Coverage Pointers - Volume XXV No. 6

Volume XXV, No. 6 (No. 653)
Friday, September 1, 2023
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 and Connecticut appellate courts and Canadian 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.


Coverage Pointers header


Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations.  I can’t begin to tell you how many of you call me with that greeting, “I have a situation”. 

We wish you well for the Labor Day (or, for my Canadian friends, the Labour Day) weekend. I will be enjoying it across the border.

By the way, feel free to share this publication with your friends and colleagues.  We have over 3000 subscribers. but can handle 3000 more.

Ryan Maxwell and I hope to see you at the NYIA Legal Roundtable which will be held on Thursday, September 7, 2023, at 2:00pm.  The two of us will be speaking on an important topic,

  • Preserving the Attorney-Client Privilege with Coverage Counsel.  

Other subjects covered include:

  • Priority of Coverage and Vertical Exhaustion of Policy Limits
  • The Latest with New York’s Labor Law 240(1)
  • Litigation Funding Running Rampant in New York, Now Funding Surgeries
  • Possible Reasons for the Over 50% Drop in Reported New York Court Decisions Involving Insurance Coverage Issues

Moderator Marc Craw of MLMIC Insurance Company will be joined by a panel of defense and coverage attorneys who are seeing and experiencing insurance litigation trends firsthand. Registration is complimentary for NYIA members.

Thursday, September 7 | 2:00 p.m. (ET)

Virtual Roundtable | Microsoft Teams

Event Links
Registration | Add to Calendar | Event Information | Questions

As the courts’ summer hiatus winds down, there is a paucity of new decisions (do they come in “paucities”) being released by the appellate courts,  But if it’s coverage, we have it for you and there are some really interesting cases in today’s issue, as you can see from the headlines below.  The actual issue of our publication is attached as a pdf.


Hurwitz Fine Recognition:

We avoid any claims that we’re the best thing to come along since sliced bread (too many carbs in that claim, in any event).  But, once a year, we do take note of, and take pride in, our firm’s recognition by our peers.  So, I hope, you will indulge me in congratulating our partners and associates for the honor given to them by their brothers and sisters at the Bar.

Two national publications have released their annual awards.


28 HF Attorneys Recognized by The Best Lawyers in America® and Best Lawyers: Ones to Watch in America®

Congratulations to 28 of the firm’s attorneys who have been selected by their peers for inclusion in the 2024 edition of The Best Lawyers in America®. Among this list, five Hurwitz Fine attorneys were named to the Best Lawyers: Ones to Watch in America® list.

In addition, Firm Members Michael F. Perley and Edward C. Robinson were also named as Best Lawyers “Lawyer of the Year” in Buffalo for Litigation – Municipal (Michael F. Perley) and Elder Law (Edward C. Robinson). “Lawyer of the Year” honors are awarded annually to only one lawyer per practice area in each region with extremely high overall feedback from their peers, making it an exceptional distinction.

The attorneys named to the 2024 edition of The Best Lawyers in America® and the practice areas in which they were honored are as follows, in alpha order.  The year designation next to the name reflects the first year that lawyer was so recognized:

David R. Adams


Personal Injury Litigation – Defendants

Eric S. Bernhardt


Litigation – Insurance

Jody E. Briandi


Litigation – Insurance, Litigation – Municipal, Personal Injury Litigation – Defendants, Product Liability Litigation – Defendants

Todd C. Bushway


Product Liability Litigation – Defendants

Evan Y. Bussiere


Real Estate Law

Patrick B. Curran


Personal Injury Litigation – Defendants

Ann E. Evanko


Corporate Law, Employment Law – Management, Litigation – Labor & Employment, Mediation

Robert P. Fine


Corporate Law, Health Care Law, Mergers & Acquisitions Law, Trust Law, Trust & Estates

Lawrence C. Franco


Corporate Law, Tax Law, Trusts & Estates

Dan D. Kohane


Commercial Litigation, Insurance Law, Litigation – Insurance

Elizabeth M. Midgley


Personal Injury Litigation – Defendants

Mark S. Nemeth


Personal Injury Litigation – Defendants, Product Liability Litigation – Defendants

Steven E. Peiper


Insurance Law, Litigation – Insurance

Michael F. Perley


Litigation – Municipal, Personal Injury Litigation – Defendants

V. Christopher Potenza


Personal Injury Litigation – Defendants

Edward C. Robinson


Elder Law, Trusts & Estates

Lawrence M. Ross


Corporate Law, Health Care Law, Tax Law

Andrea Schillaci


Litigation – Health Care, Product Liability Litigation – Defendants

Steven M. Sorrels


Product Liability Litigation – Defendants

Scott D. Storm


Insurance Law

Amber E. Storr


Commercial Litigation

Agnieszka A. Wilewicz


Insurance Law

Kevin J. Zanner


Corporate Law, Real Estate Law


Five Hurwitz Fine attorneys were also named to the “Ones to Watch” list:

Brian D. Barnas


Insurance Law

Ryan P. Maxwell


Insurance Law

Anastasia M. McCarthy


Personal Injury Litigation – Defendants; Product Liability Litigation – Defendants

Alice A. Trueman


Personal Injury Litigation – Defendants

Brian M. Webb


Personal Injury Litigation - Defendants


Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers recognitions are compiled based on an exhaustive Purely Peer Review® evaluation. More than 123,000 industry leading lawyers are eligible to vote (from around the world), and we have received more than 20 million evaluations on the legal abilities of other lawyers based on their specific practice areas around the world.

