Coverage Pointers - Volume XXI, No. 14

Volume XXI, No. 14 (No. 553)
Friday, December 27, 2019

A Biweekly Electronic Newsletter  

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers.  

In some jurisdictions, newsletters such as this may be considered Attorney Advertising.

If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.

You will find back issues of Coverage Pointers on the firm website listed above.

Dear Coverage Pointers Subscribers:

Do you have a situation?  We love situations.                                                                                                     

I’m Scottsdale, AZ-bound for a couple of weeks.  Love to have coffee, lunch or an adult beverage with any folks in the neighborhood.  Just let me know.  E-mail or cell (number in signature block, below).

Read carefully below about a bad faith milestone but first...

Happy New Year from the Coverage Pointers staff at H&F to you, your friends, associates, and loved ones.  We’re so delighted that you are with us.  As of the New Year, our firm grows to 50+ attorneys with our coverage team reaching 15 lawyers strategically spread throughout New York State and Connecticut.  Our jurisdictional reach includes New York, New Jersey and Connecticut and I am licensed as a Foreign Legal Consultant in Ontario, Canada.  We provide expert consultation anywhere in the United States.  If you need help in those jurisdictions or need to find able and competent counsel anywhere in the country or in Canada, reach out.

The History of the New Year Celebration:

It is said that the celebration of the commencement of the year is the oldest of all holidays, even older than Ground Hog's Day.  Historians tell us that it was first observed in Babylon about 4000 years ago, and coins, carrying the date 2000 BC have been found with etchings of Babylonian gods with funny New Year's hats.  At that time, the Babylonian's celebrated New Year at the time of the first new moon after the Vernal Equinox, the first day of spring. However, like Washington's Birthday thereafter, the holiday was moved to an arbitrary date, January 1, 153 BC, when the Romans started fooling around with the calendars.  When Julius Caesar established what is now known as the Julian calendar in 46 BC, he again established January 1 as the celebratory day of the New Year.  However, to fix up the mischief caused by previous emperors who had tampered with the calendar, he had to let one of the years last 445 days.  Caesar celebrated New Year's that year, with salad and anchovies, and the rest is history.

And in case you're wondering about the song, "Auld Lang Syne," a song everyone sings and nobody has ever understood, it was written by Robert Burns in the 1700's, and first published in 1796.  A Scottish song, it is well known that not a single person who has sung the song at the stroke of midnight actually understands any of it, but the tradition of making sounds that appear to be the words continues nonetheless.  After all, who can really understand what the final verse really means:

And here's a hand, my trusty friend

And gie's a hand o' thine

We'll tak' a cup o' kindness yet

For auld lang syne

Numbers and Milestones:

It’s count time – and each year, we provide you with two sets of statistics, in order of importance.  First, another end-of-the-year bad faith milestone.

It has been 21 years, six months and 16 days or 7869 days since the last time any New York appellate court has affirmed a finding of bad faith against any carrier, under any policy, for any reason. The last appellate decision upholding a bad faith verdict from a New York state appellate court was Smith v. General Accident Insurance Company, decided on June 11, 1998.

On that day, Bill Clinton was president, number ‘1” on the American Library Association “most requested book” list was Trump – the Art of the DeaI, Compaq Computer paid $9 billion for Digital Equipment Corporation in the largest hi-tech acquisition to date, George Pataki was Governor of the State of New York, “Windows 98” was released by Microsoft and the New York Daily News carried ads offering a SONY Walkman for $59 and an RCA 25” TV for $248.97.

Let’s hope this streak continues.

Secondly, we report to you that over the past 12 months, seventeen authors have published columns in Coverage Pointers reviewing 531 judicial or regulatory pronouncements:



Coverage Corner



Serious Injury Highlights



On Property and Potpourri



Basics on No Fault



On Bad Faith



Capital Roundup



Jersey Journal



Wandering Waters






Jen's Gems






Connecticut Chronicles






Wide World of Coverage



Legislative Markers



Off the Mark



Dishing Out Serious Injury






Similarly, in 2018 we reported on 524 decisions, so it appears the courts were no less busy this year than last.

For the past 20+ years, Coverage Pointers has reported on every New York appellate coverage case, and many from the lower courts, and, more recently, on appellate decisions in NJ and CT.   We also cover bad faith and construction defect decisions from across the country.  If you to this link on our website, you can search all of our newsletters for the content you might find useful.

This week’s issue:

In my column, I report on a “failure to cooperate” case, we think unfortunately decided, that makes a difficult standard for denials based on that breach of policy condition, even tougher.


We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know.

  • Premises Pointers:  This monthly electronic newsletter covers current cases, trends and developments involving premises liability and general litigation. Our attorneys must stay abreast of new cases and trends across New York in both State and Federal Court and will now share their insight and analysis with you. This publication covers a wide range of topics including retail, restaurant and hospitality liability, slip and fall accidents, snow and ice claims, storm in progress, inadequate/negligent security, inadequate maintenance and negligent repair, service contracts, elevator and escalator accidents, swimming pool and recreational accidents, negligent supervision, assumption of risk, tavern owner and dram shop liability, homeowner liability and toxic exposures (just to name a few!).  Please drop a note to Jody Briandi at [email protected] to be added to the mailing list.
  • Labor Law Pointers:  Hurwitz & Fine, P.C.’s Labor Law Pointers offers a monthly review and analysis of every New York State Labor Law case decided during the month by the Court of Appeals and all four Departments. This e-mail direct newsletter is published the first Wednesday of each month on four distinct areas – New York Labor Law Sections 240(1), 241(6), 200 and indemnity/risk transfer. Contact Dave Adams at [email protected] to subscribe.
  • Products Liability Pointers (coming soon):  Whether the claim is based on a defective design, flawed manufacturing process, or inadequate instructions/warnings, product liability litigation is constantly evolving.  Products Liability Pointers examines recent New York State and Federal cases as well as high court decisions from other jurisdictions, keeping our readers up-to-date with the latest developments and trends, and providing useful practice tips and litigation strategies.  This monthly newsletter covers all areas of product liability litigation, including negligence, strict products liability, breach of warranty claims, medical device litigation, toxic and mass torts, regulatory framework and governmental agencies.  Contact Brian F. Mark at [email protected] to subscribe.

Jen’s Gems:

Happy New Year from our family to yours.

Jennifer A. Ehman

Crime Stats:

The Buffalo Enquirer
Buffalo, New York

27 Dec 1919


(Chicago Tribune Service for THE BUFFALO ENQUIRER.)

          New York, Dec. 27.—One out of every twelve persons who walk the streets of New York city was a victim of robbers during the year just ended.  Never was there such a harvest in any other year since the insurance people have been writing policies.  In New York city during 1919, the “hands up” entry, the loft looters, bank robbers, pickpockets, second-story men and others of their ilk under various classifications have “cleaned up” an approximate total of close to $25,000,000.

          The burglary insurance men say there never were so many robberies before; that their claims for losses in 1919 over 1918 amounted in some cases to as much as 100 per cent; that reports of robberies come into the individual companies sometimes as high as a dozen or more for a day; that thirty per cent increase over last year in the number of robberies would be a conservative estimate.  So great, in fact, has been this increase that the companies have been obliged to raise their premium rates twenty per cent on all policies under $2,000.


Peiper on Property and Potpourri:

The Fourth Department brings us an interesting gift this season, and we are overjoyed to report the same to you in this issue’s column.  For years, we’ve argued that policyholders in a coverage dispute should be held to the same standard in discovery.

That is to say, if a carrier’s file is not categorically exempt from discovery then neither is the policyholder’s.  As such, communications, draft reports, and other materials exchanged between the policyholder and his or her attorney may well be discoverable.  At the very least, an in camera review of all documentation must be conducted to determine if, in fact, the policyholder met his or her burden in withholding the documentation.  This is, in fact, the rule that insurers have been required to comply with for the past 25 years.

The Travelers case from December 20, 2019 confirms that a policyholder’s file is not sacrosanct, and that he or she must (as the carrier must) establish the basis for withholding discovery materials.  A simple categorical objection based upon “material prepared in anticipation of litigation” will no longer serve as a valid reason for withholding production.

This is, in our opinion, a correct ruling, and from this author’s point of view…long overdue.  In the future, at least in the Fourth Department, practitioners may well be advised to seek production of all materials generated in contemplation of the claim and litigation.  If not prepared solely for purposes of litigation, the materials (including reports from counsel) may well be discoverable. 

Happy and Merry to all, and to all a good night.

Steven E. Peiper

[email protected]

Kindness Repaid, a Century Ago:

Daily News
New York, New York

27 Dec 1919


          Chivalrous Thomas Mulhern, bartender at 501 Eighth Avenue, yesterday learned quite a bit concerning prohibition and woman’s rights when Federal Judge Mack fined him $25 for selling ginger ale highballs to two shivering women.

          He admitted selling the heatful drinks but protested: “I thought prohibition was for men only.”

Wilewicz’ Wide-World of Coverage:

Dear Readers,

Happy, happy holidays! Best wishes to you and yours this holiday season! In our house, Christmas is the biggest holiday of the year, with a celebration that consists essentially of three days of food, starting on Christmas Eve Eve. That day, we prep the bigos and soups, as those need to simmer for hours for full flavor. Then, on Christmas Eve, we cook all day, putting together potato cutlets, mushroom sauce, and vegetable salad, just to name a few. We used to make pierogi, but those take too long, so instead we double down on side dishes. On Christmas Eve, we also do all the presents after dinner. Christmas Day itself thus tends to be anticlimactic, as everyone just sleeps in and has leftovers all day.

Anyway, back to insurance coverage! This week, we bring you a quick one from the Second Circuit entitled Dr. Robert Haar v. Nationwide Mutual Fire. There, the sole question for the court was whether the Public Health Law provided a private right of action for a doctor who was referred to the Office of Professional Medical Conduct by a carrier who disagreed with his determinations. Indeed, after a peer review of some of his findings, which concluded that there was “no cause and effect relationship” between the injuries treated and the alleged accident, the insurance company made a complaint to the OPMC about the physician. He sued and tried to assert a claim for bad faith reporting. Unfortunately for him, the courts concluded that there was no such cause of action. As such, his claims, though they had moved all the way up to the Second Circuit (via the NYS Court of Appeals), were eventually dismissed.

Until next year!

Agnes A. Wilewicz
[email protected]


The Side Effects of Prohibition:

The Buffalo Times
Buffalo, New York
27 Dec 1919

Four Dead in Chicago.

          CHICAGO, Dec. 27.—County and city officials here today joined hands for a crusade against selling as a beverage wood alcohol, which, since July 1st, has killed approximately 35 men.  For today were in hospitals unconscious from drinking wood alcohol and four died yesterday.

          “We have held inquests on 28 or 30 bodies since July 1st, all victims of this drug,” said Peter M. Hoffman, coroner of Cook County.  “I expect a lot more in a few days from New York celebrations.”

          One ordinary drink of wood alcohol can make a man permanently blind and sometimes kills him.” Mr. Hoffman added.

          The men who sold wood alcohol to men who died after drinking it have been held to the grand jury as murder charges.

          A city ordinance which would limit sale of wood alcohol to commercial men alone, and remove it from drugstores and saloons, is expected to be submitted in a few days.

13 Dead in Hartford.

By United Press.

          HARTFORD, Conn., Dec. 27.—Thirteen persons are dead and eight in a serious condition here as the result of drinking whisky containing wood alcohol.  Two of the deaths occurred early today and physicians said that others might be expected within a few hours.

Barnas on  Bad Faith

Hello again:

Just a brief note this week to wish everyone a Merry Christmas and Happy Holidays.  Thank you all for reading and for the feedback over the course of the last year.  I hope that everyone has a happy and healthy 2020.

That’s all for now.  Have a great weekend.

Brian D. Barnas

[email protected]

At Least he Could Walk to Prison:

Democrat and Chronicle
Rochester, New York

27 Dec 1919


Theft of Pair of Shoes Sends Man to Pen for Sixty Days

          In City Court yesterday Frank Boland, 39 years old, of Sheldon, Conn., was committed to the penitentiary for sixty days for stealing a pair of shoes from a Front street store and selling them for a drink of alleged whiskey.  The owner of the shoes lives in front street and had been presented with the footwear.  The shoes were worth $6.  When he found they had been stolen trouble ensured and Boland was soon under arrest on a charge of intoxication.


