Coverage Pointers - Volume XV, No. 3

Dear Coverage Pointers Subscribers:

Situations?  You have a situation?  We LOVE situations.

We bring greetings from Colorado Springs, where Beth and I are attending the FDCC Annual Meeting.  Great CLE, beautiful mountains and great people.

For the first time in a year or two, not a single general interest insurance coverage opinion was rendered by a NY appellate court in the two weeks preceding an issue.  Summer is always a quiet time for the courts, and this year is no exception.  So, my column is barren, although I do discuss training availability, but other columnists had better fortune.

We were delighted at the turnout for the first two DRI Insurance Law Committee Webinars – Insurance 101.  Thanks for the nice notes from those who tolerated me in the first of the three presentations.  Audrey’s letter below gives you the information on the remaining segment, August 8.

We’re So Social --  H&F Social Media:

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A Vote for Women, August 2, 1913:

In a New York Times letter-to-the-editor just over 100 years ago, a traveling salesman, one Leon Meyer, complained about the problem he – and other traveling salesmen – had in voting in elections.  Wenona Marlin, a short-story writer, noted his missive and wrote to the New York Times Editor, a century ago, expressing her views:

As a believer in “Votes for Women,” I heartily sympathize with the appeal for “Votes for Salesman.”  We have much in common.  However, to offset the 250,000 traveling salesman without votes, we have millions of women without votes.

Cat Toolbox Presentation and Registration is Now Open:
2013 Catastrophe Toolbox Presentation
August 21, 2013
Stamford Connecticut

Hurwitz & Fine, P.C. was pleased to be invited to join the Catastrophe Toolbox team. Alford Bolin Dowdy, LLC of Mobile, AL; Boehm Brown Harwood, P.A. of Orlando, FL; Mozley, Finlayson & Loggins, LLP of Atlanta, GA had organized and presented two fantastic conferences held in 2011 in Boston and 2012 in Atlanta. With the arrival of Sandy, the Northeast states are now included in the program and we were honored to be included on the Catastrophe Toolbox program and presentation team.
This year the program will be presented at the University of Connecticut Extension Campus in Stamford, CT on Wednesday, August 21, 2013. It will commence at 1 pm and end at 4 pm. A reception will follow. Registration will be available beginning at noon. There is no fee to attend, but we do need a head count and so require a reservation from you. You can contact one of the below named partners to make your reservation. Seats are already beginning to fill.
We are applying for adjuster continuing education credits in a number of states including Florida, Texas and North Carolina. This year we likely will provide them electronically either on a flash drive or through a web portal with password access.
The contacts at each firm are:
Dan D. Kohane ([email protected]) and Steven E. Peiper ([email protected])
Helen Alford ([email protected]);
Janet L. Brown ([email protected]); and
Wayne D. Taylor ([email protected] ).
The states we plan to include are as follows: Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Kentucky, Kansas, Louisiana, Massachusetts, Maryland, Missouri, Mississippi, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee and Texas. The expansion includes many states in the Northeast who experienced issues with Sandy as well as a number of the tornado alley venues.
We chose Stamford CT for its central location among those still dealing with Sandy issues and its ease of access along the Northeast corridor. It is our hope that the convenient location will allow many of you to attend. We look forward to seeing you there.

Peiper’s Pipings:
Don't say we didn’t warn you.  The first issue of August is, traditionally, the leanest of publications.  This year, of course, is no exception.  We do review an interesting case out of the Fourth Department dealing with unsigned indemnity agreements.  Other than that, we've got nothing. 

With nothing else to comment on from a legal perspective, I'll take this opportunity to thank you, the readership, for your support and kind words.  Whether you believe it or not, we do actually enjoy putting this publication together every other Thursday.  That said, as I am sure you can believe, many times it is a major hassle.  

Understand, however, we don't just continue to publish issues because it is what we do.  On the contrary, we put a new issue out every two weeks because more importantly you all express genuine appreciation of our efforts.  If you no longer cared, I suppose neither would we.  At least once a week, I am referred to as Peiper on Property.  I am not sure if that's what I want on my headstone, but it is a nice reminder that this actually matters (on some small level) to someone.   

Anyway, thanks for the well wishes and support.  You keep reading, and we'll keep writing.  Thanks again. 

Steven E. Peiper
[email protected]


One Hundred Years Ago -- Baseball Debut --- A One Game (or Perhaps Two) Wonder
When Esty Chaney pitched for the Boston Red Sox, a good portion of the fans at Fenway Park may not have realized who was on the mound. He stood only 5-feet-11 (listed with a playing weight of 170 pounds), but the next day’s Boston Globe wrote, “He is as big a man as [catcher] Forrest Cady, and many thought the announcer said that it was Cady pitching when the change was made, and left the grounds under the impression that it was Cady.” Cady stood three inches taller, but this was near the end of a disappointing Elks Day doubleheader and focus among the fans may have been fading. It was still nearly 20 years before the players wore uniform numbers, and public-address announcers strode back and forth using a megaphone to announce changes.
Esty Chaney made his debut for the reigning world champion Red Sox on August 2, 1913. Boston had lost four games in a row to the visiting Naps (as the Cleveland team of the day was called). Rube Foster had started the game for the Red Sox, but wrenched his knee and had to leave the game. Charley Hall had let the game get out of hand and by the time Chaney came in to pitch the top of the ninth inning of the second game of the twin bill, Boston was trailing 6-0. Chaney gave up one hit and two walks, letting in one run. Manager Bill Carrigan kicked about a play involving Nap Lajoie, but predictably to no avail – though Carrigan did manage to get himself ejected. Chaney finished out the inning, and Cleveland left Fenway Park having pocketed five wins in a row over the Red Sox.
As for Chaney, he was gone about a week later. He never got into another major-league game – or did he? Did he play one game in the majors – or two?
The next year, Chaney appeared in one more game in the “majors” – on May 19, 1914, with the Brooklyn Tip Tops in the Federal League. It’s in the books, and most baseball researchers deem the short-lived Federal League a major league. One game, four innings, seven hits, two walks (and one strikeout), yielding three runs. Call it a career; that was it.

