Coverage Pointers - Volume X, No. 7

Dear Coverage Pointers Subscribers

 

As fall begins to settle in and as your editor settles in to watch the battle of the VP candidates, there are all kinds of interesting things to discuss.  Ahh, where to start?

 

PLRB Claims Conference in Seattle Washington

March 22 - 25, 2009

Mark it on your calendar.  I'll be presenting on the art of simplifying complex liability coverage issues. Always a fabulous conference and I hope to see you there.

 

Welcome Margo Lagueres and Margo's Musings!

 

Estoy encantada de tener el privilegio de unirme a tan estimable bufete y tomo esta oportunidad de saludar a todos nuestros lectores de habla espanola.  Por favor, no duden en contactarme si puedo asistirles de alguna forma.

 

Margo

 

In our most recent issue, we announced Mark's departure to the Social Security Administration and we surely wish him well.  However, we are absolutely delighted to introduce to you the newest member of our coverage team, Margo Lagueres, who will take up the cudgels of the Serious Injury column.

 

Margo M. Lagueras focuses her practice in insurance coverage matters with additional background in No-Fault/SUM arbitration and subrogation, third party matters, as well as tort liability defense.  As part of this practice, Ms. Lagueras begins this week authoring a bi-weekly column entitled "Margo's Musings" on recent developments in serious injury in New York No-Fault law for the firm's electronic newsletter "Coverage Pointers".

 

A bilingual attorney, Ms. Lagueras also has extensive research experience which includes a prior position as a librarian in both New York City and at the University at Buffalo.
  

She is a member of the Erie County and New York State Bar Associations. Ms. Lagueras received her J.D. magna cum laude from the University at Buffalo Law School where she received the Robert J. Connelly Award for Excellence in Trial Advocacy and participated in the Jessup International Moot Court Board. She received her MLS from the University at Buffalo School of Information Science where she graduated as a member of the Beta Phi Mu Honor Society with a perfect GPA. Ms. Lagueras has a M.A. in Spanish Literature from New York University and a B.A. received summa

 

Margo will be a wonderful addition to our coverage team having handled coverage matters for the last few years here in town. 

 

Audrey's Angles

 

Here's the good word from the land of milk, honey and no fault from our own Audrey Seeley:

 

The main topic this edition is Governor Patterson's veto of the bill to amend the intoxication exclusion.  Governor Patterson's veto message indicates that the reason why the bill was vetoed was because it was broadly written to require insurers to pay for medical care beyond that which is life saving or beyond stabilizing the individual.  It does appear from the message that we will see another bill limited to medical care that is life saving.  We will keep a watch out for it and keep you updated.

 

There is a supplement to an Insurance Department Circular letter regarding the Workers' Compensation Board adoption of the pharmaceutical fee schedule for your perusal.

 

The Appellate Division, Second Department, issued a decision that an insured's estate who was murdered by the driver of a motor vehicle was entitled to the no-fault death benefit but not uninsured motorist coverage.  It is an interesting read and perplexing as well.  How can the incident be considered an "accident" under one part of the policy but not an "accident" under another part of the policy....There is another one we will keep on our eye on to see if leave if requested to appeal to the Court of Appeals.

 

Finally, I have had quite a few responses to the November 19th no-fault seminar.  If you need additional information please do not hesitate to email me at

 

Audrey Seeley

[email protected].

 

On the Governor Veto of the DWI No Fault Bill, Comments from the Editor:

 

Thankfully, the Governor vetoed the bill that would have required carriers to pay no fault benefits to those who were injured by their own intoxication or drug impairment, presently excluded under PIP policies.  However, this bill is likely to return next year, but limited to ER treatment rather than all medical expenses.  Here's a part of the Governor's veto message: 

It is fundamental that health service providers should be compensated for the life saving services they provide to their patients. However, this bill is extremely expansive in scope and requires no fault insurers to provide coverage for far more than just emergency care. Indeed, the bill would require no fault insurers to reimburse a health service provider for all health-related services - including, pharmaceutical, therapeutic, surgical, rehabilitative and diagnostic - not merely until the patient is stabilized, but until the $50,000 no fault limit is exhausted. This would go well beyond the stated purpose of the bill, and the costs of providing such care would result in higher automobile insurance rates for the public.  

 

However, because I believe that this bill's goals are sound, I have instructed my staff to work with the Legislature,  the  health  services provider  groups,  and  the insurance industry to investigate this issue further and to help enact a new  bill  that  accomplishes  the  intended purpose  of this bill in a manner that will protect the interests of the health services providers, injured patients and the public. 

Jury Selection Bill Vetoed as Well

 

In our June 27, 2008 edition, we complained bitterly about legislation that had passed both houses of the legislature and was heading to the Governor's office for consideration, dealing with jury selection in civil cases.  The opening paragraph of our summary read:

 

Final Legislative Action on Civil Jury Selection

 

Little discussed on the streets yet is NYS Assembly Bill 11715, introduced in the Assembly on June 20, adopted by the Assembly on June 23, delivered to and adopted by the Senate on June 24 and now heading to the Governor for final consideration.  It's a bill guaranteed to extend the time to select a civil jury trial and tinker with jury alternates, with no particular advantage.

 

Thankfully, the Governor vetoed that bill as well, with these comments:

The problem with the bill is that the proposed mechanisms contravene well-settled legal principles governing review of trial court determinations and would create logistical burdens that could unnecessarily delay trials and seriously inconvenience citizens performing their civic duties by appearing as jurors to hear civil cases. Because of these concerns, a number of bar associations and other groups strenuously oppose this bill.

Earl's Pearls

 

In this week's column, Earl Cantwell favors us with an excellent summary of a very popular question with an oft-misunderstood answer:  What is a Business Record?

 

How Times Have Changed!

 

One hundred years ago today, the LA Times reported the arrest of 12 members of the Salvation Army at the corner of 5^th and Hill in downtown Los Angeles for parading without a license.  That may be considered a crime beyond serious comprehension today.  However, if someone remained at that corner for another 99 years, they would have seen another series of arrests at that corner, the arrest of the Fifth and Hill Gang in 2007.  The LA Times reported that [p]olice recovered 45,000 balloons of heroin during the 10-month investigation. They also found 85 pounds of tar heroin -- enough when diluted to fill a half-million balloons.  How times change.

 

A Tip of the Hat to Jimmy Slagle

 

N.B.  The Chicago Cubs are in post-season playoffs right now, being down one game to none.  That brings back fond baseball memories.

 

These are the saddest of possible words:

"Tinker to Evers to Chance."

Trio of bear cubs, and fleeter than birds,

Tinker and Evers and Chance.

Ruthlessly pricking our gonfalon bubble,

Making a Giant hit into a double --

Words that are heavy with nothing but trouble:

"Tinker to Evers to Chance."

 

Franklin Pierce Adams

 

Any real baseball fan knows that those three Hall of Fame infielders were the most famous double play combination in baseball history and the poem was written by a New York Giant as he sadly watched the Cubs complete double-play after double-play.  A "gonfalon" by the way, is a pennant. 

 

Few remember, however, who backed up that Cubs infield back in the second half of the first decade of the 20^th century.  The centerfielder was Jimmy Slagle.

 

One hundred years ago today, Jimmy Slagle played in his final major league ballade. 

Jimmy "The Rabbit" Slagle, was born in Worthville Pennsylvania which, in the year 2000, had a population of 85.  You may not remember, Jimmy, but there is a plaque in his honor in Worthville.  He was a starting outfielder for the Chicago Cubs at a time when the Cubbies were a powerhouse, going to three World Series in four years and winning the titles in 1907 and 1908 (the last time the Cubs won the Series).

During the 1907 World Series, against Ty Cobb and the Tigers, Slagle drove in a team-high four runs and scored the winning run in the deciding fifth game.  He also stole six bases, an achievement that remains a record for a five-game Series.

Anyway, Jimmy died in Chicago in 1956, without children to survive him.  We remember him today, on the 100^th anniversary of his final game.

This Week's Highlights (Including the a Case Reviewing the Benefits of Murder-by-Car)

• Insured Recovers Cost of Enforcing Additional Insured Provisions
• Legal Malpractice Coverage Restored - Knowledge that Client May be Sued for Misconduct and Suspicion that Someone Might Sue Law Firm as Well, Does Not Require Notice Prior to Policy Inception
• Intentional Pedestrian Knock Down Not an Accident, so Uninsured Motorist Benefits Unavailable
• Claim for Fraud against Title Insurance Company Dismissed

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

Margo M. Lagueras
[email protected]

 

• Summary Judgment Affirmed Absent Objective Medical Evidence
• No Probative Value in Unaffirmed Medical Reports and Uncertified Hospital Records
• Complaint Survives SJ Motions by Raising Triable Issue of Fact Under Significant Limitation of Use Category
• Reversed: Physical Examinations Six Years After Accident Are Clearly Not Contemporaneous and Do Not Save Complaint
• Reversed: Physician's Affirmation Based On Unaffirmed MRI Lacks Probative Value
• Reversed: Irreconciled Neurological Findings Doom Plaintiff's Complaint
• Unaffirmed MRI Reports Sufficient Where Opposing Parties' Experts' Reports Also Rely On Them
• Reversed, On the Law: When Reports and Affidavits Are Insufficient to Save Complaint 

AUDREY'S ANGLES ON NO-FAULT

Audrey Seeley

[email protected] 

Litigation 

• Insurer Failed to Submit Admissible Evidence of Failure to Appear for IME
• Insurer Failed to Submit Signed Peer Review Report in Opposition to Summary Judgment 
• Governor Patterson Vetoes Bill on Intoxication Exclusion
• Workers' Compensation Pharmaceutical Fee Schedule Application to No-Fault Claims 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

• Plaintiffs Late Disclaimer Argument Fails Where Evidence of Notice to the Carrier was not in Admissible Form
• No Physician/Patient Relationship with IME Doctor, Therefore no Claim for Medical Malpractice

 We hope you enjoy this issue's offerings.  You know how to find us. 

Dan

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
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

 

Margo’s Musings on “Serious Injury”

 Audrey’s Angles on No Fault

Peiper on Property
Earl’s Pearls

Across Borders

 

10/2/08            Jenel Management Corp., v. Pacific Insurance Company
Appellate Division, First Department
Insured Recovers Cost of Enforcing Additional Insured Provisions

Was the stairwell area where the underlying accident occurred covered by the additional insured clause in the policy procured by the underlying plaintiff's employer from Pacific?  That clause would extend coverage to Jenel’s insurer's co-plaintiffs, the employer's landlord and the managing agent of the building.   “Yes,” says the court. Coverage exists because the underlying claim arose out of the "maintenance or use" of the leased premises, within the meaning of the additional insured clause.  Why?  The accident occurred in the course of an activity necessarily incidental to the operation of the space leased by the employer, and in a part of the premises that was necessarily used for access in and out of the leased space.  Interestingly, the court allowed the co-plaintiffs to recover half the costs not only of defending the main action, but also to get reimbursement for prosecuting the claim to recover those costs, citing  Perchinsky v State of New York, 232 AD2d 34, 39 [1997], lv denied sub nom. Perchinsky v Granny G. Prods., 93 NY2d 812 [1999].  The rationale in Perchinsky was as follows, involving a successful claim for indemnity brought by the Lions Club:

 

Here, the Lions Club is seeking to enforce its contractual indemnification rights against the indemnitor not for the costs of enforcing the indemnification claim, but merely for the costs of pursuing "defensive" third-party claims against parties other than the contractual indemnitor. Permitting the Lions Club to enforce this right is entirely consistent with [previous cases] because it is not an award of counsel fees in an action between the indemnitor and the indemnitee, inter se (see, id., at 270, n 3). To hold otherwise would deprive the indemnitee of the full benefit of the bargain it struck with the indemnitor. Thus, the Lions Club's claim for contractual indemnification from Granny "G" should be limited to the costs, including reasonable counsel fees, incurred in the defense of plaintiff's action, including the prosecution of the third-party actions, but not the prosecution of its cross claim against Granny "G".

Editor’s Note:            Attaboy Max.

 

 

 

9/23/08            Executive Risk Indemnity Inc. v. Pepper Hamilton LLP
Appellate Division, First Department
Legal Malpractice Coverage Restored – Knowledge that Client May be Sued for Misconduct and Suspicion that Someone Might Sue Law Firm as Well, Does Not Require Notice Prior to Policy Inception
Here, while evidence suggested that members of the law firm  subjectively either believed or feared that the firm might be subjected to professional liability claims by entities claiming injury as a result of its client’s conduct the firm's subjective belief that a suit may ensue based upon is not enough to require law firm to provide prior notice to carrier about to sign onto risk. The knowledge of its client’s actions, and of its own legal work related to those operations, may have provided objective evidence that client might be sued and supported a concomitant suspicion that those with claims against client might seek relief against the law firm as well. But there was nothing in the record constituting objective evidence permitting a reasonable professional to conclude that the law firm did anything that would subject it to suit or other claim.

 

9/16/08            Met Life Auto & Home v. Kalendarev
Appellate Division, Second Department

Intentional Pedestrian Knock Down Not an Accident, so Uninsured Motorist Benefits Unavailable

Driver of the car admitted that pedestrian was the purposely struck with the car and pled guilty to assault.  Pedestrian sought to recover Uninsured Motorists Benefits but UM carrier moved to permanently stay the arbitration.  Petition granted.  UM benefits cover auto accident and an assault with an auto is not an accident.

9/16/08            Prince v. Accardo and United General Title Insurance Company

Appellate Division, Second Department

Claim for Fraud against Title Insurance Company Dismissed

This was an action to recover damages for fraud and for rescission.  Prince’s home was subject to a foreclosure action and he conveyed his house to Accardo by a June 2005 deed. However, Prince remained in possession pursuant to a lease and purchase option agreement with Accardo.

Berkshire financed Accardo's purchase of the home and obtained from United General Title Insurance Company, a title insurance policy naming both Berkshire and Accardo as insureds.  Thereafter, Accardo undertook to evict the Prince who started this lawsuit to recover damages for fraud and rescind the dead. The claim, among other things, was that the defendants, including the title company, conspired to defraud Prince into selling the house to Accardo, who never intended to permit them to exercise their option to buy the house back.