Off the Mark:

Dear Readers,

Happy holidays everyone!  This year, Christmas at the Mark household will be relatively low key.  We generally host the wife’s family on Christmas Eve.  Unfortunately, things just didn’t work out this year and we decided not to have our usual party.  On the bright side, less cooking and entertaining means I get to spend more time with the wife and kids.  Speaking of the kids, they have been trying their best to behave before the big day.  They even stopped fighting about who gets to brush their teeth first before bed.  As this is the last edition of Coverage Pointers for 2019, I wish everyone a happy and healthy new year!

This edition of “Off the Mark” brings you a recent construction defect case from the Appellate Court of Illinois, First District, Third Division.  In Certain Underwriters at Lloyd’s London v. Metro. Builders, Inc., the Court examined a carrier’s duty to defend its insured relative to claims arising out of faulty workmanship resulting in damage to real property and to the building owner’s personal property.  The Court, found no duty to defend the underlying claims of damage to the real property caused by its insured’s faulty workmanship as such claims do not constitute an “occurrence” and thus, are not covered by the CGL policy.  However, the Court did find a duty to defend the claims of damage to personal property as such claims alleged damage to property other than the insured’s work product, which is covered under the CGL policy.

Until next time …

Brian F. Mark

[email protected]


Is Bigamy a Defense?

The Buffalo Times
Buffalo, New York

27 Dec 1919


Unexpected Angle to Action Against Geo. Parker

Special to The Buffalo TIMES.

         HORNELL, Dec. 27.—An unexpected angle developed in the action of the People against George Parker, charged with non-support, in police court, when Attorney John Hollis announced that the marriage of Parker and his wife was illegal because Mrs. Parker had a husband living at the time they were married nine years ago.  Although the statute of limitations prevents the prosecution of Mrs. Parker on a bigamy charge, Attorney W. W. Orr declares that Parker is legally compelled to support her because he knew of the other husband at the time of the marriage.  Recorder Fay P. Rathbun will have to decide the question.

Boron’s Benchmarks:

Dear Subscribers:

While looking forward to a bunch of Boron family gatherings coming up in the next week, I’ve also taken the time to look back, albeit only to last week, to review and write-up the Zannini v Phenix Mutual Fire Insurance Company opinion issued by the Supreme Court of New Hampshire on December 17.  You see, my beat is, as seasoned readers of Boron’s Benchmarks know, Supreme Court decisions on insurance coverage issues from states not named New York.  Now, I hope you all know that we think of Coverage Pointers as our gift to each of you, and what better time of year to share gifts than this week?  The Zannini decision is as chock full of worthwhile analysis by the New Hampshire Supreme Court of the enforceability of a suit limitation time provision in a homeowner’s policy as your favorite holiday treat is of calories.  I say go ahead and indulge, calories be damned, and read the decision to see why this case comes out differently (thank goodness) than the 2014 New York Court of Appeals Executive Plaza decision that held (some would say infamously) that suit limitation provisions are enforceable, except when they’re not.

May the entire holiday season give you and yours all the joy, hope and peace you wish for!

Eric T. Boron

[email protected]


Wherefore Art Thou First Amendment?:

The Oneonta Star
Oneonta, New York

27 Dec 1919


          New York, Dec. 26.—Five persons, including Miss Glady Griner, daughter of John P. Griner of Baltimore, member of the United States Railway Commission to Russia, were held in $500 bond each on charges of disorderly conduct in connection with the Christmas day demonstration here of the League for Amnesty of Political Prisoners.  Hearings for all of them, participants in the attempted “walk” up Fifth avenue yesterday as a demonstration in behalf of conscientious objectors and other federal convicts, have been set for next Friday.

          Fifty members of the Free Political Prisoners committee of the People’s Freedom union appeared in court when the five were arraigned.  The others arrested were Dr. Gertrude Kelly, president of the Irish Women’s council; Miss Mary Duffy, and Julius and Samuel Friedman.

Barci’s Basics (On No Fault):

Hello Subscribers!

Happy Hanukah! Merry Christmas! Happy Holidays to all others! I am headed to the Flower City, home of late George Eastman, known around this time of year for the Genesee Keg Tree, a pride and joy of many locals, for the holidays. If you don’t know what city I mean, I am talking about Rochester, NY. I talk about trips to Rochester quite a bit since it’s where I grew up, where my parents and many good friends still live, and I feel like there is always something going on I don’t want to miss. Speaking of growing up, we are at the end of a decade and it is only the second full decade I’ve lived through. As a 90’s baby, this past decade was the one that came with the most significant changes for me (including graduating high school, college, and law school; passing the bar exam; and being admitted to practice law!) and the world around me. I look forward to the changes that this next decade brings to my life, but I know one thing that will stay constant – Coverage Pointers every other week. See you back here in 2020!

On the no-fault front, I chose to focus on one important decision out of the Second Department that discusses the disconnect in the fee schedules for payment of no-fault claims from licensed acupuncturists. For those who don’t know, the fee schedule provides the allowable reimbursement rate for those who provide medical services to an eligible injured person after a car accident. Medical providers typically charge their own rates for the services they provide, and the fee schedule allows insurers to pay the same amount for the same or similar services across providers in each geographical region. This provides uniformity for payment and attempts to prevent overbilling. When there is no fee schedule for a type of provider or service, a similar service that is provided for in the fee schedule is what the “unknown” service gets reimbursed as. Insurers tend to hire code reviewers to determine the proper fee schedule amount when there is a “similar services” issue and reimburse based on the code review amount. There becomes a dispute when the provider believes they are entitled to a higher reimbursement than the code review allows for. Here, no code review was done and the insurer instead sought a declaration that the chiropractic fee schedule should be followed over the physicians’ fee schedule for licensed acupuncturist treatment. Check out my full discussion to see what the court says about this.

That’s all folks,

Marina A. Barci


President Wilson Continues to Convalesce:

Daily News
New York, New York

27 Dec 1919


          Washington, D. C., Dec. 26.—President Wilson showed no ill effects today of his Christmas liberties feasting.  The Christmas meal was the largest Mr.  Wilson has had since the beginning of his illness.

          The President walked some today as usual and passed most of the morning hours in his wheel chair in the White House grounds.

Editor’s Note:  Woodrow Wilson suffered a severe stroke in September 1919 that left him practically incapacitated through the end of his term in 1921.  His second wife, Edith, who he married during his presidential term, carried out many of his duties, without the public knowing the severity of his disability.


Ryan’s Capital Roundup:

Hello Loyal Coverage Pointers Subscribers:

With my family’s 2019 Hanukah festivities in the rear view, Santa Claus is coming to town on Wednesday and my kids are “amped”! Hopefully they get everything they wanted, or at least everything that they have expressed as much, within reason—Santa’s on a budget.

For those keeping score, I may have successfully predicted a Stanford Crimson NCAA Women’s Volleyball National Championship. Since I remained silent until the Sweet 16, I’ll invite criticism only to the extent that those individuals discounting my prediction also successfully predicted the third-ranked team to win. With the team graduating its starting lineup, I will provide another prediction right now: Stanford will not repeat in 2020, opening the door for a team not named Stanford or Nebraska to take top honors for the first time since Penn State won in 2014. This time, I will take the field. Shockingly bold, I know.

This week, the Legislative List provides an update to two important bills that H&F’s own V. Christopher Potenza, Esq. profiled earlier this year. The first (VETOED!) concerned a proposed amendment to the General Obligations Law that would have required non-settling defendants to select their verdict offset before trial.  A non-settling defendant would have been required to choose, prior to trial, whether to reduce liability by the monetary amount of the settlement or by the yet to be determined percentage of liability attributed to the settled defendant by the jury at trial.   While reasonably well intentioned to foster settlements of tort actions, the bill was wrought with challenges and strongly opposed by our friends at the NYIA.  The second, now pending a decision from the Governor, would alter the course of defense litigation immensely by permitting a plaintiff to recover directly against a third-party defendant found to be liable to the defendant in certain actions.

In addition to the updates above, the Legislative List outlines extended civil protections for those providing information for suspected insurance fraud to the National Insurance Crime Bureau. The Regulatory Roundup has a few important emergency measures outlined, including the inevitable implementation of the new Insurance Law § 3420(f) limits of liability for limousines on the regulatory side, the delay of implementation on the New Workers Comp Board fee schedule for new no-fault providers until October 1, 2020, and a face-lift to the DFS adjudicatory procedures post-2011 consolidation of the departments (a long time coming). There is nothing to report in From the Filings Cabinet this edition because time is of the essence, but I will have more for you next time Bob Pastel!

Happy Holidays. Until next time…

Ryan P. Maxwell

[email protected]

Buffalo, Industrial Giant:

The Buffalo Times
Buffalo, New York

27 Dec 1919


          Auspicious marshals to usher the Old Year out, and inspiring herald to proclaim the New Year at hand, are the announcements that the Dunlop Tire Corporation, hitherto of England, is planning to make Buffalo its home, and that the Buffalo Steel Car Company has purchased 82 acres in Walden Avenue, preparatory to building a large car shop on that site.

          Both are big industries.  The Dunlop Corporation is characterized as the largest concern of its kind in Europe.  Its location in Buffalo will mean the employment of 5,000 men.  The Buffalo Steel Car Company will be connected with the New York Central and West Shore railroads.  It will employ 1,500 men in the construction of new cars and in repair work.

          It is a particularly fine tribute to Buffalo that the English industry, after making an expert survey of American cities, pitched on Buffalo as the most desirable, on account of its superior power resources and shipping facilities.  The magnitude of the real estate transfer preliminary to the erection of the plant of the Buffalo Steel Car Company is a notably significant fact, both in its bearings on the extent of the enterprise this company represents, and as illustrative of the forward movement in local real estate.

          It is always gratifying to record such events as those above summarized, and it is especially so at this time when Buffalo is at the transition point of junction and departure, between the new business era and the old.  The facts form a stirring demonstration of the vigorous industrial growth of the Queen City and are, we are sure, a happy augury of much that will happen before 1920 gets to the maturity that 1919 has arrived at now.

Editor’s Note: the Buffalo Steel Car Company was acquired in 1927 and appears to have stopped producing in Buffalo shortly thereafter.   Dunlop was acquired by Sumitomo Rubber and was in partnership with Goodyear for several years.  That partnership was dissolved with Sumitomo returning to ownership. It still employs over 1300 men and women.


CJ on CVA and USDC(NY)

Hello all,

It’s hard to believe that Christmas is here and soon 2019 will be in the rearview mirror. This past weekend I finally got to get out on the slopes and begin to enjoy the benefits of a Western New York winter. All the snow on the slopes gives me hope that we’ll have a long ski season this year. Although, as I write this with very sore legs, I certainly wished I had hit the gym a little more this summer…I guess I’ve found my new year’s resolution.

This edition our focus turns to the District Courts. I bring to you a case interpreting a Claims Made Professional Liability Insurance Policy involving the famed hip-hop artist Fat Joe and a dispute over his 2016 hit “All The Way Up”. According to the court, based on an underlying complaint, “nothing can stop” him from receiving a defense in an action disputing the origins of the song.

On the CVA front, the Queens Daily Eagle reported that “nearly 1,200 people” have sued their abusers under the state’s Child Victims Act. We are sure that there will be more coming, especially as the look-back window draws to a close this spring. I’ll have a full CVA edition for you in the new year.

Have a very happy and safe holiday season! 

Charles J. Englert, III


A Hot Wedding:

The Brooklyn Daily Times
Brooklyn, New York

27 Dec 1919

Bride’s Veil Catches Fire, But She Escapes Injury

          Hicksville, Dec. 27.—The marriage of Rebecca Saffran, of Boston, Mass., to Nathan Scheiner, of Hicksville, on Wednesday night, came near terminating fatally for the bride, when her veil was ignited by the flame of one of the burning tapers held by the guests.  According to the Jewish custom, burning tapers are used to light the canopy or chupa, under which the bride and groom are married. During the ceremony one of the guest’s candles set fire to the canopy.  It flamed up instantly, but the fire was extinguished before fatal injury resulted, but not in time to prevent burning severely the back of the bride’s neck.

          A large number of the bride’s friends from Boston and vicinity attended as well as the many friends of the groom in New York.