Notes from Serious Injury-ville:

Only one serious injury case was issued in the last two weeks meriting our attention here.  That case merely reminds us that a party’s own evidence may be used against him or her, and that submitting evidence is not a time to inundate the court with all the available evidence.  Evidence should only be submitted to the court after it has been searched and considered to ensure the result in Straussberg is not repeated.  An ounce of prevention . . . .

With the courts on hiatus, now is a better time than ever to submit any questions you might have.  Situations are our specialty after all!  I was asked several months back about an issue involving exacerbation of an injury.  If the claimant arguably required surgery before an accident, experiences exacerbation during the accident, gets surgery after the accident, and then is disabled thereafter, what result?  Well, the question is almost entirely one of causation.  If the claimant is disabled as a result of an injury requiring surgery, then it is likely that there has been some significant limitation of use injury.  The issue is whether the claimant’s significant limitation of use was a result of the accident.  At the very least this can only be resolved by expert medical opinion based upon an examination of the claimant’s medical records both before and after the accident.

Michael P. Scott-Kristansen
[email protected]


A Sound Development, A Century Ago: Electrical World, August 2, 1913, page 251:

Loud-Speaking Telephone Enunciators in Baseball Grand Stand

An interesting trial installation of loud-speaking telephones, which may be made a permanent feature, has been made in the Comiskey Baseball Park in Chicago. It consists of a number of the recently developed telephone enunciators known as "musolaphones" and installed by the Chicago Musolaphone Company. The reproducers of this system are incased in horns or resonators suspended over both tiers of seats in the grand stand. Ultimately about 175 of these reproducers will be installed and about half of that number is in use now.
By means of this system the announcement of the batteries of the baseball teams, changes in the line-up, or other announcements, may be made to the assembled audience. There is one transmitter booth where the operator sits, and an "amplifier," to build up the tone, is used for each five reproducers. Before the game begins the system is utilized to transmit phonographic music from a Victor record. The music is rather harsh and not particularly pleasant, but the speaking announcements are clear and effective. The musolaphone people say that the "music" could be toned down by introducing more resistance into the circuit.
The musolaphone is said to be adapted for announcing bargain sales to department-store throngs, giving fire alarms in crowded factories, announcing the departure of trains in railroad stations or varied purposes of like nature. It can also be connected with a commercial telephone service to transmit music to subscribers. An interesting fact, and one which does not seem to be clearly understood, is that where a quartet is singing in the studio or transmitting booth a better effect is obtained if a separate transmitter and an individual source of electricity are used for each performer. A motor-generator set, consisting of a motor and four small direct-current generators, has been devised for this purpose.
Editor’s Note:  It appears the company went out of business in about 1917.


Audrey’s Angle:

My son just turned six months old and I cannot believe how much he has developed in that time.  I discovered last week that his two bottom teeth are coming in and he is now rolling over (a bit too easily) as well as working on sitting, unsupported.  Thank you to everyone who has sent me congratulations and some words of wisdom over the past six months.  I am truly enjoying him as he is and not wishing and hoping for when he crawls, walks, and talks.  However, I am a planner and am looking for any suggestions on baby proofing my house when he does begin to crawl and walk.

Speaking of planning, I hope that you have the following three DRI events on your calendar:

  • The remainder of the Insurance 101 webcast series;
  • DRI Annual Meeting in Chicago; and
  • The Insurance Coverage and Practice Symposium in New York.


The Insurance 101 webcast series still has two segments left and it is never too late to sign up.  The per-site cost for the individual segments is $150 for DRI members and $180 for non-DRI members. Please register online at
“Coverage and Bad Faith Litigation” will be presented on August 8th (1:00 – 2:30 p.m. CDT) by Mike Marick of Meckler Bulger Tilson Marick & Pearson LLP and Kevin Willging, Senior Counsel and Second Vice President of Travelers. This webcast will overview litigation of coverage and bad faith lawsuits and will address claims typically asserted, common motion practice, and strategic considerations.

The DRI Annual Meeting will be held in Chicago this year from October 16-20th with the theme “Energizing Your Career: Making Rain in the Windy City.” If you plan on attending it is recommended that you register early to ensure that you get a room in the hotel block.  The block buster speakers this year are:

  • New York Times Best Selling Author, Dan Buettner discussing the principles of The Blue Zones – the Secrets of Long Life,
  • Pulitzer Prize Winner Charles Krauthammer providing insight into “The Future of Health Care, Medicine and Bioethics,” and
  • Former Nixon White House Counsel John W. Dean, along with a lawyer and historian will present the “The Legacy of Watergate – Ethics of Representing an Entity Under Current Model Rules.”


Also, the Insurance Law Committee will be presenting a great program on Friday regarding effective communication strategies to bridge generational differences. Dr. Arin N. Reeves will be speaking about the conscious and unconscious biases around generational differences, such as prejudgments, learning styles, values, and stereotypes about professional potential as well as bridging those gaps to help firms and insurance company’s internally manage them. You absolutely do not need to be a coverage lawyer to learn something from this program.  If this program is like our program last year you will want to get there early as it was standing room only.

Finally, please save the date for the Insurance Coverage and Practice Symposium which will be held in New York from December 12-13.  It will be at a new hotel – Sheraton NY Times Square.  More details regarding the program will be forthcoming once the brochure is issued.

Audrey A. Seeley
[email protected]

Not a Fly By Night Accomplishment– One Hundred Years Ago Today:

French aviator Eugene Gilbert became the first person to fly 1,000 miles in a single day to win the semi-annually awarded Pommery Cup. The prize was to be given to the person who "makes the longest flight across country from sunrise to sunset on one day, during which he may stop as often as he wishes to replenish fuel". Gilbert departed Paris at 4:45 am, flew seven hours non-stop to the Spanish town of Vittoria, departed again at 1:00 and arrived at the Portuguese town of Pejabo at 8:00 pm.