For the 2024 edition of The Best Lawyers in America®, more than 13.7 million votes were analyzed, which resulted in more than 76,000 leading lawyers included in the milestone 30th edition. For the 2024 edition of Best Lawyers: Ones to Watch® in America, more than 2.4 million votes were analyzed, which resulted in more than 25,000 lawyers honored in the new edition. Lawyers are not required nor allowed to pay a fee to be listed; therefore, inclusion in Best Lawyers is considered a singular honor.


32 Hurwitz Fine Attorneys Named to the 2023 Upstate New York Super Lawyers and Rising Stars Lists

We are also pleaed to announce that 32 attorneys from Hurwitz Fine have been selected for inclusion on the 2023 Upstate New York Super Lawyers and Rising Stars lists. In addition, six of the Top 50 and two of the Top 10 Upstate New York Super Lawyers are Hurwitz Fine attorneys.

The 2023 Upstate New York Super Lawyers list is an exclusive list, recognizing no more than 5% of attorneys in New York. The following Hurwitz Fine lawyers were selected to these lists:

  1. David R. Adams – Construction Litigation
  2. Eric S. Bernhardt – Personal Injury General: Defense
  3. Diane F. Bosse – Insurance Coverage
  4. Jody E. Briandi – Personal Injury General: Defense; Top 25 Women; Top 10
  5. Todd C. Bushway – Personal Injury General: Defense
  6. Evan Y. Bussiere – Real Estate
  7. Patrick B. Curran – Personal Injury Medical Malpractice: Defense
  8. Ann E. Evanko – Employment & Labor; Top 50; Top 25 Women
  9. Lawrence C. Franco – Business/Corporate
  10. Dan D. Kohane – Insurance Coverage; Top 50
  11. Elizabeth M. Midgley – Personal Injury Medical Malpractice: Defense
  12. Mark S. Nemeth – Civil Litigation: Defense
  13. Steven E. Peiper – Insurance Coverage
  14. Michael F. Perley – Personal Injury General: Defense; Top 10, Ranked 2nd.  
  15. V. Christopher Potenza – Personal Injury Products: Defense; Top 50
  16. Edward C. Robinson – Estate & Probate
  17. Lawrence M. Ross – Health Care
  18. Andrea Schillaci – Business Litigation; Top 50; Top 25 Women
  19. Scott D. Storm – Insurance Coverage
  20. Amber E. Storr – Business Litigation
  21. Timothy P. Welch – Construction Litigation
  22. Agnieszka A. Wilewicz – Insurance Coverage
  23. Kevin J. Zanner – Business/Corporate

The following Hurwitz Fine lawyers were included on this year’s Upstate New York Rising Stars list:

  1. Brian D. Barnas – Insurance Coverage
  2. Robert J. Caggiano – Personal Injury General: Defense
  3. Alexis M. Florczak – Business/Corporate
  4. Scott D. Kagan – Civil Litigation: Defense                  
  5. Ryan P. Maxwell – Insurance Coverage
  6. Anastasia M. McCarthy – General Litigation
  7. Maxwell C. Radley – Business/Corporate
  8. Patricia A. Rauh – Estate & Probate
  9. Brian M. Webb – Personal Injury: Defense


The Rising Stars list recognizes no more than 2.5% of attorneys in each state. To be eligible for inclusion in Rising Stars, a candidate must be either 40 years old or younger, or in practice for 10 years or less.

Super Lawyers, part of Thomson Reuters, is a research-driven, peer influenced rating service of outstanding lawyers who have attained a high degree of peer recognition and professional achievement. Attorneys are selected from more than 70 practice areas and all firm sizes, assuring a credible and relevant annual list.

The annual selections are made using a patented multiphase process that includes:

  • Peer nominations
  • Independent research by Super Lawyers
  • Evaluations from a highly credentialed panel of attorneys 

The objective of Super Lawyers is to create a credible, comprehensive, and diverse listing of exceptional attorneys to be used as a resource for both referring attorneys and consumers seeking legal counsel.

The Super Lawyers lists are published nationwide in Super Lawyers Magazines and in leading city and regional magazines and newspapers across the country, as well as the Upstate New York Super Lawyers Digital Magazine.


