Dear Coverage Pointers Subscribers, 


We are reaching the beginning of the summer recess for most of the appellate courts, so we can expect to see a last flurry of judicial expression over the next very few weeks.  Once the courts go into vacation mode, there is a dramatic slowdown in the number of decisions until shortly after Labor Day. 


Nice to be home.  Travels since last issue, besides Albany (see below) included Dallas and Charleston.   


Serious Injury Threshold Legislation - the Hangnail Bill


I had the opportunity to participate in a legislative roundtable with the chairs of the Assembly and Senate Insurance Committees as the No Fault legislation, presently under consideration, was debated.  The bill, along with our analysis, is reported in our April 30th edition and deserves your closest attention.  If adopted, the No Fault Serious Injury threshold is, for all intents and purposes, reduced to nothing.  A single suture, the removal of a splinter and virtually any other injury would be serious enough to qualify for a pain and suffering award.  Indeed, summary judgment motions would no longer be allowed and every case asserting such an injury would become a jury question.


It's an awful piece of legislation, guaranteed to dramatically increase the cost of litigation as virtually every case, no matter how small, would be tried to a jury rather than screened by a judge in a motion for summary judgment.


This is not a pro-consumer bill.  Litigants with real disputes will be faced with unfortunate and needless delays as smaller personal injury cases fill up the dockets.  Consumers will surely see an increase in insurance premiums as more and more cases need to be resolved by jury verdict rather than motion and virtually every personal injury will meet the threshold.  Our over-crowded and unpaid judiciary will be flooded with lawsuits without the tools necessary to even pare down the few that might be subject to dismissal on motion.


There are approximately 200 threshold appeals a year among the four judicial Departments, an average of 50 per Department or 4 ½ per month.  Considering the that there are over 100,000 personal injury auto accidents a year, very, very few need appellate review.  We suggest that the threshold is not broken, but has provided a very workable framework for over three decades.


I commend State Farm, Progressive and the trade organizations who are doing their level best to assure that accurate information is provided to our state legislators.  No Fault reform is necessary to protect us from the cheaters and hucksters who seek to abuse the system.  However, this bill is a turn in the wrong direction.


We hope and believe that our legislators understood the criticisms levied against this unfortunate offering by the trade organizations and your editor.  We urge all our readers to stay abreast of this proposal as the Legislature moves towards the end of the legislative session.  Strange and scary things can occur in Albany in the final days of the legislative session and this bill has surely not been put to rest yet.


The Two to Read, Maybe Three (I'll see you two Additional Insured Decisions and Raise you a Bi-Economy)


If you are going to read two decisions this week, I'd draw your attention to the first two decisions reported in this week's newsletter, the June 3rd Court of Appeals opinion in Regal Construction and the June 8th Second Department opinion in Stellar Mechanical.  They both have to do with the breadth of coverage afforded to additional insureds. 


The high court's decision in Regal is another examination of the push and pull between B.P. Air Conditioning broad provision of defense to the AI and the limitations on AI coverage outlined in Worth Construction.  No real surprises in the decision but a good refresher.


The Stellar Mechanical decision is an instructive outline of the same questions but deals with both defense and indemnity.  It took a complaint, an amended complaint and a second amended complaint before the allegations in the underlying lawsuit were broad enough to trigger the defense of a party claiming additional insured status.  However, all the party received was a defense, because even in a case eventually settled, indemnity was not awarded because the injuries did not arise out of the named insured's work.


As to the third, Jennifer Ehman reports on a lower court case that confuses an insurer's indemnity obligations to an additional insured with insured contract provisions and obligations owing to a named insured.  However, the court, citing Bi-Economy v. Harleysville does award "consequential damages" for breach of contract under a liability policy.  This is one of the first reported decisions that does so. 

One Hundred Years Ago Today

Life requires balance, and the yin and yang in life are reflected in our century look back.  When we think of opposites and balances, we consider hot and cold, dark and light, up and down, good and evil.  One hundred years ago, it was the juxtaposition of wet and dry.


Jacques Cousteau's birthday

On the moist side, we celebrate the 100th birthday of the late Jacques-Yves Cousteau, born June 11, 1910.  When we think of the late undersea explorer, we picture the great environmentalist in his ship, the Calypso,  involved in an underwater research project, swimming with the dolphins or some such thing.  Captain Cousteau died in 1997, leaving a great legacy of scientific research and many good memories to those who followed his distinguished career.