In This Week’s Issue:

Dan D. Kohane
[email protected]

  • Empowerment


Michael P. Scott-Kristansen

[email protected]  

  • Defendants’ Own Evidence Creates Issue of Fact Preventing Summary Judgment in Defendants’ Favor


Margo M. Lagueras

[email protected]


  • Burden of Proof of Disability Following Denial of Wage Loss Benefits Is on Applicant and Applicant Fails to Sustain
  • “Canned Rebuttal” Is Insufficient
  • Bill Received by Carrier More Than 45 Days After Service Rendered Is Time Barred
  • Denial Not Upheld Where Assignor Presents Reasonable Excuse for Non-Appearance at Scheduled IMEs



  • SOL Bars Claim
  • EUO Letters Mailed More Than 70 Days After Receipt of Bills Were Untimely
  • Peer Review Is Not Admissible at Trial on Issue of Medical Necessity


Steven E. Peiper

[email protected]

  • Contract Signed After the Loss, Did Not Provide Retroactively


Elizabeth A. Fitzpatrick
[email protected]

  • No bantering this week, in Colorado.


Audrey A. Seeley
[email protected]

  • ATCP Violations Not an “Occurrence” Under CGL Policy
  • Insurer Not Required to Provide Additional Coverage to Permissive Operator When Only One Auto Policy Available to Cover Owner and Operator and Policy Complied With Financial Responsibility Law


Cassandra A. Kazukenus
[email protected]

  • Proposed Regulation 11 NYCRR 65-5 (Insurance Regulation 68-E) : Sets forth process for decertification of fraudulent health insurance providers.


Katherine A. Fijal

[email protected]

  • Newly Acquired or Constructed Property
  • Court Excludes Insurer’s Expert Testimony about Hospital Computer


Jennifer A. Ehman
[email protected]

  • Court Finds Triable Issue of Fact as to Whether the Named Insured Should Have Been Provided Independent Counsel
  • Carrier Fails to Timely Deny Coverage After Notice of Lawsuit
  • Notice to Mortgagee Not Required


Bad Faith

  • Bad Faith Requires Independent Tort Claim Separate from Contractual Claim under Missouri Law


Earl K. Cantwell

[email protected]

  • Insurers, Insureds, Counsel and Conflicts of Interest


That’s all for now.  See you in two weeks.


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

Steven E. Peiper, Team Leader
[email protected]

Elizabeth A. Fitzpatrick
Cassandra Kazukenus
Michael P. Scott-Kristansen

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 and Fitz’ Bits
Audrey’s Angles on the Nationally Noteworthy
Cassie’s Capital Connection
Fijal’s Federal Focus
Keeping the Faith with Jen’s Gems
Earl’s Pearls

Dan D. Kohane
[email protected]


Inasmuch as the summer respite led to an absolute blank slate of appellate decisions for my column this issue, we thought we would use the opportunity to talk about in-house training.  Our Coverage Team is ready to come to your shop, at a mutually convenient time, and provide effective and practical training in any number of areas.

Our goal is to empower claims professionals to take on both the routine and the complex matters that come before them.  Our training modules are designed for that purpose, to promote and enable self-reliance. Here is a list of some of the topics and we can craft others to meet your needs: 


      • The Impact of K2 Investments on Coverage Decisions
      • Tenders, Additional Insured Obligations, Indemnity Agreements and Priority of Coverage
      • Good Faith, Consequential Damages and Extra-Contractual Liability - the New York Experience
      • NY Disclaimer Letters - Nuts & Bolts: How to Create and Write and Send a Disclaimer Letter, and How Not To. (The Reservation of Rights Letter Myth)
      • Uninsured and Underinsured Claims Handling
      • Preventing Bad Faith Claims - First Party Cases
      • Preventing Bad Faith Claims - Liability Cases
      • The Cooperation Clause - How to Handle
      • No-Fault Arbitrations and Appeals: Mock Arbitrations
      • The Serious Injury Threshold
      • Preserving the Record, Taking an Appeal
      • No Fault Regs - Knowledge is Power
      • An Auto Liability Policy Primer
      • A CGL Policy Primer
      • A Homeowners Liability Policy Primer
      • EUO's Under First Party Policies
      • How to Resolve Coverage Disputes: DJ Actions, Insurance Law Section 3420 Direct Actions (Choice, Strategy and Timing)
      • Insured-Selected Counsel: When is it Necessary and How to Avoid it?
      • Mediation and the Role of the Mediator
      • ADR and How to Get to "Yes"
      • The Internet as a Tool for the Claims Representative
      • Tackling Tenders


Michael P. Scott-Kristansen
[email protected] 

07/24/13       Straussberg v. Marghub
Appellate Division, Second Department
Defendants’ Own Evidence Creates Issue of Fact Preventing Summary Judgment in Defendants’ Favor
The Court upheld the denial of the defendants’ motion for summary judgment.  The defendants failed to demonstrate the plaintiff’s thoracolumbar injuries were not permanent consequential limitation of use or significant limitation of use injuries.  While defendants may have met their burden on the issue of causation, and therefore prevailed by showing the accident did not cause the plaintiff’s injuries, their own evidentiary submissions demonstrated that there was an issue of fact requiring trial.

Margo M. Lagueras

[email protected]


07/22/13       Applicant v Amica Mutual Inc. Co.
Erie County, Arbitrator Michelle Murphy-Louden
Burden of Proof of Disability Following Denial of Wage Loss Benefits Is on Applicant and Applicant Fails to Sustain
The 20-year-old Applicant was involved in a motor vehicle accident in August 2008, was paid wage loss until March 2009, and was then denied further wage loss based on an internal medicine IME.  At the arbitration, Applicant claimed lost wages from March 2009 through August 2011, the full three years allowable. 