Training and More Training:
Schedule your in-house training for 2023.  Need a topic?  Here are 160 or so coverage topics from which to choose.


Need a mediator?

Coverage mediation is a thing!  Subject matter expertise may be useful.

Hey coverage lawyers.  Hey professionals. Have you and a friend, adversary, or lawyer for whom who have respect reached a stalemate on a coverage dispute?  Look, we know each other.  We know that.  We don’t want to litigate every coverage disagreement.  Why?   Because the position we oppose today may be the one we advocate tomorrow.  Face it.  We all understand that.

Let me help mediate your disagreement to see if there is some mutual agreement, we can reach that will not box us into a corner. Reach out to me.  I will be pleased to mediate your dispute.

My partners, Mike Perley and Ann Evanko, are also available to help resolve other challenges.

You don’t want adverse precedent that will bite you next time you might have a slightly different view on coverage issues. You don’t want to spend tens of thousands of dollars to litigate a coverage issue before a motion judge or appellate justice that knows as much about insurance coverage as you do about nuclear physics.  For those in the Western District of New York, I am certified by the Court and on the WDNY Mediation Panel as are Mike and Ann.

Try mediation.



We have other firm newsletters to which you can subscribe by simply letting the editor (or me) know, including a new publication, which was created to advise on business and employment law questions:

  • 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:  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.
  • Medical & Nursing Home Liability Pointers.  Medical & Nursing Home Liability Pointers provides the latest news, developments, and analysis of recent court decisions impacting the medical and long-term care communities. Contact Chris Potenza at [email protected] to subscribe.


Peiper on Property (and Potpourri):

Enjoy your weekend.


Steven E. Peiper

[email protected]


President’s Paid, the World is At Peace – 100 Years Ago:

The Buffalo News

Buffalo, New York

01 Sep 1923

President Gets $5833 Check on First Pay Day

          WASHINGTON, Sept. 1.—An invitation to “come often” was extended by President Coolidge to Miss Katherine shea, employe of the treasury disbursing office, today when she handed the Chief Executive a warrant for $5833.33, the first payment of salary received by Mr. Coolidge as President.  The total of the check represented the salary of the President dating from August 3, the day he took the oath of office.


Wilewicz’ Wide-World of Coverage:    

Planes, trains, and tunnels. See you in September!

Until next time.


Agnes A. Wilewicz

[email protected]


Not So Grand Theft Auto – 100 Years Ago:

Buffalo Courier

Buffalo, New York

01 Sep 1923


          Charles Froelick, No. 249 Pine street, was dismissed from the charge of grand larceny in stealing a touring car, in city court yesterday after the complainant, Isadore Newman, No. 19 Superior street, admitted that the car was worth less than $25 and the testimony left a doubt as to Froelick’s guilt in the matter.

          Froelick declared that on the night of August 28 he was sitting on his porch with his wife when four negroes in a car came along and represented to him that they had had an accident, could not make the car run well, and wanted to sell it.

          “They asked me $10 for the car,” said Froelick.

          Froelick offered to buy the car and drove it away with the four negroes occupying the rear seat.  They were arrested at the corner of Genesee and Sycamore street by Henry F. Pfaff No. 9 Walden avenue, who apprehended them when some passersby yelled, “Stop those fellows.”  Newman claimed the car as his property.


Barnas on Bad Faith:

Hello again:

Unfortunately, the Hurwitz Fine softball team suffered another first round playoff defeat.  We just couldn’t make the big defensive plays or get the key hits when it counted.  I am still waiting for my end of season meeting with the Board to determine if I will be back as skipper next year.  Our fans are starting to get frustrated with these premature playoff exits.

Undeterred, we move straight from Hurwitz Fine softball season to Hurwitz Fine fantasy football season.  Our draft is this Friday at our version of Radio City Music Hall: the Peiper residence.  My team has two straight championship appearances, but we are still looking for that elusive first place trophy.  Hopefully this is the year.

This week I have a bad faith case from the Eleventh Circuit that applies Georgia law.  The insured sent a demand letter under O.C.G.A. § 33-4-6 and requested that payment of a life insurance claim be made within sixty days.  However, at the time the demand was sent, the insurer had an expert opinion that said the decedent’s death was not covered under the policy.  A subsequent report obtained by the insurer determined that it was a covered death, and the claim was paid.  The Eleventh Circuit granted summary judgment to the insurer, finding that the decision not to pay the claim within the sixty-day demand window was not in bad faith, which would have permitted the insured to recover statutory penalties.



Brian D. Barnas

[email protected]


KKK Under Attack in Texas – 100 Years Ago:

The Buffalo Commercial

Buffalo, New York

01 Sep 1923



          TULSA, Okla., Aug. 1, (A.P.)—Martial law in its harshest form, struck dawn on Tulsa County today to stamp out mob activities and bring to justice those responsible for numerous floggings during the last two years.  Under a proclamation issued by Gov. Walton all civil agencies are superseded by the military and the right to the writ of habeas corpus is suspended.

