Coverage Pointers - Volume XIV, No. 21

Dear Coverage Pointers Subscribers:

Do you have a situation?  We do love situations.

If it is Friday, I’m at the DRI Insurance Coverage and Claims Symposium in Chicago where I’m speaking today on Ethical Use of Social Media in Claims Investigation.  Chicago is foggy but the audience will be clear and focused. We are looking forward to returning home later on today. 

Our Long Island office is up and running.  Contact Beth Fitzpatrick at 535 Broad Hollow, in Melville, 631.465.0700 or by e-mail at [email protected] if we can help you in the NY Metro area.

We welcome to the Coverage Pointers family many friends of Beth Fitzpatrick who are new subscribers to our publication.  If you wish to unsubscribe, just let us know.  Our issue is attached and past issues are available on the website, .

Speaking of Beth, we’re pleased to announce her new column that will appear in upcoming issues.  Beth, an all-around coverage lawyer, has a particular affinity for social media issues, Coverage B and related topics.  Fortunately for us, her name has created the appropriately titled, and we will be introducing Beth’s Banter on Coverage BDon’t be surprised if her column strays from CGL Coverage B, to Employers’ Liability Coverage B to other bits and bytes as she settles in to her new role.  In the meantime, she writes an introductory note:


Beth’s Banter on Coverage B:

Greetings from the City of Chicago where we are attending the fabulous DRI Insurance Coverage and Claims Symposium.

In upcoming columns, I will be shedding some light on the oft ignored Coverage B, which affords coverage for personal and advertising injury, as well as cases addressing the 1B coverage afforded by an employer's liability policy.  Thrown in for good measure, the column will report on decisions across the country analyzing issues  related to various social media platforms and the discoverability of a claimant's privacy protected pages of Facebook and other such platforms. Stay tuned.

I would like to invite you all to check out the upcoming NYSBA sponsored Advanced Insurance Coverage seminar, which will be held at five venues across the state.  I will be speaking on Long Island on May 17 and in Albany on May 10th. Dan will be joining me in Long Island and also speaking in Buffalo, where Steve will also be speaking on May 10th.  For additional information or for assistance registering, please feel free to e-mail me at [email protected].

Elizabeth A. Fitzpatrick
[email protected]


On This Date in Baseball, April 12, 1913:
Pitcher Luke Glavenich debuted in the American League for the Cleveland Naps and played in his one and only game in the bigs.  He pitched one inning, gave up three hits, five runs (one earned), walked three, struck out one, made an error in the field and never played the game at the major league level again.  His lifetime ERA was 9.0


Peiper’s Perils:

We start this week out on a somber note.  On my way to the airport today, I heard that NOAA has decided to "retire" the name Sandy for tropical storms.  As you may know, storm names are reused every 6 years unless a particular storm is overwhelming in terms of loss of life or damage.  As we know all too well, Sandy certainly fits the bill on both scores.  

As for the cases we review this week, we would particularly direct your attention to the McGowan v. Great Northern case we review herein.  In that case, the Second Department found particular "suit limitation" language to be ambiguous.  As a result, Great Northern ended up paying a claim that was brought well after the two year time limit established in the policy.  

Fortunately, the Court attempts to limit it to the specific language of the policy in question.  However, this is not a good start.  Yours truly is not aware of any prior decisions striking down a suit limitation clause as unclear.  As those of you who read this column regularly know, the Appellate Courts have been fairly bullish on applying the clause as written.  Stay tuned to see if this sprouts up similar decisions.

H&F in HD - Thanks again for those of you who tuned into to our Sandy webcast a few weeks ago.  If you have a desire to see us again, I have the pleasure of announcing that I will be speaking at the Nassau County Institute of Law's annual program on auto insurance.  The program focuses on No Fault, Serious Injury Threshold, SUM/UM coverages, and other commonly litigated insurance issues.  The SUM/UM presentation will be handled by Mr. Jonathan Dachs who, as some of you may know, is a leading voice in this area of law.   I have been asked to speak on evaluating disclaimers for compliance with 3420(d)(2).   The program is on Tuesday night, April 23, 2013.  Drop me a line if you're interested in attending.

That's not it.  Dan, Beth, and myself are also speaking in the annual coverage update for the New York Bar Association.  Dan and I in Buffalo, and Beth at the Long Island location.  I have the First Party/Sandy portion of the program in Buffalo, and Dan will be providing his Top Ten Insurance Law cases lecture which is an excellent overview of where we've been, and where we may be going.   The Buffalo program is May 10th.  Check out the Bar Association's website, or drop us a line if you're interested.  

That's it for now.  Off to Salt Lake City for a mediation.  Adios.  

Steven E. Peiper
[email protected]


Post-Script on the Ground Hog Day’s Note from Last Issue:

You may recall that we posted a story in the most recent issue about the lawsuit filed against Punxsutawney Phil for his “false” report and the statements provided by his handlers, claiming that they didn’t understand the groundhog’s report to them about his predictions.

A source close to the conflict has advised us of what may be the story behind the story. We are able to report same, without attribution:
By the way, I don’t know if you’ve heard, but the word I have is that the whole “early Spring” prediction was not a “misinterpretation,” but it was Phil actually setting up his handlers for contract renewal discussions this summer.  Phil had fired his prior agent, and having researched the contract renewal controversies of several major league sporting figures, determined that prior to finding a new agent he would put a little stress on management (wisely, he determined to not follow the contract negotiation strategies of the NHL players). 

So, summed up in a few words, he threw the game by giving the wrong forecast.  Apparently management does not have a good back up in place, and since Ground Hog Day comes but once a year and Ground Hogs live long lives, management was loathe to go to the expense of recruiting and then training a bench-warming replacement, which can take years to complete.  They have now been blind-sided by the nearsighted furry forecaster.

Phil is considered to have the upper hand in this negotiation, and will be looking for an aggressive agent to press his case.  Rumors that he is looking for a healthy percentage of the TV and movie rights have gone without comment, as have questions as to South Carolina, Georgia or south Florida condos for wintering, with only a brief return to Punxsutawney immediately prior to the big show.  Alleged contacts with agents for the Swedish bikini team, or the SI swim suit models, to function as new handlers in place of the old men in top hats and long coats, are also unconfirmed. 

This rodent is playing it close to the vest, with actual negotiations not scheduled until late July or August.  And, of course, he first needs to find a new agent. 


Michael’s Mini-Missive’s on Serious Injury Under the No Fault Law:

The cases this week all contain, at least from a no-fault serious injury perspective, rich discussion.  If you only read this section occasionally, read it this week for a great refresher on some serious injury basics.

The last edition of Coverage Pointers came out too late for the defendants in Salomon.  As I stated last week, competent medical evidence does not include any report where the physician failed to base the report on an examination of the plaintiff’s person or the plaintiff’s medical records.  It does not matter how brilliant your expert is, if he or she does not know the details of a plaintiff’s particular condition, the court is not going to listen.

The same applies if your expert fails to demonstrate his or her reasoning, including the facts he or she relied upon.  Conclusory is a word often used in law and rarely used almost everywhere else.  Your word processing program will probably tell you it’s not a word at all.  Often bandied about in arguments between attorneys, it is a dismissive way of saying that a conclusion is unsupported.  When used by an attorney, it usually sounds lazy.  When used by a court, it is the coup de grace.  Rather than let a party’s hopes linger in a winding analysis of the requirement that opinions have a factual backing, the court terminates the matter tout suite

The plaintiff in Kabir suffered this undignified fate.  The court essentially ignored the plaintiff’s expert’s opinion because it failed to demonstrate upon what the opinion was based.  Make sure your experts give a logically coherent explanation of why they think what they think, including reference to the facts of the case.  Otherwise you too shall be put out of your misery.