Editor’s Note:  the marriage lasted under death did they part.  The moved to Boston and then back to NYC, had several children and Mrs. Scheiner lived to 78, outliving Nathan by 15 years. I guess the blazing veil was good luck for them.


Dishing Out Serious Injury Threshold:

Dear Readers,

Happy holidays to all! I wish you and yours nothing but health and happiness this holiday season. As the holidays are upon us and the year is coming to a close its important to reflect and appreciate all the blessings of the year.  Enjoy your time with your family and we will see you in the New Year!

I selected two decision for this issue. One from Supreme Court, New York County, pertaining to the issues raised in the last issue where, in both cases, plaintiff’s counsel failed to raise a triable issue of fact where plaintiff’s expert failed to specifically contest defendant’s expert opinion that the injuries sustained were not causally related, a result of a pre-existing injury, and/or degenerative changes. Here, plaintiff’s expert specifically contests defense expert findings, effectively raising a triable issue of fact.

The second case pertains to the requirement of plaintiff or plaintiff’s expert to provide reasonable explanations for gaps in treatment. Further, where no reasonable explanation for gaps in treatment are provided, the plaintiff will fail in raising a triable issue of fact as to causation.


Michael J. Dischley


A Bargain at Twice the Price:

Press and Sun-Bulletin
Binghamton, New York

27 Dec 1919

Special Turkey Dinner

Sunday, $1.00—served from 12 to 8:30.  Best food and service in town.  Hans-Jones Restaurant, 32 Chenango street.—Advertisement. 


John’s Jersey Journal:

Happy Hanukah!! Merry Christmas!! Happy Kwanza!! Whichever holiday or traditions you and yours celebrate, wishing you peace, love, and joy this holiday season.

As of this writing, I still have some gift-wrapping left to do. I planned to get to it last night but ended up baking cookies instead. My wife enjoys baking cookies for the holidays and often participates in cookie exchanges. To help, I offered to bake chocolate chips cookies, which she tells me do not qualify as Christmas cookies. To get around this, I added white chocolate peppermint M&Ms to my chocolate chips cookies. They turned out delicious. Looking forward to munching on cookies and watching a few more holiday movies before heading back to work Thursday.


New Jersey Legislative Update

Awhile back, we reported on Senate Bill No. 2429, which if enacted, would require insurers to disclose, upon request, the policy limits of private passenger automobile policies. We reported on it here. The Bill passed the Senate in March 2019. It was then sent to the Assembly where it was recently amended on December 16, 2019.

One of the things the Bill did not address is how insurers would be notified of requests for the disclosure of policy limits. The Assembly Committee appears to have noticed this. The amendment requires all insurers who issues private passenger automobile policies in New Jersey to provide an email address to the New Jersey Department of Banking Insurance (DBI). The DBI will then publish on its website the email address of each insurer who issues private passenger automobile policies in New Jersey. Thus, personal injury attorneys would go to the DBI website, find the email address for the insurer, and email the insurer: (1) the name and address of the insured; (2) the date and approximate time of the accident; and (3) the police report (if available). The insurer would then have 30 days to disclose its policy limits.

You can read the Bill here and the Amendment here. What happens next? The Bill with the amendment will be voted on by the full Assembly. If it passes, as expected, it will then go to the Governor Murphy to sign.


Overturning an Arb. Award is Nearly Impossible

In a case decided last week, the New Jersey Appellate Division reminds us that is very difficult for an insurer to overturn an arbitration award. Absent strong public policy concerns, the Courts are very reticent to overturn an arbitration. Judges do not want to re-litigate an already decided matter and give great deference to arbitrators. The case is discussed in the attached issue.

I wish each of you all a happy and prosperous New Year!

John R. Ewell


Dying for a Drink during Prohibition:

Elmira, New York

27 Dec 1919


          The jails and the county houses have already reported their business as on decline since prohibition began its more or less perfect work, and now another well-known public institution falls in line—the morgue is about ready to go out of business in most cities. One such institution reports that where formerly some eighty bodies went from it to the potter's field every two weeks, now there are hardly any at all.

If additional evidence were needed as to the value of prohibition, the empty slabs at this final resting place of the social derelict should be eloquent testimony.

First drink, then dope, then suicide, the patrol wagon and the morgue; or, first drink, then quarreling, then murder with the same final destination—that is about the way the sordid tale has run hitherto.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

We have reached that special time of year, where families gather from near and far, but not for caroling around the yule log or the lighting of candles on the Menorah. No, it’s time for feats of strength and the airing of grievances. Of course, it’s time for Festivus! The secular response to the commercialism of the season, Festivus was made famous in 1997 by Seinfeld. For those unfamiliar with proper way to honor the holiday, CNN provided a handy step-by-step planner for your Festivus celebration (available here).

So, as we sit around our Aluminum Poles here in Connecticut, we are happy not to have significant grievances to air. Of course, we didn’t win’em all, but the courts have given true life to the plain meaning of our policy terms and conditions, upheld precedent, and followed the law even when it was difficult to do so.

A Happy Festivus and Healthy New Year to you all.

Lee S. Siegel

[email protected]


“Say No to the Dress”:

Le Meschacebe
Bonnet Carre, Louisiana

27 Dec 1919


American Women Lead in Extravagance in Supply of Garments,

According to an Expert.

          Most women have too many gowns and bonnets. It is not necessary to make a large selection of gowns. The principal reason why women have so many clothes is because they love to be attractive in the eyes of others, and they wonder what some other person will think about their clothes, rather than if the selection is suitable to themselves, according to Miss Florence Hunt, assistant in clothing and dress, Kansas State Agricultural college.

"American women are the most extravagant of any women in the world, yet there is no other place on the globe where clothes of good quality may be secured so cheaply," she told a visitor recently.

"The American woman believes she is compelled to follow the latest fads which are merely trade schemes of the designers and manufacturers to make the quickly the market.


Headlines from this week’s issue:

Dan D. Kohane
[email protected]

  • Sufficient Proof Offered for  UM/SUM Framed Issue Hearing on Whether NC Vehicle was Involved in NY Accident
  • Non-Cooperation Not Established, Even though Insured Failed Repeatedly, After being Advised of Consequences, that its Cooperation was Necessary.  Thousands Flee
  • Exclusionary Language Does Not Preclude Coverage under Copyright Infringement Policy


Steven E. Peiper
[email protected]

  • Short and Sweet – Disclosure of How Other Similar First Party Claims were Handled Not Material and Necessary in Superstorm Sandy Claim
  • What’s Good for the Goose is Good for the Gander; Discovery Rules Applied Universally to Insured and Insurer
  • Disclaimer in Subcontract Protects Installer from Loss Caused by Frozen Sprinkler Pipes


Michael J. Dischley

  • Plaintiff’s Expert Raises a Triable Issue of Fact as to Causation
  • Plaintiff or Plaintiff’s Expert Must Provide Reasonable Explanation for Gaps in Treatment


Agnes A. Wilewicz

[email protected]

  • Second Circuit Holds that there is no Private Right of Action under New York Public Health Law § 230(11)(b) in Action by Doctor against Insurance Carrier


Jennifer A. Ehman

  • Court Denies Property Owner Additional Insured Status for Slip and Fall


Brian D. Barnas
[email protected]

  • Plaintiff’s Claims for Violation of the General Business Law and Punitive Damages Based on Simple Breach of Contract Dismissed


John R. Ewell

  • PIP Insurer Did Not Meet Standard for Overturning Arbitration Award, New Jersey Appellate Division Says


Lee S. Siegel

[email protected]

  • No Coverage under LPL Policy for Fee Dispute
  • Underinsured Motorist Priority of Coverage for Test Drives


Brian F. Mark
[email protected]

  • Appellate Court of Illinois Holds No Duty to Defend Claims of Damage to Insured’s Work Product, But Finds Duty to Defend Claims of Damage to Building Owner’s Personal Property

Eric T. Boron

[email protected]

  • Homeowner’s Insurance – Summary Judgment for Insurer Affirmed – One-Year Suit Limitation Period Enforceable


Marina A. Barci

  • Fee Schedule Amount for Acupuncture Treatment Can be Considered under both the Chiropractic and Physician’s Fee Schedule


Ryan P. Maxwell
[email protected]

Legislative List

  • Vetoed Bill Would Have Required Non-settling Defendants to Select A Verdict Offset Before Trial
  • Direct Recovery Against Third-Party Defendants
  • Governor Signs New Legislation Granting Immunity for Reports of Suspected Fraud to the National Insurance Crime Bureau


Regulatory Wrap-Up

  • Emergency Adoption of Amendment to SUM Regulations Due to Recent Change to Insurance Law Section 3420(f) Liability Limit for Limousines
  • WCB Fee Schedule Postponed for Certain Providers
  • Proposed Amendment to Unify DFS’ Adjudicatory Procedures Among Banking, Insurance, and Other Financial Services Industries


From the Filings Cabinet

  • “I’ve got nothing for you. Head back to camp.” – Jeff Probst, since I was 11


CJ on CVA and USDC(NY)
Charles J. Englert III

  • Ambiguous Terms are Construed Liberally in Favor of the Insured (applying Florida law)


Earl K. Cantwell

  • Underwriting and Sales Materials Deemed Relevant to Coverage Dispute


That’s all there is.  Wishing you a great 2020.

Hurwitz & Fine, P.C. is a full-service law firm providing legal services throughout the State of New York and provide insurance coverage advice and counsel in New Jersey and Connecticut.

In addition, Dan D. Kohane is a Foreign Legal Consultant, permit no. 000241, issued by the Law Society of Upper Canada, and authorized to provide legal advice in the Province of Ontario on matters of New York State and federal law.


Dan D. Kohane
[email protected]

Agnes A. Wilewicz
[email protected]

John R. Ewell


Dan D. Kohane, Chair
[email protected]

Steven E. Peiper, Co-Chair
[email protected]

Michael F. Perley
Jennifer A. Ehman
Agnieszka A. Wilewicz
Lee S. Siegel

Brian D. Barnas
Brian F. Mark
John R. Ewell
Eric T. Boron
Marina A. Barci
Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley
Eric T. Boron
Brian D. Barnas

Jennifer A. Ehman, Team Leader
Marina A. Barci


Jody E. Briandi, Team Leader
[email protected]

Diane F. Bosse


Topical Index

 Kohane’s Coverage Corner Peiper on Property and Potpourri

Dishing out Serious Injury Threshold

 Wilewicz’s Wide World of Coverage

Jen’s Gems

Barnas on Bad Faith

John’s Jersey Journal

 Lee’s Connecticut Chronicles

Off the Mark

 Boron’s Benchmarks

Barci’s Basics (on No Fault)

 Ryan’s Capital Roundup CJ on CVA and USDC(NY)

 Earl’s Pearls


Dan D. Kohane

[email protected]

12/24/19         Government Employees Insurance Co. v. Escoto, Appellate Division, Second Department
Sufficient Proof Offered for UM/SUM Framed Issue Hearing on Whether NC Vehicle was Involved in NY Accident

On December 28, 2016, Escoto allegedly was injured in a motor vehicle accident when, while operating his vehicle, it was struck in the rear by another vehicle in Brooklyn. The other vehicle left the scene. However, Escoto took a photograph of a North Carolina-issued license plate which was on the vehicle purportedly involved in the accident. Escoto provided that license plate number to the police officer who responded to the scene of the accident. The responding police officer recorded the plate number provided by Escoto and information concerning the make and type of the vehicle related to that plate number in the police accident report.

Escoto's vehicle was insured by GEICO.which included a supplementary uninsured/underinsured motorists (“SUM”) endorsement. Using the plate number listed in the police accident report, GEICO performed a plate search of the North Carolina DMV and identified the other car a 2014 Cadillac, was owned by proposed additional respondent Charles Roberts, Jr., and insured by the proposed additional respondent North Carolina Farm Bureau Insurance Group (“Farm Bureau”). Roberts denied any involvement in the accident. Thereafter, Farm Bureau denied Escoto's bodily injury claim which he had submitted to Farm Bureau against its policy issued to Roberts. Subsequently, Escoto demanded arbitration of his claim for uninsured motorist benefits from GEICO.