          Additional troops arrived this morning to complete the occupation of the county, part of which has been under military rule since August 14.  It was understood Adjt., Gen. B. H. Markham, designated by Gov. Walton as military commander, would place civil courts under military supervision and take over the sheriff’s office and the Tulsa police department.

          Arms may be borne only by those commissioned by Adjt. Gen. Markham and all others are directed to surrender arms and ammunition in their possession.  Alleged opposition on the part of civil officials and certain citizens to the military investigation which Adjt. Gen. Markham has been conducting into flogging cases for more than two weeks brought today’s stern measures. 

          In a sweeping indictment of civil authorities, Gov. Walton, in his proclamation charged that they were in secret sympathy with those responsible for mob activities and had refused to restrain, investigate or bring to justice the guilty parties.  Lawless elements had usurped the civil agencies, including the courts.  One result of the Adjutant General’s inquiry has been the conviction of four floggers, all admitted members of the Ku Klux Klan.


Lee’s Connecticut Chronicles:

Dear Nutmeg Newsies:

Two feet firmly under four tires recently, as we delivered three 20-somethings back to college this past weekend. One to Storrs (UConn), one to Manhattan (Marymount Manhattan College), and one to New London (Connecticut College). Go Huskies, Griffins, and Camels! As Gen. Bradley once said, “Amateurs talk strategy, professionals talk logistics.” This was a huge effort of management and, most importantly, lifting with your legs. We celebrated with victory lobster rolls on the water before heading home to a suddenly empty house.

As we head into the fall and winter months, keep in mind that COVID-19 is now “just” the number three cause of death in the U.S., trailing only heart disease and cancer. So, please keep keeping safe.



Lee S. Siegel

[email protected]


It’s All in the Counting – 100 Years Ago:

Brooklyn Life

Brooklyn, New York

01 Sep 1923


New York’s New Game


          The following is an excerpt from the Cleveland Plain Dealer showing us what we enjoy in the metropolis:


Insurance Agent—Pardon me madam, but what is your age?

Miss Antique—I have seen 23 summers.

Insurance Agent—Yes, of course, But how many times have you seen them? —Seattle Post-Intelligencer.


Kyle's Noteworthy No-Fault:

Dear readers,

This week’s case involves a proceeding pursuant to CPLR 7511, in which the petitioner, Fill RX NY, Inc., as assignee of Sheila Molina, sought to vacate the award of a master arbitrator, affirming a American Arbitration Association (AAA) arbitration award that had denied its claim for first-party no-fault benefits to reimburse it for drugs and pharmaceutical products that it had furnished to Molina in connection with an automobile accident.



Kyle A. Ruffner
[email protected]


An Educated Citizenry – 100 Years Ago:

The Evening Times

Sayre, Pennsylvania

01 Sep 1923

What of Tomorrow’s Citizens?

The boy of today is the citizen of tomorrow.  His value as a citizen depends to a great degree on the training he receives now.  Education is training.  A boy with a deficient education will lack in training.  He may be a liability rather than an asset.

Less than one per cent. of American men have been college graduates, yet this one per cent. has furnished

          55 per cent. of the Presidents of the United States

          54 per cent. of the Vice-Presidents

          62 per cent. of the Secretaries of State.

          67 per cent. of the Attorney Generals

          69 per cent. of the Supreme Court Justices.

Of 150,000 persons, it has been found that

          Without a grammar school education only one wins distinction.

          With a grammar school education, 4 become distinguished.

          With a high school education, 87 reach distinction, and

                    With a college education, 800 become distinguished! Government statistics show that in 40 years after graduation, high school students earn on an average, $20,000 more than uneducated laborers in the same length of time.  A high school education requires 2160 school days, or twelve years of 180 days each.  If 2160 school days means a gain of $20,000 in earning capacity, each day has a money value of $9.26.


PARENTS OF SAYRE—Give your boys a chance!  Let them complete the education which will mean a more useful, satisfying lift to them.

BOYS OF SAYRE—Keep at it!  You have the opportunity to get an education.  Make the most of it so that you can make the most of yourself!





R. F. PAGE, President                                              LEON B. SHEDDEN, Cashier.


Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

I have joined the Board of Directors for my son’s little league because, well, I guess that’s what you do when your kids are going to spend the foreseeable future on the diamonds. It is a glimpse into our future and a bit of a peak behind the curtain. Have you served a similar role? Feel free to shoot me an email and let me know what I should expect in the coming months and years. Any tips, tricks, and tools of the trade are appreciated—I’d certainly like to avoid some of the trip wires and turbulence that come with the territory if I can help it.

This edition, I have a Hurwitz Fine “special”, and kudos to Brian Barnas, who successfully obtained judicial verification of our client’s rescission and outmaneuvered a claimed waiver of the remedy. Well done.