Michael P. Scott-Kristansen
[email protected]


One Hundred Years Ago Today:
Olean Evening Times
April 12, 1913
Front Page
Women Wept and Went Into Hysterics
But Elegantly Gowned Ladies and Men
In Evening Clothes Were Haled Into Police Court

Chicago, April 12.—In anticipation of startling disclosures there was a large crowd present today when the Illinois Senate white slave committee resumed its session. Many of the men and women, garbed in evening clothes, who were caught, when a number of questionable, resorts were raided last night and early this morning, were subpoenaed to appear before the committee.  The raiding squads interrupted "muscle" and "tango" dances, and the singing of suggestive songs that seemed to be entertaining the crowds ceased, upon the arrival of the officers.

One elegantly gowned woman collapsed when the police entered one place; another went into hysterics when a flashlight picture was taken. Others wept and got on their knees and begged the officers not to take them before the investigating committee. But their pleas were in vain.

A man, accompanied by a handsome woman, jammed a roll of bills into the hands of a policeman. "Here, my good man," he said.  "Take this and let my party out of here”.  His request was ignored.

One of the women caught in a questionable cafe was identified as a "Mrs. J. T." of Peoria, Ill., who is a leader in the reform movement there. Lieut. Gov, O'Hara declared that the names of those caught in the raids would not be disclosed.

"What we are out after is the abolishment of the 'smut' song and the animal dances. We-believe these are the two main reasons why girls go wrong," he said.

According to the website inAmericanhistory, during the Great White Slavery Scare of 1907–1914, the U.S. public devoured a flood of speeches, pamphlets, magazine articles, plays, novels, books, and films about the so-called white slave traffic. These sensational materials, which included the first full-length feature film, spread the alarming message that a secret vice syndicate was reaping huge profits through forced prostitution.

Sixty thousand innocent women a year, it was said, were held as sex slaves by means of force, trickery, seduction, drugging, debt peonage, social shame, and venereal disease. The belief in white slavery was widespread: cities formed investigative commissions and Congress passed laws (notably the Mann Act of 1910).

Historians doubt that white slavery existed, yet the campaign to abolish it was arguably one of the most important moral crusades of the Progressive Era. The scare waned when evidence repeatedly failed to emerge and World War I diverted attention to other threats, but remnants of white slavery lore have survived the century.

It took until 1916 for the Committee to render its report.  In the January 20, 1916 edition of the Salt Lake Tribune, the article read:

Illinois Senate White Slave
Investigation Committee
Reports After Making
Exhaustive Inquiry

Poverty is the principal cause of immorality, the minimum wage for girls and women is fixed at $8 a week, and unequal conditions of domestic employment render the home, in many cases, a breeding place of commercialized vice, according to the Illinois senate white slave investigation committee's report, made public tonight, when formally presented to the state senate.

That poverty is the principal cause, direct or indirect, of immorality, is the most strongly emphasized finding of the commission.

Industrial oppression of the hapless is declared by the report to be directly responsible for a large part of existing immorality. Thousands of girls, it says, are driven into prostitution "because of the sheer inability to keep body and soul together due to the low wages received by them." The system of domestic employment in America is condemned in positive terms. ''Unregulated conditions of domestic employment, uncertain hours, absence of definite social status and lack of creative opportunities render the home, in many cases, for the women servants a breeding place of immorality," says the commission's report


A Century Ago: 

Syracuse Herald
April 12, 1913
Front Page

This Doctor Says Girls Are Doomed to Have Feet Without Toes

Chicago, April 12 -- In a few years the feet of the fair sex will be transformed so that there will be no toes, and where the toes were, there will be a heel, declares Dr. Max Strunsky of New York, in an article published today. High-heeled shoes, he said compel the anterior arch ofthe foot to do the functions of a heel and in time that part of the foot will become in reality a heel.

Max’s predictions have not yet come true, based on my observations.  He may have been influenced by his more famous sister, Anna Strunsky Walling (1877–1964), who was an early 20th Century author and proponent of socialism, and a good friend of and co-author with Jack London and (according to a 1904 Oakland Tribune article), was the cause of Jack London’s divorce from his wife Elizabeth.  She lived with her brother Max in San Francisco, studied at Stanford and became a leading writer and advocate of socialism.


Jen’s Gem:

As another week winds down, I am again reminded that I am just another member of our merry band of traveling lawyers.  I look forward to the weekend having just spent two long days in New York City, where I had the thrill of arguing a Labor Law case in front of the United States Court of Appeals for the Second Circuit.  I am sure the Court was just as glad as I was when the red light went on. 

But anyways, this was a light couple of weeks for the trial courts in New York.  In fact, all I have to report on is a Suffolk County decision involving dueling excess clauses.  While not a ground breaking decision, it does remind us that the term “you” in a policy refers to the named insured, not additional insureds; always something to consider when dealing with priority of coverage problems.  Till next issue. 

Jennifer A. Ehman
[email protected]


Author of Thirteenth Amendment Dies, 100 Years Ago Today:

The (Atlanta) Constitution
April 13, 1913


Washington, April 12.—John Brooks Henderson, former United States senator from Missouri and author of the Thirteenth amendment to the constitution of the United States, died at 6:30 o'clock tonight at a hospital here from a complication of diseases. He was 86 years old.

Mr. Henderson was taken seriously ill since last Monday. Mrs. Henderson, who had been with him constantly, and his only son, John B. Henderson, Jr. were at his bedside when death came.  Funeral arrangements will be announced later.

Mr. Henderson … served in the Missouri legislature and originated many of the railroad and banking laws of the state. Mr. Henderson was a Buchanan presidential elector, a delegate to the national convention of 1860, and a member of the Missouri convention to determine the question of secession. Later he organized a brigade of union state troops and was appointed a brigadier general of militia.

When Trusten Polk was expelled from the United States Senate, Mr. Henderson was appointed to succeed him, and in 1863 was elected to the senate, serving until 1869 when he resumed law practice in St. Louis. He received the Republican nomination for governor unanimously in 1872…
Editor’s Note:  Trusten Polk was expelled from the Senate for supporting the Confederate cause during the Civil War.  Since we know you were curious, in the history of the Senate, only 15 of its members were expelled and 14 of them were expelled for Confederate support. Senator Henderson missed prominence in the movie Lincoln as the Senate had approved the Amendment by a vote of 38-6, in April 1864, nine months before the House approved the Amendment and sent it to the states.