GEICO commenced this proceeding pursuant to CPLR article 75, inter alia, to permanently stay arbitration of the uninsured motorist claim, or, in the alternative, to temporarily stay the arbitration pending a framed-issue hearing on the issue of whether the other vehicle involved in the subject accident was "uninsured" on the date of the accident. GEICO's petition also sought leave to join Roberts and Farm Bureau as additional respondents. In support of its petition, GEICO submitted, inter alia, a copy of the police accident report and the results of its license plate search.

Roberts and Farm Bureau moved pursuant to CPLR 3211(a)(8) to dismiss the petition insofar as asserted against them alleging lack of personal jurisdiction. They maintained that New York did not have jurisdiction over them since Farm Bureau was a North Carolina company not authorized to do business in New York and Roberts was a North Carolina resident who was not involved in the happening of the subject accident.

Here, the documents submitted by GEICO in support of the petition demonstrated the existence of sufficient evidentiary facts to establish a preliminary issue justifying a temporary stay. The police report evidenced that the other car was not uninsured

In opposition, Farm Bureau and Roberts raised questions of fact as to whether Roberts's vehicle was involved in the subject accident and whether Roberts was a nonresident at the time of the accident rendering his vehicle an "uninsured motor vehicle" within the meaning of Insurance Law article 52. Jurisdiction existed in New York to resolve the issues in a framed issue hearing.


12/18/19 Foddrell v. Utica First Ins. Co. Appellate Division, Second Department
Non-Cooperation Not Established, Even though Insured Failed Repeatedly, After being Advised of Consequences, that its Cooperation was Necessary. Thousands Flee

This was a “Direct Action” under Insurance Law § 3420(a)(2) to recover the amount of an unsatisfied judgment in favor of the Foddrells and against an insured of the Utica First (“Utica”). Utica insured Joney & Rana Construction Corp. (“J & R”).

In December 2006, the Foddrell (plaintiff) commenced an action against the third- party defendant J & R) to recover damages for personal injuries he allegedly

sustained in a construction-related accident (“underlying action”). At the time of the accident, J & R was insured by Utica First. Utica retained a law firm to represent J & R in the underlying action, and issue was joined in May 2007. Utica also retained an investigation company to locate and interview J & R's principal, Singh. On March 13, 2007, Singh provided the investigator with a written statement concerning the accident. In the statement, Singh listed his address, his home telephone number, and his cell phone number.

Thereafter, Singh failed to appear for his court-ordered deposition on October 8, 2008, and again on December 2, 2008. On April 8, 2009, after several unsuccessful attempts to contact Singh through written correspondence and telephone calls, an investigator met with Singh at his home. The investigator advised Singh that a deposition was scheduled for April 13, 2009. According to the investigator, Singh responded that he would contact J & R's attorneys. After Singh failed to appear for the deposition, Utica sent Singh a letter dated April 15, 2009, advising him that because of his lack of cooperation, Utica "will no longer agree to indemnify J & R."

In June 2009, the Foddrell moved to strike J & R's answer. The Supreme Court granted the plaintiff's motion to the extent of directing that J & R's answer would be stricken unless J & R appeared for a deposition by December 4, 2009. The court also granted a motion made by J & R's attorneys to be relieved as counsel for J & R in the underlying action.

After J & R, unrepresented by counsel, failed to appear for a deposition by December 4, 2009, the court issued an order dated September 30, 2010, inter alia, striking J & R's answer. An inquest was subsequently held on the issue of damages and, on August 13, 2013, a judgment was entered in the underlying action in favor of the plaintiff and against J & R sum of $673,422.71.

In November 2013, the plaintiff commenced this action pursuant to Insurance Law § 3420(a)(2) to recover the amount of the unsatisfied judgment from Utica. Thereafter, in April 2016, Utica commenced a third-party action against the third- party defendants, J & R and Singh, for a judgment declaring that it is not obligated to defend or indemnify J & R in the underlying action. Utica subsequently moved pursuant to CPLR 3215 for leave to enter a default judgment against the third-party defendants declaring that it is not obligated to indemnify J & R in the underlying action. Utica also moved for summary judgment dismissing the complaint and declaring that it is not obligated to indemnify J & R in the underlying action.

"To effectively deny coverage based upon lack of cooperation, an insurance carrier must demonstrate (1) that it acted diligently in seeking to bring about the insured's cooperation, (2) that the efforts employed by the insured were reasonably calculated to obtain the insured's cooperation, and (3) that the attitude of the insured, after his or her cooperation was sought, was one of willful and avowed obstruction.   Mere efforts by the insurer and mere inaction on the part of the insured, without more, are insufficient to establish non-cooperation'"

Here, Utica failed to meet its "heavy" burden of demonstrating J & R's non- cooperation. In support of its motion, Utica established that between January 2009 and April 2009, more than one year before J & R's answer was stricken, it made diligent efforts, through written correspondence, numerous telephone calls, and visits to Singh's home, that were reasonably calculated to bring about J & R's cooperation. Utica's submissions, however, failed to demonstrate that the conduct of J & R constituted "willful and avowed obstruction.”

Furthermore, the lower court properly denied Utica's motion to enter a default judgment against the insured declaring that it is not obligated to indemnify J & R in the underlying action. Utica established that it served the third-party summons and complaint on the third-party defendants, and that the third-party defendants defaulted. Nevertheless, since Utica failed to demonstrate the "facts constituting [its] claim," to wit, that its denial of coverage based upon lack of cooperation was proper, we agree with the Supreme Court's conclusion that Utica did not establish its entitlement to a default judgment declaring that it is not obligated to indemnify J & R in the underlying action.

Editor’s Note: Sorry, court, we disagree. What in heaven’s name is the carrier supposed to do beyond what it did? The three-point “Thrasher” test was properly described (19 NY2d 159). What else could be offered to demonstrate “willful and avowed obstruction”?


12/17/19         McGraw-Hill Education, Inc., v. Illinois National Ins. Co. Appellate Division, First Department
Exclusionary Language Does Not Preclude Coverage under Copyright Infringement Policy

This case involved the duty to defend an insured in a copyright case.

Various exclusions to coverage were cited. This was a copyright infringement policy. Exclusions I and D of the insurance policies, which preclude coverage for claims arising out of a contract, do not apply here. For a claim to "arise" out of a contract, the existence of the contract must be the "but for" cause of the loss.

Although the parties had license agreements, the licensors could have brought claims based on copyright regardless of whether a contract had ever been entered into; thus, the contract is not the “but for” cause of the loss.

Exclusion G, which precludes coverage for claims arising out of intentional violation of law or gaining profit or advantage to which the insured is not legally entitled, does not apply. The relevant policy provision with regard to infringement of copyright is in the definition of damages, which bars coverage only where it is

"judicially determined" that the violation was intentional and was carried out by a senior vice president, or someone more senior, of plaintiff.

Further, there has been no such judicial determination in the underlying actions. Defendants cannot litigate that issue in the coverage action.

Nor does the fortuity doctrine apply to bar coverage. The fortuity doctrine has been applied to insurance policies under which coverage is triggered by an "accident" or "occurrence. One of the express purposes of the policies in this case, however, was to provide coverage for a defined risk: "claims arising out of

. . . infringement of common law or statutory copyright." Thus, invoking the fortuity doctrine would render that portion of the policy illusory.


Steven E. Peiper [email protected]

12/26/19         Knickerbocker Village Inc. v. Lexington Insurance Company Appellate Division, First Department
Short and Sweet – Disclosure of How Other Similar First Party Claims were Handled Not Material and Necessary in Superstorm Sandy Claim

The lower court properly denied plaintiff's request to compel disclosure of information about defendants' handling of its other insureds' losses resulting from Superstorm Sandy. The requested discovery is not material and necessary to the prosecution of the claims in this action.


12/20/19         Mezzalingua v. The Travelers Indemnity Company, et al. Appellate Division, Fourth Department
What’s Good for the Goose is Good for the Gander; Discovery Rules Applied Universally to Insured and Insurer

Plaintiff commenced the lawsuit after sustaining water damage at its manufacturing facility. Apparently, rainwater entered the premises through an allegedly defective roof which was installed by Campany Roofing Company.

Plaintiff’s lawsuit asserted a negligence claim against Campany, and also sought damages in breach of contract from its insurer, Travelers, who previously disclaimed.

Importantly, upon receiving plaintiff’s claim, Travelers issued a Reservation of Rights letter on October 24, 2016. In the letter, Travelers identified an exclusion which purportedly removed coverage caused by rainwater. Thereafter, Travelers hired “litigation counsel” and “other consultants.” Ultimately, Travelers formally denied the claim on January 5, 2017.

During discovery, a dispute arose over plaintiff’s refusal to turn over documents which were prepared as part of developing its claim. Plaintiff argued that the documents were exempt from disclosure on the basis of the material prepared in anticipation of litigation doctrine, attorney-work product doctrine and the attorney/client privilege. Plaintiff moved for a protective order seeking to avoid disclosure, and Travelers and Campany moved to compel the same. The trial court ruled that all documents created by plaintiff after October 24th were protected because they were materials prepared in anticipation of litigation.

On appeal, the Fourth Department noted that Campany and Travelers met their initial burden of establishing the items sought were “material and necessary to their case.” The Court also noted that trial court incorrectly ruled that all documents created after October 24th were protected under a blanket rule.

The Court then recited the three ways a party can avoid disclosure; attorney/client privilege, attorney work product and material prepared in anticipation of litigation. With all three, however, once the party seeking discovery establishes the materiality of the requests, the burden then shifts to the party seeking to withhold production to establish one of the three protections.

Here, the Court ruled that plaintiff failed to meet its burden. Specifically, with regard to the material prepared in anticipation doctrine, a movant must establish the documents were prepared solely in anticipation of litigation. Mixed use reports are not subject to the exemption.

In the instant case, the items at issue where prepared by third parties as “mixed purpose reports.”                   

As such, the Court overruled the blanket October 24th trigger date adopted by the trial court, and remanded the matter back to the trial court for in camera review.

With regard to the attorney/client privilege claims, defendants established that many of the documents at issue were shared with, or prepared by, third parties. Communications made by, or in the presence of, third parties are not subject to an attorney client privilege.

The court notes, of course, that the privilege may be preserved where the third party is acting as an agent of the attorney or the client, and the expectation of confidentiality is understood by all parties. Plaintiff failed to meet its burden that the attorney/client privilege attached in this case.

Finally, the Court noted that it was that possible reports prepared by experts and/or retained consultants were subject to the attorney work product protection. As such, the documents falling within that category were also remanded to the trial court for further in camera inspection.

12/12/19         Seneca Ins. Co., Inc. v. JFR Construction Corp. Appellate Division, First Department
Disclaimer in Subcontract Protects Installer from Loss Caused by Frozen Sprinkler Pipes

Seneca commenced this action in subrogation after providing coverage for losses occasioned due to frozen and burst sprinkler pipes. Seneca identified JFR as the subcontractor who installed the sprinkler heads at the property, and asserted that JFR’s negligence in failing to ensure adequate heat was the cause of the loss.

In response, JFR moved for summary judgment arguing that it owed no duty to the owner of the premises (and Seneca’s named insured). Here, its contract was with Luna Development, the general contractor, and the subcontract at issue contained a specific provision which provided JFR had “no duty to protect pipes from freezing.”

In opposition, Seneca argued that JFR had an obligation under the NYC Building Code to protect pipes from freezing. However, JFR was protected from exposure by the provisions of its contract with Luna, and thus absolved from any liability.


Michael J. Dischley 

12/05/19         Katherine Gerrity v. Gerard Taxi Inc, et al. Supreme Court, New York County
Plaintiff’s Expert Raises a Triable Issue of Fact as to Causation

Plaintiff was a pedestrian within a crosswalk struck by a vehicle operated by the defendant. The plaintiff sued to recover damages for personal injuries that she allegedly sustained in the accident. The defendants moved for summary judgment alleging that plaintiff failed to demonstrate a "serious injury" and that plaintiff’s injuries are not causally related to the underlying accident but are the result of degenerative disc disease. Defendants’ orthopedic expert opined that plaintiff’s alleged injuries were consistent with pre-existing degenerative changes and not an acute traumatic injury. Defendants’ radiological expert opined that the MRI’s reveal degenerative changes and no radiographic evidence of traumatic or casually related injury. The Court found that defendants had met their prima facie burden. In opposition, plaintiff’s responding medical submissions raised a triable issue of fact as to plaintiff’s alleged degenerative injuries. Specifically, plaintiff submitted an opinion from her doctors that specifically disagreed with defendant’s expert findings that plaintiff’s injuries are degenerative in nature and also causally related her injuries to the subject accident. As such, the Court found plaintiff raised an issue of fact precluding summary judgment.