Until next time,



Ryan P. Maxwell

[email protected]


Something Special About Late Summer Women? – 100 Years Ago:

The Morning Sun

Yuma, Arizona

01 Sep 1923

WANTED—Lady born between August 1st and September 23rd and not over 33.  Send full particulars with a photo.  Object matrimony.  Address all communications to H. H. H., Care of the Morning Sun.

Yuma, Arizona.                                                                        Sept. 1


Rauh’s Ramblings:

On parental leave.



Patricia A. Rauh

[email protected]


Lipstick v. Saloon – 100 Years Ago:

The Buffalo Times

Buffalo, New York

01 Sep 1923


Woman Preacher Holds Out Hope for Young Folk.

          CHICAGO, Sept. 1. —The era of the lipstick is not nearly so depraved, as was the era of the open saloon, the Rev. Lida M. Herrick of London, Neb., told the International Association of Women Preachers at their convention here yesterday.

          The young people of the present are better than they ever were in the past, asserted Miss Herrick, and all the talk about the evils of flapperism is doing more harm than good.

          “Boys and girls are not going to perdition,” she said.

          “But the best way to send them there is to keep up all this talk about the evils of the younger generation.  The girls nowadays are better than their mothers were, and the boys are better than their fathers.  They do not get into so much mischief, because they have more to think about.”

          Dr. Lee Anna Starr, Bellevue, Pa., first woman graduate of the United Presbyterian Theological Seminary, told about her difficulties in breaking down the barriers of prejudice against her sex in that institution.

          No one ever doubted that women’s tongue was as clever as man’s so why not use it to serve the Lord as well as the devil,” the Rev. Ella L. Kroft of Indianapolis, said in an address.


Storm’s SIU:

Hi Team:

Three interesting cases for you this week:

  • Been Prepared by a Party or Their Representative in Anticipation of Litigation. Conversely, Protection Does Not Exist for Documents that are Prepared in the Ordinary Course of Business or That Would Have Been Created in Essentially Similar Form Irrespective of the Litigation.
  • Bad Faith Statute Does Not Extend to an Insurer's Conduct During Litigation While Acting as a Legal Adversary.  A Distinction Exists Between Conduct as a Legal Adversary and Conduct as an Insurer.  Bad Faith Claim was also Dismissed Due to the Two Year Statute of Limitations.  Acts of Bad Faith that Relate to the Initial Denial of Coverage are not Entitled to a Separate Statute of Limitations, Continuing Coverage Denials Relate to the Initial Denial.
  • An Exception to the 30-Day Preclusion Rule Exists Where the Ground for Denying the Claim is a Lack of Coverage in the First Instance.  But the Denial of a No-Fault Claim on the Ground That the Policyholder Made Material Misrepresentations in Obtaining the Policy Does Not Come Within this Preclusion Exception.

Like you probably are, I’m writing this while I watch the Dodgers cream the D-Backs.  I can’t believe summer is almost over.  Time flies by when you’re having fun! 

Talk to you again in two weeks.



Scott D. Storm

[email protected]


Jailed Bride – 100 Years Ago:

The Buffalo Enquirer

Buffalo, New York

01 Sep 1923

Jail No Place for a Honeymoon,

Bride Says

(By the International News Service.)


          Cleveland, O., Sep. 1. —A solitary picture of woe after the fourth day of her honeymoon, Mrs. Kathleen Pau, eighteen-year-old bride, tearfully declared that “the county jail was no place to spend a honeymoon!”

          Mr. Paul’s honeymoon abruptly hit a snag when, after she had declared she was twenty-one years old at the marriage bureau and married Joseph Paul, nineteen years old, in the face of parental opposition, she was placed under arrest on a charge of perjury, at her father's instigation.

          Meanwhile the youthful Joseph scurried around to raise the $500 bail to liberate his bride, pending grand jury action on the charge.

          The whole trouble arose from law passed by the last session of the state legislature and recently put into effect, which requires a prospective bride to be twenty-one years old or have the consent of her parents.


Fleming’s Finest:

Hi Coverage Pointers subscribers:

I recently decided to take up crochet as a relaxing hobby. Because I knit, I was feeling bold and got a more advanced beginner’s kit. As a result, the crocheting is having the opposite of the intended effect, so this may be my first and last crochet project.

This week’s case from the Bluegrass state looks at whether medical service providers must submit their billings within forty-five days of treatment under KRS. 342.020(4) regardless of whether a determination of liability has been made.



Katherine A. Fleming

[email protected]


Oh My – 32 MPH – 100 Years Ago:

Dunkirk Evening Observer

Dunkirk, New York

01 Sep 1923





Lester Gross Pays $25 for Too

Great Hurry in Fredonia

Business Section.