The title company moved for summary judgment and presented evidence that it engaged in no fraud or conspiracy.  Prince offered nothing of evidentiary value in opposition, merely an attorney’s affidavit.  Case against title insurance company therefore dismissed.

 

 

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

Margo M. Lagueras
[email protected]

 

9/23/08            Reyes v. Esquilin

Appellate Division, First Department

Summary Judgment Affirmed Absent Objective Medical Evidence

The Appellate Division affirmed the lower court’s ruling which granted summary judgment to

the defendants dismissing the complaint.  The defendants showed that the plaintiff’s MRI only revealed age-related degenerative changes but not any accident-related trauma.  The plaintiff did not present any objective medical evidence to rebut defendants’ evidence and, therefore, the fact that the defendants’ expert did not address the plaintiff’s condition during the 90/180-day period did not save the complaint form dismissal.

 

9/23/08            Singh v. Mohamed

Appellate Division, Second Department

No Probative Value in Unaffirmed Medical Reports and Uncertified Hospital Records

Here the lower court granted SJ dismissing the plaintiff’s complaint and the appellate court affirmed and further denied the plaintiff’s motion for leave to renew.  The plaintiff submitted only one affirmed medical report based on an examination in 2007.  That report was deemed insufficient because, while it gave range-of-motion findings which showed significant limitations in the lumbar and cervical regions, no competent objective medical evidence of range-of-motion was offered that was contemporaneous with the accident.  Since other reports from two years earlier were unaffirmed, and the hospital records submitted were uncertified, they had no probative value.  As such, the plaintiff failed to establish the duration of his spinal injuries.  In addition, the plaintiff failed to submit competent medical evidence to establish that he suffered a nonpermanent injury under the 90/180-day category of Insurance Law § 5102.

 

9/23/08            Stefko v. Arslan

Appellate Division, Second Department

Complaint Survives SJ Motions by Raising Triable Issue of Fact Under Significant Limitation of Use Category

The commercial carrier defendants sought to dismiss the plaintiff’s complaint on motions for SJ and the trial court denied those motions.  The appellate court affirmed determining that, although the defendants met their prima facie burden, the plaintiff raised a triable issue of fact regarding whether she suffered a serious injury to her cervical and/or lumbar spine under Insurance Law § 5102(d), the significant limitation of use category. 

 

9/23/08            Kurin v. Zyuz

Appellate Division, Second Department

Reversed: Physical Examinations Six Years After Accident Are Clearly Not Contemporaneous and Do Not Save Complaint

On appeal, the lower court’s order was reversed on the law and SJ was granted to the defendants determining that none of the plaintiffs sustained a serious injury.  The plaintiffs’ expert only examined each plaintiff once, nearly six years after the accident, and the plaintiffs failed to submit any sworn or affirmed medical reports finding injuries contemporaneous wit the accident.  Furthermore, the plaintiffs failed to establish injury of a nonpermanent nature.  They did not submit competent medical evidence showing they were prevented from performing their usual and customary activities during the 90/180-day post-accident period, and their

deposition testimony revealed that none of them had missed more than five days of work or school following the accident.

 

9/23/08            Uribe-Zapata v. Capallan

Appellate Division, Second Department

Reversed: Physician’s Affirmation Based On Unaffirmed MRI Lacks Probative Value

Here, the defendant met his prima facie burden showing the plaintiff did not sustain a serious injury as a result of the accident.  The plaintiff relied on an unaffirmed MRI report of her lumbar spine and right knee which did not have any probative value.  As a result, her treating physician’s affirmation as to her diagnosis, which was based on the unaffirmed MRI, also lacked any probative value, as did the plaintiff’s own self-serving affidavit.  In addition, the plaintiff did not sustain her burden as she did not offer competent medical evidence showing she was prevented from performing her usual and customary activities for the 90/180-day period following the accident.

 

9/23/08            Felix v. Wildred

Appellate Division, Second Department

Reversed: Irreconciled Neurological Findings Doom Plaintiff’s Complaint

Yet another reversal granting SJ to the defendant.  Here, the defendant’s examining neurologist found the plaintiff had no memory or other cognitive deficiencies, thus meeting the defendant’s prima facie burden showing the plaintiff did not suffer a serious injury.  In opposition, the plaintiff’s neurologist reported that he found the plaintiff suffered memory loss, but he failed to reconcile this report with his three examinations during the previous eight months in which he had found that the plaintiff had normal attention, concentration and memory.  Furthermore, the trial court should not have considered plaintiff’s claim of spinal injury as he did not allege such injury in his bill of particulars.

 

9/23/08            Williams v. Clark

Appellate Division, Second Department

Unaffirmed MRI Reports Sufficient Where Opposing Parties’ Experts’ Reports Also Rely On Them

Here the plaintiff appealed the lower court’s grant of summary judgment dismissing the complaint and determining that the plaintiff did not suffer a serious injury.  The appellate court reversed, on the law, finding that the plaintiff raised a triable issue of fact by submission of his treating chiropractor’s affidavit which, based on contemporaneous and recent examinations of the plaintiff, as well as his MRI reports showing bulging discs, set forth that the cervical and lumbar injuries and range-of-motion limitations were permanent and causally related to the accident.  Although the MRI reports relied on were unaffirmed, because the defendants’ experts’ reports also referred to those same MRI reports in making the motion for summary judgment, the plaintiff could properly rely on them in opposing that motion.  Furthermore, it was also found that the affidavit of the treating chiropractor sufficiently explained any gaps in the plaintiff’s treatment history.

 

9/23/08            LaFerlita v. Seagull 2000, Inc.

Appellate Division, Second Department

Reversed, On the Law: When Reports and Affidavits Are Insufficient to Save Complaint

The defendants’ appeal was successful and the lower court’s order denying summary judgment was reversed on the law as the plaintiffs’ reports and affidavits did not raise a triable issue of fact.  One of the plaintiff’s chiropractor’s reports was not sworn to and therefore was not competent evidence.  The affidavit of another of plaintiff’s chiropractors merely noted that he examined the plaintiff.  Although it stated that, based on a recent examination, the plaintiff had range-of-motion limitations in the lumbar and cervical spine, neither that chiropractor nor the plaintiff submitted competent medical evidence showing such limitations that were contemporaneous with the accident in question, nor did the affidavit explain the 2 ½-year gaps in the plaintiff’s treatment.  Furthermore, the affidavit of the plaintiff’s treating radiologist, while stating that the plaintiff had bulging and herniated discs, did not establish that constituted a serious injury because it failed to present objective evidence of the extent of the limitations and duration resulting from the disc injuries.

 

AUDREY’S ANGLES ON NO-FAULT

Audrey Seeley

[email protected]

 

Litigation

 

9/29/08            Post Traumatic Medical Care, P.C. a/a/o Smith v. Progressive Cas. Ins. Co.

Appellate Term, Second Department

Insurer Failed to Submit Admissible Evidence of Failure to Appear for IME

The insurer denied the plaintiff no-fault benefits on the basis that the plaintiff’s assignors failed to attend scheduled independent medical examinations (“IMEs”) in violation of a condition of the insurance policy.  The plaintiff moved for summary judgment and the appellate term held that its motion was improperly denied.  The defendant’s opposition to the motion failed to provide competent proof that the assignors failed to attend the IMEs.  Specifically, the defendant did not submit admissible evidence from a person with personal knowledge of the assignors’ non-appearance.

 

9/24/08            Bronx Multi Med. Care, P.C a/a/o Guerrero v. Kemper Cas. Ins. Co.

Appellate Term, First Department

Insurer Failed to Submit Signed Peer Review Report in Opposition to Summary Judgment

The plaintiff’s summary judgment was properly granted as the defendant’s opposition failed to raise a triable issue of fact in that it submitted an unsigned peer review report which failed to comply with CPLR 2106.

 

9/16/08            State Farm Mut. Auto. Ins. Co. v. Langan

Appellate Division, Second Department

Insured Murdered and Estate Entitled to Death Benefit Under No-Fault

On February 12, 2002, Mr. Spicehandler was involved in a fatal hit-and-run incident (NOTE: the decision does not say “accident.”)  Mr. Popadich was the driver of the motor vehicle that struck Mr. Spicehandler.  Mr. Langan was the administrator of Mr. Spicehandler’s estate and sought uninsured motorist benefits as well as a death benefit under no-fault under Mr. Langan’s insurance policy with State Farm.  Mr. Langan took the position that Mr. Spicehandler was an insured under his policy at the time of this incident.

 

On September 28, 2005, Mr. Popadich pleads guilty to second degree murder in this fatal incident with Mr. Spicehandler.

 

State Farm had already denied insurance coverage under Mr. Langan’s policy on the ground that Mr. Spicehandler’s injuries were not caused by an “accident” as they were the result of Mr. Popadich’s intentional criminal conduct.

 

State Farm commenced a declaratory judgment action against Mr. Langan and its summary judgment motion was granted.  On appeal the Appellate Division modified the decision.

 

The Court held that the decision of lack of insurance coverage under the uninsured motorist endorsement of the policy was correct.  The Court reasoned that the purpose of UM coverage was to ensure that an injured person who suffers injury or death because of a financially irresponsible motorist is provided with coverage.  UM coverage is supposed to provide that injured person with the same type of coverage they would have had the tortfeasor been identifiable and insured at the time of the accident.  Accordingly, if Mr. Popadich had been identified and insured at the time of the incident the inquiry turns to whether there would be coverage under Mr. Popadich’s insurance policy for the wrongful death action commenced by Mr. Spicehandler’s estate.  The Court concluded there would not be insurance coverage because Mr. Popadich’s insurance policy would exclude insurance coverage for intentional injuries inflicted on Mr. Spicehandler.  It logically follows that there would not be any coverage under the UM endorsement for the same reasons.

 

Now, the Court turns to whether State Farm must pay the death benefit under the no-fault portion of Mr. Langan’s policy.  The Court reversed the lower court’s determination and held that Mr. Langan was entitled to the death benefit. 

 

The Court reasoned that in determining whether there was coverage under the no-fault portion of the insurance policy, an analysis of whether Mr. Spicehandler’s death, from his own perspective, was unexpected or unforeseen, thereby rendering it an accident.  The Court further reasoned that in the context of insurance, other than the uninsured context, the fact that the tortfeasor acted intentionally, i.e., committed murder, has no effect on whether the insured has insurance coverage for the incident.  The caveat is that coverage will be affected if from the insured’s viewpoint the event was not unexpected or unusual and was not brought about by the insured’s own misconduct.

 

The Court then states that from Mr. Spicehandler’s perspective the incident causing his death was unforeseen and was not attributed to his own misconduct (my question is how do we know what Mr. Spicehandler’s perspective was as, respectfully, he is deceased).  Therefore, there is insurance coverage under the no-fault portion of the State Farm policy.

 

There were two concurring justices and only one of them dissented in part.  The one justice, who dissented, dissented on the decision regarding coverage under the no-fault portion of the policy.  The reasoning is that the determination is inconsistent with the Court’s previous order in the same case which provided that there was no insurance coverage available under the entire policy for Mr. Spicehandler’s death if it resulted from intentional conduct.  The Court’s prior order is binding and constitutes the law of the case which cannot be disregarded.  Finally, the lone dissenter on this issued further reasoned that the determination provides an inconsistent interpretation of the phrase “caused by an accident” which is contained in the no-fault portion of the policy and the uninsured motorist endorsement.

 

9/25/08            Governor Patterson Vetoes Bill on Intoxication Exclusion

On September 25, 2008, Governor Patterson vetoed a bill that would amend the intoxication exclusion to prohibit the insurer from denying payment of a bill from a provider who treated an individual who was injured in a motor vehicle accident while driving in an intoxicated state or impaired by a drug.  The bill further provided that the insurer could recover the amount paid from its insured.

 

Governor Patterson’s veto message explained that this bill was vetoed because the proposed language would provide for coverage for more than just life saving medical care that is required to be provided by state and federal law.  The proposed language would require a no-fault insurer to pay for all health related expenses such as prescriptions, surgical, rehab, diagnostic, and therapeutic treatment not until the individual is stabilized but potentially until the policy limits are exhausted.  The result of imposing such a requirement upon the no-fault insurer would result in higher insurance rates for consumers.  The message indicated that the Governor believed that goals of the bill were sound yet wanted the insurance industry, the Governor’s office, and the health care industry to investigate the issue and craft a new bill.

 

9/19/08            Insurance Department Circular Letter, Supp. 1 to Cir. Ltr. No. 9.

Workers’ Compensation Pharmaceutical Fee Schedule Application to No-Fault Claims.

The Workers’ Compensation Board adopted, by emergency regulation, a new pharmaceutical fee schedule that will apply to all no-fault insurers.  This fee schedule will be applicable to pharmaceuticals dispensed on or after July 7, 2008.  Under the new fee schedule, the maximum reimbursement for a brand name prescription is the Average Wholesale Price minus 12% plus a dispensing fee of $4.00.  For a generic prescription, the maximum reimbursement is the Average Wholesale Price minus 20% plus a dispensing fee of $5.00.  The accepted Average Wholesale Price is found in the Red Book, Medi-Span Master Drug Database, Blue Book, or other nationally recognized drug pricing index adopted by the Board.  Finally, the Board’s pharmacy fee schedule regarding designated pharmacies does not apply to no-fault benefits.

 

 

PEIPER ON PROPERTY (and POTPOURRI)

Steven E. Peiper

[email protected]

 

            Again, another week passes with no mention of first party.  However, please take a look at the Second Department’s interesting decision in the Bazakos which discusses the physician/patient relationship in the context of independent medical examinations.  Please note the 3-2 split on this one which looks like a ticket to the Court of Appeals to us.  As always, we’ll keep an eye on it and let you know how it turns out. 
 

09/25/08          236 West 40th Street Corp. v Chicago Title Insurance Company

Appellate Division, First Department

Plaintiffs Late Disclaimer Argument Fails Where Evidence of Notice to the Carrier was not in Admissible Form

The First Department upheld that trial courts declaration that an exclusion applied to bar plaintiffs claim.  Moreover, when plaintiff sought to avoid the denial by arguing that the carrier’s disclaimer was untimely, the Second Department noted that the plaintiff failed to present any evidence in admissible form which established when notice was provided to the carrier.  As such, plaintiffs claims of late denial, and therefore statutory preclusion under Insurance Law § 3420(d), were denied.