The Arbitrator reviewed in detail the history of varying treatment with numerous providers, including multiple and essentially unremarkable MRIs, normal EMG/NCV studies, and epidural injections.  Applicant’s records revealed that she was discharged by and/or treated only briefly with many of her providers.  She attended only two sessions of physical therapy because it allegedly was too painful.  Only two of her treating doctors rendered opinions regarding disability and provided disability notes, which covered limited periods ending in February 2009.

During the arbitration hearing, Applicant testified that she worked as a cashier at the Pembroke Travel Plaza on the Thruway and was required to clean and maintain the plaza two or three days a week.  She had not worked since the accident and, as a result, lost her home and was unable to provide for her child.  She also claimed that after 2009 or 2010 she continued treating with a chiropractor and had seen an orthopedist; however, she failed to explain why she did not submit any medical records from these providers. 

The Arbitrator noted that Applicant’s failure to produce records caused the Arbitrator to consider that such records, if they did exist, were not favorable to Applicant’s claim.  The Arbitrator additionally noted that the records submitted did not support the Applicant’s claim of disability.  Although the Arbitrator did not find the IME report to be persuasive, in order to recover for lost wages after a denial, Applicant must prove that she was disabled during the period claimed.  Applicant failed to meet her burden of establishing that she was disabled from March 2009 through August 2011, and, as a result, her claim was denied.

07/19/13       Elite Medical Supply of NY, LLC v Geico Ins. Co.
Erie County, Arbitrator Douglas S. Coppola
“Canned Rebuttal” Is Insufficient
After about three weeks of treatment, the treating chiropractor issued a prescription and letter of medical necessity for an Elite cervical traction unit and a multi-mode stimulator.  He certified that they had provided positive results during in office trials.  Respondent requested a peer review which was performed by Ron Amidror, D.C.  He noted that the MRI reports showed non-specific but tiny osteophyte degenerative changes at C5-6 and C6-7 with no cord impingement.  He opined that at least six to eight weeks of treatment should have been received before contemplating the prescription of the DME in question.  The Arbitrator found Dr. Amidror’s report to be very detailed and persuasive, whereas the Applicant’s response was limited to “a typical ‘canned rebuttal’ which is similar in form and content to the Elite Medical Supply rebuttals that the prescribing chiropractors are asked to supply.”  The claim was denied.

07/19/13       WJW Med Products Inc. v Liberty Mutual Fire Ins. Co.
Erie County, Arbitrator Douglas S. Coppola
Bill Received by Carrier More Than 45 Days After Service Rendered Is Time Barred
The chiropractor issued a prescription and letter of medical necessity on a form provided by Applicant on January 9, 2012.  At the hearing Applicant claimed that he mailed that bill on January 25, 2012, to a “typical billing address” that he had in his system without verifying that it was correct.  He never asked the chiropractor for the billing address, even though he never received any acknowledgement of the claim.  Time passed and he again submitted the bill to a wrong address, and again he received no acknowledgement.  Applicant claimed that he called Respondent, but did not note the number called or the adjuster he spoke with.  He claims he was told to call back after 30 days and claims that he again resubmitted the bill, this time to a PO Box in Montgomery, PA, with no zip code.  Not until January 10, 2013, did Applicant mail the bill to the correct address.  It was immediately denied based on the 45-day rule.

The Arbitrator found it curious that a medical supply business would not be able to contact the prescribing doctor to obtain the correct address for billing when it receives a prescription for its products.  Applicant could have a pre-printed fax form that the doctor could use that would contain fields for the doctor to provide the correct billing information, file number, etc., so that the billings could be submitted timely.  Applicant’s efforts to ascertain the correct address cannot be construed as “reasonable,” and as the bill was first received by Respondent well after the 45 days, it was untimely and denied.

07/17/13       Lackawanna Chiropractic v A. Central Ins. Co.
Erie County, Arbitrator Kent L. Benziger
Denial Not Upheld Where Assignor Presents Reasonable Excuse for Non-Appearance at Scheduled IMEs
Benefits were denied based on the Assignor’s failure to appear at two properly scheduled IMEs.  At the telephonic hearing, Applicant’s counsel stated that the Assignor was out of the country attending to his sick mother in Yemen at the time of the examinations.  The Arbitrator directed Applicant to obtain affidavits as to that excuse, which Applicant failed to do.  Nevertheless, at the in-person hearing the Assignor testified that, although he did not recall the dates of his trip, he did recall that the trip conflicted with the scheduled IMEs.  Applicant also testified that his records indicated the dates the Assignor was out of the country and those records confirmed that the dates coincided with the scheduled IMEs.  He also stated that this information was communicated to Respondent.  The Arbitrator found this to constitute a valid excuse for non-appearance and awarded in favor of Applicant.


07/19/13       Wexford Med. P.C. v Commerce Ins. Co.
Appellate Term, First Department
SOL Bars Claim
Plaintiff alleged that services were rendered on January 9, 2003, and the bill was timely received by the defendant and not denied within 30 days.  Given that plaintiff was required to submit the bill within 45 days of the service and that the claim accrued 30 days after, the action, which was commenced on September 18, 2009, was clearly barred by the six-year statute of limitations and should have been dismissed.

07/01/13       Optimal Well-Being Chiropractic, P.C. v Ameriprise Auto & Home
Appellate Term, Second Department
EUO Letters Mailed More Than 70 Days After Receipt of Bills Were Untimely
Plaintiff moved for summary judgment and defendant cross-moved to dismiss the complaint alleging it timely denied plaintiff’s claims based on the failure to appear at two scheduled EUOs.  On appeal, the court agreed that an EUO need not be scheduled to be held within 30 days of receipt of the claim form.  However, here the EUO scheduling letters were not timely mailed as they were mailed more than 70 days after receipt of the bills.  As such, they were untimely and did not toll the time to pay or deny the bills. 