12/11/19         Naomi Hwang v. Aliyev Ilgar, et. al. Appellate Division, Second Department
Plaintiff or Plaintiff’s Expert Must Provide Reasonable Explanation for Gaps in Treatment

Plaintiff was a pedestrian struck by a vehicle operated by the defendant. The plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in the accident. The defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The Supreme Court denied the motion. On defendants’ appeal, the Court found the defendants met their prima facie burden. Further, the Court found that, in opposition, the plaintiff failed to raise a triable issue of fact as to causation, and neither she nor her physicians offered a reasonable explanation for her lengthy gaps in treatment from December 2013 to December 2014, and again from October 2015 to October 2017. As such, the Appellate Court found that the Supreme Court should have granted the defendants' motion for summary judgment dismissing the complaint.


Agnes A. Wilewicz [email protected]

12/17/19         Dr. Robert D. Haar, M.D. v. Nationwide Mutual Fire Ins. Co. United States Court of Appeals, Second Circuit
Second Circuit Holds that there is no Private Right of Action under New York Public Health Law § 230(11)(b) in Action by Doctor against Insurance Carrier

Dr. Robert Haar, an orthopedic surgeon, sued Nationwide Mutual and alleged that they had in bad faith reported him to the New York State Office of Professional Medical Conduct (OPMC). According to prior decisions rendered in this case, Haar had provided treatment for several patients injured in accidents and insured by Nationwide. After treatment, he submitted the claims for payment and Nationwide paid some and disclaimed coverage for some. One of the claims was denied based upon peer review reports that found that there was “no cause and effect relationship” between the injuries treated and the alleged accident.

Accordingly, Nationwide submitted a complaint to the OPMC who investigated and ultimately did not take any disciplinary action against Haar.

In this most recent decision in the case, the sole question for the court was whether there is an implied private right of action under Public Health Law § 230(11)(b) for bad faith reporting of professional misconduct to the OPMC. The court noted that New York case law did not clearly resolve the issue, and thus it was ripe for appellate review. Having sent the matter back down to the New York Court of Appeals, that appellate court determined that there was no private right of action under the statute. Specifically, the Court of Appeals held that “the statutory text and legislative history do not imply a legislative intent to create a right of action under section 230(11)(b).” Finding that this was dispositive of the entire appeal, the Second Circuit affirmed and dismissed the doctor’s claim.



Jennifer A. Ehman 

12/11/19         Wesco Ins. Co. v. Travelers Prop. Cas. Co. of Am. Supreme Court, New York County
Hon. Lucy Billing

Court Denies Property Owner Additional Insured Status for Slip and Fall

This decision arises from a slip and fall. The underlying plaintiff claims to have sustained injury “from falling on ice on the sidewalk outside Capital One’s bank in Waldman Management’s shopping center on Staten Island.”  No mention is made in the decision as to whether the injured plaintiff was entering or exiting the bank.

This declaratory judgment action was commenced by Wesco, the insurer for Waldman Management. Wesco claimed its named insured was entitled to additional insured coverage under the policy of insurance issued by Capital One’s insurer, Travelers. Travelers cross-moved.

The court began by examining the terms of the lease agreement. The lease defined “all walkways, sidewalks, driveways, stairways and parking lots which are part of the Shopping Center” as common areas.  The sidewalks are not part of the demised premises, which was limited to the ground floor of the building.

Under the lease, Waldman Management retained exclusive responsibility for removal of snow and ice from common areas. It is stated in the decision that the court in the underlying action had already found Waldman Management responsible under the lease for maintenance of the sidewalk on which the underlying plaintiff fell, and a factual issue as to whether it was liable for the injury. Apparently, there were factual questions over whether the sidewalk was a public sidewalk or a private sidewalk, and Waldman’s motion for summary judgment was denied. All claims against Capital One were dismissed in the underlying based upon a finding that it was not responsible for the icy sidewalk.

The court in the declaratory judgment action then moved to the terms of the Travelers’ policy. The policy contained an additional insured endorsement which provided coverage for any “lessor of premises which whom you have agreed in a written contact executed prior to loss to name as an additional insured,…but only which respect to liability arising out of that part of the premises leased to you.” Wesco argued that, even though the underlying plaintiff’s injury did not arise from the ownership, maintenance, or use of the premises leased to Capital One, Waldman Management’s lability arises from its ownership of the leased premises, which is all that the Travelers policy’s additional insured provision required. In considering this argument, the court reasoned that if the sidewalk on which the injured plaintiff fell was a private sidewalk, Waldman’s liability does not arise from its ownership of the premises but arises from its ownership of the entire shopping center including its commons areas, which includes the sidewalk.

Conversely, if the sidewalk was a public sidewalk owned by the City, Waldman’s liability arises from its ownership of the abutting real property.

The court then noted that where a lease obligates the tenant to indemnify the owner for damages arising from the leased premises or adjacent sidewalks or obligates the tenant to maintain the adjacent sidewalks, then the provisions covering the additional insured’s liability arising from the ownership, maintenance, or use of the lease premises covers a claim arising from the sidewalk’s condition. Where, as here, the lease only obligated the tenant to indemnify the owner for damages arising only from the leased premises and obligated the owner to maintain the adjacent sidewalks, then the same provision covering the additional insured does not cover a claim arising from the sidewalk's condition. Only if the lease imposes no duty on the owner to maintain the sidewalk, and the part of the sidewalk where the underlying plaintiff fell (1) "was necessarily used for access in and out" of the leased premises and (2) was part of the premises that Capital One was licensed to use under the lease, would the owner be entitled to coverage.

Wesco did not claim that the underlying plaintiff was injured in connection with his use of the leased premises and did not claim coverage for liability arising from the use of the leased premises. Second, the lease expressly provides that no part of the sidewalk was part of the leased premises, licensed to Capital One for its use, or within its control.

The court also expressly distinguished these facts from case law directing that the Travelers policy should not be viewed in strictly territorial terms, but rather in operation terms. Here, in contrast to the authority on which Wesco relied, the lease did not define Capital One's leased premises or its operations to encompass the means of access that adjoined the leased premises or operations necessary to the bank's business, such a drive-in banking facility, or a parking lot exclusively for the bank's customers. Nor did the tenant assume a maintenance obligation for an area not part of the leased premises.  The court stated that these examples are the only types of contexts that might fall within the coverage afforded. Based on this reasoning, the court granted Travelers’ motion finding that it had no duty to defend or indemnify Waldman in the underlying and denied Wesco’s motion.


Brian D. Barnas [email protected]

12/20/19         Reid v. Univera Healthcare Appellate Division, Fourth Department
Plaintiff’s Claims for Violation of the General Business Law and Punitive Damages Based on Simple Breach of Contract Dismissed


Plaintiff commenced this breach of contract action alleging that Univera erroneously denied her Medicare Part D prescription drug coverage under the health insurance agreement between Plaintiff and Univera. Specifically, plaintiff alleged that she was prescribed a compounded drug that Univera initially covered, but that Univera improperly refused to provide coverage for that compounded drug during certain periods of time between 2013 and 2017.

Plaintiff’s General Business Law § 349 cause of action was dismissed. Univera's conduct was not consumer-oriented, rather, Plaintiff’s claims were merely a private contract dispute over insurance policy coverage, which does not affect the consuming public at large, and therefore falls outside the purview of General Business Law § 349. Furthermore, the amended complaint failed to allege that Univera engaged in a deceptive or misleading practice.

Plaintiff’s claims of tortious breach of duty of reasonable care and fraud were dismissed. Plaintiff alleged in the amended complaint that Univera owed her a duty of care stemming from the nature of the services it provided. This allegation does not constitute a tort cause of action because it simply refers to Univera's obligation to provide health insurance coverage to plaintiff under the Plan. This did not transform a simple breach of contract into a tort claim.  The claim for fraud was also dismissed because a cause of action for fraud does not arise where the only fraud alleged merely relates to a party's alleged intent to breach a contractual obligation.

Plaintiff’s claim for punitive damages was also dismissed because Univera's denial of drug coverage pursuant to the Plan was specific to plaintiff, and plaintiff did not allege such egregious conduct by Univera that would warrant punitive damages.

Plaintiff’s claim for nonpecuniary damages based on emotional distress was also dismissed. Absent a duty upon which liability can be based, there is no right of recovery for mental distress resulting from the breach of a contract-related duty.


John R. Ewell 

12/17/19         Citizens United Reciprocal Exch. v. AHS Hospital New Jersey Superior Court, Appellate Division
PIP Insurer Did Not Meet Standard for Overturning Arbitration Award, New Jersey Appellate Division Says

T.S. was injured in an automobile accident and sought medical treatment at AHS Hospital. T.S. was insured by CURE and had PIP coverage. AHS billed CURE $20,000 for services provided to T.S., but CURE paid less than $3,000. AHS filed a demand for arbitration for the remaining balance. The arbitrator awarded AHS the remaining balance. The arbitrator disqualified CURE’s expert and rejected the expert’s findings because she determined the methodology was unreliable and flawed. Ultimately, the arbitrator found AHS’ charges were usual, customary, and reasonable, and CURE failed to provide competent evidence to contradict AHS.

CURE filed an order to show cause to vacate the arbitration award. CURE argued that the arbitrator erred in rejecting its expert’s findings. The trial court denied CURE’s order to show cause because the arbitrator disqualified CURE’s auditor. Under New Jersey law, appellate review of an arbitration award is limited. The Appellate Division reviewed the record and concluded that CURE did not satisfy the high standard for appellate review of an arbitration award. Further, the Appellate Division noted that there were no public policy considerations requiring the award be overturned.


Lee S. Siegel [email protected]

12/20/19 Continental Casualty Co. v. Parnoff
United States Court of Appeals, Second Circuit
No Coverage under LPL Policy for Fee Dispute

In the continuing Parnoff saga (see CP 11/29/19 available here), the Second Circuit affirmed a ruling of no coverage from the District of Connecticut. Parnoff, a Connecticut attorney, sued his malpractice carrier for defense and indemnity in a dispute brought by his former client. The client, Darcy Yuille, successfully sued Parnoff in a state court action for more than $1.4 million, on claims of conversion and civil theft, together with prejudgment interest. The appellate panel in the coverage action affirmed the trial court’s order granting Continental judgment on the pleadings, holding that there was no coverage available for the former client’s claim under the Lawyer’s Professional Liability (LPL) policy.

As is typical with these professional errors and omissions policies, coverage is only triggered for claims arising from negligent acts or omissions in the performance of legal services by an insured. The Policy also excluded from the definition of damages, inter alia, claims for the return of legal fees, costs, and expenses. Here, the court confirmed that there was no coverage because the client sought the return of disputed legal fees that Parnoff transferred from an escrow account to a personal checking account he shared with his wife. “Yuille was not seeking damages caused by ‘an act or omission in [Parnoff's] performance of legal services,’” the court reasoned. As a result, the grant of coverage was not triggered and neither defense nor indemnity was owed.

Further, the award to the client of costs and interest was excluded “as injuries that are a consequence of” the disputed legal fees.


12/02/19          Akerlind v. Nationwide Mut. Ins. Co.
Connecticut Superior Court, Hartford County
Underinsured Motorist Priority of Coverage for Test Drives

A Hartford County court denied Nationwide summary judgment, holding that under the Connecticut statutory scheme its UIM policy is potentially applicable to the loss suffered by its insured. Here, Nationwide’s insured, Akerlind, was struck by a motor vehicle driven by the tortfeasor while out for a test drive – or at least that is what we can gather from the opinion. Nationwide argued that since the dealership carried a $1 million liability policy – more than the amount of the UIM coverage – that there was no underinsurance as a matter of law. But Nationwide failed to take into account the Connecticut statute governing priority of coverage in situations like these. Pursuant to Connecticut General Statutes § 14-60, a dealership’s insurance is not available when the tortfeasor has their own liability insurance. Section 14-60(a) provides that when a dealer loans a vehicle to an insured operator (e.g. a test drive), the operator's insurance “shall be the prime coverage….” If, however, the driver is uninsured, then the operator and the dealer are jointly liable by operation of law. Because Nationwide failed to show that the tortfeasor was uninsured, the court denied its motion.