 

09/23/08          Bazakos v Lewis

Appellate Division, Second Department

No Physician/Patient Relationship with IME Doctor, Therefore no Claim for Medical Malpractice

Plaintiff initially sustained injury in an unrelated accident, and commenced a lawsuit for damages as a result of that incident.  As part of that claim, plaintiff was required to appear at an Independent Medical Exam which was performed Dr. Lewis.  It was during this examination that plaintiff allegedly sustained additional injuries.

 

Subsequently, plaintiff commenced an action in negligence against Dr. Lewis.  Notably, the action could not have been brought as medical malpractice action because it was beyond the two year statute of limitations governing that type of claim.  Understanding the statute of limitations defense that would have been available, defendant argued that the claim was one of malpractice and that plaintiff could not avoid the limitation by identifying the claim under a negligence theory. 

The Second Department disagreed with the trial courts decision, and held that because plaintiff was compelled to appear before Dr. Lewis a physician/patient relationship had not been formed.   This was because a physician/client relationship could not be formed where the doctor’s role in the examination was not to treat plaintiff, but rather to evaluate his condition.  Without the physician/patient privilege, the Second Department reasoned that a claim in medical malpractice could not occur.  

 

It is noted that Justice Covello, joined by Justice Santucci, dissented from the holding of the rest of the court.  Justice Covello based his decision on standing precedent which held a physician/patient relationship could be formed, in limited circumstances, with the IME doctor.  If the physician/patient relationship could be formed, the dissent reasoned that the relationship could likewise give rise to a medical malpractice action. 

 

EARL’S PEARLS

Earl K. Cantwell, II
[email protected]

 

What is a Business Record?

 

            Of all the rules of evidence, the “Business Record” statute in New York, codified in CPLR 4518 is perhaps the most misunderstood. There may be an assumption that every business document qualifies, and therefore, is admissible as a matter of course, although that is certainly not the case for a many documents. 

 

            Under CPLR 4518, to be an admissible business record the document must be made as a memorandum or record of a transaction or event in the regular course of business, and it is within the regular course of business to make such a record at the time of the transaction or event (or within the a reasonable time thereafter).  The CPLR has been updated to provide that an electronic record is admissible if it is a true and accurate representation of either the original document or an original electronic record.

 

            Limits of this rule frequently come into play with respect to official and unofficial accident reports.  For example, in Carr v. Burnwell Gas of Newark, Inc., 23 A.D.3d 998, 803 N.Y.S.2d 834 (4^th Dept. 2005), it was decided that parts of a written statement given by a driver to a police accident investigator that appeared in a report were hearsay and not admissible.  Nor was it admissible under any hearsay exception, since it was not a statement against interest, a party admission, or a business record, as the driver was under no “business duty” to report the incident to the police. See also, Hatton v. Glasser, 219 A.D.2d 697, 631 N.Y.S.2d 757 (2d Dept. 1995), wherein it was held that the trial court committed reversible error when it received into evidence an unredacted police report pertaining to an accident. The report contained hearsay statements of the individual and his witness and was not admissible as a business record exception to the hearsay rule. The report also contained the police officer’s conclusions as to the cause of the accident, even though he was not an eye-witness.  Note that the plaintiff also correctly contended that the trial court erred in admitting into evidence his hospital record without redacting a toxicology report. However, this was held not to be error due to the business record exception (CPLR 4518). 

 

            Therefore, not every record qualifies as a business record made in the normal course of events as part of business duty or routine, and portions of various tests, reports and memoranda may need to be redacted or excised due to hearsay statements. 

 

            Under CPLR 4518, hospital bills are entered into evidence as prima facie evidence of the facts contained therein and proof that the certified bill is correct, that each item was necessarily supplied, and the amount charged was reasonable.  However, hearsay statements, reports, tests and narratives may become embedded in hospital bills and not be admissible on that basis. 

 

            Other business records are also considered as prima facie evidence of the facts contained therein, provided they are certified by the head of a hospital, laboratory, department or bureau of a municipal corporation or of the State. 

 

            Simply because a record comes from a business or corporation and is part of some business or corporate “file” does not mean that such a document (or all parts of it) will qualify as a business record and be admissible as an exception to the hearsay rule. The hearsay rule exceptions focus on whether there is enough circumstantial evidence to suggest that the evidence is accurate and not biased, even though not generated in court. Records made in the regular course of business presumably bear such an endorsement, since they are made and kept in routine practice and it is in the business’s interest to make and keep accurate records without an eye toward litigation or adversary proceedings.  However, if a test, report, narrative or description crosses the line and becomes an ad hoc statement either by or against a party, it may be subject to exclusion as a non-business record unless it can be admitted under some other hearsay exception, such as a statement by a party against interest.

 

ACROSS BORDERS

 

9/30/08            Fidelity and Guaranty Insurance Underwriters v. Jasam Realty

United States Court of Appeals, Second Circuit
Second Circuit Finds Addition Of Named Insured Created New Insurance Contract For Purpose Of Determining Rescission Based On Misrepresentations Made By Insured When Requesting Coverage
 The Second Circuit Court of Appeals vacated and remanded the district court’s judgment on a jury verdict in this case involving an insurer’s duty to defend a personal injury lawsuit pursuant to a GCL policy. The original policy was issued in 1997 and was renewed annually until cancelled in 2001. An agent for the insurer issued a binder to add a named insured in 1999, but the insurer claimed to have had no notice of the addition until 2000. The Court of Appeals held that the district court erred when it refused to specify for the jury which date – 1999 or 2000 – to consider in deciding whether the insured made misrepresentations in connection with requesting coverage. Furthermore, the Court of Appeals held that the insured’s presumably truthful representations in 1997 did not entitle it to judgment as a matter of law because its addition of coverage in 1999 created a new contract.

Submitted by: Skip Wilson and Heather Hornsby (McDowell Knight Roedder & Sledge LLC)

 

9/29/08            Wachovia Insurance Services, Inc. v. Toomey
Florida Supreme Court
Florida Supreme Court Answers Certified Questions From Eleventh Circuit Court Of Appeals On Assignment Of Claims In Insurance Case
The Florida Supreme Court gave the following three answers to questions certified by the Eleventh Circuit Court of Appeals: (1) “a settlement agreement between two parties that explicitly contains both an assignment of causes of action against a third party insurer and an immediate release of the insured on the same causes of action is valid and not barred by . . . Fidelity & Casualty Co. of New York v. Cope, 462 So. 2d 459 (Fla. 1985)”; (2) “the claim for breach of fiduciary duty arising from the relationship between the insurance broker and the insured involving allegations of failure to provide insurance coverage was also assignable as it is analogous to a cause of action for bad faith”; and (3) “the claim for negligent failure to procure insurance coverage should not have been dismissed as a matter of law based on Moss v. Appel, 718 so. 2d 199 (Fla. 4th DCA 1998), was assignable, and should have been submitted to the jury.” The case arose out of a wrongful termination claim by two former employees of a Tampa-based mortgage company. At the time of termination, the company had an Employment Practices Liability Insurance Policy that covered claims for breaches of written employment contracts.

Submitted by: Skip Wilson and Heather Hornsby (McDowell Knight Roedder & Sledge LLC)

 

9/24/2008        J-U-B Engineers, Inc. v. Security Insurance Co. of Hartford

Supreme Court of Idaho
Summary Judgment Properly Granted in Favor of Third Party Insurance Defense Attorney on Legal Malpractice Claim, who was Directed by Insurance Company NOT to Pursue Attorney Fee Claim Against Opposing Party of Behalf of Insured Client
 Attorney who was hired by carrier to defend its insured in a lawsuit involving a claim for negligent engineering services obtained summary judgment on behalf of client/insured. Client instructed attorney to file claim for attorney's fees against underling plaintiff. Carrier instructed attorney not to pursue fee claim. Attorney did not pursue fee claim and client sued attorney for malpractice, claiming injury to its reputation in not being more aggressive with regard to litigation tactics. Idaho Supreme Court affirmed summary judgment for attorney, concluding no proximate cause or damages proved in connection with the client's claim for damage to reputation.

Submitted by: Michael K. Kiernan and Burks A. Smith, III (Abbey, Adams, Byelick, Kiernan, Mueller, Marone & Samis, L.L.P)

 

REPORTED DECISIONS

 

Met Life Auto & Home v. Kalendarev

Hodges, Walsh & Slater, LLP, White Plains, N.Y. (Harold L.
Moroknek of counsel), for petitioner-respondent.
Finder and Cuomo, LLP, New York, N.Y. (Vangeles Skartsiaris
of counsel), for proposed additional
respondent GEICO Insurance
Company.


DECISION & ORDER

In a proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of an uninsured motorist claim, Emanuel Kalendarev appeals from an order of the Supreme Court, Queens County (Rios, J.), dated May 18, 2007, which granted that branch of the petition which was for a permanent stay of arbitration.

ORDERED that the order is affirmed, with one bill of costs.

The appellant, while a pedestrian on the sidewalk, allegedly was injured when a vehicle being driven by nonparty Rotem Balila and insured by the proposed additional respondent GEICO Insurance Company (hereinafter GEICO) jumped the curb and struck him and several others. Balila subsequently pleaded guilty to assault in the first degree arising from the incident, admitting that the appellant was his intended target. GEICO disclaimed coverage for the incident based on the intentional conduct of the insured. The appellant thereafter demanded arbitration of a claim for uninsured motorist benefits from his own insurer, the petitioner Met Life Auto & Home (hereinafter Met Life). Met Life commenced this proceeding, inter alia, for a permanent stay of arbitration. We affirm the grant of that relief.

The appellant's injuries were not the result of an accident and, therefore, he was not entitled to uninsured motorist benefits under the subject insurance policy (see State Farm Mut. Auto. Ins. Co. v Langan,AD3d[decided herewith]; Westchester Med. Ctr. v Travelers Prop. Cas. Ins. Co., 309 AD2d 927; Matter of Progressive Northwestern Ins. Co. v Van Dina, 282 AD2d 680; Matter of Aetna Cas. & Sur. Co. v Perry, 220 AD2d 497). The appellant's arguments to the contrary are either not properly before this court or without merit. Thus, a permanent stay of arbitration was properly granted.

Prince v. Accardo and United General Title Insurance Company

Kleinman, Saltzman & Bolnick, P.C., New City, N.Y. (Laurence
D. Kleinman of counsel), for appellant.

DECISION & ORDER

In an action, inter alia, to recover damages for fraud and for rescission, the defendant United General Title Insurance Company appeals from an order of the Supreme Court, Queens County (Dorsa, J.), entered April 13, 2007, which denied its motion for summary judgment dismissing the complaint insofar as asserted against it, with leave to renew upon the completion of discovery.

ORDERED that the order is reversed, on the law, with costs, and the appellant's motion for summary judgment dismissing the complaint insofar as asserted against it is granted.

The plaintiffs, whose house was the subject of a foreclosure action, conveyed title to the house to the defendant Michel-Angelo Accardo by deed executed on June 21, 2005. Thereafter, the plaintiffs remained in possession pursuant to a lease and purchase option agreement with Accardo.

Berkshire Financial Group, Inc. (hereinafter Berkshire), financed Accardo's purchase of the plaintiffs' property. Prior to closing, Berkshire obtained from the appellant, United General Title Insurance Company, a title insurance policy naming both Berkshire and Accardo as insureds.

Accardo undertook to evict the plaintiffs, who thereafter commenced the instant action, inter alia, to recover damages for fraud and to rescind the deed. The complaint asserted, among other things, that the defendants defrauded the plaintiffs into selling their house to Accardo, who never intended to permit them to exercise their option to buy the house back.

On its motion for summary judgment dismissing the complaint insofar as asserted against it, the appellant demonstrated its entitlement to judgment as a matter of law by submitting evidence sufficient to establish, prima facie, that it did nothing fraudulent and was not a participant in an allegedly fraudulent scheme against the plaintiffs (see Alvarez v Prospect Hosp., 68 NY2d 320, 324). In opposition, the plaintiffs, who only submitted an affirmation from an attorney having no personal knowledge of the facts, failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 563). Contrary to the Supreme Court's conclusion, the appellant's motion was not premature, as the plaintiffs offered no evidentiary basis suggesting that discovery might lead to relevant evidence or that facts essential to opposing the motion were exclusively within the appellant's knowledge and control (see CPLR 3212[f]; Kimyagarov v Nixon Taxi Corp., 45 AD3d 736, 737). Accordingly, the Supreme Court should have granted the appellant's motion for summary judgment dismissing the complaint insofar as asserted against it.

Executive Risk Indemnity Inc. v. Pepper Hamilton LLP

 

Defendants Pepper Hamilton LLP and W. Roderick GagnÉ appeal from an order of the Supreme Court, New York County (Karla Moskowitz, J.), entered on or about January 4, 2008, which, inter alia, granted the motion and cross motion of plaintiff Executive Risk Indemnity, Inc. and third-party defendants Continental Casualty Company and Twin City Fire Insurance Company, and declared that they are not obligated to defend and indemnify defendants Pepper Hamilton LLP and W. Roderick GagnÉ under the subject excess professional liability insurance policies.


SAXE, J.

The law firm Pepper Hamilton and one of its members, W. Roderick GagnÉ, were deprived of millions of dollars in professional liability insurance coverage purchased by the firm, by the order of the motion court declaring that the three excess insurance carriers have no obligation to indemnify the firm. The court reasoned that because the law firm knew of misconduct on the part of its client, and of the likelihood that claims would be made against the firm itself based upon its representation of that client while the misconduct took place, it had an obligation to inform the insurers of its knowledge of the misconduct and its concern that it might be subject to suit as a result when applying for coverage or for renewal of coverage. As to two of the insurers, the court precluded coverage under the policies' "prior knowledge" exclusions, and as to the third, it held that the insurer was entitled to rescission of the policy effective the year the claims were made.

The underlying claims against counsel arise out of an alleged securities fraud scheme by the firm's former client, Student Finance Corporation (SFC) and its principal, Andrew Yao. SFC was in the business of financing loans to students in trade schools, primarily truck driving schools; it then pooled the loans into certificates or securities that it sold to investors, using private placement memoranda prepared by Pepper Hamilton. Another client of Pepper Hamilton, Royal Indemnity Company, provided credit risk insurance for the pooled loans.

