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Dear Coverage Pointers Subscribers:

 

Greetings from a hotel room high above the Magnificent Mile in the Windy City.  I'm attending the DRI Insurance Claims Institute, always an excellent program with top-notch speakers. 

 

LMK DECIDED BY COURT OF APPEALS
Before we tell you anything else, we announce that on Thursday, April 2, the Court of Appeals did the right thing in the LMK decision involving recovery of legal fees by claimant's counsel in No Fault proceedings.  Audrey mentions it in her letter below and analyzes it in her Audrey's Angles column in today's issue.

 

WELCOME TO NEW PLRB/LIRB SUBSCRIBERS

I was delighted to speak at the PLRB/LIRB Claims Conference in Seattle this past week and truly honored to have received the 2009 Outstanding Presentations Award.  My topic was "Complex Liability Insurance Coverage Issues" with a focus on an approach to unraveling mixed coverage, contract and tort issues to arrange them for analysis.  We are pleased to welcome over 30 new subscribers from conference attendees.   I hope that you enjoy our user-friendly publication.  Pass it on to others who might find it worthwhile and if they do, we'd be happy to include them as direct subscribers.  Close to 1800 subscribers receive Coverage Pointers directly and many hundreds more receive copies forwarded by others.  We have an interactive site on the World Wide Web - it's the New York Insurance Law group in LinkedIn www.linkedin.com/groups?gid=1777061.

 

FROM 30,000 FEET

For those who are just joining our readership ranks, let me introduce the treats you have in store.  For almost 11 years, we have been publishing this electronic newsletter and we dare say, it's one of the oldest in this medium.  It's a labor of unconditional love from our coverage team and you'll meet most of them in their columns or articles in the issue which is attached in Word format. We use Word, rather than .PDF format for a couple of reasons, the most important of which is that we want you to be able to easily cut and past case summaries or articles into your electronic claim files, when you see an summary or article that you may find useful or that you want to share with others.  Back issues are available on our website, www.hurwitzfine.com.  Just click on the Newsletter tab.

 

Each issue is welcomed by a cover letter, and if you're reading this, you've found it.  This missive contains highlight and overviews of the attached issues and other perspectives on the issue (and issues) of the day (not all having to do directly with insurance) with a little useless but entertaining (at least to me) ramblings tossed in for good measure.  Maintain your sense of humor (or, for our Canadian readers, humour) as you read this particular offering.

 

Our columns include:

 

  • Kohane's Coverage Corner which covers all liability and casualty policies cases, E&O, D&O, excess and umbrella, reinsurance, regulatory and virtually anything else not covered by the other authors;
  • Audrey's Angles is penned by Audrey Seeley, the Queen of No Fault in New York, who writes on judicial and arbitral decisions in the No Fault area dealing with everything from claim filing to peer reviews to attorney fees to appeals.
  • Margo's Musings comes to you from Margo Lagueras.  Margo focuses on the high volume of appellate cases discussing the "Serious Injury" threshold required to be met under the No Fault statute in New York in order for a NY auto accident victim to be permitted to maintain an action for pain and suffering against the owner or operator of a motor vehicle.
  • Peiper on Property (and Potpourri) is Steve Peiper's analysis of first party property cases, life, health and disability, surety, title insurance and whatever other interesting cases catch our eye that may be litigation but not insurance related.
  • Earl's Pearls is the work of our prolific contributor, Earl Cantwell who contributes several paragraphs each issue of in-depth analysis of a topic which is of interest to our readership.  He may discuss an evidentiary decision, new discovery rules, spoliation, or any other topic of consideration.  For example, in this week's issue, Earl discusses a recent case on the confidentiality of settlement agreements in New York.
  • Across Borders covers significant insurance cases from other jurisdictions that come to you from members of the Federation of Defense & Corporate Counsel (FDCC) and their submissions to Hot Cases (www.thefederation.org).  

You will also find occasional specialty columns and articles.  For example, we are completing Scott Duquin's (aka the Duke of Lead) series on lead poisoning litigation. This week's issue contains such a special column:

 

SCHOOL DISTRICT LIABILITY FOR INTERNET USE

As a special treat, attached to this issue is Paul Suozzi's article on School District Liability for Internet Use.  Thanks Paul.

 

HAPPY TWEED DAY

We all know that April 1st is April Fool's Day.  Fewer realize that April 3rd is listed as National Tweed Day.  Virtually every website that discusses this bizarre holiday suggests that it celebrates the warm, fashionable woolen clothing that originated in Scotland.  However, this Editor suggests otherwise.  Is it only coincidental April 3 celebrates the birthday of corrupt Tammany Hall leader, William "Boss" Tweed, who was born on that day in 1823?  Is National Blagojevich Day just around the corner?

 

FROM AUDREY SEELEY:

Greetings from the DRI Insurance Coverage and Claims Institute in Chicago.  There has been a tremendous turnout, despite the economic climate, and the program this year is top notch.