          Lester Gross of Buffalo paid a fine of $25 for reckless driving in Judge L. G. Monroe’s Court in Fredonia Friday.  Gross was arrested by Officer Hart who alleged that the Buffalo man was driving 32 miles an hour in the business section.

          H. R. Fenn of Pittsburgh was also arrested by Officer Hart for reckless driving in passing a streetcar while discharging passengers left a deposit of $10.


Gestwick’s Greatest:

Dear Readers:

It’s that time of year again—fantasy football. At the firm, we have quite a few fantasy football lovers—so many, in fact, that we have not one, not two, but THREE fantasy football leagues. My colleague, Brian Barnas, heads the firm’s “Premier Hurwitz Football League,” while I run the firm’s “Tier II” and “Tier III” Fantasy Football Leagues. Oh, and I run one for each side of my family, too. I should’ve been a bookie.

This week, I have a nice case for your reading pleasure. The two questions are whether a commercial auto carrier waived its right to rely on the defense that the accident did not trigger the policy’s insuring agreement. The court answered “no.” I agree with this but encourage the inclusion of that defense in the initial disclaimer anyway, to avoid the question altogether. The second question was whether the use or operation of the automobile was the true cause of the claimant’s injuries. Holding in the negative, the court reasoned that there were no allegations in the underlying complaint that the vehicle was used negligently, but only that the rebar upon which the claimant stepped, causing his fall, was negligently maintained.

That’s it for two weeks. I’ll let you know how all my drafts go next time around. Good luck in yours, for those who partake.



Evan D. Gestwick

[email protected]


A Baby as a Prize? – 100 Years Ago:

The Herald Statesman

Yonkers, New York

01 Sep 1923



Son of Poor Parents Will Go to One

Who Guesses Gate Figures at Kingston

Exposition Soon To Be Held


          Kingston, N. Y., Aug. 31.—A real, live baby boy, who isn’t old enough to know anything about the business, is going to be put up as a prize tomorrow and the man or woman who wins him will have him for life, or at least until he grows up and gets a right to thank for himself.

          The baby prize was a feature determined upon the managers of the Kinston fair, which has been in progress for a week and comes to a close tomorrow afternoon.  It was a good-sized fair, in a tent on one of the lots on the border of the city, with big booths and displays of all sorts. 

          The Chamber of Commerce and the leading businessmen of Kingston are in charge of the fair and their executive committee decided that it would be a winning stunt to give away a live baby, just like the old song, only there was to be no half-pound of tea to accompany the baby.

          Up to yesterday the baby had not been put on exhibition, but the members of the committee who saw the youngster said everything was in his favor, including a splendidly cheerful disposition, good looks and a desire to put his best foot forward.  The child is ready, the members of the committee say, for the bargain which has been arranged for him.  He is a baby whose parents must put him out for adoption and the committee is hoping, now that the awarding is so near, that some real warm-hearted people will get him.

          The winner will get the baby for guessing the nearest to the figures for the total week’s attendance at the fair.  The competition is open and all that anyone has to do to bid for the baby is to write down the number representing an estimate of the number of tickets sold for the fair and the attached name and address.  These will be opened at the close of the fair and the winner will be announced.

          Some people have become indignant over the offer, but the committee insists that the baby is a “dead game sport” and they don’t intend to see anyone get him who is not just the property person. 

Editor’s note:  I had to track down the postscript to that story, which I did.  See the follow up, below.


On the Road with O’Shea:

Hey Readers,

A word to the wise, if you get a pair of “Newfies” be prepared when they blow their coats at the same time. Currently, I have a “small” brown bear who is shedding more hair than that receding from my head. At least, now I may have a source to have a nice, natural looking toupee made, if there is such a thing.

This week I have two cases from the Second Department concerning “all reasonable” efforts to ascertain the identity of owners and operators involved in hit and run accidents. Let’s just say the trial courts erred in their decisions on the issue.

Until Next Time,



Ryan P. O’Shea
[email protected]


Oh, THAT Kind of Baby – 100 Years Ago:

Poughkeepsie Eagle-News

Poughkeepsie, New York

01 Sep 1923

“Live Baby” Story Goes Around World

Kingston Fair Offer Travels To Paris – “Child” Proved To Be a Pig

          When the Kingston Exposition several weeks ago announced that a “live baby” would be raffled off, a story started that has gone around a large part of the world.  It was not until the Exposition was closing that the public learned the “live baby” was a “live baby pig”, but a story which reached the Paris edition of the New York Herald described the amazement of mothers that a “baby boy” should be offered.

          A clipping in a current issue of the Ellenville Journal shows the echo of the advertising stunt of the Exposition.  The Journal received a card from Mrs. Charles J. Bayley, who has been visiting at Switzerland.  While at Switzerland Mrs. Bayley on Sept. 2 saw the following in the Parties edition of the New York Herald.