It is asserted that in order to make its operations appear more successful, SFC falsely represented to investors that student loans in its securitized loan pool were not more than 90 days overdue and in default, when in fact, significant numbers of them were in default. In order to make it appear that student loans in the securitized loan pool were current, rather than more than 90 days overdue, SFC made forbearance payments from reserve accounts of its own. This practice resulted in SFC's understating its default rates, skewing its performance data for the student loans and making the certificates more attractive to investors, underwriters and credit risk insurers.

SFC's inaccurate representation of its default rates apparently began to come to light in or around March 2002, when a round of financing fell through after the lender uncovered SFC's use of forbearance payments through careful scrutiny of its financial documents. Without the new financing, SFC no longer had the liquidity to make up the monthly shortfalls in loan payments. According to GagnÉ, Yao first directly informed him in mid-March of SFC's practice of making forbearance payments for loans that would otherwise be declared in default. While Pepper Hamilton initially continued to represent SFC, after further consideration and interoffice consultation, it withdrew from its representation of SFC on April 24, 2002.

SFC was eventually forced into bankruptcy, and in April 2004, the bankruptcy trustee contacted Pepper Hamilton to request that it enter into a tolling agreement while he considered whether to bring any claims against the law firm. At this point, Pepper Hamilton notified its primary professional liability insurer, Westport Insurance Corporation, of the potential claim; the excess insurers — Executive Risk Indemnity Inc. (ERII), Continental Casualty Company and Twin City Fire Insurance Company — were notified as well.

In November 2004, the bankruptcy trustee commenced an action against the firm and GagnÉ; another action was commenced by Royal Indemnity in March 2005. These underlying professional liability claims against Pepper Hamilton and GagnÉ allege negligence in their failure to discover SFC's securities fraud, as well as actual complicity in SFC's fraudulent scheme.

Pepper Hamilton's professional liability coverage for the period from 2001 to 2004 was as follows:

April 27, 2001 to October 27, 2002 ("Year 1")

Primary Westport             $20 million

1st Excess Continental                  $30 million

October 27, 2002 to October 27, 2003 ("Year 2")

Primary Westport             $10 million

1st Excess  Twin City                   $10 million

2nd Excess Executive Risk            $10 million

3rd ExcessContinental$10 million

October 27, 2003 to October 27, 2004 ("Year 3")

Primary Westport             $10 million

1st Excess Twin City                    $10 million

2nd Excess Executive Risk            $10 million

3rd Excess Continental                 $10 million

While Westport did not contest its obligation to defend Pepper Hamilton, the excess insurers interposed various challenges to coverage, and all the insurers disputed the proper period in which the claims should be deemed to fall. On October 12, 2005, ERII commenced this action against Pepper Hamilton, GagnÉ and Westport, seeking a declaration that it had no obligation to indemnify the firm or its partner in connection with the actions brought by the bankruptcy trustee and Royal. Pepper Hamilton and GagnÉ counterclaimed for a declaration in their favor and brought third-party claims against the other two excess carriers. Continental cross-claimed for rescission of its excess policies for 2002-2003 and 2003-2004, based upon the alleged nondisclosure of information known to the law firm prior to their issuance.

The excess insurers all moved for summary judgment, contending that they had no coverage obligation, due to the application of the prior knowledge exclusion in their policies, or because the claim should be deemed to fall within a period in which they had no coverage obligation, or on the ground that rescission of their policy covering the period of the claim was required based upon a misrepresentation of facts in Pepper Hamilton's application for insurance. The motion court granted the excess insurers' motions. It declared that the prior knowledge exclusion applied as a matter of law, reasoning that the documentary submissions — numerous e-mails and memoranda acknowledging the possibility of a lawsuit against them — establish as a matter of law that in 2002 GagnÉ and Pepper Hamilton were aware of facts that could lead a reasonable attorney to anticipate litigation arising from its representation of SFC. The motion court also granted Continental's cross motion, concluding that Continental was entitled to rescind its 2002-2003 and 2003-2004 policies based upon Pepper Hamilton's failure to disclose the SFC circumstances in its renewal applications and that the claim could not fall within Continental's 2001-2002 policy, since the insurer was not notified of the claim until 2004, and the rescission of the later policies meant that the continuous coverage provision did not apply.

This appeal ensued. For the reasons that follow, we reverse.

The insurance coverage is dictated by the terms of the primary Westport policies, since the ERII, Twin City and Continental excess policies expressly incorporate the majority of the terms of the primary Westport policies. The Westport primary policies contain the following Insuring Agreement clauses:

"I.A. The Company shall pay on behalf of any INSURED all LOSS in excess of the deductible which any INSURED becomes legally obligated to pay as a result of CLAIMS first made against any INSURED during the POLICY PERIOD and reported to the Company in writing during the POLICY PERIOD or within sixty (60) days thereafter, by reason of any WRONGFUL ACT occurring on or after the RETROACTIVE DATE, if any. 

"I.B. If, during the current POLICY PERIOD, any INSURED first becomes aware of a POTENTIAL CLAIM and gives written notice of such POTENTIAL CLAIM to the Company either during the current POLICY PERIOD, or during the POLICY PERIOD of any subsequent policy issued to the NAMED INSURED as a result of continuous and uninterrupted coverage with the Company, any CLAIMS subsequently made against any INSURED arising from the POTENTIAL CLAIM shall be considered to have been first made during the POLICY PERIOD the INSURED first became aware of a POTENTIAL CLAIM."

The policies define the term "claim" as a demand made upon the insured for a loss, including by a suit or an arbitration proceeding or administrative proceeding against the insured, while a potential claim is defined as either "any act, error, omission, circumstance or PERSONAL INJURY which might reasonably be expected to give rise to a CLAIM against any INSURED under the POLICY," or "any breach of duty to a client or third party which has not resulted in a CLAIM against an INSURED."

The "prior knowledge" exclusion upon which ERII and Twin City rely provides that the policies do not apply to any claim "arising out of any act, error, or omission committed prior to the inception date of the policy which the insured knew or should have known could result in a claim, but failed to disclose to the Company at inception."

We disagree with the motion court's broad view of the nature and extent of the acts, errors or omissions and the type of knowledge to which the prior knowledge exclusion may be applied.

The two-step analysis set out in Coregis Ins. Co. v Baratta & Fenerty, Ltd. (264 F3d 302, 306 [3d Cir 2001]) should be used to determine whether the exclusion applies. In Coregis, the Third Circuit employed what it referred to as a "mixed subjective/objective standard" to determine whether a professional liability policy's similarly-worded exclusion applied. That standard asks first the subjective question of whether the insured had knowledge of the relevant facts, and second, the objective question of whether a reasonable lawyer would foresee that those facts might be the basis of a claim.

The primary focus of our analysis here is the objective requirement that there be a basis on which to reasonably expect a claim against the law firm. Notably, it has been held that this prong of the test "does not require that the insured actually form such an expectation [that a suit or claim will result]" (Colliers Lanard & Axilbund v Lloyds of London, 458 F3d 231 [3d Cir 2006]), but that a reasonable person would expect the claim. By the same token, even if the evidence establishes as a matter of law that the insured has formed a subjective belief that a suit may ensue based upon some other party's misconduct, that does not alone establish the existence of objective facts which would support the conclusion of a reasonable professional that the insured will be subjected to professional liability claims.

Here, while evidence strongly suggests that defendant GagnÉ and other firm members subjectively either believed or feared that the firm might be subjected to professional liability claims by entities claiming injury as a result of SFC's conduct, his or the firm's subjective belief that a suit may ensue based upon SFC's misconduct is not enough. Pepper Hamilton's knowledge of SFC's actions, and of its own legal work related to SFC's operations, may have provided objective evidence that SFC might be sued and supported a concomitant suspicion that those with claims against SFC might seek relief against SFC's law firm as well. But we find nothing in the record constituting objective evidence permitting a reasonable professional to conclude that Pepper Hamilton itself did anything that would subject it to suit or other claim. Certainly, no wrongful conduct on Pepper Hamilton's part is established as a matter of law so as to entitle the insurers to summary judgment declaring that the firm knew or should have known that a claim might be made against the firm.

We recognize that the policy here, unlike that in Selko v Home Ins. Co. (139 F3d 146 [3d Cir 1998]), does not specify that the prior knowledge exclusion applies where there is "basis to believe that the insured had breached a professional duty." Therefore, Selko's holding is not directly applicable insofar as, in accordance with that insurance policy, it requires the insurer to present facts establishing that the insured breached a professional duty. We further recognize that Coregis v Baratta & Fenerty, supra, may not be relied upon to require the insurers to establish a breach of a professional duty. Although the court in that matter stated that such a breach and a basis for a claim are "two peas in a pod" and that a breach of a professional duty will tend to establish a basis for a claim (264 F3d at 307 n 3), as a matter of logic, the converse of that statement is not necessarily true. Under the terms of the policies at issue here, the insurers are not required to establish that facts known to Pepper Hamilton establish that the firm breached a professional duty.

Nevertheless, even though the terms of the policy exclusion here do not require that the insured had prior knowledge that it breached its professional duty, we cannot read the exclusion as the insurers suggest, that is, to apply whenever the insured has knowledge of a client's misconduct and represented the client while the misconduct occurred. Construing the prior knowledge exclusions strictly and narrowly, as we must (see Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377, 383 [2003]), we conclude that the "known of" act, error or omission at the heart of such a potential claim must be that of the insured, not that of its client. Furthermore, such act, error or omission must constitute wrongful conduct on the part of the insured; the firm's mere representation of a client while the client itself — unknown to the firm - engages in wrongful conduct cannot suffice.

ERII and Twin City contend that the requisite "act, error, or omission" that the law firm knew or should have known about before the policies' inception and of which it should have notified its insurers is established by numerous pieces of evidence, including the private placement memoranda the law firm prepared for SFC's use in selling the certificates, which memoranda inaccurately stated that the pooled student loans were not in default; GagnÉ's e-mails informing the law firm of SFC's conduct; his memorandum to the firm's Finance and Ethics Committee seeking its input and advice; a memorandum from the firm's general counsel advising all the firm's attorneys who had been involved in providing services to SFC to save all records and to refrain from discussing the matter with anyone outside the firm, in order to protect the firm's interests; and other documents containing similar content. Other submissions, primarily e-mails from GagnÉ to Yao referring to SFC's use of school reserves, were offered to establish that before April 2001 Pepper Hamilton was aware of SFC's forbearance payments from reserve accounts to cover loan defaults.

The insurers' focus on evidence establishing Pepper Hamilton's and GagnÉ's knowledge of SFC's misconduct misperceives the nature of the "act, error, omission, or circumstance" requirement for the application of the prior knowledge exclusion. The difficulty with their position is that these pieces of evidence tend to establish wrongful acts by SFC, not wrongful acts by Pepper Hamilton or GagnÉ. Even Pepper Hamilton's preparation of the private placement memoranda, in which it included information that apparently was inaccurate regarding the existence of loan defaults, does not establish - at least not as a matter of law on a summary judgment motion — the commission of wrongful or improper acts by Pepper Hamilton.

We reject the suggestion that the prior knowledge exclusion applies when the knowledge possessed by the insured is that it drafted documents that the client then used to further its scheme. In our view, the policy cannot be properly read to require Pepper Hamilton to notify its potential insurers of its client's misconduct and its own recognition that it may be subjected to legal claims brought by those injured as a result of its client's misconduct. It is not enough that the firm has adverse information about a client; the firm must have itself acted improperly, so as to have itself created the possibility of a professional liability claim against it.

Although the prior knowledge exclusion pertains to "any act" of the insured and is not specifically limited to wrongful acts that will result in claims of malpractice or breach of professional duty, the provision's use of the words "any act" cannot reasonably be understood to apply to the mere act of providing professional services. Any other interpretation would require a law firm with such coverage to notify its carrier any time the firm performed ordinary and usual professional services in the course of representing a client, including the preparation of standard documents, if it discovered that the client might then have used those properly prepared documents in the course of possibly perpetrating a fraud or other illegal act against others. It is simply unreasonable that in order to protect its liability coverage, a law firm must inform its professional liability carrier as soon as it finds out about its client's possible misconduct, any time the firm believes that it could be subject as a deep pocket to claims by the client's creditors.

We recognize that the plaintiffs in the underlying actions against the law firm have alleged misconduct on the part of Pepper Hamilton and GagnÉ and, further, that GagnÉ is said to have possessed enough knowledge of SFC's use of reserve accounts to render the firm complicit with SFC's scheme. If it is ultimately established that the law firm participated in the misconduct, such as by preparing documents on behalf of the client knowing that the documents contained false or insufficient information, or by knowingly creating the forbearance payment mechanism in order to assist SFC in defrauding investors, then application of the prior knowledge exclusion could be justified. But, in this context and on this evidence, those are not conclusively established facts but merely disputed factual assertions, which fail to establish, as a matter of law, the firm's knowledge of an act of misconduct of which it should have informed its professional liability insurance carriers. 

We further reject ERII and Twin City's alternative argument that as a matter of law they have no insurance obligation because the underlying claims triggered policy coverage in Year 1 (April 27, 2001 to October 27, 2002). The record before us does not support such a determination. We therefore conclude that summary judgment in favor of ERII and Twin City was improper.

A similar analysis requires the reversal of the grant of summary judgment to Continental.

The motion court granted rescission of the 2002-2003 and 2003-2004 excess policies Continental issued to Pepper Hamilton, based on Pepper Hamilton's failure to disclose, in its renewal applications, its knowledge of SFC's misconduct and the claims it believed might result. However, an insurance policy may only be rescinded due to a misrepresentation in the application when the subject matter of the misrepresentation is material to the risk and the applicant knew of the falsity and made the misrepresentation in bad faith (see Allstate Ins. Co. v Stinger, 400 Pa 533, 539, 163 A2d 74, 78 [1960]). Moreover, the party seeking rescission has the burden of establishing these elements by clear and convincing evidence (Justofin v Metropolitan Life Ins. Co., 372 F3d 517, 521 [3d Cir 2004]).