 

The headliner is the New York State Court of Appeals decision in LMK!  Yes, I said LMK.  I know you have been waiting anxiously for it.  The opinion was by Judge Pigott, a Buffalo native.  It was short and straight to the logical conclusion - attorney's fees are calculated on the aggregate of the bills per insured; a late denial does not preclude the tolling of interest.  This is a major decision in the no-fault area and will have a great impact in the future of the amount of claims.  If you would like a complete copy of the decision please email me at [email protected].  The obvious issue after the decision is what is the next argument we will see from the plaintiff's bar?  We are looking at that and in the event you are on the receiving end of such a post-LMK argument,  please share it with us and what your response was so that we can share it with all of our subscribers.  One tactic that may be tried, which most likely will not see success due to a consolidation motion, is the mass filing of suits with only one bill.  The second tactic, which I am still trying to see if it truly exists after this decision, is the $60/$80 as opposed to the 20% minimum argument.  This decision continually discusses the attorney's fee being based upon the 20% to a maximum of $850.00.  I will continue to review this issue and keep you updated if I hear anything.  The full decision is in the attached issue.

 

Audrey

 

TRAINING

 

This is a great time to speak of company training.  For those who found my presentation worthwhile and would like a reprise at a company location, contact me and we'd be happy to work out a convenient time for a visit.

 

We can craft training topics to meet your particular needs.  Here are just a few of the topics on which we can present:

 

  1. ADR and How to Get to "Yes"
  2. Auto Liability Policy Primer
  3. CGL Policy Primer
  4. Construction Cases - The Interplay between Indemnity Agreements and Insurance Policies
  5. EUO's Under First Party Policies
  6. Homeowners Liability Policy Primer
  7. How to Resolve Coverage Disputes:  DJ Actions, Insurance Law Section 3420 Direct Actions (Choice, Strategy and Timing)
  8. Insured Selected Counsel: When is it Necessary and How to Avoid it? 
  9. Mediation and the Role of the Mediator
  10. New Rules Regarding Notice, Developing Proof of Prejudice and a Strategic to Avoiding Direct Actions
  11. No Fault Regs - Knowledge is Power
  12. No- Fault Arbitrations and Appeals: Mock Arbitrations, Preserving the Record, Taking an Appeal
  13. NY Disclaimer Letter - Nuts & Bolts: How to Create and Write and Send a Disclaimer Letter, and How Not To. (The Reservation of Right Letter Myth)
  14. Other Insurance, Additional Insureds and Priority of Coverage
  15. Preventing Bad Faith Claims - First Party Cases
  16. Preventing Bad Faith Claims - Liability Cases
  17. Primary and Excess Insurance - Rights & Responsibilities
  18. SUM Claims Handling
  19. The Cooperation Clause - How to Handle
  20. The Internet as a Tool for the Claims Representative 

AREAS OF PRACTICE

At the PLRB/LIRB Claims Conference, we were asked where in New York State we represent clients.  The answer is simple:  anywhere our clients need us.  Our geographical reach is throughout New York and most of our coverage work is outside of Western New York.  As an expert witness, I've traveled throughout the US, Canada, and to London.  As a coverage mediator, our geographical reach is also without borders.

 

AUDREY WOWS THEM IN CHICAGO

Here in Chicago on Wednesday, our Audrey Seeley, a national leader in her own right in the Insurance Coverage Committee of DRI, was an opening speaker at the DRI Insurance Coverage and Claims Institute, Insurance 101program speaking on Inside Baseball - Understanding How Insurance Companies Work.  Atta lawyer.

 

NEW YORK HIGH COURT HOLD OCCASIONAL SELLERS OF USED PRODUCTS NOT STRICTLY LIABLE

In Jaramillo v. Weyerhaeuser Company and Technology Licensing Associates, Inc., decided by the New York Court of Appeals on Tuesday, March 31st, the high court decided that the occasional seller of products in not strictly liable for product defects.  New York courts have long held that both manufacturers and those regularly in the product distribution chain are strictly liable for defects in design, manufacturing and inadequate warning.  This case involved an "occasional" seller, one who sold a product it owned but not an entity regularly selling this particular product.   To review this decision, click here.

 

100 YEARS AGO TODAY

Regular readers often comment on our historical dalliances.  We don't want to disappoint.  A century ago today, it was a simpler time:

 

April 3, 1909

New York Times, p.16, col. 3

 

TAKE SCHOOLBOYS TO JAIL

Eleven Students of Horace Mann School Arrested for Ball Playing

 

While their school companions cheered, eleven baseball players of the Horace Mann School, at Broadway and 120th Street, were driven in a patrol wagon to the West 125th Street Police Station and charged with disorderly conduct yesterday. This was the result of letters complaining of baseball played in the street from W. H. White of 417 West 117th Street and William Watson of 44 Morningside Avenue West. These letters, containing stories of broken windows, came to Commissioner Bingham.

 

Detectives drove eleven boys into the doorway of the school yesterday and sent for a patrol wagon. While they waited for the wagon the 200 other pupils pushed and jostled them, giving cheers and singing school songs. The crowd ran with the wagon to the station house, and kept on cheering and singing till James E. Russell of the Teachers College at Columbia bailed the eleven boys out.


Editor's Note: 
The Good Samaritan, James E. Russell, went on to be the Dean of the Columbia University Teachers College.  Under his leadership, the enrollment of Teachers College grew from 169 students in 1897 to almost 5,000 in 1927. During this period the budget expanded tenfold and the physical plant grew from two buildings to 17.

