after she was evaluated at Mercy Hospital with complaints of head and right sided neck pain. The Applicant was referred for and underwent physical therapy from January 5, 2002 through May 6, 2002. In the interim, Applicant began a course of chiropractic care from April 4, 2002 through August 10, 2002. A May 16, 2002, cervical spine MRI was unremarkable.

The Applicant underwent an orthopedic IME with Dr. George Kartalian on July 16, 2002, resulting in the insurer issuing a general denial of all orthopedic benefits effective August 6, 2002. The Applicant also underwent a chiropractic IME with Gary Kostek on September 27, 2002, where Mr. Kostek concluded that Applicant was in need of further chiropractic from October 21, 2002 through December 2, 2002, one time per week. Also, the insurer retained Dr. Robert Levine to conduct a peer review of a prescription for a muscle stimulator apparently for Applicant’s complaint of dizziness. Dr. Levine opined that a review of the treating neurosurgeon and physiatrist’s medical records the Applicant had no objective findings to account for her complaints requiring a muscle stimulator. Accordingly, payment for the muscle stimulator was not recommended.

Arbitrator O’Connor held that Applicant failed to establish a prima facie case of medical necessity as to the treatment rendered subsequent to the orthopedic and chiropractic benefit denials. Applicant did not submit any treatment records refuting the conclusions set for by either IME physician or chiropractor. Accordingly, Applicant’s entire claim was denied.

6/9/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Thomas J. McCorry, Esq. (Erie County)

Applicant Physician, Sole Owner of Corporation That Owns Facility Where Injections Rendered, Lacked Standing To Arbitrate Whether Corporation Entitled To Fee For Usage Of Facility For Medical Services.

Here is the Angle: The Applicant, treating physician, was the sole shareholder of a corporation that owned the facility where Applicant conducted injection therapy on the eligible injured person. The Applicant sought reimbursement for the portion of the corporation’s bill for a fee for facility usage. Arbitrator McCorry held Applicant lacked standing, despite the fact that any payment would go directly to Applicant, to proceed with the arbitration.

The Analysis: The issue in this arbitration was whether the Applicant, treating physician, who is the sole shareholder of a limited liability corporation that owns the facility where the medical treatment occurred can bill in his own name for the facility’s use and the supplies.

The Applicant provided injection therapy to the eligible injured person charging $532.74. The insurer paid $316.24, on the ground that the Applicant cannot separately bill for supplies and medication that are integral to the performance of the injection procedure. The insurer, to support its position, relied upon Workers’ Compensation Fee Schedule Surgery Ground Rules, Section 16 which provides “surgery supplies and materials provided by the physician (EG sterile trays, supplies, drugs etc.) over and above those usually included with the office visit or other service rendered maybe (sic) charged for separately.”

The Applicant argued that he billed for the physicians component of the services rendered as well as the fee associated with performing a procedure at a surgical center. The Applicant further asserted that the insurer usually pays the surgical center a separate fee for medication trays and use of the facility. Since Applicant is the sole shareholder of Advanced Pain Care, LLC, which is the corporate owner of the facility where the injections took place he should be able to bill in his own name for the facility fee.

Ultimately, Arbitrator McCorry held that Respondent’s denial was untimely but the correct Applicant in the arbitration is not the physician but the corporation that owns the facility – Advanced Pain Care, LLC. Therefore, Applicant’s claim was denied without prejudice.

6/9/06 In the Matter of the Arbitration between the Applicant and Respondent

Arbitrator Thomas J. McCorry, Esq. (Erie County)

Insurer Not Responsible For Medical Treatment Related To Pain A Result Of Conditioning Program To Return Applicant Back To Pre-Accident Tennis Skill Level, When Applicant Returned To Occupation Without Discomfort.

Here is the Angle: The Applicant was able to return to her usual occupation without discomfort but had to undergo an aggressive conditioning program to improve tennis skill for competition. The Applicant had associated pain and discomfort with conditioning program. However, Arbitrator McCorry held that it is not the insurer’s responsibility to pay for medical treatment associated with that pain and discomfort so that the Applicant can return to her pre-accident level of tennis skill.

The Analysis: Applicant sought payment for chiropractic treatment rendered by Daniel Cox, DC. The insurer denied chiropractic treatment on the basis of an independent medical examination conducted by Dr. Frank Luzi. Dr. Luzi opined that the Applicant “has maximized her benefit from physical and massage therapy. I feel she requires no further treatment or diagnostic test. She is capable of doing exercises on her own. I feel she has reached pre-accident status.” The insurer further argued that Applicant received medical treatment and physical therapy at Buffalo Spine & Sports Institute wherein her treatment course ended around September 8, 2004. At that time, Applicant’s cervical and lumbar ranges of motion were without pain and her motor and sensory examinations were normal.

Further, Applicant’s treating therapist indicated, in a September 8, 2004 report, that the Applicant began working with an athletic trainer for aggressive preparation to return to tennis. Also, Applicant’s treating physician indicated in January 4, 2005, that Applicant was “medically stable.”

Arbitrator McCorry denied Applicant’s claim noting:

It is an interesting question as to whether an individual, who has returned to her usual occupation without discomfort, can be said to have not reached her pre-accident status by reason of her desire to train and compete, in order to improve her tennis game. I don’t think that it is a No-Fault insurer’s responsibility to pay for bills for treatment that appears to be related to the pain and discomfort of going through a conditioning program so that the injured party can return to her pre-accident level of tennis skill.

Across Borders

Visit the Hot Cases section of the Federation of Defense & Corporate Counsel website, www.thefederation.org ranked among the top five legal research websites in an article published in Litigation News, a publication of the Litigation Section of the American Bar Association. Dan Kohane serves as the FDCC’s Website Editor Emeritus.

6/9/06 Brannon v. Continental Casualty Company
Alaska Supreme Court

Although Cause Of Action For Breach Of Duty To Defend Accrues When Insured Notified Of Insurance Company’s Refusal To Defend, Statute Of Limitations Equitably Tolled Until Entry Of Final Judgment In Underlying Action
A cause of action for breach of contract generally accrues when the agreement at issue is breached. As such, an insurance company breaches the duty to defend when it refuses to defend its insured, and its insured is notified of the refusal. Although a cause of action for breach of the duty to defend accrues when the insured is notified of the insurance company’s refusal to defend, the statute of limitations is nevertheless equitably tolled until entry of final judgment in the underlying action.

Submitted by: Bruce Celebrezze and Jasbina Ahluwalia

6/6/06 Morris v. Economy Fire and Casualty Company
Indiana Supreme Court

Request For Statement under Oath from Insureds Reasonable on Its Face
Following a claimed break-in and loss of property from a mini-storage facility used by the insureds, a dispute arose between them and their property loss insurer. When the insurer demanded compliance with policy provisions requiring its policyholder to produce records and documents and submit to an examination under oath, but refused to first provide the insureds with transcripts of their prior recorded statements taken by the insurer, the insureds brought an action claiming that their insurance company failed to deal in good faith and immediately submitted interrogatories and requested production of documents from the defendants. The insureds contend that they were entitled to refuse compliance with the policy provision until the insurer first provided them with copies of any prior statements they gave to the insurer. The court concluded that a single request for a statement under oath from each of the insureds is reasonable on its face, the insureds had no basis for any single document request being “outrageous” or unreasonable,” and there was no valid reason for the insureds to avoid their contractual undertaking to submit to examination under oath.

Submitted by: Bruce Celebrezze and Jasbina Ahluwalia

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providing legal services throughout the State of New York.

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Automobile Insurance Company of Hartford v. Cook

CIPARICK, J.:

The issue in this declaratory judgment action is whether the insurer has a duty to defend its policyholder under his homeowner's insurance policy in an underlying wrongful death action, resulting from a shooting committed in self defense. We conclude that the insurer here is obligated to defend under the policy.

On February 20, 2002, Alfred Cook shot and killed Richard Barber inside his [*2]home. At the depositions, the witnesses testified that the two men had known each other for many years, but became involved in a dispute relating to their business relationship. Barber, weighing about 360 pounds, was approximately three times Cook's size and had previously attacked the smaller man, causing injury to his leg. On the morning of February 20, Barber and another man were outside of Cook's home, hurling objects at the house. They left without further incident, but Barber returned later that day with two other companions. When Cook, who was standing outside his door, saw them approaching, he asked a person visiting him to leave because he expected trouble. He returned inside, locked the door and, anticipating a confrontation, retrieved a .25 caliber hand gun from his bedroom.

There was further testimony that the group burst into Cook's home. The four individuals gathered in the kitchen where Barber began demanding money from Cook while pounding his fists on the kitchen table. Cook, alarmed, drew his gun and demanded that they leave his house. Barber apparently laughed at the small size of the pistol, at which point Cook withdrew to his bedroom for a larger weapon. He picked up a loaded, 12 gauge shotgun and stood in his living room at the far end of his pool table. Cook again ordered them to leave the house. Although Barber started to head toward the door with his companions, he stopped at the opposite end of the pool table, turned to face Cook and told his companions to take anything of value, and that he would meet them outside because he had some business to attend to. When Barber menacingly started advancing toward Cook, Cook warned him that he would shoot if he came any closer. Cook aimed his gun toward the lowest part of Barber's body that was not obscured by the pool table — his navel. When Barber was about one step away from the barrel of the gun, Cook fired a shot into Barber's abdomen. Barber died later that day at a hospital.

Cook was indicted for intentional and depraved indifference murder. At trial he raised a justification defense. A jury acquitted him of both murder counts and of the lesser included offenses of manslaughter in the first and second degrees.