The evidence relied upon here, as discussed, simply shows that Pepper Hamilton knew of SFC's misconduct and believed (correctly) that it might itself be subjected to lawsuits brought by parties injured by SFC's actions. The questions of whether Pepper Hamilton gave false answers on Continental's renewal application and whether any such false answers were given in bad faith are questions of fact and cannot properly be determined as a matter of law in the context of a summary judgment motion. Even if we were to accept that the information omitted constituted information that was required by the policy renewal application, Continental fails to establish as a matter of law that if it had been informed of the client's misconduct and the firm's concern about being subject to suit as a result, it would have handled the renewal application differently. The affidavit of an underwriter asserting that, had the information been disclosed, the renewal application would have been handled differently, is not by itself sufficient to satisfy the insurer's burden (see Feldman v Friedman, 241 AD2d 433 [1997]; Chicago Ins. Co. v Kreitzer & Vogelman, 210 F Supp 2d 407, 412-413 [2002]).

Unless and until it is established that the later policies are rescinded, the continuous coverage provision of Westport's policy applies to provide for coverage based upon the 2004 notice. The grant of summary judgment to Continental was therefore improper.

Accordingly, the order of the Supreme Court, New York County (Karla Moskowitz, J.), entered on or about January 4, 2008, which, inter alia, granted the motion and cross motion of plaintiff Executive Risk Indemnity, Inc. and third-party defendants Continental Casualty Company and Twin City Fire Insurance Company, and declared that they are not obligated to defend and indemnify defendants Pepper Hamilton LLP and W. Roderick GagnÉ under the subject excess professional liability insurance policies, should be reversed, on the law, without costs, and the motion and cross motion for summary judgment denied.

M-2182Executive Risk Indemnity Inc. v Pepper Hamilton LLP, et al.

Motion seeking leave to take judicial notice and for other related relief granted.

 

Reyes v. Esquilin

The Law Offices of Alvin M. Bernstone, LLP, New York
(Matthew Albert Schroeder of counsel), for appellant.
Litchfield Cavo LLP, New York (Sean Hyun-Baek Chung of
counsel), for respondent.

Order, Supreme Court, Bronx County (Dianne T. Renwick, J.), entered July 5, 2007, which granted defendants' motions for summary judgment dismissing the complaint for lack of a serious injury as required by Insurance Law § 5102(d), unanimously affirmed, without costs.

Plaintiff failed to present objective medical evidence responsive to defendants' showing that the MRIs of plaintiff taken shortly after the accident revealed only age-related degenerative changes, not any sudden trauma that can be causally related to the accident (see Pommells v Perez, 4 NY3d 566, 579 [2005]; Ronda v Friendly Baptist Church, 52 AD3d 440 [2008]; Becerril v Sol Cab Corp., 50 AD3d 261 [2008]). Absent such evidence, it does not avail plaintiff's 90/180-day claim that defendants' experts did not address his condition during the
relevant period of time (see Blackwell v Fraser, 13 AD3d 157, 157 [2004]; cf. Webb v Johnson, 13 AD3d 54, 55 [2004]).

Uribe-Zapata v. Capallan

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellant.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Queens County (Schulman, J.), dated January 11, 2008, which denied his motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Matilde Uribe-Zapata on the ground that she 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, and the defendant's motion for summary judgment dismissing the complaint insofar as asserted by the plaintiff Matilde Uribe-Zapata on the ground that she did not sustain a serious injury within the meaning of Insurance Law § 5102(d) is granted.

The defendant met his prima facie burden of showing that the plaintiff Matilde Uribe-Zapata (hereinafter the plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-57).

In opposition, the plaintiff failed to raise a triable issue of fact. The magnetic resonance imaging (hereinafter MRI) reports concerning the plaintiff's lumbar spine and right knee lacked probative value since they were unaffirmed (see Verette v Zia, 44 AD3d 747, 748; see also Grasso v Angerami, 79 NY2d 813, 814-15; Pagano v Kingsbury, 182 AD2d 268, 270). In addition, the affirmation of the plaintiff's treating physician lacked probative value since he relied on the unsworn [*2]MRI report concerning the lumbar spine in arriving at the plaintiff's diagnosis (see Malave v Basikov, 45 AD3d 539, 540; Verette v Zia, 44 AD3d at 748; Furrs v Griffith, 43 AD3d 389; see also Friedman v U-Haul Truck Rental, 216 AD2d 266, 266-67). Finally, the self-serving affidavit of the plaintiff was insufficient to show that she sustained a serious injury as a result of the subject accident (see Michel v Blake, 52 AD3d 486, 486-87; Shvartsman v Vildman, 47 AD3d 700, 701; Yakubov v CG Trans Corp., 30 AD3d 509, 510). The plaintiff failed to proffer competent medical evidence that she sustained a medically-determined injury of a nonpermanent nature which prevented her, for 90 of the 180 days following the subject accident, from performing her usual and customary activities (see Sainte-Aime v Ho, 274 AD2d 569, 569-70).

 

Singh v. Mohamed

Janus & Tannenbaum, P.C., Garden City, N.Y. (Kenneth J. Gorman
of counsel), for appellant.
Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Holly E. Peck of counsel), for
respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals (1) from an order of the Supreme Court, Kings County (Ruchelsman, J.), dated July 10, 2007, which granted the defendants' 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 (2), as limited by his brief, from so much of an order of the same court entered November 1, 2007, as denied that branch of his motion which was for leave to renew.

ORDERED that the order dated July 10, 2007, is affirmed; and it is further,

ORDERED that the order entered November 1, 2007, is affirmed insofar as appealed from; and it is further,

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

Contrary to the plaintiff's contentions on appeal, the defendants, on their motion for summary judgment, met their prima facie burden by showing that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). 

In opposition, the plaintiff failed to raise a triable issue of fact. The only affirmed medical report submitted by Dr. Ali Guy, the plaintiff's treating physician, was dated March 10, 2007, which included his findings from an examination conducted on February 20, 2007. Dr. Guy's other reports, dated May 3, 2005, and May 27, 2005, were unaffirmed and therefore without any probative value in opposing the defendants' motion (see Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747; Nociforo v Penna, 42 AD3d 514; see also Grasso v Angerami, 79 NY2d 813; Pagano v Kingsbury, 182 AD2d 268, 270). The plaintiff's hospital records were uncertified and thus also without any probative value (see Mejia v DeRose, 35 AD3d 407).

Dr. Guy's March 10, 2007, report was insufficient, standing alone, to raise a triable issue of fact. While Dr. Guy provided recent range-of-motion findings (based upon his February 20, 2007, examination), which showed that the plaintiff had significant range-of-motion limitations in the lumbar and cervical regions of his spine, neither Dr. Guy nor the plaintiff proffered competent objective medical evidence that showed range-of-motion limitations in those regions of the spine that were roughly contemporaneous with the subject accident (see Perdomo v Scott, 50 AD3d 1115; Ferraro v Ridge Car Serv., 49 AD3d 498; D'Onofrio v Floton, Inc., 45 AD3d 525; Borgella v D & L Taxi Corp., 38 AD3d 701, 702). Thus, in the absence of contemporaneous findings of range-of-motion limitations in his spine, the plaintiff was unable to establish the duration of his alleged spinal injuries (see Ferraro v Ridge Car Serv., 49 AD3d 498).

The plaintiff also failed to proffer competent medical evidence that he sustained a medically-determined injury of a nonpermanent nature which prevented him from performing his usual and customary activities for 90 of the 180 days following the subject accident (see Silla v Mohammad, 52 AD3d 681, 683; Casas v Montero, 48 AD3d 728, 730; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535; Sainte-Aime v Ho, 274 AD2d 569).

The Supreme Court providently exercised its discretion in denying that branch of the plaintiff's motion which was for leave to renew. Neither the plaintiff nor Dr. Guy provided a reasonable justification as to why the doctor's reports containing contemporaneous range-of-motion findings in the plaintiff's lumbar and cervical regions of the spine, were not in proper form when submitted in opposition to the initial motion (see Doumanis v Conzo, 265 AD2d 296, 297; cf. Simpson v Tommy Hilfiger U.S.A., Inc., 48 AD3d 389).
RIVERA, J.P., FLORIO, ANGIOLILLO, McCARTHY and CHAMBERS, JJ., concur.

Stefko v. Arslan

Baker, McEvoy,Morrissey & Moskovits, P.C., New York, N.Y.
(Holly E. Peck and Michael I. Josephs of counsel), for
appellants Murat Asland and Aleka Taxi, Inc.
Gerber & Gerber, Brooklyn, N.Y. (Thomas Torto of
counsel),for appellants Elfar Ahmed and
Gymnastics Transit, Inc.
Friedman & Moses, LLP, New York, N.Y. (Steven B.
Dorfman of counsel), for respondent.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Murat Arslan and Aleka Taxi, Inc., appeal, and the defendants Elfar Ahmed and Gymnastics Transit, Inc., separately appeal, from an order of the Supreme Court, Kings County (Knipel, J.), dated March 28, 2007, which denied their respective motions for summary judgment dismissing the complaint insofar as asserted against them 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 affirmed, with one bill of costs.

On their motions for summary judgment, the defendants met their prima facie burdens by showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). In opposition, the plaintiff, with her submissions, raised a triable issue of fact as to whether she sustained a serious injury to her cervical and/or lumbar spine under the significant limitation of use category of Insurance Law § 5102(d) as a result of the subject accident (see Altreche v Gilmar Masonry Corp., 49 AD3d 479; Lim v Tiburzi, 36 AD3d 671; Clervoix v Edwards, 10 AD3d 626; Acosta v Rubin, 2 AD3d 657; Rosado v Martinez, 289 AD2d 386; Vitale v Lev Express Cab Corp., 273 AD2d 225).

 

Kurin v. Zyuz

James G. Bilello, Westbury, N.Y. (Patricia McDonagh and Jerry
Christoforatos of counsel), for appellants.
William Pager, Brooklyn, N.Y. (James Benintend of counsel),
for plaintiffs-respondents.
Richard T. Lau, Jericho, N.Y. (Gene W. Wiggins of counsel),
for plaintiff on the counterclaim
Serguei Ibraguimov.

DECISION & ORDER

In an action to recover damages for personal injuries, the defendants Christine Damiani and John Damiani appeal from so much of an order of the Supreme Court, Kings County (Lewis, J.), dated March 30, 2007, as denied their motion for summary judgment dismissing the complaint insofar as asserted against them on the ground that none of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed insofar as appealed from, on the law, the appellants' motion for summary judgment dismissing the complaint insofar as asserted against them is granted, and upon searching the record, summary judgment is awarded to the defendant Oleksandr B. Zyuz dismissing the complaint insofar as asserted against him; and it is further,

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

Contrary to the Supreme Court's determination, the defendants Christine Damiani and John Damiani (hereinafter the appellants) established a prima facie case that none of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d) (see Toure v Avis Rent-A-Car Sys., 98 NY2d 345, 352; Gaddy v Eyler, 79 NY2d 955, 956-957; see Mager v Cooney, 50 AD3d 648). In particular, the plaintiffs' depositions revealed that none of them missed more than five days from work or school, and that they were not medically prevented from performing their usual and customary activities (see Insurance Law § 5102[d]). The affirmed medical reports of the appellants' medical experts, who examined the plaintiffs, concluded they were not seriously injured as a result of the accident, and the reported injuries were the result of degenerative disorders.

In opposition, the plaintiffs failed to raise a triable issue of fact (see Morris v Edmond, 48 AD3d 432, 433). The plaintiffs failed to submit a sworn or affirmed medical report from their treating physician finding injuries contemporaneous with the accident (see Grasso v Angerami, 79 NY2d 813; Patterson v NY Alarm Response Corp., 45 AD3d 656; Verette v Zia, 44 AD3d 747). Their medical expert, Dr. Mark Kostin, physically examined each plaintiff on only one occasion nearly six years after the accident. While Dr. Kostin found significant limitations in the plaintiffs' range of motion, such findings were clearly not contemporaneous with the subject accident (see Morris v Edmond, 48 AD3d at 433; D'Onofrio v Floton, Inc., 45 AD3d 525; Rodriguez v Cesar, 40 AD3d 731, 732). Moreover, the plaintiffs failed to proffer competent medical evidence that any of them sustained a medically-determined injury of a nonpermanent nature which prevented them, for 90 of the 180 days following the subject accident, from performing their usual and customary activities (see Morales v Daves, 43 AD3d 1118; Rodriguez v Cesar, 40 AD3d at 733; Sainte-Aime v Ho, 274 AD2d 569, 570).

Although the defendant Oleksandr B. Zyuz did not file a notice of appeal, we search the record pursuant to CPLR 3212(b) (see Dunham v Hilco Constr. Co., 89 NY2d 425, 430; Merrit Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106), and award summary judgment dismissing the complaint insofar as asserted against him on the ground that the plaintiffs did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Morris v Edmond, 48 AD3d at 433; Wilson v Buffa, 294 AD2d 357, 358).

 

Felix v. Wildred

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Stacy R. Seldin of counsel), for appellant.

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendant appeals from an order of the Supreme Court, Queens County (Rosengarten, J.), dated February 8, 2008, which denied his motion for summary judgment dismissing the complaint on the ground that the plaintiff Jean Felix 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, and the defendant's motion for summary judgment dismissing the complaint is granted.

Contrary to the Supreme Court's determination, the defendant met his prima facie burden by showing that the plaintiff Jean Felix (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957), which occurred on January 14, 2006. The affirmed medical report of the defendant's examining neurologist clearly showed that the injured plaintiff, when examined, had normal memory for recent and past events, was able to calculate, and showed no deficits in cognitive function.

In opposition, the plaintiffs failed to raise a triable issue of fact. Although the injured plaintiff's treating neurologist reported that an examination on September 20, 2006, revealed that the injured plaintiff sustained a memory loss, the neurologist failed to reconcile this finding with his findings of normal concentration, attention, and memory going back eight months preceding that examination, made in connection with three postaccident examinations of the injured plaintiff on January 23, 2006, February 24, 2006, and March 24, 2006, respectively (see Magarin v Kropf, 24 AD3d 733; Powell v Hurdle, 214 AD2d 720). Since the injured plaintiff did not allege in his bill of particulars that he injured his spine, any claims concerning his spine were not considered by this Court, and should not have been considered by the Supreme Court (see Ifrach v Neiman, 306 AD2d 380).

 

LaFerlita v. Seagull 2000, Inc.