06/27/13       Alev Med. Supply, Inc. v Geico Ins. Co.
Appellate Term, Second Department
Peer Review Is Not Admissible at Trial on Issue of Medical Necessity
On appeal, plaintiff argued that the admission of defendant’s peer review reports and underlying medical records was error.  Plaintiff did not, however, challenge the substance of defendant’s expert witness’s testimony.  At trial, the issue of medical necessity must be resolved based upon the testimony of medical experts, not a peer review report.  Here, defendant established its defense of lack of medical necessity through the testimony of its expert and, as such, reversal was not warranted.

Steven E. Peiper

[email protected]

07/19/13       Meabon v Town of Poland
Appellate Division, Fourth Department
Contract Signed After the Loss Did Not Provide Contractual Indemnification Retroactively
Plaintiff commenced the above-captioned matter after falling from the roof of a pole barn being constructed for the Town.  At the time of the incident, plaintiff was in the course of his employment with Cadillac Construction.  Upon joining issue in the instant action, the Town commenced a third-party action against Cadillac seeking common law and contractual indemnification. 

Initially, the Appellate Division dismissed the Town’s common law indemnity claim because the injured party did not sustain a grave injury under Workers’ Compensation Law § 11. 

The contractual indemnity claim, however, presented a more interesting argument.  The contract upon which that claim was based was not signed until a week after plaintiff’s accident.  As such, Cadillac argued that although a contract existed it could not be applied retroactively absent consent from both parties. 

Here, Cadillac established that the contract was not meant to apply retroactively, and accordingly the Town’s contractual indemnification claim was likewise dismissed.   In so holding, the Court also noted that providing a certificate of insurance, which Cadillac apparently did, does not rise to a “course of conduct” upon which a contractual indemnification claim could otherwise have been based. 

Elizabeth A. Fitzpatrick
[email protected]

In the Rockies.


Audrey A. Seeley
[email protected]

7/30/13         Grand View Windows, Inc. v. Brandt, et. al.
Court of Appeals, Wisconsin
ATCP Violations Not an “Occurrence” Under CGL Policy
American Family issued a commercial general liability (“CGL”) policy to Grand View Windows, Inc. (“Grand View”).  Grand View was sued by a homeowner pursuant to a home improvement contract for, inter alia, violations of the Wisconsin Administrative Code §ATCP 110, also known as the Home Improvement Practices Act (“ATCP”).  American Family prevailed on summary judgment on the issue that the ATCP violations determined at trial were not accidental and thus not an “occurrence” under the CGL policy.  The CGL policy’s definition of “occurrence” contained the usual accident language.

On appeal, the homeowner argued that the ATCP violations were an “occurrence” under the CGL policy as Grand View’s failure to give notice of an impending contract performance delay was a failure more negligent and accidental than volitional.

American Family relied upon the common-law interpretation of accident as well as the recent decision in Stuart II, Stuart v. Weisflog’s Showroom Gallery, Inc., 311 Wis2d 492, to support its contention that the ATCP violations were not an “occurrence” under the CGL policy.  The term “accident” has been construed to mean an unexpected or unforeseen incident characterized by a lack of intention.  Further, Stuart II provided further explanation of volitional acts and misrepresentation.  In Stuart II, there was a similar allegation that the insured violated the ATCP by making a false or misleading representation to induce the homeowner to enter into the home improvement contract.  While the result is unexpected, the causal event must be accidental to be an “occurrence.”  The insured made the misrepresentation at the time to induce the homeowner to enter into the contract, thus making the act volitional and not accidental.

Here, the ATCP imposed a duty upon Grand View to disclose an impending delay in performing the home improvement contract.  Since the jury found Grand View failed to disclose the delay, it thus represented there would be no delay in the contract’s performance.  Thus, Grand View’s act in failing to disclose the delay was a misrepresentation and ultimately a volitional act not within the definition of an “occurrence” under the CGL policy.

7/30/13         Allstate Prop. and Cas. Ins. Co. v. Davis, et. al.
Court of Appeals, Missouri
Insurer Not Required to Provide Additional Coverage to Permissive Operator When Only One Auto Policy Available to Cover Owner and Operator and Policy Complied With Financial Responsibility Law.
Allstate Property and Casualty Insurance Company (“Allstate”) issued a personal auto policy to Robert and Jeanie Simpson that listed their 21 year old son, Javan Simpson, as a driver.  The policy also listed three vehicles, the one at issue here being a 1997 Nissan pickup.  The policy further provided $50,000 per person and $100,000 per accident in insurance coverage, which was $25,000 more than required under the Missouri Motor Vehicle Financial Responsibility Law (“MVFRL”).

Javan Simpson was involved in a motor vehicle accident while operating the 1997 Nissan with his parents’ permission.  He did not have a separate personal auto policy that provided coverage for this accident.  Allstate settled the personal injury claim for the policy limits with the agreement that Allstate would file a declaratory judgment action seeking a declaration of whether MVFRL required Allstate to provide an additional coverage to Javan Simpson as the operator of the vehicle.

The Court of Appeals held that Allstate had no such obligation.  The MVFRL requires a motor vehicle owner to maintain a policy with $25,000/$50,000 limits, and in the absence of same the operator must maintain such a policy.  These policies have been dubbed an “owner’s policy” and an “operator’s policy.”

The injured party argued that when the MVFRL is read in conjunction with Karscig v. McConville, 303 SW3d 499 (Mo. banc 2010), there is a requirement for an “owner’s policy” and an “operator’s policy.”  Thus, while Allstate only issued an “owner’s policy,” under which Javan was an insured, Allstate was required to provide an additional $50,000 in insurance coverage to Javan Simpson as an operator.  The Court rejected the argument that Karscig requires such a result.  Rather, Karscig addressed the situation where multiple policies existed – one for the owner and one for the permissive operator.  Here, there was only one policy – an “owner’s policy” – which provided more than the statutory minimum coverage for the accident.  Thus, Karscig placed no obligation on Allstate to provide additional coverage to Javan Simpson.