The administrator of Barber's estate, Victoria Pruyn, commenced a wrongful death action against Cook. The first cause of action alleges that "[i]njury to the decedent and the decedent's death were caused by the negligence of the defendant, Alfred S. Cook." Specifically, the complaint alleges that Cook's behavior "consisted of negligently playing with a loaded shotgun; negligently pointing that shotgun at the abdomen of the decedent; negligently discharging that shot gun into the decedent's abdomen; and engaging in unruly behavior at the Defendant's residence on February 20, 2002." In a separate cause of action, the complaint alleges that Cook intentionally shot Barber causing Barber's death. At his examination before trial, Cook testified, "I knew the [shot from the] shotgun would injure Mr. Barber because I had to stop him, but I did not anticipate it killing him." [*3]

Cook sought homeowner's personal liability coverage from his insurer, the Travelers's Insurance Company, appearing in this action as the Automobile Insurance Company of Hartford. Hartford disclaimed coverage explaining that the incident was not an "occurrence" within the meaning of the policy and furthermore that the injury inflicted upon Barber fell within a policy exclusion, as it was "expected or intended" by Cook. The insurer commenced this declaratory judgment action against both Cook and Pruyn for a declaration that it was not obligated to defend or indemnify Cook in the wrongful death action. After depositions, Hartford moved for summary judgment and Cook cross-moved, seeking a declaration that the insurer was required to defend and indemnify him in the underlying tort action.

Supreme Court denied Hartford's motion and granted Cook's cross motion to the extent of declaring that the insurer had a duty to provide a defense for Cook in the wrongful death action. The court found that Hartford failed to prove that the incident was not an occurrence covered by the policy or that Cook's actions were subject to the exclusion for injuries expected or intended by the insured. The court held that the insurer had a duty to defend because the negligence allegations in the complaint could potentially be proven at trial.

The Appellate Division reversed, concluding that since Cook intentionally shot Barber, his actions could not be considered an accident or "occurrence" and, thus, were not covered by the policy (21 AD3d 1155, 1157 [2005]). The court also noted that the acts came within the policy exclusion for bodily injury "expected or intended" by the insured. One Justice dissented and voted to affirm, holding that if the negligence claim were established, Cook's actions would be covered by the policy. This Court granted leave to appeal and we now reverse.

Our inquiry is two-fold: whether an "occurrence" is involved that gives rise to policy coverage and, if so, whether it falls within the "expected or intended" injury policy exclusion. As relevant here, the insurance policy defines an "occurrence" as "an accident . . . which results, during the policy period, in . . . bodily injury." The policy also contains an exclusion for bodily injury "which is expected or intended by any insured." The policy represents that it will provide a defense and pay — up to the policy limits — the amounts for which the insured is legally liable, "[i]f a claim is made or a suit is brought against any insured for damages because of bodily injury . . . caused by an occurrence to which this coverage applies, even if the claim or suit is false."

It is well settled that an insurance company's duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is "exceedingly broad" and an insurer will be called upon to provide a defense whenever the allegations of the complaint "suggest . . . a reasonable possibility of coverage" (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648 [1993]). "If, liberally construed, the claim is within the embrace of the policy, the [*4]insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be" (Ruder & Finn Inc. v Seaboard Sur. Co., 52 NY2d 663, 670 [1981]).

The duty remains "even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered" (Fitzpatrick v Am. Honda Motor Co., Inc., 78 NY2d 61, 63 [1991]). For this reason, when a policy represents that it will provide the insured with a defense, we have said that it actually constitutes "litigation insurance" in addition to liability coverage (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310 [1984] citing Intl. Paper Co. v Cont. Cas. Co., 35 NY2d 322, 326 [1974]). Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course.

When an insurer seeks to disclaim coverage on the further basis of an exclusion, as it does here, the insurer will be required to "provide a defense unless it can 'demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation' " (Allstate Ins. Co. v Mugavero, 79 NY2d 153, 159 [1992] [citation omitted]). In addition, exclusions are subject to strict construction and must be read narrowly (see Seaboard, 64 NY2d at 311).

An examination of the wrongful death complaint leads to the conclusion that Cook's claim is covered by the policy. Among other things, the complaint alleges that Cook negligently caused Barber's death. If such allegations can be proven, they would fall within the scope of the policy as a covered occurrence. The policy defines an "occurrence" as an accident, and we have previously defined the term "accident" albeit in a life insurance policy "to pertain not only to an unintentional or unexpected event which, if it occurs, will foreseeably bring on death, but equally to an intentional or expected event which unintentionally or unexpectedly has that result" (Miller v Cont. Ins. Co., 40 NY2d 675, 678 [1976]). Thus, if Cook accidentally or negligently caused Barber's death, such event may be considered an "occurrence" within the meaning of the policy and coverage would apply. The fact-finder in the underlying action may indeed ultimately reject the notion that Cook negligently caused Barber's death given the evidence of intentional behavior, but that uncertain outcome is immaterial to the issue raised here — the insurer's duty to defend in an action where it is alleged that the injury was caused by the negligent conduct of the insured.

Turning to the exclusion — as an allegation of negligence implies an unintentional or unexpected event, Hartford necessarily has failed to demonstrate that the allegations of the complaint are subject to no other interpretation than that Cook "expected or intended" the harm to Barber (compare Mugavero, 79 NY2d 153 [where the harm caused was [*5]inherent in the nature of the acts alleged to be committed by the insured — child sexual abuse — and fell within the homeowners' insurance policy's exclusion]). Hartford is thus required to defend Cook in the underlying wrongful death action.

In light of this disposition, it is unnecessary to address the remaining arguments — specifically, whether acts of self defense are intentional acts precluding coverage under a homeowner's policy. Suffice it to say that a reasonable insured under these circumstances would have expected coverage under the policy. As to a duty to indemnify, that determination will abide the trial.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the order of Supreme Court should be reinstated.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and order of Supreme Court, Albany County, reinstated. Opinion by Judge Ciparick. Chief Judge Kaye and Judges G.B. Smith, Rosenblatt, Graffeo, Read and R.S. Smith
concur.
Decided June 8, 2006

Hoffend & Sons, Inc. v. Rose & Kiernan, Inc.

ROSENBLATT, J.:

The appeal before us involves a suit by a policyholder against its insurance broker, contending that the broker did not obtain a policy that would have covered the loss involved. We hold that, as a matter of law, the policyholder did not establish that it made a specific request for [*2]the coverage in question or that it had a special relationship with the broker. Accordingly, we affirm the Appellate Division's dismissal of the complaint, although for different reasons.

Plaintiff Hoffend & Sons, Inc. is an Ontario County firm that does design and construction work for theater stages. Defendant Rose & Kiernan, Inc. (R & K) was Hoffend's insurance brokerage firm and defendant Mark Nickel's employer.

On December 11, 1998, R & K gave Hoffend a written proposal for insurance coverage for one year starting December 12, 1998. The proposal included descriptions of two policies relevant to this appeal. One was a "Blanket Installation Floater," or builders' risk policy, provided by Travelers Indemnity Co. of Illinois, to cover property damage to domestic construction projects generally. The second was a Great Northern "Foreign Liability Exporters' Package Policy," to cover general liability, non-owned automobile coverage and workers' compensation for foreign projects. It did not cover property damage incurred during construction abroad.

On December 22, Ruth Abate of R & K sent a letter to Dan DiPofi, Hoffend's chief financial officer, stating that the Travelers builders' risk policy would cover only property damage arising out of domestic projects. Foreign projects, she pointed out, should be discussed on a project-by-project basis.

The loss in question arose out of a foreign project. On February 8, 1999, Hoffend entered into a contract with an Argentine contractor, ORMAS, for a construction project in La Plata, Argentina. Hoffend was the subcontractor, providing the Argentine firm with materials, engineering and design expertise, as well as supervision. Donald Hoffend, a Hoffend principal, claims that he and R & K's Mark Nickel discussed the project at a December 11, 1998 meeting and that he made it clear to Nickel that the project should be "covered." Under the contract with ORMAS, Hoffend was obligated to acquire insurance for labor-related accidents, which was covered by the Great Northern Exporters' Package Policy. The ORMAS contract, however, made no mention of builders' insurance to cover property damage — the type of loss involved here.

In December 1999, R & K gave Hoffend a written insurance proposal for the period from December 12, 1999 to December 12, 2000, which included the date of the loss in question. The coverage was to be essentially the same as the previous year, but the proposal did not specifically state that foreign coverage under the Travelers blanket installation floater would still have to be negotiated on a project-by-project basis. Hoffend's Dan DiPofi testified that to simplify the bonding process he wanted to show R & K (who also handled the bonding) that most of Hoffend's La Plata work would take place in the United States. DiPofi did not recall anyone at R & K stating that the project would be covered for the type of loss involved here. [*3]

R & K's Ruth Abate also testified that under Hoffend's contract with ORMAS, the latter was to be responsible for the builders' risk insurance. The Travelers builders' risk policy clearly states that it only covered property in the United States, Puerto Rico and Canada. After the policy was issued, DiPofi and Donald Hoffend read it and did not contact R & K with any questions or changes.

The accident took place on October 5, 2000, when a lighting bridge at the project collapsed, damaging Hoffend's work and causing consequential damage. Hoffend filed claims with both Travelers and Great Northern. With a reservation of rights, Great Northern agreed to defend and indemnify Hoffend against third party liability. Travelers disclaimed, citing the territorial limitation in its policy. As a result, the property damage in Argentina was not covered by either policy.