This Week’s Headlines:


Dan D. Kohane
[email protected]

  • A Mixed Bag for the Insurer: A Timely Disclaimer to One Insured; An Ineffective Reservation of Rights to Another.  “Acts or Omissions” Language in AI Endorsement Does Not Require Demonstration of Negligence
  • Accident Did Not Occur in Insured’s Described One-Story Premises, When It Occurred on Steel Framing of Fourth Floor Addition
  • Insurer Did Not Make Motion for Contractual Indemnity; Its Insured Did.  Accordingly, Insurer is Not an Aggrieved Party on Appeal
  • Ignorance of Counsel No Excuse for Failing to Discover Existence of Umbrella Policy


Michael P. Scott-Kristansen

[email protected] 

  • Plaintiff’s Argument Falls Flat on an Expert’s Conclusory Opinion
  • Despite Having Full Range of Motion, Plaintiff Successfully Opposes Defendant’s Motion for Summary Judgment with Evidence of Other Limitations
  • Clumsy Plaintiff Gets Nailed Again and Again
  • A Rare 90/180-day Injury Survives Alone
  • A Good Effort by Both Sides, but Plaintiff Prevails
  • Medical Experts’ Reports Must Be Based on Relevant Medical Records or A Medical Examination to be Useful
  • Experts’ Opposing Plausible Opinions Cannot Be Resolved By Motion for Summary Judgment


Margo M. Lagueras

[email protected]


  • Wage Loss Benefits Denied Where Injuries Resulted from an Intentional Act
  • Peer Reviewer’s Failure to Address Specific Type of Lumbosacral Orthosis Results in Award to Applicant
  • Boilerplate Letters of Medical Necessity Provided by Applicant to Medical Providers Are Found Completely Lacking in Credibility
  • Claim Denied Where Injuries Were Sustained While Fleeing the Police



  • A UB-04 Form Is Not the Functional Equivalent of an NF-5
  • Summary Judgment Granted Where Plaintiff’s Treating Doctor Failed to Meaningfully Rebut Peer Reviewer’s Conclusions
  • Only Peer Review Submitted in Motion Practice Need Be Sworn or Affirmed
  • Acupuncturist’s Services Are Governed by Workers’ Compensation Fee Schedule


Steven E. Peiper

[email protected]


  • Mortgage Must Remain Active to Recover Under a Mortgagee Clause
  • What the?!?!?...Suit Limitation Clause Found Ambiguous


  • Party Seeking Indemnity Must Exonerate Itself, AND Establish Negligence on the Party from whom Indemnity is Sought
  • Court Finds a Question of Fact of Whether Neighbor Qualifies as a Third-Party Beneficiary of a Fireplace Inspection (i.e., Service) Contract
  • Attorney Affirmation Does Not Meet Burden for Establish Material Prepared In Anticipation of Litigation Exemption


Elizabeth A. Fitzpatrick
[email protected]

  • Coming Soon.


Cassandra A. Kazukenus
[email protected]

  • On Maternity Leave – Watch This Space


Katherine A. Fijal

[email protected]

  • Plaintiffs’ Claims Grounded in GOL §5-335 Preempted by Federal Law – ERISA


Jennifer A. Ehman
[email protected]

  • Where the Lessee’s Policy Added the Property Owner as an Additional Insured by Endorsement, its Coverage was deemed Primary to that provided by the Owner’s Policy


Earl K. Cantwell

[email protected]


That’s all for now.  See you real soon..


Dan D. Kohane
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, NY 14202    
Phone: 716.849.8942
Fax:      716.855.0874
E-Mail:     [email protected]


Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York

Dan D. Kohane
[email protected]

Audrey A. Seeley
[email protected]

Jennifer A. Ehman
[email protected]

Dan D. Kohane, Team Leader
[email protected]

Michael F. Perley
Elizabeth A. Fitzpatrick
Katherine A. Fijal
Audrey A. Seeley
Steven E. Peiper
Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Michael P. Scott-Kristansen
Diane F. Bosse

Andrea Schillaci, Team Leader
[email protected]

Jody E. Briandi
Steven E. Peiper

Audrey A. Seeley, Team Leader
[email protected]

Margo M. Lagueras
Cassandra Kazukenus
Jennifer A. Ehman

Jody E. Briandi, Team Leader
[email protected]

 Elizabeth A. Fitzpatrick

Diane F. Bosse

Index to Special Columns

Kohane’s Coverage Corner
Michael’s Mini-Missives on Serious Injury
Margo’s Musings on No Fault

Steve on Sandy, Peiper on Property and Potpourri
Beth’s Banter on Coverage B
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Earl’s Pearls
Across Borders

Dan D. Kohane
[email protected]

04/11/13       Strauss Painting, Inc. v Mt. Hawley Ins. Co.
Appellate Division, First Department
A Mixed Bag for the Insurer: A Timely Disclaimer to One Insured; an Ineffective Reservation of Rights to Another.  “Acts or Omissions” Language in AI Endorsement Does Not Require Demonstration of Negligence
There was a contract between Strauss and the Metropolitan Opera (the “Met”) that obligated Straus to purchase insurance naming the Met as an additional insured. The court determined that Mt. Hawley is obligated to defend and indemnify the Met in the underlying personal injury action. The carrier’s policy contained a blanket additional insured endorsement.

Mt. Hawley sent out a reservation of rights letter to deny on late notice but, according to the court, did not disclaim.  Reservations of rights letters are not effective to a preserve late notice defense in New York and as a result, the court found that its disclaimer was ineffective.

The court also found that the “acts or omissions” language in the AI endorsement did not require a showing of negligence on the part of the named insured, a finding inconsistent with some other decisions in NY.

However, Mt. Hawley properly and timely disclaimed coverage as to Strauss on late notice.  Notice given to the broker by Strauss was not notice to the carrier.
Editor’s Note:  There is a split in authority as to whether “acts or omissions” language requires (or does not require) a showing of negligence on the part of the AI.

04/09/13       Seneca Insurance Company, Inc. v Cimran Co., Inc.
Appellate Division, First Department
Accident Did Not Occur in Insured’s Described One-Story Premises, When It Occurred on Steel Framing of Fourth Floor Addition
Seneca Insurance Company brought an action for declaratory relief and rescission.  In October 2009, while construction was underway to add three stories to Cimram’s one-story building.  Cimram, the insured didn’t notify Seneca until March 3, 2010.  A few days later, Seneca reserved its rights to disclaim coverage and/or rescind the policy, stating that further investigation of the claim was needed, including whether defendants had misrepresented on their insurance application that they had no intention of conducting demolition or construction at the premises.

In the meantime, Seneca cancelled the policy effective April 1, 2010, for the reason that "[t]he building is currently under construction."  Seneca then commenced the DJ action alleging that the accident did not take place at the "Designated Premises" covered by the policy.  The accident occurred on the three story addition.  Seneca argued that the policy was void ab initio based on defendants' material misrepresentations in their original insurance application, as well as in their yearly policy renewal applications, that no demolition or construction at the premises was contemplated.

The insured argued that the cancellation of the policy meant that Seneca had waived its right to rescind the policy.

The court found that Seneca is not precluded from rescinding the policy merely because it cancelled it.  Seneca hasn’t yet established whether it has a right to rescind, there being questions of fact.  However, there are no issues of fact precluding summary judgment declaring that the construction site from which the injured worker fell was not part of the insured premises and therefore was not covered under the policy.

The property was described in defendants' application for insurance as a one-story building occupied by a billiard hall and a health spa and the accident took place on the steel framing of the fourth floor.

If a policy insures a portion of a building, it does not cover an injury occurring in another portion of the building.

04/04/13       Mt. Hawley Insurance Company v Interstate Fire and Casualty Appellate Division, First Department
Insurer Did Not Make Motion for Contractual Indemnity; Its Insured Did.  Accordingly, Insurer is Not an Aggrieved Party on Appeal
The underlying personal injury action was brought by an employee of Helix who sought to recover for injuries sustained during a construction site accident.  Defendants in that suit included GDM, Car-Win and 48 Laight.  48 Laight had retained Helix.

48 Laight moved for summary judgment, and Helix (not Mt. Hawley, its general liability insurer) cross-moved for summary judgment in the third-party action for contractual indemnity.  Mt. Hawley was not a party to the third-party action. Accordingly, Mt. Hawley's appeal was dismissed because it was not an aggrieved.