          “Kingston, N. Y., Saturday—This city has come into the public eye by offering a live baby boy as a prize to the winner of the lottery being conducted during the town fair here.  The baby is the child of a poor family which is unable to support it and has offered it to the town.  It will be awarded to the family guessing the number of people admitted to the fair, on condition that the family can give ample proof of its ability to support the child.  The mothers of Kingston are up in arms against the unprecedented procedure.”

          The Exposition management now recalls, however, it was very careful never to use the word “boy”, although the “poor family” was frequently mentioned.


Louttit’s Legislative and Regulatory Roundup:

Dear Readers,

I hope everyone is continuing to enjoy their summer. Today’s column notes a law set into effect on August 1, 2023, that automatically provides Spousal Liability coverage to all insureds (married or not) spousal liability coverage. With this coverage, if the covered spouse is the driver during an accident where they are responsible, or any other kind of accident where the party at fault has no insurance, or insufficient insurance, the spouse is entitled to the limits of the liability coverage.  Detractors of the law assert that roughly half of New York State’s driving population would be mandated coverage which it would not benefit. However, an insured can affirmatively opt out of this coverage. We will keep an eye on this law and its effect on the insurance industry and New York’s insureds.



Robert P. Louttit

[email protected]


Something’s Fishy on the Kansas Dockets – 100 Years Ago:

The Kansas City Times

Kansas City, Missouri

01 Sep 1923





Hearing in Habeas Corpus Action Precipitates Bewildering Legal Squabble—Physician is Free Temporarily.

          “I never have seen such vicious actions in a lawsuit in my life.”

          That was the declaration late yesterday of Judge E. E. Porterfield, who heard the evidence on the application of Dr. L. A. Marty for a writ of habeas corpus to prevent his return to Spearville, Kas., where he is charged with kidnapping his 5-year-old daughter, Margaret, from his divorced wife, Mrs. Olive B. Marty, a nurse.

          The physician’s fight against extradition started Thursday after Dr. Marty had given himself up to the police.  Attorneys for both Dr. Marty and Mrs. Marty took the stand yesterday.


          Judge Porterfield announced he would give his decision in the case after C. A. Vassar, chief of police, testifies.  The hearing will be resumed at 10:30 o’clock this morning.

          Detective Whistler testified that immediately after Doctor Marty was arrested, I. M. Lee, another attorney for Marty, appeared with a forthwith writ to produce, Doctor Marty in court at 4 o’clock.


At that time Doctor Marty was granted a temporary writ of habeas corpus.

The hearing was set for 11 o’clock yesterday morning.  When this hearing came up yesterday, attorneys for Doctor Marty filed an amended application for a writ of habeas corpus, setting forth that the governor’s warrant on which Doctor Marty was held was faulty in that the governor was not in Jefferson City the day it was issued.


          The hearing was continued until 1 o’clock in the afternoon, when Frank Warren, attorney for Mrs. Marty, made a motion that the prisoner be discharged as Dr. Marty was not actually under arrest on the governor’s warrant and that the warrant never had been served on Dr. Marty.  Warren declared that when Dr. Marty was arrested, A. L. Jefferis, patrolman, and a deputy sheriff from Kansas had the warrant at Platte City, Mo., where they had gone in search of Dr. Marty.

          Dr. Marty’s attorneys insisted he actually was under arrest on the warrant and that he had been in jail twenty-four hours.


          The police blotter was taken to the courtroom.  Beside dr. Marty’s name the words, “held on governor’s warrant,” had been erased and the words, “held on writ,” substituted.  Ault testified the policy record had been changed since 12 o’clock yesterday, as he had viewed it at that time.

          At this point Judge Porterfield interrupted with the declaration about the vicious scheme to preserve the warrant for Dr. Marty’s arrest. 

          “The changing of the charge on the policy blotter and other manipulations were worked up to commit the unlawful and malicious act of preserving the warrant,” he declared.  “Dr. Marty went to Kansas with a court order.  So far as I can see, he did not commit a crime.”


Rob Reaches the Threshold: 

As the summer winds down, we now get to one of the best times of the year – fantasy football draft season. I (currently) am in three leagues, with consecutive drafts coming all in the next week. May the draft gods be ever in your favor.

The justices of the Appellate Division have been hard at work prepping for their respective drafts, because yet again there is a lack of any groundbreaking or interesting cases on the issue of Serious Injury Threshold.

We will try again next time. See you all in two weeks. 



Robert J. Caggiano

[email protected]


Fire and Tornado Insurance Policy for a Buck – 100 Years Ago:

Muncie Evening Press

Muncie, Indiana

01 Sep 1923


FIRE!            FIRE!            FIRE!



Ten Days More to Get a $1000 Fire and Tornado Policy For $1.00

After Wednesday this policy will cost you $1.25.  The special introductory price of $1.00 was offered merely to get a number of polices out of the hands of the public to help advertise this wonderful proposition.  These policies are sold upon a

Four Day Satisfaction Plan

Upon receipt of it, if you are not satisfied, you can return it to The Press within four days and your money will be refunded.