Hoffend seeks to impose liability on Nickel and R & K for having failed to acquire the coverage that Hoffend claims to have specifically requested, namely coverage for foreign projects under the Travelers builders' risk policy. Hoffend also asserts that it had a special relationship with Nickel, who reviewed Hoffend's operations, provided advice regarding insurance, bonding, banking, contracts and product development, and aided Hoffend in creating its business plan and corporate information statement. That special relationship, Hoffend argues, imposed on R & K a continuing duty to advise and guide Hoffend, obligating R & K to procure the additional coverage that would have included the loss in question.

The Appellate Division found questions of fact as to whether Hoffend had requested the specific coverage at issue, and whether it had a special relationship with Nickel. The court dismissed the complaint, however, because Hoffend had received the policy and was therefore charged with knowledge of its contents, thus precluding a cause of action for negligence or breach of contract against R & K and Nickel.

We see no question of fact as to either of Hoffend's contentions. The record shows that Donald Hoffend's recollection of events was vague at best, and in light of other proof in the record fails to raise a question of fact as to a request for the specific coverage involved. He admitted that he could not remember asking for additional coverage for any specific project at any of the annual meetings with R & K. Donald Hoffend did not identify specific coverage obtained for any individual project and could not remember any specific conversations on the subject. Moreover, he could provide no details of discussion between the December 1998 meeting regarding the insurance proposal and the February 1999 execution of the ORMAS contract, nor could he say if Nickel had assured him as to specific coverage for any aspect of the Argentine project.

On the other hand, DiPofi recalled telling R & K that Hoffend would only be a [*4]supplier for the Argentine firm and not involved in the installation. He could not remember ever asking R & K for full coverage for all losses related to the project. Further, he stated that nobody at R & K had ever represented that the Travelers policy would cover any property losses abroad related to the project.

R & K made it clear to Hoffend that foreign projects would not be covered under the Travelers policy and that coverage of that type would have to be negotiated case by case. In R & K's December 22, 1998 letter to Hoffend, Abate emphasized that the relevant policy would "cover [Hoffend's] U.S. projects only" and that foreign coverage remained open for discussion. In the face of this unambiguous writing, Donald Hoffend's assertions as to what occurred at later meetings are too vague to establish a specific request for coverage of the particular risk involved. His recollection "that we are covered" is insufficient to impose liability on R & K.

Murphy v Kuhn (90 NY2d 266 [1997]) is on point.There, we held that a broker has a common-law duty either to obtain the coverage that a customer specifically requests or to inform the customer of an inability to do so. Although Hoffend contends it made a request sufficiently specific to trigger that duty, the record does not support its assertion. A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage.

Moreover, the broker in Murphy handled the policyholder's personal insurance needs for 13 years and served as the company's insurance broker for over three decades. We held there was no special relationship in that case and we decline to hold that one exists here. In this case, the services provided by Nickel in his capacity as an R & K employee did not rise to the level of a special relationship. Hoffend, a sophisticated commercial entity, did not compensate R & K for its insurance advice apart from its payment of premiums, nor did it delegate its insurance decision-making responsibility to R & K. In short, as in any ordinary broker-client relationship, Hoffend told R & K in general what insurance Hoffend had decided to purchase. It did not ask R & K what that insurance should be.

Lastly, in light of our holdings on the specific request and special relationship issues, we need not consider whether, as the Appellate Division held, Hoffend was barred from recovery because, having received and had an opportunity to read the policy, it requested no changes in it.

Accordingly, the order of the Appellate Division should be affirmed, insofar as appealed from, with costs.
* * * * * * * * * * * * * * * * *
Order, insofar as appealed from, affirmed, with costs. Opinion by Judge Rosenblatt. Chief Judge Kaye and Judges G.B. Smith, [*5]
Ciparick, Graffeo, Read and R.S. Smith concur.
Decided June 8, 2006

O'Neil v. GEICO

Mallilo & Grossman, Flushing, N.Y. (Francesco Pomara, Jr., of
counsel), for appellants.
Montfort, Healy, McGuire & Salley, Garden City, N.Y.
(Donald S. Neumann, Jr., and Hugh J. Larkin
of counsel), for respondents.

In an action to recover damages for personal injuries, the plaintiffs Brynn Fleming and Taji Fleming appeal from an order of the Supreme Court, Queens County (Kitzes, J.), dated May 31, 2005, which granted the defendants' motion for summary judgment dismissing the complaint insofar as asserted by them on the ground that neither of them sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the appeal by the plaintiff Brynn Fleming is dismissed as abandoned (see 22 NYCRR 670.8[e][1]); and it is further,

ORDERED that the order is affirmed insofar as appealed from by the plaintiff Taji Fleming; and it is further,

ORDERED that one bill of costs is awarded to the defendants, payable by the plaintiff Taji Fleming.

On appeal, the plaintiff Taji Fleming does not dispute the Supreme Court's determination that the defendants made a prima facie showing of entitlement to judgment as a matter of law on the ground that she did not sustain a serious injury as a result of an automobile accident [*2]that occurred on January 18, 2001. Rather, she argues only that the Supreme Court abused its discretion in refusing to accept her late submission of an affirmation of an orthopedic surgeon who performed surgery on her left ankle on June 9, 2003, and erred in finding that she failed to raise a triable issue of fact in response to the motion. We reject both contentions.

The Supreme Court providently exercised its discretion in refusing to consider the late submission of the affirmation of the orthopedic surgeon, submitted after the motion had been adjourned four times at the plaintiffs' request, and marked final (see Patrick v De Dominicis, 26 AD3d 871). Moreover, the evidence submitted by Taji Fleming in opposition to the motion, which was accepted by the Supreme Court, including a conclusory affidavit of a chiropractor, failed to raise a triable issue of fact as to whether she sustained a serious injury as a result of the accident (see Psomas v Kehoe, 253 AD2d 456).

Finally, even considering the affirmation of the orthopedic surgeon, the defendants were entitled to summary judgment. Since the orthopedic surgeon did not treat Taji Fleming until more than 2½ years after the subject automobile accident, after she had reinjured her left ankle in a trip and fall, it is sheer speculation to conclude that the accident caused her to require surgery on the ankle (see Correa v City of New York, 18 AD3d 418; Barnes v Cisneros, 15 AD3d 514).
FLORIO, J.P., ADAMS, LUCIANO and FISHER, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Valley Psychogical v. Liberty Mutual Insurance

MEMORANDUM AND ORDER

Calendar Date: March 31, 2006
Before: Crew III, J.P., Peters, Carpinello, Lahtinen and Kane, JJ.


Craig Meyerson, Latham, for appellant.
Taylor & Associates, Albany (Keith M. Frary of
counsel), for respondent.




Kane, J.

Appeal from an order of the County Court of Albany County (Breslin, J.), entered May 16, 2005, which affirmed an order of the City Court of the City of Albany dismissing the claim.

Plaintiff alleges that it provided psychological testing and psychotherapy to a woman after her involvement in a motor vehicle accident. It is undisputed that the woman was injured in an accident involving a vehicle insured by defendant, thus invoking coverage by defendant. As assignee of the woman's no-fault insurance claims, plaintiff submitted to defendant two bills for services rendered. Defendant denied both claims, but those denials were issued more than 30 days after the claims were received. Plaintiff filed a commercial claim in Albany City Court seeking payment. At trial, defendant asserted a defense of provider fraud, alleging that plaintiff submitted fraudulent bills because its principal licensed psychologist did not provide active and personal supervision over the employees providing services to plaintiff's assignee as required by workers' compensation schedules ^[FN1]. City Court determined that defendant's assertion of a fraud [*2]defense was not precluded by its untimely denial, then dismissed the claim based on the fraud defense (195 Misc 2d 540). Upon plaintiff's appeal, County Court affirmed. Plaintiff now appeals to this Court.

Because defendant's untimely denial precluded it from asserting the defense raised here, plaintiff was entitled to judgment in its favor. While our review of this City Court claim is limited to whether "substantial justice has [] been done between the parties according to the rules and principles of substantive law" (UCCA 1807; see Sten v Desrocher, 8 AD3d 915, 915 [2004]), the misapplication of substantive law in this case mandates a reversal. The law requires an insurer to accept or deny a claim for no-fault benefits within 30 days after the claimant provides proof of the claim (see Insurance Law § 5106 [a]; 11 NYCRR former 65.15 [g]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997]). An insurer that fails to deny a claim within the 30-day period is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., supra at 282; Loudermilk v Allstate Ins. Co., 178 AD2d 897, 898 [1991]; Ultra Diagnostics Imaging v Liberty Mut. Ins. Co., 9 Misc 3d 97, 98 [2005]). Untimely disclaimers, however, do not preclude an insurer from denying liability "on a strict lack of coverage ground" (Central Gen. Hosp. v Chubb Group Ins. Cos., 90 NY2d 195, 198 [1997]).

Defendant successfully argued in City Court and County Court that its fraud defense asserted a lack of coverage thereby rendering its untimely denials irrelevant. We disagree. In contrast to fraudulent conduct such as staging an automobile accident, which results in no coverage at all thus not requiring a timely denial coverage is not extinguished by allegations, or even proof, that a medical services provider unilaterally schemed to defraud the insurer by providing unnecessary or excessive treatment thus requiring a timely denial to avoid preclusion of the defense (see Ultra Diagnostics Imaging v Liberty Mut. Ins. Co., supra at 99-100; Fair Price Med. Supply Co. v Travelers Indem. Co., 9 Misc 3d 76, 78-79 [2005]; Melbourne Med. v Utica Mut. Ins. Co., 4 Misc 3d 92, 94 [2004]). In fact, the Court of Appeals expressly noted that the fraud exception from preclusion for untimely denials does not apply to a defense that the provider's treatment was excessive, as that defense does "not ordinarily implicate a coverage matter" (Central Gen. Hosp. v Chubb Group Ins. Cos., supra at 199, 202). Because the defense raised here was analogous to an argument that the treatment was excessive or unnecessary, it does not implicate coverage and therefore required a timely denial. Since defendant's fraud defense was precluded, substantial justice was not meted out according to the substantive law, requiring reversal and remittal for City Court to determine the amount of judgment to be entered in plaintiff's favor (see UCCA 1807).