Brian F. Mark [email protected]


12/18/19         Certain Underwriters at Lloyd’s London v. Metro. Builders, Inc.
Appellate Court of Illinois, First Department, Third Division
Appellate Court of Illinois Holds No Duty to Defend Claims of Damage to Insured’s Work Product, But Finds Duty to Defend Claims of Damage to Building Owner’s Personal Property.

This declaratory-judgment action arises out of an underlying construction defects action related to a project involving the construction, renovation, demolition, and other related activities at three properties in Chicago. The properties involved were 1907, 1909, and 1911 West Schiller Street. The project involved converting two of the buildings (1909 and 1911) into single-family dwellings. Metropolitan Builders, Inc. (Metropolitan) was hired by the property owner as the general contractor for the construction project.

During the construction, a wall adjoining two structures collapsed. The amount of structural damage ultimately led the City of Chicago (the City) to declare the structures unsafe and demolish them. The owner of the building turned to its insurer, AIG Property Casualty Company (AIG), for indemnification and reimbursement for the damages it suffered. AIG paid the owner "a sum of over

$1,802,479.88 for repairs, demolition, construction, and other associated expenses arising from" the collapse. AIG then filed a subrogation action against Metropolitan seeking reimbursement of its payment to the property owner.

Metropolitan had obtained a permit from the City to perform construction activity to convert the 1909 and 1911 properties into single-family dwellings, but had not

obtained a permit to perform construction activity of any kind on the 1907 property. In October 2016, the structures on the 1907 property and 1909 property collapsed. Not much is known about how the collapse occurred. The allegations were that Metropolitan had constructed a new wooden framing building and removed portions of the stairway within the 1907 property, without the authorization of a permit, in addition to altering the structural integrity and lower level supports of the 1907 and 1909 properties.

The entire existing structures at the 1907 and 1909 properties collapsed, causing significant damage to the properties, "including in areas where [Metropolitan] was not conducting work." The existing structures on the properties were later deemed unsafe and demolished by the City. The underlying complaint alleged warranty and contract claims, as well as various tort claims, against Metropolitan. The various tort claims each alleged that, "[a]s a result of the aforementioned negligence, [the property owner] suffered losses including, but not limited to, damage to [its] real and personal property."

Metropolitan tendered its defense of the underlying action to its insurer, Certain Underwriters at Lloyd's London (Lloyd's). Lloyd's denied coverage and filed a declaratory judgment action, seeking a declaration that it owed no duty to defend Metropolitan. In its motion for summary judgment, Lloyd's argued that, while its insurance policy with Metropolitan required Lloyd's to defend Metropolitan for claims of liability resulting from "property damage" caused by an "occurrence," the allegations of the underlying complaint alleged neither "property damage" nor an "occurrence."

The trial court ruled that the underlying complaint adequately alleged "property damage," but held that the underlying complaint failed to allege an "occurrence" as defined by the insurance policy and thus entered summary judgment in favor of Lloyd's. Metropolitan appealed, claiming that summary judgment for Lloyd's was inappropriate, as the underlying complaint alleged an "occurrence" as well as "property damage."

In analyzing the duty to defend, the Court noted that an insurer has a duty to defend "[i]f the underlying complaints allege facts within or potentially within policy coverage."

Metropolitan had a commercial general liability (CGL) policy with Lloyd's that, in pertinent part, insured Metropolitan for liability resulting from "'property damage' [that] is caused by an 'occurrence.'"

The Court began its analysis by looking at the purpose of CGL policies. "'[C]omprehensive general liability policies are intended to protect the insured from liability for injury or damage to the persons or property of others; they are not intended to pay the costs associated with repairing or replacing the insured's defective work and products, which are purely economic losses. Finding coverage for the cost of replacing or repairing defective work would transform the policy into something akin to a performance bond.'"



An "occurrence" under the Metropolitan policy is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." As is typical in CGL policies, the policy did not define the term “accident.”

In the absence of a policy definition, Illinois courts typically interpret "accident" to mean "'an unforeseen occurrence, usually of an untoward or disastrous character or an undesigned, sudden, or unexpected event of an inflictive or unfortunate character.'"

The Court reiterated prior holdings that a CGL policy "does not cover an accident of faulty workmanship but rather faulty workmanship which causes an accident." Simply put, “there is no occurrence when a subcontractor's defective workmanship necessitates removing and repairing work."  Rather, the mere repair or replacement of a contractor's poor work product is considered to be the "'natural and ordinary consequences of faulty workmanship,'" not an "'accident.'" The Court noted that while a CGL policy will not insure a contractor for the cost of correcting construction defects, 'damage to something other than the project itself does constitute an "occurrence" under a CGL policy'"

Property Damage

The Policy defines "property damage" in relevant part as "physical injury to tangible property, including all resulting loss of use of that property." The Court reviewed case law examining what constitutes “property damage” and acknowledged that the prevailing rule is that to constitute "property damage" in CGL policies with definitions like the one at issue, the property's appearance must be altered in some measurable way, but it must also be property beyond that of the contractor's work product. If the only property injured is the very project on which the contractor was working, then the damages sought are merely economic losses stemming from disappointed commercial expectations. They are contractual damages for the cost of repair or replacement or to make the property owner whole for the diminution in the property's value. Such damages are not recoverable in a CGL policy. But again, allegations of damage to property other than the project itself, requiring more than mere repair or replacement, constitute "proper damage" under the CGL policy.

Underlying Allegations

The Court next looked to the allegations in the underlying complaint to determine whether they alleged “property damage” that was caused by an “occurrence.”

The underlying complaint alleged two different kinds of damages suffered by the property owner: "losses including, but not limited to, damage to both [the property owner's] real and personal property."

The Court agreed with Lloyd's that the damage to the real property is not covered by the CGL policy. Metropolitan was the general contractor on the job, with overall responsibility for the renovation and conversion of the properties' existing structures into single-family housing. Instead of rehabbing and converting them, Metropolitan's allegedly faulty workmanship led to their collapse and ultimate demolition. Thus, the collapse of the structures was not an "accident" or "occurrence" but was, instead, the natural and ordinary result of faulty workmanship on the contractor's work product.

Metropolitan argued that the underlying complaint alleged damage to parts of the property on which Metropolitan was not working. However, the properties were under the responsibility of Metropolitan, as general contractor, to convert the structures into single-family homes. Even if the damage extended to parts of the project on which Metropolitan was not currently working, it was still part of Metropolitan's scope and responsibility, and thus was part of the project itself.

The Court reached a different conclusion, however, with regard to the second claim of damages alleged in the underlying complaint—the claim of damage to the property owner's "personal property." The damage alleged to the property owner's personal property is, quite obviously, damage to something other than the project itself. To be sure, the underlying complaint gave no description whatsoever of what "personal property" of the owner was damaged—furniture, computers, appliances, keepsakes, etc. It was the unspecified nature of that personal property, in fact, that led Lloyd's to argue that no damage to personal property has been alleged whatsoever.

The Court noted that the underlying complaint did allege that the personal property was owned by the property owner. The Court further noted that it has specifically rejected the notion that the alleged damage to "personal property" must be specifically identified in the underlying complaint to trigger coverage for an "occurrence."

In considering whether an insurer has a duty to defend, the underlying complaint and the insurance policy are read in favor of coverage "unless it is clear from the face of the underlying complaints that the allegations fail to state facts which bring the case within, or potentially within, the policy's coverage." The Court held that it was certainly not "clear" from the underlying complaint that the allegation of damage to the owner's personal property falls outside the definition of "occurrence."

Although the underlying complaint was vague as to whether AIG covered the damaged personal property, the Court noted that it was not "clear from the face of the underlying complaint" that AIG did not cover claims of damage to the owner's personal property. In fact, the underlying complaint did allege that AIG paid the owner for “other associated expenses.” The Court found no reason why that could not include payment for damage to the owner's personal property.

Thus, the Court held that however vague they may be, the underlying complaint's allegations at least potentially satisfied the policy's definition of "occurrence."

And because the damage to the owner's personal property was beyond a mere contractual damages claim for repair or replacement of the contractor's work product, it likewise constituted "property damage" under the policy.

The Court determined that the admittedly vague references to damage to the property owner's "personal property" were enough to allege "property damage" caused by an "occurrence" under the policy. The allegations were enough to trigger the insurer's duty to defend.

Accordingly, the Court reversed the trial court’s decision, holding that the underlying complaint alleged sufficient facts to require Lloyd's to defend Metropolitan.


Eric T. Boron [email protected]

12/17/19         Zannini v Phenix Mutual Fire Ins. Co. Supreme Court of New Hampshire
Homeowner’s Insurance – Summary Judgment for Insurer Affirmed – One- Year Suit Limitation Period Enforceable

Plaintiffs' residence sustained “significant flooding” as the result of burst pipes. The opinion provides the following additional background facts:

[T]he house was insured by the defendant, and the plaintiffs filed a claim for water damage. The defendant sent an adjuster to investigate, who instructed the plaintiffs to remove the floor of the house so that he could investigate the area underneath. After they did so, the house began to collapse, and the plaintiffs repaired its framing to prevent it from collapsing completely. As a result of removing the floor, the plaintiffs “suffered a complete loss [of the house] and direct physical loss of [their] personal property and use of the [house] for a substantial amount of time.” On May 3, 2016, the defendant sent the plaintiffs a letter denying coverage of the damage caused by the collapse.

The policy’s “Suit Against Us” provision provided for the following: “No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss.”

After the May 3, 2016 denial letter was issued by Phenix Mutual, a series of letters were exchanged over the next 20 months or so reflecting, generally, the parties’ exchange of further information and discussions about whether there might be any potential for resolving the denied claim, despite Phenix Mutual’s denial. To be clear, Phoenix Mutual never withdrew its denial of the claim in any of the correspondence exchanged.

Nearly two years after the pipes burst, plaintiffs filed a declaratory action against Phenix Mutual, alleging breach of contract. Phenix Mutual moved for summary judgment on the ground that the policy’s one-year time-limitation for suing Phenix Mutual expired before plaintiffs filed their suit. Plaintiffs opposed arguing:

1. the suit limitation provision is unenforceable because it is against public policy; and

  1. genuine issues of material fact existed as to whether plaintiffs either waived or was estopped from asserting the one-year time limit as a defense. The trial court, the Superior Court of New Hampshire, granted Phenix Mutual’s summary judgment motion, concluding that allowing parties to contract for a shorter period to initiate an action than the statutorily prescribed limitation period does not violate the public policy of the State of New Hampshire. The trial court further concluded that the provision was not unreasonable, and not unenforceable, because the plaintiffs did not show that it was impossible for them to comply with the provision. Finally, the trial court concluded that the back and forth communications between the parties' counsel did not create an issue of material fact as to whether Phenix Mutual tolled the one-year period, was estopped from asserting it as a defense, or, waived it.

The Supreme Court of New Hampshire’s opinion affirming the grant of summary judgment for Phenix Mutual cited, as you may imagine, both New Hampshire case law and New Hampshire statutory law in upholding summary judgment for Phenix Mutual. Likely of interest to many of you, and certainly to me, is footnote “3” of the Supreme Court’s opinion noting that courts of other states, including Georgia and New Jersey have upheld one-year time-limitation provisions contractually provided for in insurance policies.

Finally, the Supreme Court of New Hampshire’s opinion analyzes, discusses, and distinguishes the Executive Plaza, LLC v Peerless Ins. Co. decision of the New York Court of Appeals in 2014 (22 N.Y.3d 511) that held a two-year time- limitation provision was “unreasonable as applied because it included a condition precedent that could not be met within two years”. New Hampshire’s Supreme Court distinguished the Executive Plaza facts, most notably indicating the suit limitation provision at issue in Executive Plaza functioned, under the unique facts of that particular insurance claim, as a “nullification of the claim,” and not a limitation period. The Supreme Court of New Hampshire recognized that, notwithstanding the New York Court of Appeals’ ultimate ruling in Executive Plaza, the New York Court of Appeals had actually noted in its opinion that there was nothing “inherently unreasonable” about a two-year limitation period, and that it had previously upheld one-year and six-month limitation periods in other cases that had come before it.