 

Olean (NY) Evening Times - April 3, 1909

Page 1, Col 6

 

GREAT MARATHON RACE IS ON

 

The great international Marathon will take place at the Polo grounds this afternoon, with six of the greatest long-distance runners in the world as competitors. The race is for 26 miles, 385 yards, for a prize of $10,000. This is the richest purse ever hung up for a similar event in this or any other country . Johnny Hayes, winner of the Olympic Marathon in London, the thrilling race that has been responsible for the Marathon craze here, will represent the United States; Alfred Shrubb will wear the Union Jack; Thomas Longboat, the maple leaf of Canada; Doranda Pietri will represent Italy; Matthew Maloney, now of Yonkers, but only a few years out, will wear Ireland's emerald, while Henri Saint Yves wears the tri-color of France.

 

Editor's Note:  Press reports the following day reported that St. Yves, a novice marathon runner, crossed the finish line five minutes before any other competitor. He "killed off Longboat and Shrubb at 21 and 25 miles and raced the three other competitors into such a state that they were unable to cause him the slightest worry or anxiety for the first twenty miles."  In a 2006 book entitled 100 Greatest Days in Sports, the author declared that April 3, 1909 was ranked 99th because of that race. April 15, 1947 was ranked at the top of the list, the day Jackie Robinson broke baseball's color barrier at Ebbets Field in Brooklyn.

 

PUBLISHED IN THE TICL JOURNAL
For those who are NY Bar and TICL Section (Tort, Insurance & Compensation Law) members, you'll find two of my article in the Winter 2009 edition of the TICL Journal, that Section's quarterly publication:  Ouch that Hurts, The Difference Between Intentional Injury and Assault Exclusions (previously published as an addendum to the April 4, 2008 issue of Coverage Pointers) and Excuses, Excuses, Excuses, A Primer and Checklist on Late Notice Issues previously published as an addendum to the April 18, 2008 issue of Coverage Pointers.  The value of being a CP subscriber is that you received these articles almost a year earlier than the rest of the world.  Let me know if you need reprints, although they are readily available on our website. 

 

IN THIS WEEK'S ISSUE:

 

KOHANE'S COVERAGE CORNER

Dan D. Kohane

[email protected]

  • Carrier Proves Material Misrepresentation in Policy Application and Can Rescind Policy
  • Trust Exclusion Means What it Says
  • No Excuse for Late Notice
  • Issues Not Previously Decided; Carrier has Obligation to Defend
  • Claims Against Law Firm for Breach of Fiduciary Duty and Misappropriation of Confidential Information do Not Give Rise to Duty to Defend Firm under Law Firm Malpractice Policy
  • With Respect to Coverage, the Cart (Wagon) Does Not Come Before the Horse (Truck).  Fourth Department Rules that Non-Owned Auto Coverage Does Not Apply to Someone Borrowing a Hay Wagon from the Insured Farm 

MARGO'S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT

Margo M. Lagueras

[email protected]

  • Conclusion that Pain is Related to Degenerative Disease and Was Not Exacerbated by the Accident Requires "Persuasive Evidence"
  • Objective Evidence that ROM Remains Restricted Even After Surgery Raises Triable Issue of Fact Under Permanent Limitation Category of Serious Injury
  • Affidavits Quantifying Limitations Found in Both Contemporaneous and Recent Examinations Raise Triable Issues of Fact to Defeat Summary Judgment
  • "Limitation" Unsupported by ROM Testing Will Not Pass Muster
  • Defendants' Examining Orthopedist Notes Significant Limitations in Plaintiff's Spine
  • No Good as Against One, No Good as Against Any
  • Contemporaneous Quantitative or Qualitative Assessment of Extent and Duration of ROM Limitations is Required Even Where There Has Been Surgery
  • Entirely New Injury Asserted for First Time in Supplemental Bill of Particulars Served in Opposition to Summary Judgment Must be Timely Objected to or Objection Will be Unpreserved for Review
  • Claim Under the Permanent Consequential Limitation of Use Category May be Supported where Treatment for Injury Would be Only Palliative and Prognosis is Guarded
  • Defendant Fails to Show Plaintiff's Failure was "Willful and Contumacious" 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

  • Attorney's Fees Calculated on Total of Bills in Dispute Per Insured; Interest Can Be Tolled if Untimely Denial Issued
  • Summary Judgment Denied as Denial Timely Issued After Additional Verification Received
  • Peer Reviewer's Reliance Upon Other Physicians' Reports in Rendering Opinion Does Not Render Report Insufficient to Establish Lack of Medical Necessity

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

  • The Term: "Use in Whole or in Part for Business Purposes" is Ambiguous.  Barn Storing Business Items, in Part, is Not Clearly Being Used for Business Purposes
  • Plaintiff's Claim on Breach of Contract Barred by the Statute of Frauds
  • Plaintiff's Malpractice Claim Dismissed Where She Cannot Establish the Existence of Coverage

 That's it for now.  See you in a couple of weeks.  Drop us a line and tell us how we're doing.  Enjoy the issue and Paul's article on Internet Liability for School Districts as well. 