The Court also rejected the argument that by listing Javan Simpson on the policy as a driver Allstate intended to afford him separate coverage under an “operator’s policy.”  This is because the Court has already recognized that listing a driver on a policy is not dispositive of whether the driver is a named insured.  Rather, it is dispositive evidence of permissive use of a covered vehicle.  Accordingly, Allstate was not required to provide insurance coverage above the $50,000 policy limit.


Cassandra A. Kazukenus
[email protected]

Proposed Regulation 11 NYCRR 65-5 (Insurance Regulation 68-E)
Sets forth process for decertification of fraudulent health insurance providers.

This proposed regulation contains all new materials and does not amend any existing regulations.  This regulation is authorized pursuant to Insurance Law §5109 which allows the Superintendent of Financial Services and the Commissioners of Health and Education to establish standards and procedures for the investigation and suspension or removal of a provider of health services that provides no-fault health services.

DFS may investigate any reports or allegations regarding providers of health services engaging in any of the unlawful activities set forth in Insurance Law §5109(b) (for example professionals who exceed the limit of his/her competence or made false statements in a medical report).  After conducting the investigation, DFS will send to the Commissioner of Health or Education a list of providers believed to have engaged in unlawful activities.  The notice must include the grounds for inclusion on the list.  Within 45 days of receipt of the list, the Commissioners shall notify DFS whether he or she confirms that DFS has a reasonable basis to proceed with notice and a hearing as to whether the provider should be deauthorized from demanding or requesting payment for medical services under no-fault.


Notice of any hearing to a provider should be provided at least 30 days prior to the hearing in writing.  The notice should state the grounds for the hearing.

At least 10 days prior to the hearing, the provider may file an answer to any charges.  A statement by any regular salaried employee of any of the three departments which is affirmed as true and includes the facts that show the notice was delivered as required is presumptive evidence of such.


The hearing may be held before the Superintendent of DFS, Commissioner of Health/Education, any deputy or any designated salaried employee of the Departments.  The hearing must be conducted in compliance with the State Administrative Procedure Act.

The person conducting the hearing can administer oaths, examine and cross-examine witnesses and shall report his or her findings that may be adopted by the superintendent or commissioners.

Providers will be permitted to:

  • Be present during all testimony;
  • Represented by counsel;
  • Inspect all adverse documentary proof;
  • Examine and cross-examine witnesses; and
  • Present proof.

There will be a stenographic record of the hearing.

If it is determined that the provider engaged in the prohibited activity, the superintendent or commissioner may temporarily prohibit the provider from demanding or requesting any payment for no-fault medical services for up to 90 days.

Upon review of the hearing officer’s report and recommendation, the superintendent or noticing commissioner may issue a final order prohibiting the provider from demanding or requesting any no-fault payments and requiring the provider from treating any person seeking no-fault benefits.  If an order prohibiting the provider from obtaining payment for no-fault benefits also bars the provider from treating No-Fault patients for more than three years, the provider may submit a written application seeking reconsideration of the order after three years.

Katherine A. Fijal
[email protected]

07/23/13       Amera Seiki Corporation v. Cincinnati Ins. Co.
United States Court of Appeals Eighth Circuit – Iowa Law Applied
Newly Acquired or Constructed Property
Amera Seiki Corporation [“ASC”] is an Iowa Corporation which imports computerized industrial equipment for customers in the United States.  ASC purchased a commercial property policy from Cincinnati Insurance [“Cincinnati”].  The policy was effective November 5, 2009 to December 31, 2010, and extended coverage to certain “Newly Acquired or Constructed Property”.  As relevant here, the policy provides that coverage may be extended to apply to “loss” to:  “Business personal property, including such property that you (ASC) newly acquired other than at fairs, trade shows or exhibitions.”

During the policy period ASC purchased a vertical lathe from a manufacturer in Taiwan for delivery to a customer in Illinois.  ASC paid for the lathe and had the lathe shipped from Taiwan in June, 2010.  ASC arranged for transport of the lathe by ship to Los Angeles, California, and stored the lathe until a flatbed truck could transport it to Illinois.  The lathe arrived at the APL Container Terminal at the Port of Los Angeles on or about June 29, 2010.  ASC paid $1950.00 to store the lathe at the terminal from July 8, 2010 to July 13, 2010.  On July 13, 2010, a longshore worker at the terminal was moving the lathe by yard tractor to the location where the delivery driver could pick it up when the lathe and was destroyed. ASC filed a claim with Cincinnati and Cincinnati denied most of the claim.  Cincinnati advised ASC that the coverage extension for newly acquired property did not apply; however, paid $10,000 of transportation coverage.

ASC filed suit in Iowa State Court and Cincinnati had the case removed to the Northern District of Iowa.  After discovery, both ASC and Cincinnati filed cross-motions for summary judgment.  The district court denied Cincinnati’s motion and granted summary judgment to ASC.  The district court determined that ASC’s temporary acquisition of the location at the terminal constituted a location ASC acquired within the meaning of the newly acquired property extension in the Cincinnati policy.  The district also decided the reference to ‘location you acquire’ in the policy provision was ambiguous.

The parties later stipulated that the amount of the loss was $337,025.50, but disagreed as to whether Iowa law required Cincinnati to pay prejudgment interest on that amount. The district court awarded prejudgment interest to ASC under Iowa Code §535.2(1)(b), which provides for interest on money after the same becomes due.  Cincinnati appealed from judgment and the award of prejudgment interest.  For the following reason the United States Court of Appeals, Eighth Circuit [“Court”] affirmed. 

When addressing the issues of “Newly Acquired Property” the Court noted that Iowa law requires that the Court interpret the policy language from a reasonable rather than a hypertechnical viewpoint, giving undefined words their ordinary meaning.  Further noting that under an objective test, a policy is ambiguous if the language is susceptible to two reasonable interpretations and that the policy is read as a whole, not seriatim by clauses. 