04/03/13       Ortiz v Fage USA Corp.
Appellate Division, Second Department
Ignorance of Counsel No Excuse for Failing to Discover Existence of Umbrella Policy
Fage brought an action seeking a declaration that Utica Mutual is obligated to defend and indemnify it in an action commenced by Ortiz.  Fage had a primary automobile insurance policy and a commercial liability umbrella policy, with Utica, and a primary automobile insurance policy with State Farm.

The umbrella policy required Fage to inform it of an occurrence or suit as soon as practicable.  Fage did not inform Utica of the underlying action or the automobile accident from which it arose until more than 2½ years after the accident, and more than 2 years after the underlying action was commenced.  Fage claimed that its counsel was unaware of the umbrella policy and once discovered, prompt notice was given.

The injured plaintiffs subsequently sent Utica written notice of the accident and underlying action. Utica accepted coverage on the primary policy but cited late reporting as a reason to deny coverage on the umbrella.

Where an insurance policy requires that notice of an occurrence be given as soon as practicable, notice must be given within a reasonable time in view of all of the circumstances.  Here, no notice was given to Utica until two years after the underlying action was commenced.  This was an unreasonable delay.

Fage did not provide an acceptable excuse for its delay, such as lack of knowledge of the accident or a reasonable belief in nonliability.  Ignorance of counsel is not an acceptable excuse.

Utica has no duties under the umbrella policy as a result.
Editor’s Note: The insured tried to rely on the notice by the injured party but as the injured party’s notice was not being litigated, its notice was not particularly relevant at this point.

Michael P. Scott-Kristansen
[email protected] 

04/10/13       Kabir v. Vanderhost
Appellate Division, Second Department
Plaintiff’s Argument Falls Flat on an Expert’s Conclusory Opinion
The defendant was entitled to summary judgment.  She met her burden of establishing that the plaintiff did not sustain a serious injury by submitting an expert’s opinion, which stated that the plaintiff’s cervical and lumbar spine conditions were the result of preexisting, multilevel degenerative disc disease, and evidence that the plaintiff only missed six or eight days of work.

The plaintiff failed to support his allegation of a 90/180-day injury, and his support for her cervical/lumbar spine injury was insufficient.  The plaintiff submitted his own expert’s opinion, but it was conclusory.

04/09/13       Torres v Ndongo
Appellate Division, First Department
Despite Having Full Range of Motion, Plaintiff Successfully Opposes Defendant’s Motion for Summary Judgment with Evidence of Other Limitations
The defendants were not entitled to summary judgment.   The defendants established that the plaintiff did not suffer a permanent consequential or significant limitation of use injury to her cervical or lumbar spine by submitting affirmed medical reports.  The reports demonstrated that the plaintiff’s spine had a full range of motion and that her MRIs revealed only degenerative changes. 

In response, the plaintiff submitted a radiologist’s affirmed report stating that the plaintiff suffered disc bulges in her cervical and lumbar spines and that such bulges were not the result of degenerative disc disease.  The radiologist pointed to the plaintiff’s young age and the absence of other physical indicators of disc disease to support her conclusion.  The plaintiff also submitted the findings of her physician and her neurologist, finding contemporaneous and recent limitations.  This established that she had limitations of the required duration to meet the requirements of a “significant” or “permanent consequential” limitation.

The defendant also submitted the plaintiff’s deposition testimony and medical records, demonstrating the plaintiff suffered similar injuries in a previous car accident, but the plaintiff submitted her physician’s affirmation stating that her prior history did not contribute to her present injuries.

The plaintiff also addressed the gap in her treatment with evidence of her neurologist’s conclusion that further treatment would be palliative only.
04/04/13       Bravo v Martinez
Appellate Division, First Department
Clumsy Plaintiff Gets Nailed Again and Again
Calling the plaintiff clumsy might be insensitive.  Then again it might be generous.  The plaintiff alleged serious injuries to his neck, back, and shoulder, but the defendant met its burden on the issue of causation.  The defendant submitted evidence that the plaintiff had preexisting injuries to his neck, back, and shoulder from three previous auto accidents in 200, 2001, and 2006.  The defendants also submitted evidence that the plaintiff’s shoulder injury was degenerative.

The plaintiff’s evidence was insufficient to resist the defendants’ motion for summary judgment because it did not account for the back injury from the 2006 accident and did not adequately explain the difference between the shoulder condition exhibited in an MRI from the 2000 accident and the shoulder condition exhibited in an MRI after the present accident.

The Plaintiff also lost on its 90/180-day claim because he alleged in his verified bill of particulars that he was only confined to home for two months.

04/03/13       Nicholson v Bader
Appellate Division, Second Department
A Rare 90/180-day Injury Survives Alone
The plaintiff moved for summary judgment on the issue of serious injuries.  To prevail, the plaintiff had to show not only that his injuries met the definition of a serious injury, but also that his injuries were caused by the accident. 

The plaintiff prevailed on his 90/180-day injury claim by submitting his own deposition testimony, his NYPD employment records, and the affirmations and affirmed reports of his treating physician.  This evidence collectively demonstrated that the plaintiff was out of work for 90 out of 180 days after the accident, his absence was caused by a medically determined injury to his spine, and that the injuries were caused by the accident.

The defendant’s evidence was insufficient to oppose the motion.

04/02/13       Kim v Gomez
Appellate Division, First Department
A Good Effort by Both Sides, but Plaintiff Prevails
The defendant’s motion for summary judgment was denied.  The plaintiff alleged serious injuries to his cervical and lumbar spine.  The defendant met its burden by submitting an orthopedic surgeon’s affirmed report stating that the plaintiff had full range of motion in his spine and a radiologists report stating that bulging discs shown on an MRI were due to degenerative disc disease.  The defendant also pointed out that plaintiff ceased treatment four months after the accident without explanation.

The plaintiff responded with the affirmed report of his physician stating that plaintiff had range of motion limitations that were contemporaneous and persisting.  The physician’s report also explained his basis for concluding the disc bulges were caused by trauma.  The plaintiff addressed the cessation of treatment by submitting his own affidavit stating that he could not afford to pay for continuing treatment after his no-fault benefits expired.  The Court found support for plaintiff’s version of events in his physician’s statement that plaintiff failed to make a complete recovery.

04/02/13       Salomon v Singh
Appellate Division, First Department
Medical Experts’ Reports Must Be Based on Relevant Medical Records or A Medical Examination to be Useful
The defendants’ motion for summary judgment was denied.  The defendants met their burden on the serious injury issue by submitting the affirmed reports of an examining orthopedist and neurologist stating the plaintiff had full range of motion.  The plaintiff rebutted this evidence with affirmed medical reports, based on tests conducted soon after the accident and again more recently, stating that plaintiff’s cervical spine had a limited range of motion.

As to causation, the defendants did not meet their burden.  Medical experts’ passing references to past medical conditions of the plaintiff were not sufficient because the experts did not review relevant medical records or opine about whether such injuries suggested a lack of causation.

04/02/13       Caines v Diakite
Appellate Division, First Department
Experts’ Opposing Plausible Opinions Cannot Be Resolved By Motion for Summary Judgment
The defendant met its burden once again, but the plaintiff also met his, so the defendant’s motion for summary judgment was denied.  The Court does not set forth how defendant met its burden, but it does something much more useful.  It actually cites a rule.  Unfortunately for the newcomer to no-fault serious injury cases, this is not a common occurrence. 