Dan 

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Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of
New York
NEWSLETTER EDITOR
Dan D. Kohane
[email protected]

INSURANCE COVERAGE TEAM
Dan D. Kohane, Team Leader
[email protected]
Michael F. Perley
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras

FIRE, FIRST-PARTY AND SUBROGATION TEAM
Andrea Schillaci, Team Leader
[email protected]
Jody E. Briandi
Steven E. Peiper

NO-FAULT/UM/SUM TEAM
Audrey A. Seeley, Team Leader

[email protected]
Tasha Dandridge-Richburg
Margo M. Lagueras

APPELLATE TEAM
Jody E. Briandi, Team Leader

[email protected]
Scott M. Duquin

Index to Special Columns

Kohane’s Coverage Corner
Margo’s Musings on “Serious Injury”
 Audrey’s Angles on No Fault
Peiper on Property and Potpourri
Earl’s Pearls

Across Borders
Duquin -- The Duke of Lead
Reported Decisions

KOHANE’S COVERAGE CORNER

Dan D. Kohane
[email protected]

4/2/09              Kiss Construction NY, Inc., v. Rutgers Casualty Insurance Company
Appellate Division, First Department
Carrier Proves Material Misrepresentation in Policy Application, and Can Rescind Policy
Applicant for CGL coverage told insurer that it was a painting contractor and policy was issued.  In fact, applicant was a general contractor.  Insurer was able to establish, with underwriting guidelines and affidavits, that it would never have issued a policy to a general contractor.  Court accepted that proof and rescinded policy, ab initio (from inception) and directed insurer to return premiums paid.

4/2/09              American Guarantee and Liability Insurance Company v. Hoffmann
Appellate Division, Second Department
Trust Exclusion Means What it Says
The policy at issue excludes from coverage any claims based "in whole or in part" on acts "in connection with" a trust of which defendants are beneficiaries. This is an enforceable exclusion Here, each claim in the underlying proceeding centered on the transfer of stock held by a trust for the petitioners therein to a trust created by defendants of which they were the sole trustees and beneficiaries.

4/2/09              Silverite Construction Company, Inc. v. One Beacon Insurance Company
Appellate Division, First Department
No Excuse for Late Notice
Insured waited 2½ month-plus before giving notice of a workers injury.  Its excuse was that it did not believe worker had a claim or would bring one.  However, as worker was removed from the site by ambulance and missed a week of work and only returned on light duty and filed a claim against the City, excuse was unacceptable.  Insurer properly disclaimed and its slight delay, to determine insured status of Silverite, did not preclude denial.
3/24/09            Franklin Development Co., Inc., v. Atlantic Mutual Insurance Company
Appellate Division, Second Department
Issues Not Previously Decided; Carrier has Obligation to Defend
Editor’s Note:
Very often, we find that the participants in coverage appeals in New York are Coverage Pointer’s subscribers.  On occasion – if time permits before an issue is published – we will ask the attorney or claims professional involved in the appeal to provide the CP summary in order to give our readers the unique perspective of those in that particular litigation.  We thank Brian M. Hussey for this summary of the Franklin Development case.  He was the policyholder lawyer who successfully prosecuted this appeal:
This DJ was brought by the owner of commercial premises seeking defense and indemnity as an expressly named additional insured on his tenant's policy. The request for coverage was denied, as the carrier claimed that the place of the accident was not within the demised premises ( as required by its A/I endorsement).  The underlying injury action was brought by an employee of the sole second floor tenant claiming he tripped and fell down stairs while leaving work at the end of the day. The owner impleaded the second floor tenant seeking insurance and contractual indemnity per written lease. In the injury action, summary judgment was granted to a codefendant( ground floor tenant) and to the third-party defendant (second floor tenant). Owner appealed the denial of its motion to dismiss the plaintiff's action and its motion for conditional summary judgment for contractual indemnity against the second floor tenant.
 
On the first appeal, the Second Department granted the owner's motion dismissing the plaintiff's action for no notice of defect and declined to rule whether the place of the accident was appurtenant to the demised premises, an issue that was briefed by both owner and second floor tenant. The DJ was now limited to the duty to defend as the dismissal of the injury action mooted the claim for indemnity. It was urged to the trial court that the claim of appurtenance to the demised premises was adequate for a finding that the duty to defend was owed to the owner.  The carrier moved for summary judgment based on the scope of demise argument. The Court dismissed the DJ based on collateral estoppel, its own ruling on the maintenance duties during the summary judgment motions in the injury action and sua sponte imposed sanctions on owner's attorneys for maintaining a frivolous action.
 
The Second Department reversed, holding that: the owner was not collaterally estopped by express trial court findings in action # 1 that were unreviewed in Appeal #1, the requisite full and fair opportunity test was not met; the sanctions were vacated; and, that the carrier's motion papers in the DJ failed to establish that the underlying complaint did not suggest a reasonable possibility of coverage. The appellate issue is that unreviewed findings in action #1 are not collateral estoppel in the DJ ( it is my belief that if the findings in action #1 would have been collateral estoppel in the DJ if not appealed or if the argument was abandoned during appeal #1). The coverage issue is more familiar, that there are separate triggers for the duty to defend and the duty to indemnify; and, that the duty to defend may be triggered by a possibility of coverage. Because allegations may trigger the duty to defend, the Second Department did not have to rule on the appurtenance issue to rule on the duty to defend; however, the opinion cites to Jenel Mgmt. Corp. v. Pacific Ins. Co., 55 AD3d 313, wherein the First Department did hold stairs necessarily incidental to the demised premises and thus triggering A/I coverage.    