Crew III, J.P., Peters, Carpinello and Lahtinen, JJ., concur.

ORDERED that the order is reversed, on the law, with costs, and matter remitted to the City Court of the City of Albany for further proceedings not inconsistent with this Court's decision.

Footnotes

Footnote 1: Medical providers must comply with workers' compensation payment schedules to qualify for payment under the no-fault law (see Insurance Law § 5108; 11 NYCRR 68.1

LMK Psychological Services v. Liberty Mutual Insurance

MEMORANDUM AND ORDER

Calendar Date: May 5, 2006
Before: Cardona, P.J., Spain, Carpinello, Mugglin and Lahtinen, JJ.


Taylor & Associates, Albany (Keith M. Frary of
counsel), for appellant.
Craig Meyerson, Latham, for respondents.




Spain, J.

Appeal from an order of the Supreme Court (McNamara, J.), entered June 3, 2005 in Albany County, which, inter alia, partially granted plaintiff's motion for summary judgment.

Plaintiffs commenced this action as the assignees of the no-fault insurance claim rights of 15 individuals to whom plaintiffs provided psychological treatment following automobile accidents. Asserting that defendant had failed to timely deny coverage or seek verification of the insurance claims, plaintiffs moved for summary judgment. Defendant cross-moved for sanctions pursuant to 22 NYCRR part 130 and for severance of the claims. Supreme Court granted summary judgment with respect to the third, a portion of the seventh, tenth, eleventh and thirteenth causes of action and otherwise denied plaintiffs' motion. The court denied defendant's cross motion for sanctions and severance. On defendant's appeal, we affirm.

"[A]n insurer is required to either pay or deny a claim for no-fault automobile insurance benefits within 30 days from the date an applicant supplies proof of claim" (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997]; see Insurance Law § 5106 [a]; 11 NYCRR 65.15 [g]; 65-3.8; LaHendro v Travelers Ins. Co., 220 AD2d 971, 972 [1995]). A plaintiff may obtain summary judgment on a cause of action to recover first-party no-fault benefits by "submitting evidentiary proof that the prescribed statutory billing forms had been [*2]mailed and received, and that payment of no-fault benefits was overdue" (Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 743 [2004]; see Insurance Law § 5106 [a]).

Defendant asserts that plaintiffs failed to provide adequate proof that the claim forms were properly mailed and, thus, did not establish a prima facie case of entitlement to benefits. Plaintiffs supplied direct proof of actual mailing by producing signed and stamped mailing certificates (see Badio v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230 [2004]). In addition, plaintiffs' officer, Jonathan Kogen, provided an affidavit stating based on his review of plaintiffs' business records and his own personal knowledge that plaintiffs mailed the claim forms to defendant and that none were returned as undeliverable. This "proof of proper mailing gives rise to a presumption that the item was received by the addressee" (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001]). Defendant has not submitted proof to rebut this presumption; indeed, defendant does not deny receipt of the claims and, in fact, its papers in opposition include evidence that claims were received on dates which correspond to those in the mailing receipts produced by plaintiffs. Accordingly, we hold that plaintiffs met their prima facie burden of proof with regard to mailing of the claim forms.

Defendant also asserts that plaintiffs failed to establish a valid assignment of benefits because the assignor's signature on the assignment forms was not properly authenticated. Upon receipt of the allegedly defective assignments, defendant had 10 days to request verification (see 11 NYCRR 65-3.5 [a]; former 65.15 [c], [d]). "[F]ailure to object to the adequacy of . . . claim forms within 10 days of receipt constitute[s] a waiver of any defenses based thereon, including the alleged lack of a valid assignment of benefits" (Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564, 565 [2005], lv denied 5 NY3d 713 [2005]; see Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535, 535-536 [2005]; Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348, 348-349 [2005]; but see Siegel v Progressive Cas. Ins. Co., 6 Misc 3d 888 [2004]). Inasmuch as defendant failed to request verification of the assignments at issue within the 10-day period proscribed by regulation, its objection to the assignments was waived.

Next, we are unpersuaded by defendant's arguments that summary judgment was premature because discovery was incomplete. In opposition to the prima facie case established by plaintiffs, defendant "did not make the required showing that 'further discovery may raise a triable issue of fact'" (Williams v General Elec. Co., 8 AD3d 866, 867 [2004], quoting Mitchell v Atlas Copco N. Am., 307 AD2d 635, 636 [2003]; see Herba v Chichester, 301 AD2d 822, 823 [2003]). Indeed, it is undisputed that defendant did not send timely delay notices or claim denials; thus, defendant is precluded from raising any defense to payment of the claims unless such denial is based on lack of coverage (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., supra at 282). Defendant's remaining argument in opposition to summary judgment that plaintiffs committed fraud by misrepresenting Kogan as a "treating doctor" although he did not personally provide or supervise the psychological services rendered by plaintiffs, and that such fraud falls within the narrow "lack of coverage" exception, obviating the need for a timely denial has been rejected by this Court (see Valley Psychological v Liberty Mut. Ins. Co., ___ AD3d ___ [decided herewith]).

Defendant asserts that Supreme Court abused its discretion in failing to sanction plaintiffs for asserting frivolous causes of action because several of the claims asserted had been paid or settled. Sanctions pursuant to 22 NYCRR part 130 should be awarded for taking legal actions which are completely without merit in law, are undertaken primarily to delay the [*3]resolution of the litigation or assert false material statements of fact (see 22 NYCRR 130-1.1 [c]; Ireland v GEICO Corp., 2 AD3d 917, 919 [2003]; Mountain Lion Baseball v Gaiman, 263 AD2d 636, 639 [1999]). That level of misconduct has not been established here. The record reveals that plaintiffs voluntarily withdrew one of the allegedly frivolous claims and the others were not dismissed because Supreme Court found issues of fact existed as to whether payment had been made or a settlement had been reached. Under these circumstances and absent proof of actual payment or settlement, we find no basis to interfere with Supreme Court's sound discretion (see Northern Adirondack Cent. School Dist. v La Plante Co., 229 AD2d 764, 766 [1996]; Golden v Barker, 223 AD2d 769, 770 [1996]).

Finally, we discern no abuse of discretion in Supreme Court's decision not to sever the claims (see CPLR 603; State Farm Fire & Cas. Co. v Dayco Prods., 19 AD3d 923, 924-26 [2005]; Hempstead Gen. Hosp. v Liberty Mut. Ins. Co. , 134 AD2d 569, 570 [1987]).

Cardona, P.J., Carpinello, Mugglin and Lahtinen, JJ., concur.

ORDERED that the order is affirmed, with costs.

Cullen v. Treen

Appeal from an order and judgment (one paper) of the Supreme Court, Oswego County (Norman W. Seiter, Jr., J.), entered October 14, 2004 in a personal injury action. The order and judgment granted defendant's motion for summary judgment dismissing the complaint.


SHANLEY LAW OFFICES, OSWEGO (P. MICHAEL SHANLEY OF COUNSEL), FOR PLAINTIFF-APPELLANT.
SUGARMAN LAW FIRM, LLP, SYRACUSE (SHERRY R. BRUCE OF COUNSEL), FOR DEFENDANT-RESPONDENT.


It is hereby ORDERED that the order and judgment so appealed from be and the same hereby is unanimously affirmed without costs.

Memorandum: Plaintiff commenced this action to recover damages for injuries he allegedly sustained when the bus that he was driving was rear-ended by a vehicle driven by defendant. Supreme Court properly granted defendant's motion for summary judgment dismissing the complaint. Defendant met his initial burden on the motion by establishing through competent medical evidence that plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102 (d) under the two categories of serious injury alleged by plaintiff, i.e., the permanent consequential limitation of use and significant limitation of use categories of serious injury, and plaintiff failed to raise an issue of fact (see Cook v Franz, 309 AD2d 1234, 1234-1235; Winslow v Callaghan, 306 AD2d 853, 854). The chiropractor's affidavit submitted by plaintiff in opposition to the motion was insufficient to raise an issue of fact because it was based solely on plaintiff's subjective complaints of pain (see Toure v Avis Rent A Car Sys., 98 NY2d 345, 350), and the affidavit otherwise failed to establish that plaintiff's limitation was "significant or consequential (i.e., important . . . )" (id. at 353 [internal quotation marks omitted]; cf. Cummings v Riedy, 4 AD3d 811, 812-813). The additional medical reports submitted by plaintiff indicate that he had only a mild partial disability, which is insufficient to meet the serious injury threshold (see Gaddy v Eyler, 79 NY2d 955, 957; Licari v Elliott, 57 NY2d 230, 236; King v Johnston, 211 AD2d 907; see generally Toure, 98
NY2d at 350-351).
Entered: June 9, 2006

Haines v. New York Mutual Underwriters

Appeal from an amended judgment (denominated amended order) of the Supreme Court, Onondaga County (James W. McCarthy, A.J.), entered January 27, 2005 in a declaratory judgment action. The amended judgment granted defendant's motion for summary judgment and dismissed the complaint.