The issue in this case is an injury to the plaintiff’s knee.  The court states: “By ascribing plaintiff’s left knee injury to a different, yet equally plausible cause, the affirmations of plaintiff’s experts suffice to raise an issue of triable fact.”  The rule is rather intuitive and not worth much discussion.  In simple terms it means that when experts for both sides disagree, and they both have logical and well-supported reasoning, neither side can win a motion for summary judgment.  The case will have to go to trial to resolve the dispute.

In this case, the plaintiff’s expert noted that the plaintiff had no history of knee injuries before the accident and that an MRI taken shortly after the accident revealed a meniscus tear.  The expert then opined that the accident caused the plaintiff’s knee injury.


Margo M. Lagueras
[email protected]


04/01/13       Applicant v Geico Insurance Co.
Erie County, Arbitrator Michelle Murphy-Louden
Wage Loss Benefits Denied Where Injuries Resulted from an Intentional Act
Applicant sought wage loss benefits for injuries sustained when he was one of three pedestrians struck by R.B., the driver to whom Respondent’s insured, C.W., had loaned her car.  R.B. was arrested and arraigned on three counts of Assault in the Second Degree.  Applicant argued that the incident had to be viewed from C.W.’s perspective and as she was not involved in the incident, the incident was unexpected, unusual and unforeseen from her perspective – and thus, an “accident.”

The Arbitrator reviewed the Court of Appeals holding in State Farm Mutual Automobile Insurance Co. v Langan, where Langan, who was the named insured under the State Farm policy, sought uninsured and no-fault benefits under the policy as executor of the estate of Spicehandler, who was killed by a third party, arguing that Spicehandler was an insured under his policy.  State Farm disclaimed on the grounds that the decedent’s injuries were caused by an intentional act, not a covered “accident.”  With regard to no-fault benefits, the Court of Appeals affirmed the Appellate Division and analyzed the incident from Spicehandler’s perspective, which had been found to be an insured under Langan’s policy.  The Arbitrator therefore reasoned that it was necessary to first determine whether R.B. was an insured under Respondent’s policy such that the incident should be viewed from R.B.’s perspective, rather than from C.W.’s.

Because R.B. was using the vehicle with C.W.’s permission, pursuant to the Regulations, R.B. was an insured under the policy.  As such, the incident had to be viewed from R.B.’s point of view.  As R.B. intentionally committed a felonious assault with the vehicle, Applicant’s injuries were not the result of an “accident” and, therefore, he was not entitled to no-fault benefits.  Therefore, the claim for wage loss benefits was denied in its entirety. 

03/26/13       Elite Medical Supply of NY, LLC v Geico
Erie County, Arbitrator Michelle Murphy-Louden
Peer Reviewer’s Failure to Address Specific Type of Lumbosacral Orthosis Results in Award to Applicant
The devise at issue was an expander LSO (lumbosacral orthosis) but the peer review doctor based his report on a traditional LSO.  The Arbitrator noted that the expander LSO is not like a traditional LSO as it contains an air pocket system which expands the vertebrae to as to reduce pressure.  The peer report and the authority cited therein did not address this specific device and therefore did not rebut the Applicant’s prima facie showing of medical necessity.

03/25/13       Elite Medical Supply of NY, LLC v Geico Insurance Co.
Erie County, Arbitrator Michelle Murphy-Louden
Boilerplate Letters of Medical Necessity Provided by Applicant to Medical Providers Are Found Completely Lacking in Credibility
In contrast with the award referenced above, here the Arbitrator reached the same determination in a series of arbitrations with regard to various items supplied by Applicant, including cervical traction units and lumbosacral orthosis, where Applicant conceded that the letters of medical necessity were actually template letters, authored by Applicant, and provided to the treating/prescribing providers.  The providers then simply change the injured person’s name, age, date of accident and a generalized statement that they presented to Dr. X with ongoing moderate to severe neck pain.  The Arbitrator not only found these letters of medical necessity to be completely inadequate, but also found that the treatment notes clearly refuted the statements in the letters, as where the in-office trial during which the device was found to be effective, thus supporting the prescription, was actually days after the device was dispensed.  The Arbitrator found the peer reviews to be persuasive and denied the claims for reimbursement.
Note:  Perhaps supplying the referring medical providers with a couple of slightly different templates to choose from?

03/19/13       Applicant v Geico Insurance Company
Onondaga County, Arbitrator Mary Anne Theiss
Claim Denied Where Injuries Were Sustained While Fleeing the Police
Although not an Erie County award, we could not resist.  The evidence showed that the Claimant crashed into a house as he was attempting to elude capture by the police.  At his deposition he testified that he was “not pulling over for the arresting officer.”  The Arbitrator noted that when an intentional act results in injury, there is no coverage.  Therefore, the claim was denied as the injuries sustained would have been an expected or anticipated result of the Claimant’s actions.


04/10/13       Sound Shore Med. Ctr. v New York Central Mut. Fire Ins. Co.
Appellate Division, Second Department
A UB-04 Form Is Not the Functional Equivalent of an NF-5
On appeal, the Appellate Court reversed the Appellate Term’s conclusion that a UB-04 is the “functional equivalent” of an NF-5.  Thus, only the verification request issued after receipt of the NF-5 was effective to toll the 30-day period within which to pay or deny the claim, resulting in the determination that the carrier did not make a second request for verification such as would indefinitely toll the claim.

A UB-04 is a universal billing form developed by, among others, the National Uniform Billing Committee, which was formed in 1975 by the American Hospital Association.  An NF-5 is a form published by the New York State Department of Financial Services in 11 NYCRR Appendix 13.

Briefly, the facts are as follows.  The motor vehicle accident occurred on October 30, 2008, and the injured assignor sought treatment from plaintiff between November 7, 2008 and November 12, 2008.  On November 24, 2008, defendant received a UB-04 from plaintiff stating that plaintiff had provided $13,053.02 in no-fault benefits to the assignor.  There was no other documentation, nor an NF-5, submitted with the UB-04.  In response, defendant issued a request for verification on November 26, 2008, and stated that the claim was delayed because it was pending receipt of the No-Fault application from the assignor and also needed a valid DRG Code (“diagnosis related group”- used to classify patients into groups based on criteria including principal diagnosis, treatment, age etc.). 

On December 22, 2008, defendant received an NF-5 accompanied by a second UB-04 which contained a notation that it was not a bill, and referring to the NF-5 as the bill.  Along with the NF-5 and UB-04, plaintiff also sent defendant a DRG Master Output Report detailing how the bill amount of $4,834.95 was calculated, and the assignment of benefits which was not signed by the assignor but indicated that the signature was on file.  On December 31, 2008, defendant then issued what it considered to be its second verification request seeking x-ray results, discharge summary, an executed assignment of benefits form and other items.  Although plaintiff did not respond to the verification request, defendant did nothing further.  It did not deny the claim or make a request for additional verification.

Plaintiff then commenced this action to recover no-fault benefits for the services rendered.  Defendant asserted, as an affirmative defense, that the action was premature because of the outstanding verification request.  Defendant then moved for summary judgment to dismiss the first cause of action for payment of $4,834.95, arguing that plaintiff failed to respond to its initial request of November 26, and its second request of December 31, and that, as such, the time to pay or deny the claim was tolled indefinitely.  Plaintiff cross-moved, arguing that it did not bill defendant until the NF-5 and that, as a result, the November 26 verification request was a nullity as it pre-dated the NF-5.  As a result, no toll was in effect and defendant was precluded from interposing a defense to the first cause of action.