Baker, McEvoy, Morrissey & Moskovits, P.C., New York, N.Y.
(Holly E. Peck of counsel), for appellants.
Reingold & Tucker, Brooklyn, N.Y. (Abraham Reingold of
counsel), for respondents.

DECISION & ORDER

In an action to recover damages for personal injuries, etc., the defendants appeal from an order of the Supreme Court, Kings County (Schack, J.), dated September 4, 2007, which denied their motion for summary judgment dismissing the complaint on the ground that the plaintiff Frank LaFerlita 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, and the defendants' motion for summary judgment dismissing the complaint is granted.

The Supreme Court correctly determined that the defendants met their prima facie burden of showing that the plaintiff Frank LaFerlita (hereinafter the injured plaintiff) did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident (see Toure v Avis Rent A Car Sys., 98 NY2d 345; Gaddy v Eyler, 79 NY2d 955, 956-957). The Supreme Court erred, however, in concluding that the plaintiffs' submissions raised a triable issue of fact. The report of Dr. Mark Cadden, one of the injured plaintiff's chiropractors, was not competent evidence since it is not sworn before a notary (see Rabolt v Joohyun Park, 50 AD3d 995; Casas v Montero, 48 AD3d 728; Santoro v Daniel, 276 AD2d 478). The affidavit of Dr. Richard Hurwitz, another of the injured plaintiff's chiropractors, merely noted that he examined the injured plaintiff on July 6, 2007. While Dr. Hurwitz noted that the injured plaintiff had range-of-motion limitations in his cervical and lumbar spine based on a recent examination, neither he nor the plaintiffs proffered competent medical evidence that showed range-of-motion limitations in the injured plaintiff's spine that were contemporaneous with the subject accident (see D'Onofrio v Floton, Inc., 45 AD3d 525; see also Ferraro v Ridge Car Serv., 49 AD3d 498).

The affidavit of Dr. Harold S. Parnes, the injured plaintiff's treating radiologist, along with his magnetic resonance imaging reports, merely revealed that as of February 2004 and March 2004, the injured plaintiff had certain bulging and herniated discs. The mere existence of bulging or herniated discs is not evidence of a serious injury in the absence of objective evidence of the extent of the alleged physical limitations resulting from the disc injuries and their duration (see Siegel v Sumaliyev, 46 AD3d 666; Yakubov v CG Trans Corp., 30 AD3d 509, 510; Kearse v New York City Tr. Auth., 16 AD3d 45, 49). The affidavit of the injured plaintiff failed to raise a triable issue of fact (see Casas v Montero, 48 AD3d 728; Roman v Fast Lane Car Serv., Inc., 46 AD3d 535).
Moreover, neither the plaintiffs nor Dr. Hurwitz adequately explained the gap in the injured plaintiff's treatment between February 11, 2005, when he was last treated by Dr. Cadden, and his most recent examination on July 6, 2007, by Dr. Hurwitz (see Pommells v Perez, 4 NY3d 566, 574; Berktas v McMillian, 40 AD3d 563, 564; Waring v Guirguis, 39 AD3d 741, 742).

The plaintiffs also failed to submit competent medical evidence that the injured plaintiff was unable to perform substantially all of his daily activities for not less than 90 of the first 180 days subsequent to the subject accident (see Sainte-Aime v Ho, 274 AD2d 569).
RIVERA, J.P., FLORIO, ANGIOLILLO, McCARTHY and CHAMBERS, JJ., concur.

 

Williams v. Clark

 

Steve S. Efron, New York, N. Y., for appellant.
Picciano & Scahill, P.C., Westbury, N.Y. (Gilbert J. Hardy and
Francis J. Scahill of counsel), for respondents Jason L. Clark and Noel S.
Harnden.
Carman, Callahan & Ingham, LLP, Farmingdale, N.Y. (Peter F.
Breheny of counsel) for respondents
Rental Car Finance Corp. and Vanessa
Guyce.

DECISION & ORDER

In an action to recover damages for personal injuries, the plaintiff appeals from an order of the Supreme Court, Kings County (Balter, J.), dated February 28, 2007, which granted the motion of the defendants Rental Car Finance Corp. and Vanessa Guyce, and the separate motion of the defendants Jason L. Clark and Noel S. Harnden, for summary judgment dismissing the complaint insofar as asserted against them on the ground that he did not sustain a serious injury within the meaning of Insurance Law § 5102(d).

ORDERED that the order is reversed, on the law, with one bill of costs, and the motions for summary judgment dismissing the complaint are denied.

The defendants established their prima facie entitlement to judgment as a matter of law through evidence demonstrating that the plaintiff, as a result of the subject motor vehicle accident, 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, 956-957). In opposition, the plaintiff raised a triable issue of fact as to whether he sustained a permanent consequential limitation of use of his cervical and lumbar spines via the submission of his treating chiropractor's affidavit (see Casey v Mas Transp., Inc., 48 AD3d 610; Green v Nara Car & Limo, Inc., 42 AD3d 430; Francovig v Senekis Cab Corp., 41 AD3d 643, 644-645; Acosta v Rubin, 2 AD3d 657). The plaintiff's treating chiropractor opined, based on his contemporaneous and most recent examinations of the plaintiff, as well as upon his review of the plaintiff's magnetic resonance imaging (hereinafter MRI) reports, which showed, inter alia, bulging discs, that the plaintiff's lumbar and cervical injuries and observed range-of-motion limitations were permanent and causally related to the subject accident. Moreover, although the MRI reports were unaffirmed, the plaintiff properly relied on them in opposition to the defendants' motions because the reports of the defendants' experts contain references to those MRI reports (see Zarate v McDonald, 31 AD3d 632; Silkowski v Alvarez, 19 AD3d 476; Ayzen v Melendez, 299 AD2d 381).

Contrary to the defendants' assertions, the affidavit of the plaintiff's treating chiropractor adequately explained any lengthy gap in the plaintiff's treatment history (see Pommells v Perez, 4 NY3d 566, 574; Paz v Wydrzynski, 41 AD3d 453).

The plaintiff's remaining contentions are without merit.
FISHER, J.P., BALKIN, McCARTHY and CHAMBERS, JJ., concur.

Jenel Management Corp., v. Pacific Insurance Company

Law Offices of Charles J. Siegel, New York (Christopher A.
South of counsel), for appellant-respondent.
Max W. Gershweir, New York, for respondents-appellants.

Orders, Supreme Court, New York County (Jane S. Solomon, J.), entered February 15, 2007 and January 24, 2008, which, inter alia, declared that, in connection with an underlying action for personal injuries, plaintiff insurer and defendant are co-primary insurers of plaintiff insurer's coplaintiffs herein, and denied certain items of damages claimed by plaintiff insurer, unanimously modified, on the law, to award plaintiff insurer $7,059.25 in attorneys' fees it incurred in prosecuting third-party claims against defendant's insured in the underlying action, and otherwise affirmed, without costs.

At issue is whether the stairwell area where the underlying accident occurred is covered by the additional insured clause in the policy procured by the underlying plaintiff's employer from defendant herein, which clause extends coverage to plaintiff insurer's coplaintiffs herein, the employer's landlord and the managing agent of the building. Coverage exists because the underlying claim arose out of the "maintenance or use" of the leased premises, within the meaning of the additional insured clause, where the accident occurred in the course of an activity necessarily incidental to the operation of the space leased by the employer, and in a part of the premises that was necessarily used for access in and out of the leased space (see ZKZ Assoc. v CNA Ins. Co., 89 NY2d 990 [1997]; New York Convention Ctr. Operating Corp. v Cerullo World Evangelism, 269 AD2d 275, 276 [2000]). We note that this result is consistent with the lease, which required the employer to procure insurance against any liabilities "on or about the demised premises or any appurtenances thereto." The concededly excess policies that defendant would have the court review raise no priority-of-coverage issues (see Bovis Lend Lease LMB, Inc. v Great Am. Ins. Co., 53 AD3d 140, __ [2008], 2008 NY Slip Op 03150, *3; cf. BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 716 [2007]). The coplaintiffs' third-party claims against the employer were an essential component of their defense of the main underlying action, and, accordingly, plaintiff insurer is entitled to reimbursement of the $7,059.25 in attorneys' fees it incurred in prosecuting those claims (see Perchinsky v State of New York, 232 AD2d 34, 39 [1997], lv denied sub nom. Perchinsky v Granny G. Prods., 93 NY2d 812 [1999]; Springstead v Ciba-Geigy Corp., 27 AD3d 720 [2006]).

236 West 40th Street Corp. v Chicago Title Insurance Company

Bennett D. Krasner, Atlantic Beach, for appellant.
Herrick, Feinstein LLP, New York (M. Darren Traub of
counsel), for respondent.

Order, Supreme Court, New York County (Milton A. Tingling, J.), entered August 3, 2007, which granted defendant's motion for summary judgment, unanimously affirmed, with costs.

The policy exclusion regarding the "Rights of tenants or persons in possession" unambiguously applies to the suit by plaintiff insured's tenant, who claimed a right of first refusal based on the lease, since the dispute concerned a party in actual possession whose right was not of record (see Herbil Holding Co. v Commonwealth Land Tit. Ins. Co., 183 AD2d 219, 225 [1992]). Plaintiff failed to raise a question of fact as to untimely disclaimer, unable to produce an affidavit from a knowledgeable witness or other admissible evidence that defendant insurer had been given notice by plaintiff of the tenant's action.

We have considered plaintiff's remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

Bazakos v Lewis

 

APPEAL by the plaintiff, in an action to recover damages for personal injuries, from an order of the Supreme Court (R. Bruce Cozzens, Jr., J.), entered in Nassau County on November 17, 2006, which granted the motion of the defendant Philip Lewis pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as time-barred.


Ralph A. Hummel, Woodbury, N.Y., for appellant.
Kopff, Nardelli & Dopf LLP, New York, N.Y. (Martin B.
Adams of counsel), for respondent.

OPINION & ORDER


CARNI, J.The issue presented for our consideration is as follows: When a physician conducts a medical examination in the context of a personal injury action on behalf of an alleged tortfeasor or his or her insurer and, in the course of doing so, affirmatively injures the examinee, should the examinee's cause of action against the examining physician to recover damages for that injury be characterized as one to recover damages for medical malpractice, or rather, one to recover damages for "simple" negligence?^[FN1] For the reasons that follow, we conclude that the cause of action is to be characterized as one to recover damages for simple negligence.

In 1998, the plaintiff, Lewis J. Bazakos, allegedly was injured when the vehicle that he was driving was "rear-ended" by another vehicle. After the accident, Bazakos commenced an action against the other driver, seeking to recover damages for his injuries.

On November 27, 2001, Bazakos was required to appear at the offices of the defendant Philip Lewis, an orthopedic surgeon licensed to practice medicine in New York, who had been selected to perform a statutory medical examination (see CPLR 3102[a]; 3121; 22 NYCRR 202.17) on behalf of the alleged tortfeasor in connection with the lawsuit. According to Bazakos, during the statutory medical examination, Lewis "took [his] head in his hands and forcefully rotated it while simultaneously pulling." In addition, according to Bazakos, this "physical action caused [him] personal injury."

Approximately two years and eleven months after the statutory medical examination took place, Bazakos commenced the instant action against Lewis. Alleging that Lewis "committed negligence toward" him during the statutory medical examination, Bazakos sought to recover damages for the alleged injuries caused by that "negligence."

Lewis then moved pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as time-barred. In support of his motion, Lewis asserted that while Bazakos might have alleged that the instant action was one to recover damages for negligence, and hence, subject to a three-year statute of limitations (see CPLR 214[5]), the action was, in actuality, one to recover damages for medical malpractice, which is subject to a 2 ? -year statute of limitations (see CPLR 214-a). In opposition, Bazakos asserted that he was never in a physician-patient relationship with Lewis because he only saw Lewis in the context of a statutory medical examination, and contended that it necessarily followed that his claim sounded in negligence, as opposed to medical malpractice.

In the resultant order, the Supreme Court agreed with Lewis that the instant action was "founded on medical malpractice." Accordingly, the court granted Lewis's motion to dismiss the complaint. We reverse.

It is well settled that the essence of a medical malpractice action is the existence of the duty which arises from the physician-patient relationship (see Caso v St. Francis Hosp., 34 AD3d 714; Mendelson v Clarkstown Med. Assoc., 271 AD2d 584; Lippert v Yambo, 267 AD2d 433; Chaff v Parkway Hosp., 205 AD2d 571). "[M]alpractice in the statutory sense describes the negligence of a professional toward the person for whom he rendered a service, and . . . an action for malpractice springs from the correlative rights and duties assumed by the parties through the relationship. On the other hand, the wrongful conduct of the professional in rendering services to his client resulting in injury to a party outside the relationship is simple negligence" (Cubito v Kreisberg, 69 AD2d 738, 742, affd 51 NY2d 900) (emphasis added). Contrary to Lewis's contention, the determination as to whether an action sounds in medical malpractice does not depend upon the need for expert testimony (see Payette v Rockefeller Univ., 220 AD2d 69, 74; Stanley v Lebetkin, 123 AD2d 854; but see Miller v Albany Med. Ctr. Hosp., 95 AD2d 977; Hale v State of New York, 53 AD2d 1025; Mossman v Albany Med. Ctr. Hosp., 34 AD2d 263).

Cast in this light, the time has come to acknowledge the essential nature of the relationship inherent in the performance of a statutory medical examination, pursuant to 22 NYCRR 202.17, by a physician retained and paid by a defendant's insurance carrier to assist in the defense of a personal injury action and the duty that flows to a party outside that relationship-in this case a personal injury plaintiff ^[FN2]. It is beyond cavil that a statutory medical examination is an adversarial process. The examinee's attendance is compelled by rule of law (see 22 NYCRR 202.17), and his or her engagement and interaction with the examining physician is nonconsensual. Indeed, because of the inherently adversarial nature of these types of examinations, this Court long ago recognized the examinee's right to be examined in the presence of his or her attorney (see Ponce v Health Ins. Plan of Greater N.Y., 100 AD2d 963). In stark contrast, the physician-patient relationship is characterized by the confidentiality and trust necessary to facilitate the securing of adequate diagnosis and treatment (see CPLR 4504; Matter of Grand Jury Investigation in N.Y. County, 98 NY2d 525). Critical to a finding of a physician-patient relationship is the consensual nature essential to the formation of the relationship. "The relationship is created when the professional services of a physician are rendered to and accepted by another person for the purposes of medical or surgical treatment" (Lee v City of New York, 162 AD2d 34, 36 ["The physician patient-relationship is a consensual one"]).