MATHEWS & HALL, SYRACUSE (DANIEL F. MATHEWS, III, OF COUNSEL), FOR PLAINTIFFS-APPELLANTS.
HISCOCK & BARCLAY, LLP, ROCHESTER (JOSEPH A. WILSON OF COUNSEL), FOR DEFENDANT-RESPONDENT. It is hereby ORDERED that the amended judgment so appealed from be and the same hereby is unanimously modified on the law by vacating the provision dismissing the complaint and granting judgment in favor of defendant as follows: It is ADJUDGED AND DECLARED that defendant has no duty to defend or indemnify its insured in the underlying action


and as modified the amended judgment is affirmed without costs.

Memorandum: Plaintiffs appeal from an amended judgment granting defendant's motion for summary judgment dismissing the complaint. William L. Haines, Jr. (plaintiff) was injured when he was struck with an object just outside a bar owned by Elmwood Beer Garden, Inc. (Elmwood Beer Garden), and plaintiffs commenced the underlying action alleging that Elmwood Beer Garden owed a duty "to the public and especially to the plaintiff" to maintain the premises in a safe condition. Defendant disclaimed coverage under the assault and battery exclusion of its insurance policy with Elmwood Beer Garden, whereupon plaintiffs commenced this declaratory judgment action.

Supreme Court properly granted defendant's motion insofar as it sought summary judgment. Because this is a declaratory judgment action, however, the court erred in dismissing the complaint and in failing to declare the rights of the parties (see Maurizzio v Lumbermens Mut. Cas. Co., 73 NY2d 951, 954). We therefore modify the amended judgment accordingly. As the Court of Appeals has written, "the language of the exclusion for suits based on Assault [*2]and Battery' is unambiguous" (U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d 821, 823) and, "if no cause of action would exist but for the assault, the claim is based on assault and the exclusion applies" (Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347, 350). We thus conclude in this case that, because no cause of action in the underlying amended complaint would exist "but for" the assault on plaintiff, defendant properly disclaimed coverage under the assault and battery exclusion in the policy at issue (id.; see Mark McNichol Enters. v First Fin. Ins. Co., 284 AD2d 964, 965).
Entered: June 9, 2006
JoAnn M. Wahl
Clerk of the Court

Lawley Service Inc, v. Progressive Weatherproofing Inc.

Appeal from an order of the Supreme Court, Erie County (Joseph G. Makowski, J.), entered June 30, 2005. The order denied plaintiff's motion for summary judgment dismissing the counterclaim.


COSTELLO, COONEY & FEARON, PLLC, SYRACUSE (PAUL G. FERRARA OF COUNSEL), FOR PLAINTIFF-APPELLANT.
GROSS, SHUMAN, BRIZDLE & GILFILLAN, P.C., BUFFALO (JOHN K. ROTTARIS OF COUNSEL), FOR DEFENDANT-RESPONDENT.


It is hereby ORDERED that the order so appealed from be and the same hereby is affirmed without costs.

Memorandum: Plaintiff, an insurance agency, commenced this action seeking premiums allegedly due for insurance and defendant, a corporation specializing in building restoration, asserted a counterclaim for tortious interference with contract. Supreme Court properly denied plaintiff's motion for summary judgment dismissing the counterclaim. Defendant had obtained its insurance through plaintiff for a period of approximately 16 years, but in 2002 defendant obtained its insurance through a different insurance agency. That agency had obtained a quote from an insurer that was considerably less than the quote from plaintiff for the same policy. The insurer issued a policy for defendant but, after a loss control inspection, the insurer cancelled the policy effective three months from the date of its issuance.

We reject plaintiff's contention that the court erred in refusing to dismiss the counterclaim on the ground that there was no valid contract of insurance between defendant and its insurer and thus that there is no basis for a counterclaim against plaintiff for interference with contract. The record establishes that defendant's insurer did not rescind the policy based upon any alleged material misrepresentations (see generally Zilkha v Mutual Life Ins. Co. of N.Y., 287 AD2d 713) but, rather, the insurer cancelled the policy after conducting a loss control inspection (see Portofino Ristorante & Catering v Michigan Millers Mut. Ins. Co., 198 AD2d 869, lv denied 83 NY2d 753). Thus, contrary to plaintiff's contention, it cannot be said as a matter of law that there was no valid contract between defendant and its insurer. Contrary to plaintiff's further contention, the record establishes that there is a triable issue of fact with respect to plaintiff's alleged tortious interference with the contract, resulting in the insurer's breach thereof (see generally NBT Bancorp v Fleet/Norstar Fin. Group, 87 NY2d 614, 621). There is evidence in the record that, after the insurer issued the policy to defendant, plaintiff's agent discussed [*2]defendant's account with an underwriter for defendant's insurer. That underwriter in turn expressed his concerns with the account to the underwriter who approved the policy. Thereafter, the insurer conducted a loss control inspection and cancelled the policy. Based on that evidence, a trier of fact could reasonably infer that a loss control inspection would not have been conducted, nor would the policy have been cancelled, had plaintiff's agent not discussed defendant's contract with an underwriter for defendant's insurer (see generally Krampen v Foster, 242 AD2d 913, 914-915).

All concur except Pigott, Jr., P.J., and Kehoe, J., who dissent and vote to reverse in accordance with the following Memorandum: We respectfully dissent because we cannot agree with the majority that there is a triable issue of fact with respect to plaintiff's alleged tortious interference with contract. We therefore would reverse and grant plaintiff's motion for summary judgment dismissing the counterclaim.

The elements of tortious interference with contract are, inter alia, the existence of a valid contract between defendant and a third party, plaintiff's intentional and unjustified procurement of the third party's breach of the contract, and the actual breach of the contract (see Jim Ball Chrysler LLC v Marong Chrysler-Plymouth, Inc., 19 AD3d 1094, lv denied 5 NY3d 709). Here, we agree with the majority that there was a valid insurance contract between defendant and its insurer and that plaintiff knew of the existence of the contract. We do not agree with the majority, however, that "there is a triable issue of fact with respect to plaintiff's alleged tortious interference with the contract, resulting in the insurer's breach" of that contract. Indeed, we conclude that there was no breach of the contract. The record establishes that the insurer had a 60-day window in which it was entitled to cancel the policy after conducting a loss control inspection. The record further establishes that, within that 60-day period, the insurer conducted an investigation of defendant's business and cancelled the policy on the ground that defendant's business did not fit within the insurer's underwriting guidelines and thus that the policy of insurance would not have been issued in the first instance. Even assuming, arguendo, that plaintiff's agent discussed defendant's contract with an underwriter for defendant's insurer prior to the investigation, we conclude that there was no breach of contract inasmuch as the insurer conducted the investigation and cancelled the policy based upon its right to do so (see Inselman & Co. v FNB Fin. Co., 41 NY2d 1078, 1080; Foster Wheeler Broome County v County of Broome, 275 AD2d 592, 595-596, lv denied 95 NY2d 769; Portofino Ristorante & Catering v Michigan Millers Mut. Ins. Co., 198 AD2d 869, 870, lv denied 83 NY2d 753; see generally NBT Bancorp v Fleet/Norstar Fin. Group, 87 NY2d 614, 620-621). Because there was no breach, it necessarily follows that plaintiff cannot be said to have intentionally procured a breach (see Inselman & Co., 41 NY2d at 1080; Foster Wheeler Broome County, 275 AD2d at 595-596).
Entered: June 9, 2006

Schmitt v. North American Company for Life and Health

Appeal and cross appeal from an order of the Supreme Court, Monroe County (Matthew A. Rosenbaum, J.), entered August 26, 2005. The order denied plaintiffs' motions for summary judgment and defendant's cross motions for summary judgment dismissing the complaints.


GEIGER AND ROTHENBERG, LLP, ROCHESTER (DAVID ROTHENBERG OF COUNSEL), FOR PLAINTIFFS-APPELLANTS-RESPONDENTS.
GOLDBERG SEGALLA LLP, BUFFALO (RICHARD J. COHEN OF COUNSEL), FOR DEFENDANT-RESPONDENT-APPELLANT.


It is hereby ORDERED that the order so appealed from be and the same hereby is unanimously modified on the law by granting the cross motions and dismissing the complaints and as modified the order is affirmed without costs.

Memorandum: The plaintiffs in action Nos. 1 and 2 commenced their respective actions to collect benefits under policies of life insurance issued by defendant to Robert Domenico (decedent). Two of the policies are at issue in action No. 1, and a third policy is at issue in action No. 2. The record establishes that, when decedent applied for the policies in January 2001, he completed applications that included a four-page questionnaire concerning his medical history. [*2]Decedent responded in the negative to the question whether he had ever been treated or diagnosed with lymphoma.

On February 26, 2001, decedent met with his treating physician concerning a lump that he noticed in the lower area of his abdomen. After examining decedent, the physician determined that the lump was an enlarged lymph node and prescribed a course of antibiotics for an infection. Decedent was referred to a surgeon when it was determined that he had not responded to the antibiotics, and a biopsy performed on March 22, 2001 revealed that decedent had malignant lymphoma.

Defendant delivered the respective policies to decedent on three dates in April 2001 and, at those times, decedent paid the first premiums on the policies. Decedent did not advise defendant of the diagnosis or that there had been a change in the state of his health. The policies issued to decedent indicated a policy date of March 9, 2001, which was defined in each policy as "the date on which this policy is issued and the insurance coverage becomes effective." Decedent died on May 9, 2002. Defendant disclaimed coverage upon receiving plaintiffs' claims for benefits based on decedent's failure to disclose the lymphoma diagnosis during the pendency of the applications and refunded the premiums paid, whereupon plaintiffs commenced their respective actions.