In affirming the district court’s decision the court addressed the Iowa Supreme Court’s recognition that the term “acquire” generally has a broad meaning.  Cincinnati argued that ASC did not ‘acquire’ the terminal under the plain and ordinary definition of ‘acquire’ because ASC did not own, lease, possess, or exercise any element of control, authority or decision making ability for the terminal. 

ASC on the other hand argued that ‘acquire’ was an extremely broad term including to get or obtain in any way.  Further arguing that if Cincinnati intended to require greater permanency, ownership, possession or control than Cincinnati should have defined the term ‘acquire’ in the policy or otherwise expressly limited the newly acquired property extension in the same way Cincinnati limited other policy provisions.  ASC maintained that it sufficiently got, obtained, possessed, and controlled – acquired – the location at the terminal where the lathe was damaged when ASC paid $1950.00 for the right to store the lathe at a specific fenced and secured property for a specified time under an agreement that ASC described as a lease.

The Court was not persuaded that the newly acquired property extension unambiguously extended coverage to the terminal; however, it did agreed with the district court that the phrase ‘any location you acquire’  is objectively susceptible to the reasonable interpretation pressed by ASC and consistent with the ordinary meaning of those words. The Court concluded that the phrase was ambiguous and that Iowa law required it to construe that ambiguity in ASC’s favor.

On the issue of prejudgment interest Cincinnati argued that the calculation of prejudgment interest should accrue from the date the district court resolved the coverage dispute and determined, with certainty, the coverage amount of $337.025.50.  The Court found that Cincinnati’s interpretation was contrary to Iowa law.  Pursuant to Iowa law interest generally runs from the time money becomes due and payable, and in the case of unliquidated claims this is the date they become liquidated, ordinarily the date of judgment.  In Iowa, however, an exception exists to the unliquidated claim rule when the damage is complete at a particular time.  Then, the interest runs from that time although the damage has not been fixed in a specific sum. Based on this exception the Court agreed with the district court holding that ASC was entitled to interest on the damage from the date that the lathe was destroyed.

07/25/13       Ashland Hospital Corp. v. Affiliated FM Ins. Co.
United States District Court Circuit Eastern District of Kentucky
Court Excludes Insurer’s Expert Testimony about Hospital Computer
In an insurance coverage action, a Kentucky Federal judge has excluded an electrical engineer’s expert opinion that an air conditioning failure did not cause damage to a policyholder’s computer data storage network.  Affiliated FM Insurance Company’s expert, Frank Lombardo, was qualified to analyze Ashland Hospital Corp.’s computer network’s failure and future reliability, but his methodology was unreliable according to Judge David L. Brunning.
Editor’s Note:        Thank you to Steven Fox, PC for providing us with this                                        summary.


Jennifer A. Ehman
                                            [email protected]    

07/26/13       Tower Ins. Co. of New York v Sanita Construction Co., Inc.
Supreme Court, New York County
Court Finds Triable Issue of Fact as to Whether the Named Insured Should Have Been Provided Independent Counsel
This is an odd case.  On February 17, 2006, Robinson Duran-Urena was injured while in the course of his employment with Sanita Construction (“Sanita”).  Per the facts provided by the court, Sanita had hired Ciampa Estates, LLC (“Ciampa”) to act as a masonry subcontractor on the jobsite.  The entities then executed an agreement in which Sanita assumed insurance obligations for the contracted work, and also agreed to indemnify Ciampa for liability arising out of any loss suffered by an employee of Sanita.  An odd situation. 

Tower issued a commercial general liability policy to Sanita, which was in effect on the date of loss. 

Mr. Duran-Urena eventually brought an action against Ciampa whose carrier tendered Ciampa’s defense and indemnification to Tower.  In response, Tower denied coverage citing the policy exclusions for contractual liability and employer’s liability; however, it agreed to defend its insured.  Notably, both exclusions contained exceptions for liability assumed in an “insured contract;” however, the decision is void of any discussion as to whether the contract was in fact an “insured contract.”   

To confirm the denial of coverage, Tower filed this action.  While Ciampa appeared and answered, Tower’s insured, Sanita, failed to do so.  Tower eventually brought this motion seeking a default against Sanita and a declaration that it was under no obligation to defend or indemnify Sanita and/or Ciampa in the underlying action.    

It does not appear that Ciampa’s opposition addressed its entitlement to coverage as an additional insured under the Tower policy; rather, the opposition was entirely based on the allegation that Tower breached duties owned to Sanita by failing to provide it independent counsel.  Ciampa urged the court that because Tower denied coverage to Sanita, placing it in conflict as to its insured, Sanita was entitled to independent counsel to represent and protect its interest. 

In considering the facts, the Court denied Tower summary judgment finding that a triable issue of fact was raised as to whether a conflict of interest was present between Tower and Sanita, such that Sanita was entitled to independent counsel.  The Court further granted the default against Sanita, and agreed to stay the action until the underlying matter was resolved.

Take Away:  Two issues struck me when reading this decision.  First, does Ciampa even have standing to argue that Sanita, an unrelated entity, should have been provided independent counsel?  Also, an outright disclaimer alone does not entitle an insured to independent counsel.  Rather, an insured is entitled to independent where it is possible that the manner in which the case is defended could push it in or out of coverage.  The classic example is the intentional acts cases. 

07/22/13       Mathis v Zurich Ins. Co.
Supreme Court, Bronx County
Carrier Fails to Timely Deny Coverage After Notice of Lawsuit
This is another “odd ball” case.  In November 2012, the court issued a decision granting a cross-motion made by defendant dismissing plaintiff’s complaint.  In that decision, the court determined that plaintiff’s failure to provide independent notice of her lawsuit to defendant, a condition precedent to coverage, precluded plaintiff from maintaining a direct action pursuant to Insurance Law § 3402(b)(2). 

Thereafter, plaintiff obtained a default judgment against defendant’s insured.  Plaintiff then mailed a copy of the judgment along with a request for payment to defendant on January 4, 2011.  By letter dated November 8, 2011, defendant disclaimed coverage due to its insureds’ lack of cooperation and violation of conditions to coverage. 