Here, there is no dispute that Bazakos did not expect, seek, or receive medical treatment or diagnosis from Lewis. Nor does Lewis contend that Bazakos consulted him as a health care provider ^[FN3]. Under similar circumstances, this Court recently recognized that the touchstone of the formation of a physician-patient relationship giving rise to a medical malpractice cause of action is the expectation and receipt of medical services by the plaintiff for a medical condition (see Sosnoff v Jackman, 45 AD3d 568, lv dismissed 10 NY3d 885). Likewise, in refusing to apply the medical malpractice statute of limitations to a participant in an experimental diet study, the Appellate Division, First Department, in Payette v Rockefeller Univ. (220 AD2d 69, 72), stated:

"[N]one of the circumstances essential to a cause of action in malpractice, essentially the existence of a physician-patient relationship, are present in the instant matter. In her complaint, plaintiff makes no claim of [the defendant's] malpractice in furnishing medical treatment. It is also clear that plaintiff did not consult [the defendant] as a health care provider. Nor did she undergo, as part of any medical treatment, the procedures she complains of, i.e., the multiple injections of isotopes of iodine, which she contends were three times the amount approved by [the defendant's] Board of Directors in its protocol. The fact that medical doctors examined and evaluated plaintiff and made notations in [the defendant's] hospital chart as to plaintiff's medical reaction to the diet does not, by itself, indicate the existence of a physician-patient relationship."

Thus, the threshold and dispositive issue is whether a physician-patient relationship exists between the examinee and the physician. The relationship defines the duty. The duty does not define the relationship. Put another way, the threshold determination of whether a physician-patient relationship exists is based upon the expectations of the parties during the course of the encounter. The Court of Appeals has recognized for more than a century that no physician-patient relationship arises from an examination rendered at the request and on behalf of an adversary in the litigation context (see People v Sliney, 137 NY 570). This Court recently held that "[a] physician-patient relationship does not exist where the examination is conducted solely for the purpose of rendering an evaluation for an insurer" (Savarese v Allstate Ins. Co., 287 AD2d 492, 493).

Here, there is no "patient" at all in this relationship-only an "examinee" compelled to participate because of the rules pertaining to pretrial discovery and disclosure in personal injury actions. The examining physician's duty not to affirmatively injure the examinee during the evaluation is adequately and appropriately embraced within a simple negligence cause of action. The examining physician is not engaged in diagnosis and treatment on the examinee's behalf. The evaluation is performed for the benefit of the defendant, defense counsel, and the defendant's insurance carrier, not the examinee. Thus, the examining physician has no duty to the examinee even to so much as properly evaluate and report upon the injuries, disabilities, or injury causation issues extant in the litigation (see Savarese v Allstate Ins. Co., 287 AD2d 492). Indeed, it is well settled that an examining physician has no duty to an examinee to properly diagnose any condition revealed during the examination (see LoDico v Caputi, 129 AD2d 361 [examining physician not liable to examinee for failure to properly diagnose a brain tumor]).

Wishing to avoid liability for having failed to properly diagnose a brain tumor during the plaintiff's statutory neurological examination, the examining neurologist in LoDico submitted an affidavit averring that "he examined the plaintiff at the request of the workers' compensation carrier; that the examination was not conducted for the purpose of treatment or diagnosis; and, therefore, there was no physician-patient relationship sufficient to support a claim for medical malpractice" (LoDico v Caputi, 129 AD2d at 363). The Appellate Division, Fourth Department, agreed. Yet the defendant in this case, secure in the knowledge that the statute of limitations for medical malpractice has expired, contends that his conduct constituted medical treatment or bore a substantial relationship to medical treatment so as to receive the benefit of the shorter medical malpractice period of limitations. We find it irreconcilable that, on the one hand, the examining physician should have the benefit of asserting the absence of a physician-patient relationship when he or she seeks to avoid medical malpractice liability for negligently failing to diagnose, yet, on the other, when it suits his or her purpose, assert that he or she was "diagnosing" or "treating" the examinee through "hands on" manipulation so as to obtain the benefit of the shorter period of limitations.

Notwithstanding the absence of a physician-patient relationship, Lewis seeks the protection provided by the shorter period of limitations contained within CPLR 214-a. A review of the legislative history of CPLR 214-a makes it clear that the period of limitations for medical malpractice actions was shortened as part of a comprehensive legislative overhaul to deal with "the critical threat to the health and welfare of the State by way of diminished delivery of health care services" and to "assure the public the basic protection to which all patients are entitled" (Mem of State Exec Dept, 1975 McKinney's Session Laws of NY, at 1599; Governor's Mem approving L 1975, ch 109, 1975 McKinney's Session Laws of NY, at 1739-1740)(emphasis added)^[FN4]. Indeed, in 1985 the Court of Appeals instructed that the analysis of whether a particular claim sounds in negligence or medical malpractice must be cast in the light of the legislative intent in shortening the Statute of Limitations in order to maintain " the adequate delivery of health care services'" (Bleiler v Bodner, 65 NY2d 65, 68, quoting Mem of State Exec Dept, 1975 McKinney's Session Laws of NY, at 1601-1602)^[FN5]. The shortening of the medical malpractice period of limitations clearly did not have, as one of its salutary purposes, the intent of providing a significant litigation advantage to physicians not engaged in providing health care services, but instead engaged in business relationships structured to provide expert witness services to insurance carriers in the defense of personal injury litigation.

Lewis's provision of the statutory medical examination service to his client, the insurance carrier, which allegedly resulted in injury to the plaintiff, with whom he had no physician-patient relationship, is simple negligence (see Cubito v Kreisberg, 69 AD2d 738, 742, affd 51 NY2d 900). A physician-patient relationship does not exist where, as here, the examination is conducted solely for the purpose of rendering an evaluation as a litigation support service for an insurer (see Savarese v Allstate Ins. Co., 287 AD2d 492, 493). To the extent that any prior decisions of this Court hold or indicate to the contrary (see Evangelista v Zolan, 247 AD2d 508), they are not to be followed.

Accordingly, we find that the instant action, which was commenced less than three years after the statutory medical examination, is not time-barred (see CPLR 214). The order of the Supreme Court is reversed, on the law, and the motion of the defendant Philip Lewis pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him as time-barred is denied.
PRUDENTI, P.J. and SKELOS, J., concur.
COVELLO, J., dissents and votes to affirm the order appealed from with the following memorandum, in which SANTUCCI, J., concurs.

When a physician performs what is commonly known as an "independent medical examination" (hereinafter IME),^[FN1] and, in the course of doing so, affirmatively injures the examinee, the examinee's cause of action against the IME physician to recover damages for that injury should be characterized as one to recover damages for medical malpractice. Indeed, well-reasoned and long-standing case law from this and other appellate courts supports this conclusion. In light of this precedent, as well as principles of stare decisis, I must respectfully dissent.

As the majority notes, it is fundamental that in order to maintain a cause of action to recover damages for medical malpractice, the plaintiff must have been in a physician-patient relationship with the defendant physician (see Jacobs v Mostow, 306 AD2d 439; White v Southside Hosp., 281 AD2d 474, 475; von Ohlen v Piskacek, 277 AD2d 375; Heller v Peekskill Community Hosp., 198 AD2d 265; Lee v City of New York, 162 AD2d 34, 37; Murphy v Blum, 160 AD2d 914, 915; Hickey v Travelers Ins. Co., 158 AD2d 112, 116). After all, "malpractice, in its strict sense, means the negligence of a member of a profession in his [or her] relations with his [or her] client or patient" (Cubito v Kreisberg, 69 AD2d 738, 742, affd 51 NY2d 900).

It has been said that a physician-patient relationship, which is a consensual relationship, would exist where a physician's "professional services" are "rendered and accepted by another person for the purposes of medical or surgical treatment" (Heller v Peekskill Community Hosp., 198 AD2d at 265; see Lee v City of New York, 162 AD2d at 36; United Calendar Mfg. Corp. v Huang, 94 AD2d 176, 179; see also Sosnoff v Jackman, 45 AD3d 568, 571). Yet, when it comes to IMEs, a person is being examined because, as the majority puts it, he or she has been "compelled" to attend the examination. Indeed, various statutes and regulations require a person whose condition is at issue to submit to a medical examination demanded by a third party, such as: a party against whom the person has commenced a personal injury action (see CPLR 3121[a]; 22 NYCRR 202.17[a]); the person's no-fault insurance carrier (see 11 NYCRR 65-1.1[d], 65-3.5[d]); or the person's employer's workers' compensation insurance carrier (see 12 NYCRR 300.2[d][1]). Thus, it is obvious that the examinee is not seeing the IME physician-who has been retained by a third party for that party's benefit-for the purpose of being healed through medical or surgical treatment.

Considering all of this, one might be inclined to conclude that an IME physician can never be in a physician-patient relationship with the examinee ^[FN2]. However, certain cases from this Court (see Evangelista v Zolan, 247 AD2d 508), and the other departments of the Appellate Division (see Smith v Pasquarella, 201 AD2d 782 [Third Department]; Violandi v City of New York, 184 AD2d 364 [First Department]; Twitchell v MacKay, 78 AD2d 125 [Fourth Department]), support the proposition that the examinee and the IME physician are indeed in a physician-patient relationship. This relationship, though, is only a "limited" one, and merely imposes a duty upon the IME physician to conduct the IME in a manner that does not affirmatively injure the examinee ^[FN3]. Thus, if the IME physician improperly manipulates the examinee during the examination, and the examinee suffers injury as a result, the examinee's cause of action against the IME physician to recover damages for that injury is one to recover damages for medical malpractice.

In Twitchell, the plaintiff examinee alleged that the defendant IME physician improperly manipulated his injured knee during the course of the examination (see Twitchell v MacKay, 78 AD2d at 126, 129). The Court concluded that the case was "a medical malpractice case" (id.). In support of its determination, the Court found as follows:

"[The examinee] would have us apply the narrow test of treatment by a physician, or examination for the purposes of treatment, in order to find that a case involved medical malpractice instead of simple negligence. We decline to do so. Such an interpretation is too constricting and fails to recognize the realities of the relationship that arise, however briefly, when a physician is in the process of exercising his [or her] profession and utilizing the skills which he [or she] has been taught in examining, diagnosing, treating or caring for another person.

 

Here, [the examinee] went to [the IME physician], albeit at the request of [the examinee's disability insurance carrier], for the purposes of an examination. The [examinee] knew that he was seeing a doctor and must have been aware of the fact that the doctor, after the examination, would express his medical judgment to [the carrier. The IME physician] was acting as a doctor and in doing so he agreed to perform his common-law duty to use reasonable care and his best judgment in exercising his skill, and the law implies that he represented his skill to be such as is ordinarily possessed by physicians in the community. Thus, if he carried out his function in a negligent or improper fashion the fact remains that the legal concept for any malfeasance or misfeasance by [the IME physician] would quite properly fall under the label of medical malpractice"

(Twitchell v MacKay, 78 AD2d at 128-129). The Court was aware of the principle that a cause of action to recover damages for medical malpractice does not lie in the absence of a physician-patient relationship (see Lee v City of New York, 162 AD2d at 37; Murphy v Blum, 160 AD2d at 915; Hickey v Travelers Ins. Co., 158 AD2d at 116), as the examinee there argued that "there [could] be no claim for medical malpractice" because "no physician patient-relationship existed" (Twitchell v MacKay, 78 AD2d at 127). The Court also noted that a "relationship . . . arise[s]" whenever a physician is "examining [and] diagnosing . . . another person" (Twitchell v MacKay, 78 AD2d at 128). Under these circumstances, it is clear that the Court determined that a physician-patient relationship existed between the examinee and the IME physician. It is also clear that the Court found that this relationship only placed a duty on the IME physician to avoid conducting the examination "in a negligent or improper fashion," and that a breach of this duty causing injury would provide the examinee with a cause of action "fall[ing] under the label of medical malpractice" (Twitchell v MacKay, 78 AD2d at 129; see also LoDico v Caputi, 129 AD2d 361, 363 [indicating that a cause of action to recover damages for medical malpractice would lie if an examinee "suffered . . . bodily injury during the course of" an IME]).

In Violandi v City of New York (184 AD2d 364), the plaintiff examinee, a police officer who was injured in the line of duty, submitted to an IME that was conducted at the request of the New York City Police Department (see Violandi v City of New York, 184 AD2d at 364). He took issue with the defendant IME physician's recommendation that he be returned to light duty (see Violandi v City of New York, 184 AD2d at 364-365). Although Violandi did not involve the situation involved in the instant case, that is, one involving an affirmative injury during an IME, the Court, citing Twitchell, stated, albeit in dicta, that a "doctor-patient . . . relationship would certainly exist" if, "during [the] examination," there was "physical manipulation" that "exacerbate[d] the [underlying] injury" (Violandi v City of New York, 184 AD2d at 364). The Court therefore recognized that, to some degree, a physician-patient relationship exists between the examinee and the IME physician.

In Smith v Pasquarella (201 AD2d 782), the plaintiff examinee alleged that during the IME, the defendant IME physician, among other things, "forc[ed] [her] injured leg into a position that caused undue and excessive pain," and also "moved [her] foot in a manner that was likely to aggravate her injury" (Smith v Pasquarella, 201 AD2d at 782-783). Although the Court did not specifically state that the examinee and the IME physician were in some sort of physician-patient relationship, the Court, citing Twitchell, concluded that even though the examination "was not conducted during the course of treatment," the abovementioned "conduct" could "constitute[ ] malpractice" (Smith v Pasquarella, 201 AD2d at 783), which, once again, can only occur in the context of a physician-patient relationship (see Lee v City of New York, 162 AD2d at 37; Murphy v Blum, 160 AD2d at 915; Hickey v Travelers Ins. Co., 158 AD2d at 116).