Oklahoma City Crowns New Capital

On the dry side, we can picture tumbleweeds, the dust bowl and the desert southwest.  On June 11, 1910, the territory Oklahoma, not yet admitted into the union as our 48th state (that happened in 1912), voted to establish a new capital city.  I asked my good friend and great Oklahoma State lawyer, John R. Woodard¸ III of the Tulsa, Oklahoma firm of Feldman, Franden, Woodard & Farris, a past president of the Federation of Defense & Corporate Counsel and a long time Coverage Pointers subscriber, to offer us a little perspective on this rather monumental occasion:


As most students of history know, June 11, 2010 is a day in Oklahoma history that will be forever remembered, for it is the 100th anniversary of the time when leaders in Oklahoma City traveled to Guthrie, the then state capital, and "took the great seal" back to Oklahoma City and proclaimed the town the state's capital. After 100 years, folks in Guthrie still remember the event, just as folks from the South remember the "war of northern aggression". The "relocation" of the state capital did allow Guthrie to be out from under the close eye of Oklahoma legislators and it has become well known as a town seen in the movie, Rainman, and now home to about 25-40 B & Bs and the Oklahoma International Bluegrass Festival (held each October and presented by one of Oklahoma's true treasures, Byron Berline, fiddler extraordinaire).


Even though Oklahoma City became the capital of Oklahoma, by the same way some would say the "Sooners" took advantage of the "Boomers" (look it up!), other events in Oklahoma occurred before the state capital changed zip codes. Troop 1 Boy Scouts began in Tulsa in March of 1910 and has been continuously chartered by the BSA ever since, making it one of if not the oldest continuously chartered Boy Scout troop in America. My granddad (also a lawyer) assisted in the chartering of Troop One and the Woodard family had four generations of scouts associated with the troop. Also, oil had been discovered near Tulsa and it was on its way to becoming the "Oil Capital of the World"-- even better than being the state capital of Oklahoma.


John R. Woodard, III


Thanks to John for his kind offering and should you even need good counsel in the Great State of Oklahoma or just want to talk about Oklahoma, military history (or the US Marines), you can contact John  at 918-583-7129 or by e-mail at  [email protected] .


P.S. for grammarian wannabees everywhere who struggle with the use of capital v. capitol: Capital is the city that serves as the seat of government, wealth in the form of money or property and the type of letter used at the beginning of a sentence.  Capitol refers to the building in which a legislative assembly meets.


Word of Wisdom from Audrey Seeley:


There is a pattern to the decisions in this edition and the last - perhaps a change is underway in upstate arbitrations on Hobby and more insurer's summary judgment motions are being granted due to the plaintiff's failure to specifically rebut the peer reviewer's conclusion.


I suggest that perhaps a change is underway upstate on how Hobby is applied to IME reports that contain phrases such as "plateau of treatment" and "endpoint of care."  There have been a few decisions coming from one of the three Western New York arbitrators tackling this issue.  This edition, Arbitrator Benziger has offered yet again a well-reasoned decision as well as a framework to analyze this issue.  A close review of the decision reveals that it provides a logical approach to whether the treatment sought is necessary and not to rely upon buzz words that could fit within the Hobby case.  Further, this approach permits the arbitrator to reach the heart of the issue - necessity of treatment -instead of deciding the case on a technical issue attributed to word choice.  We will be sure to report as to whether this officially becomes a trend. 


With regard to summary judgment motions in the insurer's favor, there is a considerable and growing body of case law coming from the Appellate Term, Second Department addressing the burden-shifting scheme on medical necessity when the insurer moves for summary judgment.  The standard is that the insurer must demonstrate that it issued a timely denial and offer, in admissible form, the peer review or IME report with sufficient factual and medical rationale for lack of medical necessity.  The burden then shifts to the plaintiff to specifically rebut the peer review or IME report's conclusions to raise a triable issue of fact. 


If you would like a copy of any of the decisions or cases please send me an email at [email protected].


Answer to Trivia Question:


Neither candidate was born in a US State.


Article II, Section 1 of the Constitution provides that: No person except a natural born citizen ..shall be eligible to the office of President; neither shall any person be eligible to that office who shall not have attained to the age of thirty-five years, and been fourteen years a resident within the United States.


John McCain was born in the Panama Canal Zone.  Barry Goldwater was born on January 1, 1909 in Phoenix, in the Territory of Arizona, three years before Arizona attained statehood.


Being born in either made them both natural born citizens.


Highlights of This Week's Issue:

Dan D. Kohane

[email protected]

Court of Appeals 

  • Court of Appeals Gives Another Nod to BP Air