3/24/09            Burkhart, Wexler & Hirschberg, LLP, v. Liberty Ins. Underwriters, Inc.,  
Appellate Division, Second Department
Claims Against Law Firm for Breach of Fiduciary Duty and Misappropriation of Confidential Information do Not Give Rise to Duty to Defend Firm under Law Firm Malpractice Policy
The Burkhart law firm was insured under a policy of professional liability insurance issued by Liberty (LIU).  During the term of the policy, the Burkhart Firm was sued in an action entitled Financial Advisors Legal Association, Inc. v Wexler & Burkhart, P.C., (the underlying action). In that action, Financial claimed that Burkhart engaged in a "wanton, willful and malicious" breach of fiduciary duty for misappropriating Financial’s confidential information and trade secrets; tortious interference with contract for using this information to attempt to convert Financial’s members and prospective members to a newly- formed competing business entity; and for "wanton, willful and malicious" misappropriation of trade secrets.
LIU denied coverage claiming that the policy did not obligate it to defend the law firm for the claims. Here, Liberty established its prima facie entitlement to judgment as a matter of law because there were no claims in the underlying complaint claiming professional negligence in the performance of legal services.
3/20/09            Richmond Farms Dairy, LLC. v. National Grange Mut. Ins. Co.
Appellate Division, Fourth Department

With Respect to Coverage, the Cart (Wagon) Does not Come Before the Horse (Truck).  Fourth Department Rules that Non-Owned Auto Coverage Does Not Apply to Someone Borrowing a Hay Wagon from the Insured Farm
In this case, Mr. Rapson and Ms. Miller were severely injured when the motorcycle they were riding collided with a vehicle driving by Richardson.  At the time of the incident, Richardson was returning to Richmond Farms Dairy (“Farm”) after using a wagon owned by the Farm to transport a load of hay that she had just purchased.  Rapson and Miller sued both Richmond and the Farm for damages related to the accident.
Upon receipt of the suit, Richardson sought coverage under the Farm’s business auto policy and the Farm’s excess policy.  Richardson maintained that at the time of the incident, the vehicle she was operating was covered under either or both of these policies.  Specifically, Richardson argued that the truck was covered because it was being used in connection with the Farm’s business or because the truck was being used in the scope of a hired auto at the time of the collision. 
The Fourth Department disagreed by noting that the truck operated by Richardson was not being used in conjunction with Farm’s business.  Although it was used as a result of a hay sale engaged in by the Farm, the Court noted that Farm’s business was selling hay – not transporting it.  Likewise, the vehicle could not qualify as a hired auto because the Farm had never discussed using the vehicle at any time prior to the loss.
As a third argument, Richardson argued that the wagon itself was a covered auto under the business auto policy.  As such, when attached to the vehicle owned and operated by Richardson, coverage was conferred to Richardson’s vehicle.  However, the Court held that the wagon only became a covered auto when it was attached to a covered auto.  Here, because the vehicle operated by Richardson, was not a covered auto, coverage did not attach. 
As such, the Fourth Department ruled that the business auto carrier had no duty to indemnify or defend Richardson in this matter.  This was the case even though the Complaint alleged that Richardson was operating the vehicle at the direction of the Farm.  Because there was no evidence to support this conclusion, the Court held that the language of the Complaint was not dispositive. 
Tired yet?  Richardson was still not done!
Richardson also sought coverage under the Farm owner’s personal auto coverage.  This claim was premised upon the fact that a farm wagon qualified as a covered auto, independently, under the personal auto policy.  However, the claim failed where the wagon was owned by the Farm (as a corporation) and not by the Farm owner (as an individual). 
Finally, Richardson sought coverage independently under the Farm’s excess policy.  However, where the purported insured did not qualify under the underlying policies, no coverage was conferred under the excess policy.  As noted above, because Richardson did not qualify under the primary policies, she too was precluded under the excess policy. 

MARGO’S MUSINGS ON SERIOUS INJURY UNDER NEW YORK NO FAULT

Margo M. Lagueras
[email protected]

3/27/09            Endres v. Shelba D. Johnson Trucking, Inc.
Appellate Division, Fourth Department
Conclusion That Pain Is Related To Degenerative Disease And Was Not Exacerbated By The Accident Requires “Persuasive Evidence”
The defendants’ examining physician concluded that plaintiff’s 50% reduction in lumbar extension and flexion was caused by degenerative disease and had not been exacerbated by the accident but he failed to offer any basis for that conclusion.  He also failed to address plaintiff’s statements to him that plaintiff had been relatively pain free prior to the accident.  Therefore, the court reinstated plaintiff’s complaint finding that defendants failed to present “persuasive evidence” that plaintiff’s pain and injuries were related to a pre-existing condition and not exacerbated by the accident.

3/26/09            Charlie v. Guerrero
Appellate Division, First Department
Objective Evidence That ROM Remains Restricted Even After Surgery Raises Triable Issue Of Fact Under Permanent Limitation Category Of Serious Injury
Another complaint that was reinstated.  Here plaintiff’s orthopedic surgeon’s affidavit contained objective evidence of range-of-motion limitations, even after corrective surgery, of plaintiff’s right shoulder and concluded that the limitation in use and range-of-motion would be permanent, thus supporting the claim under the “permanent consequential limitation of use” category.