In the end, what distinguished Executive Plaza from the Zannini’s case was that there is nothing in the Zannini’s record on appeal showing that they could not comply with the policy provisions within the one-year period. The time-limitation provision in the Phenix Mutual policy thus did not function as a “nullification” of the Zunnini’s claim.

Marina A. Barci

12/12/19         Global Liberty Ins. Co. v. Acupuncture Now, P.C. Appellate Division, First Department
Fee Schedule Amount for Acupuncture Treatment Can be Considered under both the Chiropractic and Physician’s Fee Schedule

The issue in this action was what fee schedule is applicable to reimbursement of a licensed acupuncturist who provided services to eligible individuals injuries in motor vehicle accidents. Acupuncture does not have its own fee schedule under the no-fault regulations. Global sought a declaration that licensed acupuncturists were entitled to payment of no-fault insurance benefits only as set forth in the workers’ compensation fee schedule, not under the fee schedule for physicians.

Under the no-fault regulations, coverage for necessary medical expenses shall not exceed the charges permissible under the workers’ compensation fee schedule except under “unique circumstances.” The most common unique circumstance occurs when a service is reimbursable but there is no adopted or established fee schedule application to the provider. Where there is no established fee schedule, the permissible charge for the service shall be the prevailing fee in the geographical location for the provider, subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established. Thus, because there is no adopted fee schedule applicable to licensed acupuncturists, consideration for what charges are permissible for similar procedures under already established fee schedules is required.

Here, Global relied on a 2004 informal opinion letter from the Department of Financial Services that stated insurers can pay the rates established for doctors and chiropractors instead of a higher prevailing fee in the geographical location of the provider so long as there is review for consistency with the charges permissible for similar procedures under either fee schedule (essentially the same requirement under the current no-fault regulations). However, this letter did not give any guidance as to which particular fee schedule should be applied to a licensed acupuncturist, even though DFS was aware that the fee schedules for acupuncture services performed by chiropractors were lower than the fee schedules for the same services performed by physicians.

Acupuncture Now brought a proposed rule amendment by DFS from 2010 into play, which sought to clarify inconsistent court rulings that acupuncture treatments are primarily a service performed and billed by licensed acupuncturists and that such treatments merit reimbursement at the same rate medical doctors receive for comparable service. This raised an issue of fact as to whether the physicians’ fee schedule should apply in this case. Courts have held that an insurer may use the workers’ compensation fee schedule for acupuncture services performed by chiropractors to determine the amount which a licensed acupuncturist is entitled to receive, however such holdings do not prevent the use of the physician’s fee schedule.

Here, Global did not proffer sufficient evidence to establish that the claims Acupuncture Now made were improperly billed or that they were in excess of the amounts permitted by the fee schedule. Acupuncture Now also submitted an affidavit from a licensed acupuncturist who averred that he was consistently reimbursed by workers' compensation insurers at the physician rates, for over 15 years, which Global did not rebut. Therefore, the Court affirmed that the issue of overbilling was premature prior to the completion of discovery.

The Appellate Division also joined the recommendation of the Appellate Term that the Superintendent of Insurance should consider adopting a fee schedule including licensed acupuncturists to resolve these issues.

Editor’s Note: Ryan’s column addresses that the WCB has adopted a fee schedule for acupuncturists that will go into effect in October 1, 2010 for no-fault.


Ryan P. Maxwell [email protected]

Legislative List

12/20/19         VETOED: Pretrial Verdict Offset Selection For Non-Settling Defendants
New York State Legislature
Vetoed Bill Would Have Required Non-settling Defendants to Select A Verdict Offset Before Trial

Before the holidays, Governor Cuomo vetoed a bill that would have meant drastic changes to the course of litigation and settlement practices as far as the eye could see. The vetoed bill would have required non-settling defendants to select their verdict offset before trial. H&F’s own V. Christopher Potenza, Esq. wrote a blog post earlier this year outlining the dire straits this bill posed to the defense bar:

The [proposed] amendment to General Obligations Law § 15-108 provides that, in tort cases where one defendant has settled, that remaining defendants must elect, prior to trial, whether to reduce liability by the amount of the settlement or by the amount of the equitable share of damages delegated to the settler in the verdict.  Currently, a non-settling defendant makes that “choice” after the verdict when the percentage of liability is determined, and presumably just elects the greater off-set. Advocates for this change (take a guess) argued that the current format deters settlements because it rewards non-settlors in instances where the settling tortfeasor's payment turns out to exceed what the trier of fact later determines to be the settlor's equitable share of the damages. Further, the non-settlor was able to deduct settlor's equitable share whether or not the settlor actually could have paid such sum. By now requiring the non-settlor to make this choice before trial, and before the percentages of liability are known, there is conceivably an added incentive to settle since they face the risk of making a bad choice. This decision must be made in writing or in open court prior to opening statements, or as soon as practical after a settlement is made known. In the event there are settlements by multiple defendants, the amounts must be aggregated, so that a non-settlor cannot selectively choose the monetary amount against one settling defendant, and percentage of liability against another. Non-settling defendants do not have to agree amongst themselves on which off-set to take however, and each non-settling defendant can make an independent decision. The statute further purports to codify that settling defendants would be immune from not only contribution claims, but also common- law indemnity claims (but not contractual indemnity). The law is slated to take effect on January 1, 2020, and will apply only to actions and proceedings commenced on or after such date.

It will be very interesting to see how this plays out in practice. Currently, if a settlement is deemed confidential by the settling parties, the amount of the settlement is not discoverable by the other parties until there is a post-trial hearing to determine the off- sets. As a defendant now has to now make a pretrial decision on the offset, is that settlement amount now a mandatory disclosure? How can a defendant make an informed decision without knowledge of either the settlement amount or the percentage of liability? I guess the thought is that if you increase the risk, you increase the likelihood of a settlement. You also increase the risk that a plaintiff will obtain more in settlements than a verdict if multiple defendants “overpay” by not knowing the amount of other settlements and have no determination on percentages of liability.

Governor Cuomo, in vetoing the bill, noted that “[i]n the absence of available settlement information, the potential exists for non-settling defendants to pay more than their equitable share and for plaintiffs to become unjustly enriched by receiving monetary amounts in excess of the rendered verdict. I support the public policy of this bill which encourages settlements in civil actions, however, the proposed legislation is not an effective means to that end. Numerous stakeholders have raised concerns with this approach, with many stating this change will unfairly tip the balance too far in favor of a settlement. Based on the foregoing reasons, I am constrained to veto this bill.”

The balance of settlement discussions remains intact, for now.

12/20/19         Direct Recovery Against Third-Party Defendants New York State Legislature
Bill Delivered to Governor Would Allow Plaintiffs to Recover Directly Against Third Party Defendants in Certain Actions

The New York State Legislature delivered a bill to the Governor that would alter the course of defense litigation immensely, by permitting a plaintiff to recover directly against a third party defendant found to be liable to the defendant in certain actions. As H&F’s own V. Christopher Potenza, Esq. reported earlier this year:

[The proposed] Section 1405 to the CPLR will be created to expressly permit a plaintiff to recover and collect an unsatisfied judgment or portion of a judgment directly against a third-party defendant found liable for contribution or indemnification. Direct recovery, however, is not authorized against a third- party defendant in those circumstances in which the third-party claim would have been barred by the “Grave Injury Statute” of Section 11 of the Worker's Compensation Law. The goal apparently, is to protect the ability of a plaintiff-judgement creditor to enforce their rights against a third-party by preserving the ability for the plaintiff-judgement creditor to pursue a judgment or cause of action against a third-party even if such claim or cause of action is extinguished in the bankruptcy of a defendant-judgement debtor.  This act is to take effect immediately, and shall apply to all judgments entered by plaintiffs on or after such date.

Now that this bill has officially been delivered to the governor’s office, we will keep our eyes peeled for the fate of this legislation, which no doubt would fundamentally change the nature of various legal actions in New York.

12/16/19         Insurance Fraud Prevention Measures New York State Legislature
Governor Signs New Legislation Granting Immunity for Reports of Suspected Fraud to the National Insurance Crime Bureau

Last Monday, Governor Cuomo signed into law chapter 656 of the Laws of 2019, which grants immunity for reports of suspected fraud made by or to the National Insurance Crime Bureau, a nonprofit dedicated to the investigation and prosecution of insurance fraud. With this law, New York follows in the footsteps of states like California, Florida, Pennsylvania, and Texas who have already taken steps to provide adequate protections to organizations that compile data on the state and national level from insurance companies and federal, state, and local law enforcement. The purpose of the law is to broaden the exchange of information among those fighting fraud, in the hopes of catalyzing an immediate boost in information sharing in New York.

Prior to amendment, Financial Services Law § 405 provided civil immunity to those subject to the insurance law who, in the absence of fraud or bad faith, provide:

  1. information relating to suspected violations of the banking law or the insurance law furnished to law enforcement officials, their agents and employees;
  2. information relating to suspected violations of the banking law or the insurance law furnished to other persons subject to the provisions of this chapter; and
  3. information furnished in reports to the financial frauds and consumer protection unit, its agents or employees or any state agency investigating fraud or misconduct relating to financial fraud, its agents or employees.

This latest amendment provides a new subsection (d) indicating that civil immunity is also extended to those individuals who provide “information furnished to or from the National Insurance Crime Bureau............................................... ”

The bill took effect immediately.

Regulatory Wrap-Up

12/18/19         Update to SUM Regulations For Stretch Limousines
Department of Financial Services
Emergency Adoption of Amendment to SUM Regulations Due to Recent Change to Insurance Law Section 3420(f) Liability Limit for Limousines

Earlier this year, Governor Cuomo signed into a law Chapter 59, Part III, Section 19 of the Laws of 2019, which amended Insurance Law section 3420(f) to require that any policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance and use of an altered motor vehicle or stretch limousine, having a seating capacity of eight or more passengers and used in the business of carrying or transporting passengers for hire, provide supplementary uninsured/underinsured motorist (“SUM”) coverage for bodily injury in an amount of a combined single limit of $1,500,000 because of bodily injury or death of one or more persons in any one accident. DFS’ emergency adoption of the Ninth Amendment to 11 NYCRR 60-2 reflects the amendments made by Section 19 and adds a definition of “altered motor vehicle” or “stretch limousine” consistent with Department of Motor Vehicles regulation 15 NYCRR section 79.20(f)(2).

11 NYCRR 60-2.0(a) has been amended to include a new sub-section (3) providing that the amendments to Insurance Law § 3420(f) are further implemented by way of that subpart. Additionally, 11 NYCRR 60-2.1(g) has been amended to include a new sub-section (g)(2) providing that:

an insurer providing coverage insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance and use of an altered motor vehicle, commonly referred to as a “stretch limousine”, having a seating capacity of eight or more passengers used in the business of carrying or transporting passengers for hire, shall provide SUM coverage in the amount of $1,500,000 because of bodily injury to or death of one or more persons in any one accident for any policy issued, renewed, altered, or modified on or after January 1, 2020.

For the purposes of this paragraph, an “altered motor vehicle” or “stretch limousine” shall mean a vehicle altered so as to have an extended chassis,

lengthened wheel base, or elongated seating area and in the case of a truck, has been modified to transport passengers in addition to having been altered.

In DFS’ Statement of the Reasons for the Emergency Measure, Superintendent Linda Lacewell explained that “[s]ince insurers have already begun renewing insurance policies that will take effect January 1 or later, and need to know to which vehicle owners they must provide this SUM coverage, it is imperative that this rule be promulgated on an emergency basis for the public’s general welfare.”

This amendment is scheduled to be published in the State Register on December 31, 2019, with public comment expiring on March 2, 2020.


12/18/19         WCB Fee Schedule Postponed for New Providers
Department of Financial Services

WCB Fee Schedule Postponed for Certain Providers

On November 19, 2019, the Workers’ Compensation Board adopted amendments to fee schedules for certain medical fee schedules under 12 NYCRR 329, 333, 343, and 348. DFS has postponed the implementation of such fee schedules under Article 51 of the Insurance Law for the purposes of the no- fault reparations system for persons injured in motor vehicle accidents.

Insurance Law § 5108(b) specifically authorizes the Superintendent to adopt the fee schedules prepared and established by the Chairman of the Workers’ Compensation Board (the “Chair”) or to promulgate fee schedules for health care benefits payable under the no fault system for any services for which the Chair has not prepared and established; and subsection (c) prohibits a provider of health services, as defined in Article 51, from demanding or requesting any payment in addition to the amount authorized pursuant to Insurance Law Section 5108.