We conclude that Supreme Court erred in denying defendant's cross motions for summary judgment dismissing the complaints, and we therefore modify the order accordingly. According to the express terms of each application for the respective insurance policies, "[a]ny insurance issued as a result of this application will . . . not take effect until the full first premium is paid and the policy is delivered to and accepted by the Owner during the Proposed Insured's lifetime and while such person is in the state of health described in all parts of this application . . . . " It is undisputed that the applications did not indicate that decedent had lymphoma, and it is further undisputed that he had been diagnosed with that condition prior to the delivery and payment of the first premium of the respective policies. We conclude that the failure of decedent to notify defendant of the change in the state of his health, i.e., that he was diagnosed with malignant lymphoma, constitutes a "material nondisclosure" as a matter of law (Meagher v Executive Life Ins. Co. of N.Y., 200 AD2d 720, 720). We reject the contention of plaintiffs that they raised an issue of fact by asserting that the policies became effective on March 9, 2001 pursuant to their express terms and decedent was unaware of the change in the state of his health prior to that date. "Even though a policy is by its terms to take effect at a certain time it may be shown that, from want of delivery, failure to comply with some condition precedent or other cause, it did not take effect until a subsequent time, a different date or not at all" (Whitestone Gen. Hosp. v Intramerica Life Ins. Co., 60 Misc 2d 656, 659, affd 35 AD2d 782). Here, decedent failed to comply with a condition precedent inasmuch as he failed to notify defendant of the change in the state of his health prior to the delivery of the respective policies and payment of the first premiums for each policy, and thus the policies never became effective (see id.; see also Mendel v United States Life Ins. Co. in City of N.Y., 248 AD2d 873, 874-876, lv denied 92 NY2d 804).
Entered: June 9, 2006
JoAnn M. Wahl
Clerk of the Court

New York Central Mutual Fire Insurance Company v. Aquirre

Mitchell Dranow, for appellants.
Joseph Miller, for respondent.

MEMORANDUM: [*2]The order of the Appellate Division should be reversed, with costs, and the petition to stay arbitration dismissed. Jorge Aguirre and Rosa and Amanda Alzate were allegedly injured on August 4, 2002 while sitting in a car owned by F.A. Rodriguez, which was parked on Northern Boulevard in [*3]Queens, New York. Their injuries occurred when another car was struck and pushed into the rear bumper of the Rodriguez vehicle by a car operated by an unidentified hit-and-run driver. New York Central Mutual Fire Insurance Company had issued an automobile insurance policy to Rodriguez, which included Supplementary Uninsured/Underinsured Motorists (SUM) coverage with bodily injury limits of $25,000 per person and $50,000 per accident. The policy's SUM endorsement set forth several conditions, including the following: "Notice and Proof of Claim. As soon as practicable, the insured or other person making claim shall give us written notice of claim under this SUM coverage. "As soon as practicable after our written request, the insured or other person making claim shall give us written proof of claim, under oath if required, including full particulars of the nature and extent of injuries, treatment, and other details we need to determine the SUM amount payable. "The insured and every other person making claim hereunder shall, as may reasonably be required, submit to examinations under oath by any person we name and subscribe the same. Proof of claim shall be made upon forms we furnish unless we fail to furnish such forms within 15 days after receiving notice of claim" (emphasis added). On August 15, 2002, an attorney representing Aguirre and the Alzates sent a letter to the attention of New York Central Mutual's "No-Fault Department" to make a claim under Rodriguez's policy's SUM provisions. He enclosed claimants' completed and subscribed New York State applications for no-fault insurance benefits. On September 3, 2002, the insurer sent a letter acknowledging the three claims. This letter directed the attorney's attention to and quoted the above-described "Notice and Proof of Claim" condition, and advised him as follows: "New York Central Mutual is currently investigating the facts and circumstances of the [claimed] loss. We require the immediate completion and return of the enclosed Notice of Intention to Make Claim forms. "Your failure to cooperate will jeopardize any rights which you may have under this policy for us to make Supplementary Uninsured Motorists payments" (emphasis added). [*4]Claimants never filled out and returned the proof-of-claim forms, which asked for information about the accident and claimants' injuries. In May 2003, however, they served a request for uninsured motorist arbitration on New York Central Mutual, which responded on June 19, 2003 with a proceeding in Supreme Court to stay arbitration. Supreme Court granted the insurer's petition because of claimants' failure to return the completed forms, concluding that this [*5]was a "condition precedent in the policy" for which timely disclaimer was not required. The Appellate Division affirmed on the same basis, and we granted leave to appeal. We now reverse. As an initial matter, the policy's requirement to fill out and return a proof-of-claim form is an exclusion or a condition of coverage, as the insurer concedes. This case is not analogous to Zappone v Home Ins. Co. (55 NY2d 131 [1982]), where there was no coverage under the contract of insurance. Accordingly, the outcome of this appeal turns on whether New York Central Mutual disclaimed liability or denied coverage "as soon as reasonably possible" within the meaning of Insurance Law § 3420 (d). An "insurer's failure to provide notice as soon as is reasonably possible precludes effective disclaimer, even [where] the policyholder's own notice of the incident to its insurer is untimely" (First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 67 [2003]). The "timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage" (id. at 68-69 [internal quotation marks omitted]). When "the basis for denying coverage was or should have been readily apparent before the onset of the delay [of disclaimer]," the insurer's explanation is insufficient as a matter of law (id. at 69). In Jetco, we held that an insurer's unexcused 48-day delay in notifying an insured of denial of coverage was unreasonable as a matter of law. Here, the delay was significantly longer. New York Central Mutual sent claimants a letter on September 3, 2003, directing their "immediate completion and return" of the notice-of-claim forms. The word "immediate" denotes New York Central Mutual's expectation of receipt of the completed forms right away, or without substantial loss or interval of time after they were sent. Thus, the insurer became aware of its basis for denying coverage — that claimants had not completed and returned properly filled-out proof-of-claim forms — at a point in time significantly before June 19, 2003, when it petitioned to stay arbitration. That completed forms were never returned or that the letter did not set a precise deadline for their return does not extend the insurer's time to disclaim or deny coverage, or excuse its delay in doing so ^[FN1]. [*6]


R. S. Smith, J. (dissenting):

Claimants were required under the policy to send a notice to the insurance company "[a]s soon as practicable." The Court today holds, in substance, that this requirement was nullified because the insurance company did not, as soon as possible after as soon as practicable, send claimants a notice that they had failed to send a notice. The Catch-22 quality of this holding is [*7]too much for me, and I dissent.

Insurance Law § 3420 (d) requires an insurance company to give written notice of a disclaimer of coverage "as soon as is reasonably possible." I would hold that, where the disclaimer is based on a claimant's failure to submit a document in timely fashion, and there is no fixed deadline for the claimant's submission, the time to disclaim does not start running at least until the belated submission arrives. To hold otherwise, it seems to me, places an unreasonable and unnecessary burden on the insurance company.

New York Central Mutual acted reasonably here. It demanded, as was its right, a proof of claim (or "Notice of Intention to Make Claim") form, and then waited to see when and if claimants sent the form in. New York Central Mutual no doubt assumed, quite appropriately, that until the form arrived it was in no position to judge whether the claimants had submitted the form "as soon as practicable." The insurance company could also reasonably assume that, if it never received the form, it could forget about the claim.

The form was never submitted. This was not an insignificant oversight; a proof of claim form enables an insurance company to investigate a claim and to decide whether it is legitimate or not. To permit claimants who have never submitted proof of their claim to recover is to open the door to claims that are spurious or fraudulent. Under today's holding, however, insurance companies cannot use the failure to submit proof of claim as a defense unless they [*8]themselves do what the claimant is supposed to do — send a notice before too much time has gone by. I do not think it makes sense to impose this requirement on insurance companies, and I do not think the statute requires it.
* * * * * * * * * * * * * * * * *
Order reversed, with costs, and petition to stay arbitration dismissed, in a memorandum. Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt and Graffeo concur. Judge R.S. Smith dissents in an opinion in which Judge Read concurs.
Decided June 13, 2006

Footnotes

Footnote 1:The dissent complains that there is a Catch-22 quality to the majority's position. But there is also a certain circularity to the insurer's argument that it could not disclaim as soon as reasonably possible until after it received the filled out proof-of-claim forms because it could not evaluate whether claimants had timely provided the facts until the forms were reviewed and still does not know if the facts claimants might have provided would have been timely or not, because claimants never returned the forms. The simple answer to this conundrum, of course, is for the insurer to set a deadline for return of a proof-of-claim form. And, of course, if the insurer suspects fraud in this case, it can still fight the claim in the arbitration on this basis.

Campbell v. Vakili

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Westchester County (Tolbert, J.), dated January 3, 2005, which granted the defendants' cross motion for summary judgment dismissing the complaint on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) and denied, in effect, as academic, his motion for summary judgment on the issue of liability.

ORDERED that the order is reversed, on the law, with costs, the cross motion is denied, the complaint is reinstated, and the matter is remitted to the Supreme Court, Westchester County, to determine the plaintiff's motion on the merits.