03/29/13       Crotona Hgts. Med., P.C. v Clarendon Nat’l Ins. Co.
Appellate Term, Second Department
Summary Judgment Granted Where Plaintiff’s Treating Doctor Failed to Meaningfully Rebut Peer Reviewer’s Conclusions
On appeal, defendant’s cross motion for summary judgment is granted.  Defendant established, and plaintiff’s submissions did not refute, that plaintiff’s third cause of action was premature as plaintiff had failed to respond to timely verification requests.  As regards the first, second and fourth causes of action, among other things defendant submitted affirmed peer reports setting forth the factual basis and medical rationale for the doctor’s determination that the services were not medically necessary.  In opposition, plaintiff’s treating doctor’s affidavit did not meaningfully rebut those conclusions.  As a result, plaintiff’s complaint was dismissed.

03/18/13       A-Quality Med. Supply v Geico Gen. Ins. Co.
Appellate Term, Second Department
Only Peer Review Submitted in Motion Practice Need Be Sworn or Affirmed
During the non-jury trial, defendant’s witness identified a number of peer review reports, all but one of which he had authored, and testified that the medical supplies at issue were not medically necessary.  The trial court awarded judgment to plaintiff, without consideration of the testimony of defendant’s witness, and declined to consider the peer review reports, some of which were not dated, signed or notarized, holding that they could not serve as a valid basis for defendant’s denials. 

On appeal, the court noted that the Insurance Department Regulations only require that a copy of a peer review be provided to a medical provider upon written request, and that no format for such report is prescribed.  In addition, only when a peer review report is used to support or oppose of motion must it be properly sworn or affirmed.  Therefore, the trial erred in holding that the peer review reports were an insufficient basis for the denials.

In addition, defendant’s expert’s testimony should have been considered by the trial court.  Because the trial court did not consider the testimony, the court ordered a new trial were the issue of medical necessity was to be determined on the basis of the testimony, not the peer review reports.  The court pointedly stated that admission of a peer review report into evidence as part of defendant’s proof of lack of medical necessity could constitute impermissible bolstering of its expert’s testimony.

03/15/13       Apple Tree Acupuncture, P.C. v Allstate Ins. Co.
Appellate Term, Second Department
Acupuncturist’s Services Are Governed by Workers’ Compensation Fee Schedule
On appeal, the court, citing Great Wall Acupuncture, P.C. v Geico Insurance Co., stated that, when reimbursing a licensed acupuncturist, an insurer may use the same workers’ compensation fee schedule as applied when acupuncture is performed by a chiropractor.  In this case, however, defendant failed to establish that the amount it paid plaintiff was the maximum amount permitted by the fee schedule for acupuncture services rendered by a chiropractor, and consequently any remaining balance of each claim was properly denied.  As such, defendant was not entitled to summary judgment.


Steven E. Peiper
[email protected]

04/10/13       Burke v State Farm Fire & Cas. Co.
Appellate Division, Second Department
Mortgage Must Remain Active to Recover Under a Mortgagee Clause
In this interesting case, plaintiffs sold the premises in question to Irving Development in 2007.  As part of that transaction, plaintiffs retained a sizable mortgage on the premises.  At the same time, plaintiffs also procured a rental dwelling policy through defendant State Farm. 

When Irving defaulted, plaintiffs moved for foreclosure of the loan in 2009.  By 2010, the property had been assigned, via deed in lieu of foreclosure, back to plaintiffs.  At that point, in 2010, plaintiffs realized that the premises had sustained significant damages.

As a result, plaintiff sought coverage from State Farm.  State Farm denied on the basis that plaintiff did not possess an insurable interest in the property because at the time the damage was discovered, the loan underwritten by plaintiff had been fully satisfied and released.  Accordingly, where, as here, the State Farm policy only provided coverage to mortgagees, and plaintiffs were not mortgagees at the time of the claimed loss, there was no coverage. 

The Second Department affirmed; in essence stating that in order for someone to recover under a mortgagee clause of a policy, they must actually be a mortgagee.  

04/04/13       McGowan v Great N. Ins. Co.
Appellate Division, Second Department
What the?!?!?...Suit Limitation Clause Found Ambiguous
Plaintiff’s home sustained damage in 2004 when a pipe burst.  That loss was subsequently adjusted and paid by Great Northern.  In 2006, the insured noticed an odor emanating from the area where the pipe had previously burst in 2004.  Upon inspection, it was determined that mold had formed in the affected area.

A claim was then submitted for the 2006 damage, and Great Northern denied coverage on an unspecified reason.  Due to the denial, in 2008, plaintiff commenced the instant action seeking to recover for breach of contract.  Great Northern responded by moving to dismiss based upon the two year suit limitation clause.  Apparently, the trial court was persuaded by Great Northern’s position, and the matter ultimately resulted in a substantial verdict in favor of the insured. 

At the conclusion of trial, Great Northern appealed on the basis of the suit limitation clause.  Although the court acknowledged that the suit was commenced more than two years after the loss was discovered, the actual language of the suit limitation clause at issue was ambiguous.  The language in question provided that a suit needed to be commenced within two years “after the loss.”  According to the Second Department, because the clause did not provide the “precise phrases such as ‘date of loss’ or ‘after the inception of losses,” Great Northern’s position was denied.


04/10/13       Mikelatos v Theofilaktidis
Appellate Division, Second Department
Party Seeking Indemnity Must Exonerate Itself, AND Establish Negligence on the Party from whom Indemnity is Sought
Plaintiff was employed by third-party defendant P&P Marble when he sustained injuries after falling on an icy driveway.  Thereafter, plaintiff commenced a personal injury action against TMA, as the general contractor at the site.  TMA subsequently sought third-party contractual indemnification and/or common law indemnification from P&P Marble.

With regard to TMA’s motion for summary judgment on contractual indemnification, the Court noted that the movant must establish that it was free of negligence in relation to the injury causing event.  Here, as the loss occurred due to a defective condition at a premises, the actual or constructive notice standard governed TMA’s supposed negligence.  TMA’s supervision, direction or control of plaintiff’s work was irrelevant for purposes of this case.

Where, as here, TMA could not establish that it did not possess actual, or constructive, notice of the icy condition; its motion could not be granted. 

On the other hand, however, P&P’s cross-motion dismissing the contractual indemnity claim was granted.  The clause at issue provided indemnity only where the loss arose out of P&P Marble’s negligent acts or omissions.  Because there was no evidence that P&P Marble had done anything incorrectly, it followed that the indemnity clause had not been triggered. 

In a similar vein, the Court also denied and dismissed TMA’s common law indemnity claim.  To prevail on a common law indemnity claim, the moving party must establish that it was not negligent, and that the party from whom indemnity is sought was, in fact, actively negligent.  For the foregoing reasons referenced above, TMA failed to exonerate itself from any negligence claim.  On the other hand, P&P Marble was able to establish that it did not act in a negligent manner. 

04/09/13       Castlepoint Ins. Co. a/s/o Trager v Moore
Appellate Division, First Department
Court Finds a Question of Fact of Whether Neighbor Qualifies as a Third-Party Beneficiary of a Fireplace Inspection (i.e., Service) Contract
Castlepoint brought this action as a subrogee of Ms. Trager after the Trager household sustained smoke damage.  The smoke allegedly entered the Trager residence through a faulty firebox that was owned and used by defendant Moore. 

After being notified that smoke was entering the Trager residence, Moore hired B&P to inspect the fireplace.  After the B&P inspection assured Moore that the fireplace was working appropriately, Trager used it again.  At that point, the Trager household sustained damage.