3/24/09            Lee v. McQueens
Appellate Division, Second Department
Affidavits Quantifying Limitations Found In Both Contemporaneous And Recent Examinations Raise Triable Issues Of Fact To Defeat Summary Judgment
The injured plaintiffs were sitting in a parked van when defendant’s vehicle was struck by co-defendant Reyes’ taxi and propelled into plaintiffs’ van.  McQueen moved to dismiss as against him and Reyes cross-moved for summary judgment alleging no serious injury, but failed to meet his burden.  In addition, plaintiffs’ treating chiropractor’s affidavits of both contemporaneous and recent examinations using a goniometer, and which quantified the limitations found in plaintiffs’ cervical and lumbar spines, were sufficient to raise a triable issue of fact.

3/24/09            LaMarre v. Michelle Taxi, Inc.
Appellate Division, Second Department
“Limitation” Unsupported By ROM Testing Will Not Pass Muster
Plaintiff’s physician examined his lumbar spine and concluded the lumbar spine had “limitations.”  The physician failed, however, to perform any range-of-motion testing or set forth any other objective tests performed in arriving at that conclusion.  Plaintiff thus fails to raise a triable issued under the permanent consequential limitation of use or the significant limitation of use categories.  Plaintiff further fails with regard to his claim under the 90/180-day category where his own deposition testimony established he returned to work after 30 days and he did not offer any competent medical evidence to support a medically-determined injury.

3/24/09            Kasper v. N & J Taxi, Inc.
Appellate Division, Second Department
Defendants’ Examining Orthopedist Notes Significant Limitations In Plaintiff’s Spine
And, predictably, defendants fail to meet their burden and again lose on appeal where the affirmed report noted such limitations in the ranges-of-motion of plaintiff’s cervical spine and left shoulder.  No need to consider plaintiff’s evidence in opposition.

3/19/09            Rose v. Citywide Auto Leasing, Inc.
Appellate Division, First Department
No Good As Against One, No Good As Against Any
The complaint is dismissed as against all defendants where plaintiff fails to meet the serious injury threshold against one of them.  Here, defendants’ experts concluded that plaintiff’s limitations were either degenerative or attributable to a workplace accident which occurred after the accident, and plaintiff failed to offer any factually based medical opinions to rebut either of defendants’ arguments.

3/19/09            Alicea v. Troy Trans, Inc.
Appellate Division, First Department
Contemporaneous Quantitative or Qualitative Assessment Of Extent And Duration Of ROM Limitations Is Required Even Where There Has Been Surgery
Plaintiff’s opposition to summary judgment failed to present evidence of contemporaneous range-of-motion limitations as the report of the examination performed five days after the accident was not sworn or affirmed.  The court further notes that, even if all the reports, records, MRIs, and pre and post-operative examinations had been sworn or affirmed, while they showed continuing complaints of pain, a shoulder tear, surgery and bulging and herniated discs in the cervical and lumbar spine, none contained a “contemporaneous quantitative or qualitative assessment of the extent and duration of resulting range-of-motion limitations [which] assessment is required even where there has been surgery.”  Even plaintiff’s physician’s affidavit failed because it simply described the tests performed without specific, objective evidence of how the doctor arrived at his findings or causally relating those findings to the accident.

3/17/09            Kittner v. Allen
Appellate Division, Second Department
Entirely New Injury Asserted For First Time In Supplemental Bill of Particulars Served In Opposition To Summary Judgment Must Be Timely Objected To Or Objection Will Be Unpreserved For Review
Plaintiff’s deposition testimony and the affirmation of her neurologist referred to neck, back and right shoulder pain.  However, in opposition to defendants’ motion for summary judgment, plaintiff served a supplemental bill of particulars asserting a right rotator cuff tear and that she was a candidate for arthroscopic surgery, as well as an affirmed report from her treating physician quantifying range-of-motion loss of the right shoulder.  In reply, defendants claimed that the shoulder injury was pre-existing. 

On appeal, however, defendants attempted to argue that the shoulder injury was not properly before the court because the supplemental bill of particulars was actually an amended bill of particulars which could only be filed by leave of court.  Alas for defendants, the objection came too late and was unpreserved for appellate review.

3/17/09            Dieujuste v. Kiss Mgt. Corp.
Appellate Division, First Department
Claim Under The Permanent Consequential Limitation Of Use Category May Be Supported Where Treatment For Injury Would Be Only Palliative And Prognosis Is Guarded
On appeal, the court modified the denial of defendants’ motion by dismissing plaintiff’s claims of serious injury to the lumbar spine and under the 90/180-day category.  However, plaintiff’s claim of serious injury to his right wrist survived based on an affirmed report of an examination performed 11 days after the accident which determined that the pain, limited range-of-motion, grip strength, abnormal MRI showing several sprains, and the absence of a pre-existing injury showed plaintiff sustained a significant injury as a result of the accident.  Plaintiff’s physician further concluded, based on an examination 8 months after the accident, that although there was some improvement, further treatment would only be palliative and the prognosis for full recovery was guarded.  Plaintiff’s expert corroborated those findings and reported that after one year, plaintiff still had significant limitations and a 20% loss of the right arm, and that the right wrist injury was permanent and would have a “substantial qualitative effect on [plaintiff’s] life.”

3/17/09            Arimont v. Iwakawa
Appellate Division, Second Department
Defendant Fails To Show Plaintiff’s Failure Was “Willful And Contumacious”
That is the standard when seeking to have a complaint stricken for failure to comply with discovery demands.  Here, defendant’s motion was both the strike the complaint, and for summary judgment on the serious injury issue.  Both fail.  First, because defendant fails to clearly show that plaintiff’s failure to comply with discovery demands was willful and contumacious.  And second, because defendant fails to make a prima facie showing that plaintiff did not sustain a serious injury. 