Contrary to the Supreme Court's holding, the defendants failed to show on their cross motion 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. In support of their cross motion, the defendants submitted reports prepared by, among others, the plaintiff's treating neurologist indicating that the plaintiff exhibited restricted range of motion in his cervical and lumbar spine, as well as his right shoulder, and that the injuries which the plaintiff sustained were the result of the subject motor vehicle accident (see McCluskey v Aguilar, 10 AD3d 388). Accordingly, the defendants failed to make a prima facie case for judgment as a matter of law. Under these circumstances, we need not [*2]consider whether the plaintiff's opposition papers were sufficient to raise a triable issue of fact (see Facci v Kaminsky, 18 AD3d 806, 807; Rich-Wing v Baboolal, 18 AD3d 726, 727; Coscia v 938 Trading Corp., 283 AD2d 538; McCluskey v Aguilar, supra).

The Supreme Court, having granted the defendants' cross motion, denied, in effect, as academic, the plaintiff's motion for summary judgment on the issue of the defendants' liability for the happening of the accident. The matter is therefore remitted to the Supreme Court, Westchester County, to determine the plaintiff's motion on the merits (see Korpalski v Lau, 17 AD3d 536, 538; Galati v Brice, 290 AD2d 530, 531).
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Felix v. Pinewood Builders

In an action to recover damages for personal injuries, etc., and a third-party action, inter alia, for a judgment declaring that the third-party defendant Sirius America Insurance Company is obligated to defend and indemnify the defendant third-party plaintiffs in the main action, the third-party defendant Sirius America Insurance Company appeals, as limited by its brief, from so much of an order of the Supreme Court, Orange County (Peter C. Patsalos, J.), dated June 21, 2005, as denied its motion for summary judgment.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, the motion is granted, and the matter is remitted to the Supreme Court, Orange County, for severance
of the third-party action insofar as asserted against the appellant and entry of a judgment declaring that the appellant is not obligated to defend and indemnify the defendant third-party plaintiffs.

The defendant third-party plaintiff Orange Rockland Development, Inc. (hereinafter Orange), was the general contractor at a construction site. Its liability policy with the third-party [*2]defendant Sirius America Insurance Company (hereinafter Sirius) required it to notify Sirius "as soon as practicable of an occurrence' . . . which may result in a claim." "Occurrence" was defined as an "accident." On December 5, 2003, Manuel Felix, an employee of a subcontractor, was injured in an accident at the site and was airlifted to a hospital. Orange, however, did not notify Sirius of the accident until more than seven months later, after Orange received a letter from Felix's attorney. Sirius promptly disclaimed coverage based on Orange's failure to notify it as soon as practicable of the accident. After Felix commenced this action to recover damages for personal injuries, Orange and the defendant Pinewood Builders, Inc. (hereinafter Pinewood), who was a named insured under the policy, commenced a third-party action, inter alia, for a declaration that Sirius was obligated to defend and indemnify them against Felix's claims. Subsequently, the Supreme Court denied Sirius's motion for summary judgment, and Sirius appeals. The Supreme Court also granted summary judgment dismissing the complaint insofar as asserted against Pinewood.

Sirius established its prima facie entitlement to judgment as a matter of law by demonstrating that Orange failed to notify it of the occurrence until more than seven months after it happened (see White v City of New York, 81 NY2d 955, 957; Jordan Constr. Prods. Corp. v Travelers Indem. Co. of Am., 14 AD3d 655, 656). To defeat the motion, Orange had the burden of establishing a reasonable excuse for the delay (see Argentina v Otsego Mut. Fire Ins. Co., 86 NY2d 748, 750). As the Court of Appeals has held, there are circumstances in which a good faith belief of nonliability may excuse lack of timely notice (see Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742, 743). That belief must, however, be reasonable under all of the circumstances, " and it may be relevant on the issue of reasonableness, whether and to what extent, the insured has inquired into the circumstances of the accident or occurrence'" (Great Canal Realty Corp. v Seneca Ins. Co., supra at 744, quoting Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 441). In opposition to the motion, Orange's President, Walter Berkovic, asserted in an affidavit that three days after the accident he was told by Felix's employer that Felix had returned home, his injuries were not serious, and that he would be returning to work that day. Berkovic also stated in the affidavit that he was unaware of Felix's injuries until he received a claim letter from Felix's attorney. In fact, Felix did not return to work before Orange notified Sirius of the accident, and he allegedly suffered extensive injuries. Under the circumstances of this case, we find, as a matter of law, that Berkovic's failure to adequately inquire into Felix's condition precludes a finding that Berkovic had a reasonable, good faith belief that notice to Sirius was not required under the terms of the policy (see SSBSS Realty Corp. v Public Serv. Mut. Ins. Co., 253 AD2d 583, 584-585; Zadrima v PSM Ins. Cos., 208 AD2d 529, 530; cf. Jordan Constr. Prods. Corp. v Travelers Indem. Co. of Am., supra at 656). Consequently, the Supreme Court should have granted Sirius's motion for summary judgment.

Since the third-party complaint insofar as asserted against Sirius seeks a declaratory judgment, the matter must be remitted to the Supreme Court, Orange County, for severance and entry
of a judgment declaring that Sirius is not obligated to defend and indemnify the third-party plaintiffs (see Lanza v Wagner, 11 NY2d 317, 334, appeal dismissed 371 US 74, cert denied 371 US 901).
MILLER, J.P., LUCIANO, LIFSON and COVELLO, JJ., concur.

ENTER:

James Edward Pelzer

Clerk of the Court

Allstate Insurance Company v. Cruz

In a proceeding, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, State Farm Mutual Automobile Insurance Company appeals, and Marina Cruz and Vicky Hernandez separately appeal, from a judgment of the Supreme Court, Queens County (Rios, J.), dated June 2, 2005, which, after a hearing, granted the petition and permanently stayed the arbitration, determined that the disclaimer of coverage by State Farm Mutual Automobile Insurance company was invalid, and, in effect, directed it to provide coverage regarding the bodily injury claims of Marina Cruz and Vicky Hernandez.

ORDERED that the judgment is affirmed, with one bill of costs payable by the appellants appearing separately and filing separate briefs.

In December 2000, an automobile insured by the petitioner, Allstate Insurance Company (hereinafter Allstate), in which Marina Cruz and Vicky Hernandez were passengers, was struck from behind by an automobile owned by Jessica Ortega and insured by State Farm Mutual Automobile Insurance Company (hereinafter State Farm). State Farm first received notice of the [*2]accident on July 22, 2002, from the attorneys representing Cruz and Hernandez. State Farm subsequently sent a letter to counsel for Cruz and Hernandez, disclaiming coverage on the ground that their notice to State Farm was untimely. When Cruz and Hernandez served upon Allstate a demand for uninsured motorist arbitration, Allstate commenced this proceeding, seeking a permanent stay of arbitration. After conducting a hearing, the Supreme Court determined that State Farm was required to provide coverage to Cruz and Hernandez because its disclaimer of coverage was invalid. Accordingly, the Supreme Court granted Allstate's petition and permanently stayed the arbitration. We affirm, but for reasons other than those relied on by the Supreme Court.

An insurer must give written notice of a disclaimer of coverage "as soon as is reasonably possible" (Insurance Law § 3420) after "it first learns of the accident or of grounds for disclaimer of liability or denial of coverage" (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029; see First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64, 68-69). An insurer's failure to do so "precludes effective disclaimer or denial" (Hartford Ins. Co. v County of Nassau, supra at 1029), even where the insured and the injured party have failed to provide the insurer with timely notice of the claim in the first instance (see Wasserheit v New York Cent. Mut. Fire Ins. Co., 271 AD2d 439). "It is the responsibility of the insurer to explain its delay" in disclaiming coverage (Hartford Ins. Co. v County of Nassau, supra at 1030; see Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507). An insurer's explanation of such a delay "is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay" (First Fin. Ins. Co. v Jetco Contr. Corp., supra at 69).

In this case, State Farm's disclaimer was based solely upon the lack of timely notice of the loss, and all relevant facts supporting such a disclaimer were immediately apparent to State Farm upon its receipt of notice of the accident from the attorneys representing Cruz and Hernandez (see Gregorio v J.M. Dennis Constr. Co. Corp., 21 AD3d 1056; West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278; Wasserheit v New York Cent. Mut. Fire Ins. Co., 271 AD2d 439; cf. First Fin. Ins. Co. v Jetco Contr. Corp., supra at 69). Under the circumstances of this case, State Farm's delay in issuing its disclaimer of coverage was unreasonable (see West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278; see also Gregorio v J.M. Dennis Constr. Co. Corp., 21 AD3d 1056).
MILLER, J.P., SCHMIDT, MASTRO and LUNN, JJ., concur.

Progressive Northeastern Insurance Company v. Barnes

In a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, State Farm Insurance Company appeals from (1) an order of the Supreme Court, Dutchess County (Brands, J.), dated June 3, 2005, which, after a framed issue hearing, granted the petition, and (2) an order of the same court dated October 5, 2005, which denied its motion for leave to renew and reargue.

ORDERED that the appeal from so much of the order dated October 5, 2005, as denied that branch of the motion which was for leave to reargue is dismissed, as no appeal lies from an order denying reargument; and it is further,

ORDERED that the order dated June 3, 2005, is affirmed; and it is further,

ORDERED that the order dated October 5, 2005, is affirmed insofar as reviewed; and it is further, [*2]

ORDERED that one bill of costs is awarded to Progressive Northeastern Insurance Company.