In April 2019, Workers’ Compensation Law § 13-b was amended to permit licensed acupuncturists, nurse practitioners and licensed clinical social workers to become authorized to treat injured workers, starting in 2020. The new fee schedule applied to these newest providers.

DFS acknowledge the purpose of such fee schedule to the purposes of workers’ compensation, but cautioned that:

the immediate adoption of a new fee schedule that covers acupuncturists, physical therapists, and occupational therapists, coupled with the substantial increase in chiropractic fee schedule rates, will have a significant adverse impact on the no-fault system, to wit: insurers will not have an opportunity to study the cost impact from a substantial increase in chiropractic rates; insurers and providers will not be afforded sufficient time to change their internal bill processing systems to comport with the Chair’s most recent significant amendments to the fee schedules; and the adoption of those fee schedules . . . likely will result in inaccurate billing by providers and incorrect reimbursements from insurers. These issues ultimately will increase fee schedule disputes in arbitration and the courts.

(DFS Regulatory Impact Statement) Thus, DFS believed it necessary to delay the adoption of these new fee schedules until October 1, 2020 for use in no-fault pursuant to Insurance Law § 5108.


12/17/19         Procedures For Adjudicatory Proceedings Before DFS Department of Financial Services
Proposed Amendment to Unify DFS’ Adjudicatory Procedures Among Banking, Insurance, and Other Financial Services Industries

In 2011, the New York Legislature consolidated the former New York State Banking and Insurance Departments into the Department of Financial Services (“DFS”), establishing one agency responsible for the regulation and oversight of banking, insurance, and other financial services industries. In the wake of this fundamental change, separate rules governing the adjudicatory proceedings for banking and insurance proceedings have coexisted. This proposed amendment would replace those coexisting rules with a new regulation, added to 23 NYCRR, that unifies the procedures for DFS adjudicatory proceedings.

Since 2011, the Superintendent of Financial Services was afforded with more expansive authority than that once held by the heads of the individual Banking and Insurance Departments. To that end, this proposed regulation repeals Supervisory Procedure G 111 of the Banking regulations (3 NYCRR) and Part 4 of the Insurance regulations (11 NYCRR), in favor of a new Part 2 to 23 NYCRR to encompass all persons who may be subject to a Department adjudicatory proceeding. New Part 2 to 23 NYCRR continues to uphold the public policy of expeditious and impartial adjudicatory proceedings and comply with the requirements of Executive Order No. 131 (December 4, 1989), which remains in effect pursuant to Executive Order No. 2 (January 1, 2011).

DFS contends that the coexistence of two separate, adjudicatory procedures limits the ability it has to meet present needs. Specifically, DFS has expressed an intent to hold hearings on investigations and enforcement activities that may have an impact upon both the Insurance and Banking authority of the Department, and others that may have an impact upon authority contained solely in the Financial Services Law.

This new 23 NYCRR 2, entitled “Rules Governing the Procedures for Adjudicatory Proceedings Before the Department of Financial Services” is scheduled to be published in the State Register on December 31, 2019, with public comment expiring on March 2, 2020.

From the Filings Cabinet

“I’ve got nothing for you. Head back to camp.” – Jeff Probst, since I was 11


CJ on CVA and USDC(NY)
Charles J. Englert III 

12/16/19         Cartagena et al v. Homeland Ins. Co. of New York
United States District Court, Southern District of New York Ambiguous Terms are Construed Liberally in Favor of the Insured (applying Florida law)

Plaintiffs brought this action against defendant to assert plaintiffs’ rights to a defense provided by the defendant in an underlying action. Defendant then brought a motion to dismiss the action, which the court ruled on based upon the summary judgment standard. The defendant’s motion was based upon the following grounds: (i) the insurance policy at issue excludes the claim in the underlying action because the underlying plaintiff was an independent contractor and (ii) the causes of action asserted by the underlying plaintiff are not covered by the policy. The underlying action, Elliot v. Cartagena et al., alleges that the plaintiff took an unfinished song written and recorded by Elliot and made a final version of that song, which went double platinum. In the underlying action Elliot seeks a declaration that he is either the sole author and owner of the song, or that he is a joint author with the Plaintiffs. Plaintiffs submitted a claim for coverage to defendants under plaintiffs’ Music Professional Liability Insurance Policy (the “Policy”), which provides coverage for claims brought against the insured for: infringement of copyright, plagiarism, Piracy, and misappropriation of ideas under implied contract or other misappropriation or ideas or other information.

Plaintiffs being Florida residents and defendant being a corporation domiciled in New York, the court was forced to determine which state law would govern. The court, being in New York, applied the choice of law rules of New York. The court decided that because the insureds (plaintiffs) were domiciled in Florida, and transacted business mostly in Florida, Florida law would apply. Therefore, applying Florida law, an insurer has a duty to defend its insured based solely on the allegations in the complaint.

The court ruled that the allegations in the underlying action triggered coverage under the policy. The policy issued to plaintiffs covers: infringement of copyright, plagiarism, Piracy, and misappropriation of ideas under implied contract or other misappropriation or ideas or information. Piracy was the only term defined in the policy.

The underlying complaint alleged that plaintiffs’ plagiarized Elliot’s work. Plagiarism being undefined in the policy, forced the court to determine the ordinary meaning of the term. The court determined that an ordinary person would define plagiarism as deliberately and knowingly using another’s work as your own. The underlying complaint alleged that plaintiff used Elliot’s work without credit to Elliot, and plaintiff passed that work off as their own. As the policy specifically names pilgrims as a covered peril, the court ruled that defendant’s duty to defend was triggered.

The underlying complaint also fairly alleges misappropriation. Defendant argued that because Elliot was alleging joint ownership of the musical work, he could not allege that the work was misappropriated. The court disagreed, again applying the meaning an ordinary person would use. The court determined that the ordinary understanding of misappropriation was the use of another’s property in a dishonest way. Therefore, even with Elliot alleging he was a joint owner of the musical work, plaintiff’s use of the work was a misappropriation of it, therefore the complaint correctly alleges misappropriation and the duty to defend was triggered.

Defendant also contended that Exclusion B in the Policy precludes coverage for the underlying action. Exclusion B of the Policy excludes coverage for claims “against the Insured by any past, present or future Insured, joint venturer or Independent Contractor seeking compensation, an accounting or recovery of profits or royalties or claiming an ownership interest in the Insured’s Work.” Defendant argues that Elliot was an independent contractor or joint venturer by way of implied agreement. While it is true that plaintiff paid Elliot a small sum after plaintiff used Elliot’s work, this does not make Elliot an independent contractor or joint venturer. The court held that because Elliot did not provide plaintiff with permission to use his work until after, as the underlying complaint is written, there is no possibility Elliot was working under an implied agreement with the plaintiffs. Accordingly, the exclusion did not apply.

Accordingly, the court denied defendants motion and granted summary judgment in favor of the plaintiffs, holding that the duty of the defendant to defend plaintiff’s in the underlying lawsuit was triggered.


Earl K. Cantwell

08/09/19          Metal Pro Roofing, LLC v. The Cincinnati Ins. Co.
Court of Appeals of Indiana
Underwriting and Sales Materials Deemed Relevant to Coverage Dispute


In February 2013, the insured discovered that someone hacked into their bank account and stole approximately $80,000. They made claim to Cincinnati for coverage based on “forgery or alteration” and “inside the premises-theft of money and securities” coverage descriptions. The claim was denied and the insurance company initiated a declaratory judgment action to confirm the coverage declination. On cross motions for summary judgment, the Trial Court granted summary judgment in favor of Cincinnati. It held that the claim losses were not covered under the policies, and related claims of bad faith were also dismissed.

The insured then amended their counterclaim and alleged that, even if the computer hacking losses were not covered, certain language in Cincinnati’s quotations to obtain their business lead them to “believe” that such losses would be covered if they purchased the coverage.

Cincinnati again moved for summary judgment arguing that the asserted language in the sales quotations did not amount to a representation that computer-hacking losses would be covered, and that even if it could be so construed there was an appropriate disclaimer set forth in the materials. The referenced sales literature did refer to protecting the insured’s money “inside your bank” from computer hackers. The disclaimer stated that “This is not a policy. For complete statement of the coverage and exclusions, please see the policy contract.” The Trial Court again granted Cincinnati’s motion for summary judgment, and furthermore concluded that the evidence indicated that the insured had not read or relied upon the alleged sales materials, and that the lack of reliance would be “fatal” to any claim of alleged fraud or misrepresentation.

On appeal, the Appellate Court concluded that the loss did not fall under the “forgery or alteration” coverage because there was no evidence that the computer hacker “signed” anything or signed the name of another person or organization. There was no “forgery”, i.e., false signing, and no “alteration” that was part of the hack. Likewise, there was no coverage under the “inside the premises” coverage because there was no evidence that the hacker was inside the insured’s business or that the loss was an “inside job”.

However, the Appellate Court concluded that the Trial Court erred in granting summary judgment in favor of Cincinnati based on the claim that the sales quotations for the insurance coverage “lead them to believe” that computer-hacking losses would be covered if they purchased the coverage. The Appellate Court concluded that it was possible to read the sales quotations as a “false representation” that the coverage included coverage against any loss of money or securities on deposit in a financial institution from computer hackers. The Court stated that it would be “entirely reasonable” for a prospective insured to read the language to mean that, if you want to be covered by theft from computer hackers, you should buy this policy endorsement.

The Appellate Court overruled the “lack of reliance” argument by noting that the insured’s representative had only testified that he did not read or rely upon the

actual insurance policies in purchasing and acquiring the coverage, but he had not testified that he did not read or rely upon the descriptions in the sales quotations when deciding whether to purchase the policies. Therefore, there was no conflict between his deposition testimony and the statement in his motion affidavit that he relied upon the descriptions in the sales quotations. It was held that the Trial Court should not have “stricken” his statement or granted Cincinnati summary judgment on that basis.

Cincinnati’s assertion regarding the disclaimer in the sales materials was deemed not sufficient to “neutralize” or render misleading quotation language otherwise proper. It was left to the “finder of fact” to determine whether the disclaimer, which appeared in fine print on the bottom of the quotations, was effective.

Cincinnati also argued that it could not be held liable for any “misrepresentations” because the quotations were given to the insured by the insurance agency and not by Cincinnati itself. While true, the Appellate Court ruled that Cincinnati had sent the quotations to the agent who in turn gave the quotations to the insured as part of an overall insurance proposal.

Therefore, the basic holding in the case that there was no coverage under the cited policy provisions was affirmed. However, summary judgment on the basis of the alleged “fraudulent” or deceptive sales quotations was reversed.

This case represents a disturbing example of extra-contractual information being used to challenge a coverage disclaimer, particularly where the insured alleged underwriting and sales materials which they allegedly saw and relied upon. This represents a relatively new theory of using extra-contractual information and documentation outside of the policy itself in an effort to bootstrap coverage, or at least avoid summary judgment on the issue of coverage.

The Appellate Court’s refusal to give credit to the disclaimer in the sales materials is also disturbing since that would seem to be an issue of law rather than an issue of fact. Allowing a jury, for example, to determine the legal effectiveness of a disclaimer seems inappropriate if the disclaimer in the first instance was lawful and proper. While no statute or regulation was cited, the Appellate Court seemed to emphasize that the disclaimer was “in fine print at the bottom of the sales materials” as a reason to question its validity, although it was not demonstrated or even argued that the disclaimer was not in proper form or violated any state insurance law, rule, or regulation.

On another front, this case represents a good example where coverage for cyber-losses in traditional policies can be difficult to determine and recover since many traditional policy terms and provisions are simply not applicable to the various forms of cyber-losses, which in this case was a computer hack. As the Appellate Court noted, trying to put cyber-losses into traditional property and liability policies and terms is like “putting a square peg in a round hole”. In this case, the computer hack was not a forgery, nor was it an internal theft of money or securities. Other issues frequently arise in these cases as to whether a cyber- loss is a defined occurrence, whether there is covered property damage, and whether certain exclusions apply. The best means and method of obtaining coverage for cyber-losses is to review, negotiate, and procure specific cyber insurance coverage rather than rely upon traditional property insurance or CGL coverage.

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