AUDREY’S ANGLES ON NO-FAULT
Audrey Seeley
[email protected]

BREAKING NEWS ON A LONG AWAITED DECISION FOR NO-FAULT INSURERS –
THE COURT OF APPEALS HAS ISSUED A DECISION IN LMK!!!
4/2/09              LMK Psychological Services, PC v. State Farm Mut. Auto. Ins. Co.
Court of Appeals
Attorney’s Fees Calculated on Total of Bills in Dispute Per Insured; Interest Can Be Tolled if Untimely Denial Issued
No-fault insurers has been waiting and waiting for this decision and it is a major victory!!!  Well, it has finally arrived and provided some clear guidance on the issue of attorney’s fees and on the interest tolling issue.  We reported on the appellate division decision in December 2007 and it is reprinted herein to provide some background on this case:
12/27/07              LMK Psychological Services, P.C. v. State Farm Mut. Auto. Ins. Co.
Appellate Division, Third Department
Attorney’s Fees Awarded on Per Claim Basis – What’s a Claim?
I apologize for this one as I missed it for our last issue.  Many of you have probably reviewed this decision and cringe when you hear the case name.  However, it really only reiterates case law produced by the lower courts regarding whether an attorney fee is recoverable on a per claim basis or per assignor basis.  The question it creates is how is a claim defined?  The insurance regulations contain no definition.  This decision provides no guidance on the issue either.  Further, this issue of interest accrual was not preserved for the Court’s decision and any discussion on this issue is purely dicta and not controlling authority.
For those who have not read this decision, the defendant appealed the lower court’s decision granting plaintiff summary judgment with interest and attorney’s fees.  The Appellate Division held that the issue of when interest accrues on a claim was not preserved for its review.  Yet, the Court provides its own opinion on the matter finding that the argument is meritless.  The Court opined that interest on an untimely paid no-fault claim accrues 30 days after the claim was properly presented for payment.  However, if the claim had been timely denied then interest would be tolled 30 days after plaintiff received the denial until plaintiff commenced the litigation. 
Then the Court addressed the issue of calculating attorneys’ fees.  The Court held that attorneys’ fees are awarded on a per claim basis and not a per assignor basis.  The Court went so far as to state that the Superintendent of Insurance’s opinion letter on this issue dated October 3, 2003:
undermines the goal of the no-fault law to fully compensate the claimant for economic loss resulting from the wrongful denial of a claim and wastes judicial assets by encouraging the commencement of multiple actions in order to recover the maximum available counsel fees.
Yet, the Court never defines a claim.  I think this issue is still open for interpretation.
The Court of Appeals’ decision, written by Buffalo’s own, Judge Pigott, addresses the attorney’s fees issue first.  The Court reasoned that under Insurance Law §5106(a), if a valid claim or a portion of that claim is overdue then the applicant is entitled to recover reasonable attorney’s fees in securing payment of the overdue claim.  The Superintendent of Insurance was authorized to promulgate a regulation, 11 NYCRR 65-4.6, which established a minimum attorney’s fees.  That regulation provided that the attorney’s fee must be limited to 20% of the amount of first-party benefits, plus interest, subject to a maximum of $850.00.

The Superintendent of Insurance issued an opinion letter dated October 8, 2003, providing an interpretation of that regulation.  The opinion was that the minimum attorney’s fees that could be awarded to an assignee health care provider is based upon “the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which has been submitted and denied.  The minimum attorney fee…is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action.” (emphasis added).  The opinion further states that 11 NYCRR 65-6.4(e) clearly provides that the amount of attorney’s fees is based upon 20% of the total amount of the individual bills disputed in either a law suit or in arbitration.  This is irrespective of whether one bill or multiple bills are presented as part of a total claim for benefits based upon the health services rendered by the provider to the same eligible injured person.

The Court held that the Superintendent’s interpretation of the Insurance Law will be upheld in deference as long as that interpretation is not irrational, unreasonable, or is contrary to the statute’s clear wording. 

Here, the Court upheld the Superintendent’s interpretation of a claim, for purposes of calculating attorney’s fees, that it is “the total medical expenses claimed in a cause of action pertaining to a single insured, and not – as the courts below held – each separate medical bill submitted by the provider.  Accordingly, the attorney’s fees were to be calculated based on the aggregate of all bills for each insured.

Next, the Court turned to the issue of whether interest can be tolled on a claim that is untimely denied.  The Court held that interest can be tolled pursuant to Insurance Law §5106(a).  Pursuant to Insurance Law §5106(a), interest on an overdue claim accrues at 2% per month and the claim is overdue if not paid within 30 days after a proper demand for payment.  Yet, the Superintendent’s regulation, 11 NYCRR 65-3.9(c), provides that interest will be tolled if the applicant does not request arbitration or commence a lawsuit within 30 days after receipt of the denial of the claim or payment of benefits calculated pursuant to the regulations.

The Superintendent of Insurance interpreted 11 NYCRR 65-3.9(c) as mandating a tolling of interest regardless of whether the claim was timely denied.  Again, that interpretation is provided with deference as long as it is not irrational, unreasonable, or contrary to the statute’s clear wording.  The Court held that this interpretation also was consistent with Insurance Law §5106, Fair Claim Settlement, which encourages applicants to quickly seek to resolve a disputed claim.