Finally, a decade ago, this Court decided Evangelista v Zolan (247 AD2d 508), which the Supreme Court relied upon here, and which is factually indistinguishable from the instant case. In Evangelista, the plaintiff examinee alleged, similar to what Bazakos alleges, that the defendant IME physician, in examining his injured shoulder, "so wrenched and twisted [that shoulder] that he was caused further damage" (Evangelista v Zolan, 247 AD2d at 509). Two years and eight months later, the examinee commenced an action against the IME physician, seeking to recover damages caused by the alleged aggravation of the underlying injury (id.). The IME physician then moved to dismiss the complaint as time-barred, and this Court, concluding that the examinee's claim "sounded in medical malpractice," determined that the motion was properly granted (Evangelista v Zolan, 247 AD2d at 509-510). As this Court found:

"During a physical examination in which a doctor is to provide an independent medical assessment of the [examinee's] condition and make recommendations for future treatment, the doctor impliedly contracts to utilize the same professional skills in examining the [examinee] at the insurance carrier's request as he [or she] would have in examining [the examinee] for treatment purposes. At the least, a physician has a duty not to injure a patient during his [or her] physical examination, and the breach of such a professional duty gives rise to a cause of action for medical malpractice"

(Evangelista v Zolan, 247 AD2d at 509 [citations and internal quotation marks omitted]). Although this Court did not explicitly find that the examinee and the IME physician were in a physician-patient relationship, this Court did cite Twitchell, as well as cases such as Lee, Murphy, and Hickey (see Evangelista v Zolan, 247 AD2d at 509), which, as indicated above, set forth the principle that a cause of action to recover damages for medical malpractice does not lie in the absence of a physician-patient relationship (see Lee v City of New York, 162 AD2d at 37; Murphy v Blum, 160 AD2d at 915; Hickey v Travelers Ins. Co., 158 AD2d at 116). This Court, being cognizant of that principle, necessarily determined, upon holding that the examinee's cause of action against the IME physician was one to recover damages for medical malpractice, that the examinee and the IME physician were in a physician-patient relationship. That relationship, though, was clearly limited to the extent that the IME physician only had a "duty not to injure" the examinee during the IME (Evangelista v Zolan, 247 AD2d at 509).^[FN4]

The majority states that "the threshold determination of whether a physician-patient relationship exists is based upon the expectations of the parties during the course of the encounter." The expectations of an examinee and an IME physician fully justify the imposition of a limited physician-patient relationship that merely places a duty on the IME physician to perform the examination in a manner that does not affirmatively injure the examinee. On one hand, as indicated above, the examinee does not expect the IME physician to treat his or her underlying condition. In addition, as also indicated above, the examinee, who knows that the IME physician is evaluating his or her condition for some third party's benefit, does not expect to benefit in some other manner from the IME physician's evaluation. This explains why courts have refused to saddle IME physicians with duties to properly advise or treat the examinee (see e.g. Murphy v Blum, 160 AD2d at 914-915). However, as courts have recognized, the IME physician, whose diagnostic conduct falls within the statutory definition of "practice of the profession of medicine,"^[FN5] impliedly promises that in performing the examination, he or she will exercise his or her medical skills just as carefully as if the examinee was his or her own patient (see Evangelista v Zolan, 247 AD2d at 509; Twitchell v MacKay, 78 AD2d at 128-129). Thus, as courts have also recognized, the examinee, who can never be compelled to submit to an IME that poses a significant risk of harm (see Marino v Pena, 211 AD2d 668, 668-669; Lefkowitz v Nassau County Med. Ctr., 94 AD2d 18, 21-22), can expect that, when the examination is conducted, the IME physician will exercise his or her medical skills just as carefully as they would be exercised had he or she been subjecting his or her own patient to that very same examination (see Evangelista v Zolan, 247 AD2d at 509; Twitchell v MacKay, 78 AD2d at 128-129). Implying a limited physician-patient relationship that places a duty on the IME physician to perform the examination in accordance with good and accepted medical practice, and hence, not affirmatively injure the examinee, is therefore perfectly consistent with the parties' expectations.

Aside from the persuasive reasoning of the cases discussed above, principles of stare decisis also preclude me from concurring in the majority's determination to characterize causes of action against IME physicians who affirmatively injure examinees as causes of action to recover damages for negligence. The majority has decided to depart from this Court's holding 10 years ago in Evangelista, which, as discussed above, is on point. Yet, the doctrine of stare decisis, which provides guidance and consistency in future cases by recognizing that settled legal questions should not be reexamined every time they are presented (see People v Bing, 76 NY2d 331, 337-338), requires this Court to adhere to prior holdings in controlling cases except under "compelling circumstances" (Eastern Consol. Props. v Adelaide Realty Corp., 95 NY2d 785, 787; Cenven, Inc. v Bethlehem Steel Corp., 41 NY2d 842, 843). However, I am not convinced that "compelling circumstances" warrant a departure from this Court's holding in Evangelista.

Principles of stare decisis do not preclude a court from revisiting a holding that is "out of step with the times and the reasonable expectations of members of society" (People v Hobson, 39 NY2d 479, 489). Alluding to that principle, the majority announces that "the time has come to acknowledge the essential nature of the relationship" between an examinee and an IME physician. Yet, those "relationships" have existed since 1962, the year that CPLR 3121(a), which authorizes IMEs, was enacted (see L 1962, ch 308). Thus, when this Court decided Evangelista, it certainly understood the nature of those relationships, and, despite that, essentially determined that an examinee and an IME physician are in a limited physician-patient relationship.

Principles of stare decisis also do not preclude a court from revisiting an incorrect holding (see People v Hobson, 39 NY2d at 488-489). To the extent that the majority is concluding that Evangelista was incorrectly decided, I do not agree, for reasons previously discussed.^[FN6]

Finally, to accept the majority's characterization of a cause of action against an IME physician who affirmatively injures an examinee as one sounding in negligence will lead to a curious result, to wit, that physicians committing the same negligent act and causing the same injury will be treated differently. Indeed, if an IME physician and a treating physician each conduct the same examination, depart from good and accepted medical practice in the same regard, and affirmatively injure the examinee in the same manner, the treating physician will enjoy the benefit of a shortened statute of limitations, while the IME physician will not.

For all of the foregoing reasons, Bazakos's cause of action against Lewis should be characterized as one to recover damages for medical malpractice, and consequently, the instant action was not timely commenced (see CPLR 214-a). Accordingly, I would affirm the order of the Supreme Court granting Lewis's motion to dismiss the complaint insofar as asserted against him as time-barred (see CPLR 3211[a][5]).

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendant Philip Lewis pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against him is denied.

ENTER:

James Edward Pelzer

Clerk of the Court

Footnotes

Footnote 1: The applicable Uniform Rules for Trial Courts (22 NYCRR 202.17) describe the physician as the "examining medical provider." Personal injury lawyers representing both plaintiffs and defendants, as well as physicians, have adopted the phrase "Independent Medical Examination" or "IME" as a term of art to identify and describe such examination.

Footnote 2: In this setting, the physician's client is the defendant, defense counsel, or the defendant's insurance carrier, which selects, retains, and compensates the physician. Frequently, in order to prepare a defense in the pending litigation, the defendant's attorney or his insurance carrier also direct and define the nature, scope, and focus of the evaluation. There are circumstances when medical examination physicians transcend the statutory medical examination relationship and expressly or implicitly create a physician-patient relationship by providing diagnostic treatment and advice upon which the examinee relies (see Hickey v Travelers Ins., Co., 158 AD2d 112). In such a case, the physician's diagnostic and treatment advice to the patient, not the defendant, defense counsel, or the defendant's insurance company, transforms the relationship, and thus the duty, into one sounding in medical malpractice (see Lawliss v Quellman, 38 AD3d 1123; Hickey v Travelers Ins. Co., 158 AD2d 112). However, that did not occur here.

Footnote 3: It is noteworthy that the American Board of Independent Medical Examiners promulgates "Guidelines of Conduct" for its members. Guideline 3(d) requires the examining physician to "advise the examinee that no treating physician-patient relationship will be established" (ABIME Guidelines of Conduct [American Board of Independent Medical Examiners], http://www.abime.org/node/21 [accessed February 19, 2008]).

Footnote 4: Lewis incorrectly characterizes the legislation as "seeking to limit causes of action against physicians." That may be an ancillary result. Nevertheless, the clear legislative intent was to facilitate the provision of diagnostic and treatment health care services to patients, not to provide a litigation benefit to physicians engaged outside of the health care delivery system and actually in the business of providing litigation support services to insurance carriers. It is no secret that many examining physicians limit their engagements to performing statutory medical examinations and do not maintain any significant level of engagement in the treatment and diagnosis of patients in the health care delivery system.

Footnote 5: The Court of Appeals also recognized that the legislative intent included the concern that " the health and welfare of the people of this State are gravely threatened by the inability of health care providers to get malpractice insurance at reasonable rates'" (Bleiler v Bodnar, 65 NY2d at 68, quoting Mem of State Exec Dept, 1975 McKinney's Session Laws of NY, at 1601-1602).

Footnote 1: Neither CPLR 3121 (a), nor section 202.17 of the Uniform Rules for Trial Courts, which authorize medical examinations of parties who have placed their physical or mental condition in issue, characterize such examinations as "independent medical examinations." Nevertheless, whereas certain courts, lawyers, and physicians refer to such examinations as independent medical examinations, I shall describe such examinations as IMEs, in an effort to avoid any confusion.

Footnote 2: There clearly is no such rule, though. In this regard, the majority recognizes, as other courts have, that if an IME physician proceeded to treat or advise the examinee, and the examinee detrimentally relied on that treatment or advice, a physician-patient relationship, which can either be expressly created or implied (see Lee v City of New York, 162 AD2d at 36), would be implied (see Lawliss v Quellman, 38 AD3d 1123, 1124; Forrester v Zwanger-Pesiri Radiology Group, 274 AD2d 374, 374-375; Heller v Peekskill Community Hosp., 198 AD2d at 266; Hickey v Travelers Ins. Co., 158 AD2d at 116). Accordingly, if, in such a situation, the IME physician negligently treated or advised the examinee, and the examinee suffered injury as a result, the examinee's cause of action against the IME physician to recover damages for that injury would be characterized as one to recover damages for medical malpractice (see Lee v City of New York, 162 AD2d at 36; Hickey v Travelers Ins. Co., 158 AD2d at 115).

Footnote 3: Courts in other jurisdictions that have considered the issue presented here have determined that such a limited relationship and duty exists. For example, in Harris v Kreutzer (271 Va 188, 199-203), the Supreme Court of Virginia concluded that during an IME, there is a "limited physician/patient relationship" that only vests the IME physician with a duty "to examine the [examinee] without harming [him or] her in the conduct of the examination." Similarly, in Dyer v Trachtman (470 Mich 45, 53-54), the Supreme Court of Michigan concluded that during an IME, there is a "limited physician-patient relationship" that places a duty on the IME physician "to conduct the examination in such a way as not to cause harm." Finally, it is worth noting that the American Medical Association (hereinafter AMA) Code of Ethics provides that "[d]espite" an IME physician's "ties to a third party," a "limited patient-physician relationship should be considered to exist" between an IME physician and the examinee (AMA Code of Medical Ethics, Ethical Op. 10.03).

Footnote 4: In Savarese v Allstate Ins. Co. (287 AD2d 492, 493), the plaintiff examinee, who was the subject of various IMEs, essentially took issue with the IME physicians' diagnoses and recommendations to her insurance company, which stopped paying her certain benefits. She commenced an action against the IME physicians, seeking to recover damages for medical malpractice (see Savarese v Allstate Ins. Co., 287 AD2d at 492-493). However, this Court determined that the IME physicians were entitled to summary judgment dismissing the complaint (id.). In support of its determination, this Court, which noted that "[n]o action to recover damages for medical malpractice arises absent a physician-patient relationship," stated that such a "relationship does not exist where [an] examination is conducted solely for the purpose of rendering an evaluation for an insurer" (id.). While the majority relies on this statement in support of its decision today, Savarese involved a situation where an examinee took issue with diagnoses and recommendations that IME physicians made and reported to the third party that retained them (see Savarese v Allstate Ins. Co., 287 AD2d at 493). Thus, it is clear that Savarese is factually distinguishable from both Evangelista and the instant case, which involve situations where examinees were affirmatively injured as a result of physical manipulation by IME physicians. Moreover, in Savarese, this Court did not, as it does today, overrule its prior holding in Evangelista. For these reasons, Evangelista has always been viable, at least up until the instant case.

Footnote 5: "The practice of the profession of medicine" is statutorily defined as "diagnosing, treating, operating or prescribing for any human disease, pain, injury, deformity or physical condition" (Education Law § 6521 [emphasis added]).

Footnote 6: While the majority's decision is predicated, in part, upon the conclusion that the legislative history underlying CPLR 214-a shows that the Legislature intended that only treating physicians receive the benefit of a shortened statute of limitations, the legislative history of CPLR 214-a does not necessarily support that conclusion. CPLR 214-a, which was enacted in 1975 (see L 1975, ch 109, § 6), shortened the statute of limitations on "[a]n action for medical . . . malpractice" from three to two and one-half years (CPLR 214-a). At the time, there had been a "crisis in the medical profession" because insurance companies were withdrawing, or threatening to withdraw, from this State's medical malpractice insurance market (Bleiler v Bodnar, 65 NY2d 65, 68). Thus, as the majority points out, the Executive Department, which supported the enactment of CPLR 214-a, explained that the statute, and certain others, were being enacted in an effort to prevent a cessation of the delivery of "health care services" (Governor's Program Bill Mem, Bill Jacket, L 1975 ch 109, at 1, 9). Treating physicians obviously provide, and IME physicians obviously do not provide, such services. However, it should be noted that the Executive Department, which did not suggest that it was of the opinion that only certain types of physicians should get the benefit of a shortened statute of limitations, explained that "even aside from" this goal, a shortened statute of limitations was being supported because of "special interests involved and other considerations connected with the skilled nature of the work" of "the medical professional" (Governor's Program Bill Mem, Bill Jacket, L 1975 ch 109, at 3), which includes both treating and IME physicians. Finally, it should be pointed out that the Legislature, which was certainly aware of the relationships between examinees and IME physicians, chose not to define the term "medical malpractice" in a manner that excluded claims against IME physicians. Indeed, the term was not defined at all (see Bleiler v Bodnar, 65 NY2d at 68).