In this motion to reargue, plaintiff asserted that the court overlooked relevant facts and misapplied the law in rendering its previous decision.  Plaintiff took the position that despite knowledge of the lawsuit in January 2011, defendants failed to disclaim coverage until ten months later. 

Defendants challenged the motion on the basic ground that plaintiff failed to demonstrate how this court overlooked or misapprehended a relevant fact or controlling principle of law.  It appears likely that plaintiff neglected to argue this point in its original motion. 

In considering this case, the court did not address whether plaintiff’s motion was properly brought, and instead moved to the merits of the claim.  In citing Insurance Law § 3420(a)(3), it noted that plaintiff had the right to provide notice to defendant. 

Here, defendants first learned of the accident in April 2008, and sent a letter to plaintiff’s counsel acknowledging receipt of notice.  It appears that suit was then filed and the insured never turned over the papers.  Thereafter, instead of advising defendants directly that the answer was untimely, plaintiff took a default judgment against the insured.  This deprived defendants of the right to interpose a defense against plaintiff’s claims in the underlying action.   The court held that defendants should have timely denied coverage after learning of the January 2011 default judgment.  Their failure to issue a denial until November was late and in turn ineffective.  The court vacated the prior motion and directed defendants to satisfy the default judgment. 

07/17/13       Pennachio v Hermitage Ins. Co.
Supreme Court, New York County
Notice to Mortgagee Not Required
Plaintiff owned a piece of commercial property in Staten Island.  At some point, defendant issued a policy of insurance covering damage to the property and loss of business income.  The policy provided that it could be cancelled for nonpayment of the premium, and that defendant would “mail or deliver [its] notice of cancellation to the address shown on the policy” 15 days before the effective date of cancellation.  The policy also contained a clause providing that mortgagees may recover for loss sustained as a result of damage to the property, and that if the policy is cancelled for nonpayment of the premium, defendant would provide them with at least 10 days’ written notice. 

Where defendant submitted affidavits attesting that it sent a letter to plaintiff and his insurance broker on April 20, 2010 advising that to “avoid cancellation of the policy” payment must be received by May 15, 2010, and where no money was then received prior to the actual notice of cancellation, defendant met its burden.  Plaintiff’s denial of receipt of the letters was insufficient in light of the affidavits of mailing to rebut the presumption of proper service. 

Moreover, the court held that the mortgagee’s claim that it never received written notice did not impact the validity of the cancellation.  The court found no requirement in the insurance law that an insurer provide the insured’s mortgagee with notice in order to effectively cancel a policy. 

Bad Faith

07/22/13       Hullverson Law Firm, P.C. v Liberty Ins. Underwriters
United States District Court, E.D. Missouri
Bad Faith Requires Independent Tort Claim Separate from Contractual Claim under Missouri Law
This decision arises out of a motion to dismiss bad faith causes of action.  Under Missouri law, a party complaining of breach of contract cannot also bring a tort claim dependent on the same elements as the contract claim.  In other words, an insured cannot recast a contract claim as a tort claim. 

In considering the facts pled, the court found no independent facts related to the bad faith claim.  Rather, this cause of action adopts and incorporates all of the facts alleged in the prior counts.  Accordingly, plaintiffs failed to plead or argue any count in the bad faith claim distinct from the other conduct alleged. 


Earl K. Cantwell

[email protected]


A recent case explored the possible conflicts of interest between an insurance company and its insured and, in light of that possible conflict, ruled that the insured was entitled to counsel of its own selection.  Schaefer v. Elder, 2013 WL 2099490 (California Court of Appeals, 3d District, May 16, 2013).  The homeowner, Schaefer, filed suit against a homebuilder, Elder, in Texas local courts.  The lawsuit essentially alleged that Elder, the builder, negligently built or failed to complete a residence for Schaefer.  The claim involved alleged negligent work, as well as omitting to complete other work. 

The builder’s insurance company, Castlepoint National Insurance, appointed a law firm to defend Elder.  The builder hired a different law firm and successfully moved to disqualify the law firm the insurance company appointed to defend it.  The builder argued that the insurance policy would cover the builder against the plaintiff’s claims if the alleged faulty work was performed by the builder’s own employees.  However, the policy contained a possible exclusion for coverage for negligent work done by independent contractors.  The essential argument was that, in representing the builder, the law firm had a duty to argue the work was done by employees, but there was also in the background a possible obligation to the insurance company to prove the workers were independent contractors.  The Texas court ruled that this potential inherent conflict of interest justified disqualification of the law firm appointed by the insurance company to defend the builder.  An appellate court in California agreed.

The insurance company argued on appeal that there was no real conflict of interest because the builder would be liable to the plaintiff whether the work was done by its own employees or independent contractors.  The appellate court disagreed arguing that, if there are “divergent interests” between the insurer and the insured, the insured should be entitled to independent counsel of its own selection.

Indeed, the law firm caught between the rock (the insurer) and the hard place (the insured) was completely removed and disqualified from the case.  The appellate court said the law firm could not represent the insurance company’s interest in the case either because it may well have received “confidential information” from the builder during the time period it represented the builder in defending the claim. 

This case is one of a growing trend by trial courts and appellate judges to allow insureds to select their own counsel, or retain independent counsel, when there are actual or potential conflicts of interest, usually involving coverage, between the insured and the insurer.  The conflict was particularly stark in this case because, depending on how the employees who performed the work were classified, there might be coverage or no coverage. 

If there are reservations of rights, disclaimers, or potential scenarios where in defending an insured counsel might take the insured out of coverage, the insured may seek and be entitled to approval, if not selection and control of defense counsel.

Another lesson from the case is that once litigation ensues concerning conflicts of interest and disqualification in retaining counsel, a lawyer may be disqualified from any involvement in the matter if it can be argued that confidential, privileged, or special information was conveyed to that counsel by one of the parties during a period of representation now ended or limited.

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