This decision provides some clear guidance on both issues and has been a long, but worthwhile wait, for insurers.  With respect to the attorney’s fee issue, it appears that this decision has cleared up the debate on whether the provision on $60 or $80 minimum v. the 20% to max of $850.00 is applied.  Now the question becomes what are the loopholes….  One obvious tactic would be to file a mass a individual law suits.  Yet, it is unclear how a plaintiff would successfully oppose the insurer’s motion to consolidate.  Further, I can predict that some plaintiffs will not give up the fight on the $60/$80 argument.  Yet, how do they get past not only this decision but the clear wording of the insurance regulation as to when the maximum, and not minimum fees, on the total amount of first party benefits apply.  I will continue to monitor the situation and keep you apprised of any new developments.

3/17/09            Westchester Med. Ctr. v. American Transit Ins. Co.
Appellate Division, Second Department
Summary Judgment Denied as Denial Timely Issued After Additional Verification Received
The plaintiff’s summary judgment motion should have been denied as the insurer established that it timely requested additional verification on the issue of whether the assignor was entitled to Workers’ Compensation benefits for the underlying accident.  The insurer’s 30 days to pay or deny the claim did not begin to run until the insurer received the additional verification and not the date that the bill was sent to the insurer.

3/17/09            PLP Acupuncture PC v. Progressive Cas. Ins. Co.
Appellate Term, Second Department
Peer Reviewer’s Reliance Upon Other Physicians’ Reports In Rendering Opinion Does Not Render Report Insufficient to Establish Lack of Medical Necessity
An issue was raised in this case as to the sufficiency of the peer reviewer’s opinion in establishing lack of medical necessity because the peer reviewer cited and relied upon other medical providers’ report to formulate the opinion.  The court held that the peer reviewer’s opinion can be admitted into evidence if it is based upon out of court documents as long as there is proof on reliability of those documents.  In this particular case, the peer reviewer’s opinion was based upon the plaintiff’s records.  The court held that the plaintiff could not challenge the reliability of its own medical records and reports.

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper
[email protected]

3/27/09            R.B. Woodcraft, Inc. v. Acadia Insurance Company, State Farm, et al.
Appellate Division, Fourth Department
The Term: “Use in Whole or in Part for Business Purposes” is Ambiguous.  Barn Storing Business Items, in Part, is Not Clearly Being Used for Business Purposes

State Farm issued a homeowner's insurance policy to Brooks  A residence and detached pole barn were located on the Woodcraft policy.  When a fire destroyed the barn, a claim was submitted to State Farm for the loss of the barn and the personal property within it.  State Farm paid the claim for the personal property but denied the claim for the barn, under an exclusion that eliminated coverage for “other structures . . . used in whole or in part for business purposes . . . ."
The Fourth Department concluded that State Farm is required to pay the barn claim. The storage of business items in the barn does not mean the pole barn was used in part for business purposes.  The phrase used in whole or in part for business purposes' is ambiguous in the absence of any qualifying language . . . and therefore must be construed in favor of the insureds".
3/27/09            Binkowski v Hartford Acc. & Indemn. Co.
Appellate Division, Fourth Department
Plaintiff’s Claim on Breach of Contract Barred by the Statute of Frauds

Plaintiff commenced the current action seeking to enforce an oral contract she allegedly entered into with the workers’ compensation carrier paying her benefits.  As part of the settlement of an underlying action, plaintiff allegedly agreed to pay a portion of the lien that Hartford had asserted on the recovery.  In return, plaintiff alleges that Hartford agreed to resume benefits in approximately nine years rather than the nearly thirteen years that was ordered by the Workers’ Compensation Board.

Hartford moved to dismiss based upon the premises that the alleged oral agreement violated that Statute of Frauds, and was, as such, unenforceable.  Because the contract could not be performed within one-year, the Fourth Department agreed and upheld the trial court’s dismissal.  In so holding, the Court noted plaintiff’s opposition based upon the theory of promissory estoppel was unavailing where plaintiff could not establish the existence of an actual promise.  Likewise, the Court also noted that plaintiff’s opposition based upon the doctrine of part performance also failed because plaintiff could not establish that payment of the lien was “unequivocally referable to the oral agreement.”

3/26/09            Schorsch v Moses & Singer, LLP
Appellate Division, First Department
Plaintiff’s Malpractice Claim Dismissed Where She Cannot Establish the Existence of Coverage
Plaintiff’s malpractice claim was dismissed where she was unable to establish a viable claim against the carrier providing business property insurance.  Principally, plaintiff’s case rested upon a challenge to a disclaimer that the carrier issued which denied coverage for a loss of inventory.  The carrier’s denial was allegedly based upon an “employee dishonesty” exclusion found within the plaintiff’s policy.

The First Department noted that plaintiff’s alleged reason for the loss fell within the employee dishonesty exclusion.  Further, the Court noted the fact that the carrier’s counsel failed to recite the proper policy language – which was similar, but not the same as the language found within plaintiff’s policy – did not render the disclaimer letter insufficient (note this is a property damage claim, and as such not subject to Insurance Law §3420[d]).  Having failed to establish coverage, plaintiff’s attempts to assert a legal malpractice claim likewise failed. 

EARL’S PEARLS
Earl K. Cantwell, II
[email protected]


WHEN IS A SECRET NOT A SECRET?