Pursuant to Vehicle and Traffic Law § 313(2)(a), State Farm Insurance Company (hereinafter State Farm) was required to file a notice of cancellation with the Commissioner of the Department of Motor Vehicles no later than 30 days following June 17, 2002, the effective cancellation date of the policy it issued to Guy F. DeSantis, a/k/a Gaetano F. DeSantis. Failure to strictly comply with this provision results in invalid termination of coverage as to third parties (see Vehicle and Traffic Law § 313[3]; Matter of Progressive N. Ins. Co. v White, 23 AD3d 477, 478). State Farm did not comply with Vehicle and Traffic Law § 313(2)(a) and, therefore, the termination of coverage was not effective with respect to the claim made by James Barnes, Jr., arising out of a May 31, 2004, accident (see Matter of Chubb Group of Ins. Cos. v Williams, 14 AD3d 561, 562; Matter of Material Damage Adj. Corp. v King, 1 AD3d 439, 440; cf. Matter of Rosenberg v Colonial Penn Ins. Co., 274 AD2d 520). Accordingly, the Supreme Court properly granted the petition to permanently stay arbitration pursuant to the uninsured motorist provision of the policy issued by Progressive Northeastern Insurance Company.
ADAMS, J.P., SANTUCCI, LUNN and DILLON, JJ., concur.

Progressive Northeastern Insurance Company v. Yeger

In a proceeding, inter alia, pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, the petitioner appeals from an order of the Supreme Court, Rockland County (Garvey, J.), dated October 7, 2005, which denied the petition and, in effect, dismissed the proceeding.

ORDERED that the order is affirmed, with costs.

The respondent, Itamar Yeger, was involved in a motor vehicle accident in which Yeger's vehicle struck a parked car after another vehicle veered into his lane of traffic. The alleged tortfeasor's vehicle was later found to be owned by the proposed additional respondent George Shermadini. At the time of the accident, Shermadini was insured by the proposed additional respondent Eagle Insurance Company (hereinafter Eagle). Yeger commenced an action against Shermadini in the Supreme Court, Queens County, in which a default judgment was entered in his favor. Eagle disclaimed coverage on the ground that it did not receive timely notice of the claim from either Yeger or Shermadini. In a separate declaratory judgment action (hereinafter the declaratory judgment action) in the same court, Eagle's disclaimer was determined to be valid. During the pendency of the declaratory judgment action, Yeger made a demand for arbitration under [*2]the uninsured motorist coverage provision of his insurance policy with the petitioner, Progressive Northeastern Insurance Company, his insurer.

The petitioner commenced the instant proceeding, inter alia, to permanently stay arbitration of the claim for uninsured motorist benefits on the ground that, among other things, there was coverage available under Shermadini's policy of insurance with Eagle. The Supreme Court, Rockland County, denied the petition, finding that the issue of whether the Shermadini vehicle was insured and, thus, triggered coverage under the uninsured motorist provision of Yeger's policy with the petitioner (hereinafter the policy), had been determined in the declaratory judgment action in the negative.

Contrary to the petitioner's contention, Insurance Law § 3420(a)(3) does not impose a duty on the injured party to provide notice to an alleged tortfeasor's insurer. Moreover, there is no exclusion from the requirement to provide compulsory uninsured motorists coverage pursuant to Insurance Law § 3420(f)(1) triggered by an injured party's failure to provide timely notice to a tortfeasor's insurer (see e.g. Matter of Liberty Mut. Ins. Co. [Hogan], 82 NY2d 57). Thus, the failure of Yeger, as the injured party, to timely notify Eagle, Shermadini's insurer, of the claim did not vitiate coverage under the uninsured motorist provision of the petitioner's policy. Since Eagle's disclaimer was found to be valid, the Supreme Court properly denied the petition, inter alia, to permanently stay arbitration of the uninsured motorist claim (see Matter of State Farm Ins. Co. v Archer, 256 AD2d 348).

The petitioner's remaining contentions were improperly raised for the first time on appeal (see Ricca v Valenti, 24 AD3d 647).
ADAMS, J.P., SANTUCCI, LUNN and DILLON, JJ., concur.

Patalano v. Curreri

Jean Marie Hazelton Law Firm, P.C., Southampton, N.Y., for
respondents.

In an action to recover damages for personal injuries, etc., the defendant appeals from so much of an order of the Supreme Court, Suffolk County (Costello, J.), dated May 25, 2005, as denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff Michelle Patalano did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is affirmed insofar as appealed from, with costs.

The defendant failed to make a prima facie showing that the injured plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The affirmed medical report of the defendant's examining orthopedic surgeon merely noted that the injured plaintiff had a "full and nonrestricted" range of motion in her cervical, thoracic, and lumbosacral spine without setting forth the objective testing performed which supported those conclusions (see Nembhard v Delatorre, 16 AD3d 390; Nozine v Sav-On Car Rentals, 15 AD3d 555; Bailey v Ichtchenko, 11 AD3d 419; Kauderer v Penta, 261 AD2d 365). Since the defendant failed to establish his prima facie entitlement to judgment as a matter of law, it is unnecessary to reach the question of whether the plaintiffs' papers were sufficient to raise a triable issue of fact (see Coscia v 938 Trading Corp., 283 AD2d 538). [*2]
FLORIO, J.P., SANTUCCI, MASTRO, RIVERA and COVELLO, JJ., concur.

State Farm Mutual Automobile Insurance Company v. Harkins

In an action for a judgment declaring that the plaintiff is not obligated to defend and indemnify the defendant James J. Harkins, Jr., pursuant to a policy of automobile liability insurance, in an underlying action entitled Harkins v Harkins, pending in the Supreme Court, Suffolk County, under Index No. 9666/04, the defendant Carol Harkins and the defendant James J. Harkins, Jr., separately appeal from (1) an order of the Supreme Court, Suffolk County (Oliver, J.), dated April 6, 2005, which denied their respective motions for summary judgment declaring that the plaintiff is obligated to defend and indemnify the defendant James J. Harkins, Jr., in the underlying action, and granted the plaintiff's cross motion for summary judgment, and (2) a judgment of the same court dated September 7, 2005, which, upon the order, inter alia, in effect, declared that the plaintiff is not obligated to defend and indemnify the defendant James J. Harkins, Jr., in the underlying action.

ORDERED that the appeals from the order are dismissed; and it is further,

ORDERED that the judgment is affirmed; and it is further, [*2]

ORDERED that one bill of costs is awarded to the plaintiff.

The appeals from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeals from the order are brought up for review and have been considered on the appeals from the judgment (see CPLR 5501[a][1]).

The defendants, residents of New York, were involved in a single-car automobile accident while traveling in Virginia. The defendant wife, who sustained injuries, commenced an action against the defendant husband, the driver of the vehicle, which was insured by the plaintiff insurance carrier pursuant to a policy which excluded interspousal claims. The plaintiff then commenced this action for a judgment declaring that it is not obligated to defend or indemnify the husband in the action brought by his wife.

In the absence of an express provision in an insured's policy, a carrier is not required to provide insurance coverage for injuries sustained by an insured's spouse (see Insurance Law § 3420[g]; Yankelevitz v Royal Globe Ins. Co., 59 NY2d 928, 930; Government Empls. Ins. Co. v Pagano, 251 AD2d 452, 453; cf. Federal Ins. Co. v McCampbell, 247 AD2d 359, 361-362). Insurance Law § 5103(e), which requires a carrier to provide the coverage minimally required by the state where the loss occurred, applies solely to the amount and type of coverage required by another state (see Insurance Law § 5103[e]; Matter of American Tr. Co. v Abdelghany, 80 NY2d 162, 166-167; Gallant v Travelers Ins. Co., 280 AD2d 900, 901; Dempsey v Consumers Distrib. Co., Ltd., 188 AD2d 509). As such, that provision is inapplicable to the facts of this case.

Accordingly, pursuant to the terms of the policy, the carrier was not required to defend or indemnify the husband for the injuries sustained by the wife.
CRANE, J.P., RITTER, KRAUSMAN and SKELOS, JJ., concur

Yakubov v. CG Trans Corporation

In an action to recover damages for personal injuries, the defendants appeal from an order of the Supreme Court, Kings County (Schmidt, J.), dated June 3, 2005, which 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, on the law, with costs, the motion is granted, and the complaint is dismissed.

The defendants' evidence, consisting of the plaintiff's deposition testimony, the bill of particulars, and the affirmed medical report of their examining neurologist, established, prima facie, that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955). The plaintiff does not contest on appeal that the defendant made such a prima facie showing.

Contrary to the Supreme Court's determination, the plaintiff failed to raise a triable issue of fact. Although the affirmed medical reports of the plaintiff's examining neurologist observed limitations in various aspects of the range of motion of the plaintiff's cervical and lumbar spine, the only admissible evidence submitted by the plaintiff was an examination that was remote [*2]in time and failed to take into account an intervening injury (see Ranzie v Massih, AD3d , 2006 NY Slip Op 02514; Li v Woo Sung Yun, 27 AD3d 624; Suk Ching Yeung v Rojas, 18 AD3d 863; Nemchyonok v Peng Liu Ying, 2 AD3d 421). The magnetic resonance imaging reports submitted by the plaintiff in opposition to the motion did not establish that he sustained a serious injury as a result of the subject accident. The mere existence of bulging or herniated discs is not evidence of serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injury and their duration (see Kearse v New York City Tr. Auth., 16 AD3d 45; Diaz v Turner, 306 AD2d 241). The plaintiff's self-serving affidavit was insufficient to meet that requirement. The remainder of the plaintiff's opposition consisted of either unsworn or unaffirmed medical reports and records, and thus were without probative value in opposing the motion for summary judgment (see Grasso v Angerami, 79 NY2d 813; Pagano v Kingsbury, 182 AD2d 268; Hernandez v Taub, 19 AD3d 368).

Accordingly, the Supreme Court should have granted the defendants' motion for summary judgment dismissing the complaint.
MILLER, J.P., RITTER, LUCIANO, SPOLZINO and DILLON, JJ., concur.