In the instant action, the trial court searched the Record and dismissed the fireplace inspector, B&P, on the basis that they owed no duty to Moore and/or Trager.  In reversing, the First Department first noted that a question of fact existed as to whether Trager, as a complaining party and the impetus for the inspection, was a third-party beneficiary to the Moore/B&P service contract. 

In addition, even if Trager was not a third-party beneficiary, a question of fact still existed as to whether B&P “launched an instrument of harm or exacerbated a dangerous condition” by inadequately inspecting the entire fireplace system. 

Moreover, Moore’s motion for summary judgment was also denied where they were on notice that they fireplace was not working properly prior to hiring B&P.  According to the Court, as it was unclear what/how Moore described the problem to B&P, it could not determine whether Moore acted reasonably in attempting repairs of the fireplace. 

04/03/13       New York Schools Ins. Reciprocal v Milburn Sales Co., Inc.
Appellate Division, Second Department
Attorney Affirmation Does Not Meet Burden for Establish Material Prepared In Anticipation of Litigation Exemption
This dispute arises out of a fire loss at an elementary school in Babylon, New York.  On the day of the fire, Milburn was on site as part of an ongoing sanding and painting project at the school.  The fire, it appears, started as a result of Milburn’s employees’ failure to properly dispose of their materials.

On the evening of the fire, NYSIR dispatched employees from non-party Russo to investigate the loss.  In addition, six (6) days after the fire, but before the fire marshal’s report was released, Russo reported that the loss appears to have occurred due to the negligence of Milburn’s employees. 

In the resulting litigation, Milburn sought to take the depositions of the Russo employees that were present at the scene on the night of the fire.  Milburn immediately moved to quash on the basis that their involvement (and any materials prepared as a result of their involvement) was subject to the material prepared in anticipation of litigation doctrine. 

On appeal, the Second Department noted that the party asserting the privilege bears the burden to proving its applicability.  To do so, the Court specifically instructed the party must identify “the particular material with respect to which the privilege is asserted an establishing with specificity that the material was prepared exclusively in anticipation of litigation.” 

Here, counsel to Russo asserted the privilege by way of an attorney affirmation only.  That, as we all know, is insufficient to sustain a movant’s burden.  Particularly where, as here, the attorney had no personal knowledge of the claims asserted in the affirmation.

In addition, and more importantly moving forward, the Court also ruled that the impressions and work performed by Russo could not have been in anticipation of litigation.  To that end, the Court noted that Russo’s investigation and report were issued prior to the fire marshal’s report.  As such, the Appellate Division reasoned that as the work was completed prior to the existence of a subrogation cause of action, it could not have been solely prepared in anticipation of litigation.


Elizabeth A. Fitzpatrick
[email protected]

Coming Soon.

Cassandra A. Kazukenus
[email protected]

On Maternity Leave – Watch This Space


Katherine A. Fijal
[email protected]

03/28/13       Wurtz v The Rawlings Company, LLC.
United States District Court – Eastern District of New York
Plaintiffs’ Claims Grounded in GOL §5-335 Preempted by Federal Law – ERISA
Plaintiffs sought compensatory and punitive damages, restitution, attorneys’ fees, and declaratory relief arising from defendants’ allegedly improper enforcement of claims/liens for reimbursement following Oxford Health’s payment of plaintiffs’ medical expenses pursuant to its health benefit plans with plaintiffs’ employers.  In particular, plaintiff’s assert that New York General Obligations Law §5-335 trumps any reimbursement rights that defendants might have under ERISA and/or  the terms of their health benefit plans, and further that Defendants are in violation of GOL §5-335 by virtue of their assertion of such rights.

Plaintiffs were participants in health benefit plans that are provided by their employers and insured by Oxford Health.  Pursuant to the express terms of these Plans Oxford Health is entitled to be reimbursed for their health benefits provided to a member if he or she recovers the costs of those benefits from a third party. The Rawlings Company [“Rawlings”], acting as Oxford Health’s subrogation claims recovery vendor, corresponded with plaintiffs and/or their counsel, asserting claims/liens for reimbursement of Oxford Health’s coverage of such expenses, and requesting notification prior to any settlement of their claims.

In rendering its decision the district court reviewed the history of New York General Obligations Law §5-335 along with Federal ERISA law. In essence, New York General Obligations Law §5-335 provides that, “When a plaintiff settles with one or more defendants in an action for personal injuries . . . , it shall be conclusively presumed that the settlement does not include any compensation for the cost of health care services, loss of earnings or other economic loss to the extent those losses or expenses have been or are obligated to be paid or reimbursed by a benefit provider, except for those payments as to which there is a statutory right to reimbursement.

Defendants argued that Plaintiffs were attempting to use state law to negate their obligations to reimburse their respective employers’ benefit Plans from proceeds recovered from third party tortfeasors.  It was Defendants’ position that Plaintiffs’ claims grounded in New York General Obligations Law §5-335, are superseded under two parallel and independent principles of preemption:  (1) complete preemption under ERISA §502(a); and, (2) express preemption under ERISA §514.  For the following reasons the court agreed with Defendants.

The Court noted that the main objective of ERISA is to provide a uniform regulatory regime over employee benefit plans. The goal was to minimize the administrative and financial burden of complying with conflicting directive among States or between States and the Federal Government . . . and to prevent the potential for conflict in substantive law. . . requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction. 

The relevant test for assessing whether a claim is completely preempted under ERISA was developed by the Supreme Court in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), and consists of two parts.  Claims are completely preempted by ERISA if they are (1) brought by an individual who at some point in time, could have brought his or her claim under ERISA §502(1)(13); and (ii) under circumstances in which there is no other independent legal duty that is implicated by the defendant’s actions.

As to the first prong of the test  the district court addressed whether plaintiffs are the type of party that can bring a claim under §502(a)(1)(B); then it considered whether the actual claim at issue constitutes a colorable claim for benefits under §502(a)(1)(B).

The court determined that because a civil action may be brought (1) by a participant or beneficiary of (2) an ERISA employee benefit plan it was clear that the Plaintiffs were the type of party that may bring an ERISA claim under §502(a)(1)(B).

As to whether Plaintiffs had a colorable claim for benefits under §502(a)(1)(B) the court analyzed various cases from other Circuit Courts of Appeal and determined that notwithstanding Plaintiffs’ argument that they are not making a claim for benefits, but simply seeking determination as to defendants’ right to reimbursement under the Plans, it could not save their arguments from ERISA’s preemptive force. Although Plaintiffs’ claim was characterized as one looking only at state law, it was really about their right to keep the monetary benefits they received from Defendants under their ERISA-governed plans.  The court found that this triggered issues concerning their rights and ability to recover benefits under the Plans, and as a result, brings ERISA §502(a)(1)(B) directly into play.  In sum, the court noted that no matter how reasonably it read Plaintiffs’ allegations of unjust enrichment, declaratory judgment or deceptive conduct under General Business Law §349, in their favor, the essence of Plaintiffs’ claims directly concerned the issue for benefits under ERISA §502(a)(1)(B).

The court also found Plaintiffs’ argument that their claims concern an amount of payment under the Plans, as opposed to right to payment, unpersuasive because it overlooked the fact the whole source of contention is the benefits that Plaintiffs’ received under the Plans as well as the conditions imposed on such benefits under the Plans.  The court determined that the matter went beyond a simple dispute concerning quantity of payment; instead; it concerned issues regarding benefit eligibility and conditions to the receipt of coverage under ERISA governed plans.

Moving to the second prong of the Davila test, the court addressed whether any legal duty, independent of ERISA or the Plans’ terms was implicated. Plaintiffs argued that their claims sound separately and independently in State law, specifically GOL §5-335.  Plaintiffs contend that §5-335 creates an independent legal duty between Plaintiffs and Rawlings/Oxford Health, as the interpretation of the benefits plans themselves has no relevance whatsoever, given that  §5-335 eliminates the contractual rights of the parties under the benefits plan, and arises irrespective of the terms of the relevant employee benefit plans.

The court was not persuaded by Plaintiffs’ argument. In order to assess how Defendants allegedly should have acted, the court noted that it would still need to review the terms of the Plans.  GOL §5-335 would simply become part of the equation, but it would not singularly answer the question as to Plaintiffs’ rights and entitlement to benefits under the Plans. The court noted that Plaintiffs cannot get around the fact that their claims concerning their right to benefits and defendants’ rights of reimbursement derive directly from the Plans.  The Plan remains part and parcel of any state law claims the Plaintiffs raise here, and the Supreme Court has made clear that an independent duty cannot arise where the interpretation of the terms of the benefit plans forms an essential part of their state law claims and state liability would exist here only because of Defendants’ administration of ERISA regulated benefit plans.  Consequently, because no legal duty independent of ERISA or the Plans terms is implicated here, ERISA preemption applies.

Accordingly, since both prongs of the Davila test were satisfied, the court held that Plaintiffs’ claims are completely preempted by ERISA.

The court went on to address Defendants’ additional argument that Plaintiffs’ claims were expressly preempted under ERISA’s “preemption clause” and “savings clause”.  As to the “preemption clause” the court found that ERISA mandates preemption where a state law relates to an employee benefit plan and that the Oxford Health Plans were found to meet the definition of employee benefit plan under ERISA. 

On the issue of the “savings clause” the court noted that the benefit plan is saved from preemption if the state law at issue regulates insurance, banking or securities.  The court focused on whether the Plan regulated insurance and noted that there were two requirements that a state law must satisfy in order to be deemed a law that regulates insurance.  First, the state law must be specifically directed toward entities engaged in insurance.  Second, the state law must substantially affect the risk pooling arrangement between the insurer and the insured.

On the first issue, the court found that §5-335’s restriction on an entity’s subrogation and reimbursement rights as to a beneficiary’s settlement with a third party will apply, regardless of whether the entity asserting such rights is an insurer, and regardless of whether the benefits at issue constitute insurance.  The court noted that Supreme Court precedent on this issue is clear – in determining whether a law regulates insurance within the meaning of the savings clause, “a law must not just have an impact on the insurance industry, but must be specifically directed toward the insurance industry.

On the second issue of whether §5-335 has a substantial effect on risk pooling arrangements the court stated that it was hard-pressed to accept that the law’s effect on risk-pooling arrangements is substantial, where only a slice of certain types of settlements in certain types of cases involving certain types of benefit provides are actually implicated.

On Plaintiffs’ final argument that ERISA’s “deemer” clause further supports 5-335’s applicability to, and regulation of, Oxford Health Plan, the court found that the deemer clause only comes into play once it is determined that a state law regulates insurance. Since the court determined that §5-335 did not regulate insurance the deemer clause was held to be irrelevant to the facts of this case.

Finally, the court addressed the issue of whether Plaintiffs could proceed with their action if the state law claims were re-styled as ERISA claims.  The court held that not only do Plaintiffs’ claims fail if restyled as claims under ERISA §502(a)(1)(B) because the plain language of the Oxford Health Plans expressly condition their claims to the type of lien at issue here, but they also fail for another reason.  The Second Circuit has held that a claim for benefits pursuant to ERISA §502(a)(1)(B) may only be asserted against the plan itself or particular plan representatives – specifically, the plan administrator and the plan trustee.

The court granted Defendants’ motion to dismiss in full and dismissed Plaintiffs’ complaint.



Jennifer A. Ehman
                                            [email protected]    

03/27/13       Peerless Ins. Co. v Evanston Ins. Co.
Supreme Court, Suffolk County
Where the Lessee’s Policy Added the Property Owner as an Additional Insured by Endorsement, its Coverage was deemed Primary to that provided by the Owner’s Policy
A lawsuit was brought by the estate of a school bus driver who struck a tractor trailer while it was exiting a driveway in front of a commercial property known as 199 Sunrise Highway.  The suit named the property owner.

Peerless Insurance Company, the property owner’s insurer, tendered the defense to the lessee and its carrier, Evanston.  While Evanston initially disputed coverage for the owner arguing that the accident did not involve the leased portion of the property, it eventually conceded coverage.  Thus, the sole question was the priority of coverage between the Peerless and Evanston policies.

The Peerless policy stated that it was excess to “[a]ny other primary insurance available to you [the owner] covering liability for damages arising out of the premises or operations for which you have been added as an additional insured by attachment of an endorsement.”  In comparison, the Evanston policy provided that it was excess to “[a]ny valid and collectible insurance available to you [the lessee] covering liability for damages arising out of your premises, operations, products and/or completed operations.” 

As the owner was an additional insured by endorsement to the Evanston policy, the Peerless policy was excess.  However, as the “you” within the excess portion of the other insurance provision in the Evanston policy referred to the named insured (i.e., the lessee), it was not triggered, and the Evanston policy was considered primary for the owner.     

Earl K. Cantwell
[email protected]


A recent case in Florida emphasizes the importance of not only presenting good papers and arguments to a trial court on a motion, but then the trial court in turn making an adequate record for appellate review in examining the decision, which in this case favored the insurance company.  Exotic Motor Cars & Jewelry, Inc. v. Essex Insurance Company, 2012 WL 6028236 (Fla. Ct. App. December 5, 2012).  Exotic Motor Cars sought a declaratory judgment that Essex owed coverage for an accident while the owner of Exotic Motor Cars was driving a Porsche that his dealership was ostensibly selling.  The claimant alleged he was driving the car to another dealer to be inspected before delivery to a buyer who had put a deposit on the car.  Essex denied coverage on several grounds, including disputing the alleged reason given for driving the car, and also arguing that the policy covered “titled vehicles” held by Exotic which arguably did not actually have a title to the car on the day of the collision.  The trial court ruled in favor of the insurance company but did present any significant findings of fact, conclusions of law, or other statements of how the trial court arrived at its ruling. 

For example, the appeals court noted that the policy would cover a “titled” vehicle, but it was unclear from the facts whether Exotic Motor Cars had received a signed Title Certificate at the time of the accident.  The appellate court noted that there were other grounds as well upon which Essex might prevail in the declaratory judgment action, but those grounds were “impossible to review” because the trial court did not make any meaningful findings.  The appeals court, therefore, reversed and remanded to the trial court to make additional findings pertinent to the defenses to coverage raised by Essex.

This case illustrates the desirability of having a clear court decision in a declaratory judgment action explicitly stating the grounds for the court’s reasoning, and the basis upon which it found coverage or no coverage.  Here, other than ruling in favor of the insurance company, the court did Essex no favors by entering a judgment that lacked substance.

A clear and detailed ruling in a declaratory judgment action is also desirable because, as the appellate court noted here, there might have been other grounds upon which Essex could prevail in disclaiming coverage other than those upon which the trial court apparently relied.  A full record and findings from the court below would have allowed the appellate court to review those possible defenses if that information had been available in the record.  From the insurance company’s point of view, a complete and thorough lower court ruling is preferable because, even if the appellate court reverses a trial court ruling in favor of the insurer on one point, there may be other bases to deny or exclude coverage in the record.

Courtesy of the FDCC Website

Nothing of particular interest this week

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