North of the Border:

When you read this, I will be in Melbourne, Australia, completing the first day of the AIDA 2023 World Congress that is taking place August 30 - September 1, 2023. I will be there in my capacity as President of Canadian Defence Lawyers which is applying to be a national section within AIDA, the International Insurance Law Association. I will also be speaking on September 1, 2023, at a plenary section dealing with ESG regulation in North America … the first time to anyone’s knowledge that a Canadian has spoken at an AIDA conference. Who knew that my career would take me to the other side of the world?

My column this week discusses whether an insurance company is vicariously liable for damages at common law and under privacy legislation when one of its claims adjusters who had access to policyholder personal information sells that information to a criminal gang member.



Heather A. Sanderson

Sanderson Law

Calgary, Alberta

[email protected]


Headlines from this week’s issue:

Dan D. Kohane
[email protected]

  • Jury Determination in Underlying Action on Liability Collaterally Estops Relitigation of Liability in Subsequent SUM Claim
  • If You Want to Reserve a Claim Against a Carrier, Say So.  Where Plaintiff Released Tenant and its Carriers from Liability Resulting from a Fall in the Building, but Did Not Preserve Rights Against the Same Insurers for Claims Against Landlord, Direct Action Against Carrier Dismissed When Plaintiff Seeks to Enforce Judgment Against Landlord


Steven E. Peiper

  • Court Dismisses Negligence Claim Against Driver Who was Stopped at Red Light


Agnes A. Wilewicz

[email protected]

  • See you in September.


Brian D. Barnas

[email protected]

  • Insurer’s Lack of Payment of Claim During 60 Day Demand Period Was Not Bad Faith Per Se under Georgia Law


Lee S. Siegel

[email protected]

  • Forced-Placed Insurance Is Not a Defense in a Failure to Procure Claim


Kyle A. Ruffner
[email protected]

  • Court Upholds Master Arbitrator Award, Denying Petitioners Claim for No Fault Benefits for Reimbursement of Pharmaceutical


Ryan P. Maxwell

[email protected]

  • Insurer’s Ground for Rescission Was Not Waived Absent Requirement to Verify or Investigate Information Provided by the Insured


Patricia A. Rauh

[email protected]

  • On Parental Leave


Scott D. Storm

[email protected]

  • Bad Faith Statute Does Not Extend to an Insurer's Conduct During Litigation While Acting as a Legal Adversary.  A Distinction Exists Between Conduct as a Legal Adversary and Conduct as an Insurer.  Bad Faith Claim Also Dismissed Due to the Two-Year Statute of Limitations.  Acts of Bad Faith that Relate to the Initial Denial of Coverage are not Entitled to a Separate Statute of Limitations, Continuing Coverage Denials Relate to the Initial Denial.
  • An Exception to the 30-Day Preclusion Rule Exists Where the Ground for Denying the Claim is a Lack of Coverage in the First Instance.  But the Denial of a No-Fault Claim on the Ground that the Policyholder Made Material Misrepresentations in Obtaining the Policy Does Not Come Within This Preclusion Exception.
  • Letter Providing Coverage Counsel's Legal Opinion Protected from Disclosure by the Attorney-Client Privilege.  The Question is Whether Counsel is Acting as an Investigator of a Claim (the Job of a Claims Adjuster) or Providing Legal Advice to a Client. For the Work Product Doctrine to Apply, the Material at Issue Must Have Been Prepared by a Party or Their Representative in Anticipation of Litigation. Conversely, Protection Does Not Exist for Documents that are Prepared in the Ordinary Course of Business or That Would Have Been Created in Essentially Similar Form Irrespective of the Litigation.


Katherine A. Fleming

[email protected]

  • Under Kentucky Law, Medical Providers Must Not Delay in Tendering Billings Even Where There Has Not Yet Been a Determination of Liability.


Evan D. Gestwick

[email protected]

  • Bodily Injury Cannot be Said to “Arise Out of Ownership, Maintenance, or Use of a Covered Auto” Absent a Causal Relationship Between the Auto and the Injury


ON the ROAD with O’SHEA
Ryan P. O’Shea

[email protected]

  • Trial Court Failure to Hold a Hearing on Identity of Purported Hit and Run Results in Finding of Issue of Fact
  • Incorrect Information in Police Report and No DMV Records Constitutes “All Reasonable Efforts” to Commence an Action Against MVAIC


Robert P. Louttit

[email protected]

  • New York Auto Rates Increased this Month Because of Spousal Liability Coverage


Robert J. Caggiano

[email protected]

  • No new cases.


Heather A. Sanderson
Sanderson Law, Calgary, Alberta

[email protected]

  • By Providing a Former Employee with Opportunity to Access Policyholder Information, an Insurance Company is Vicariously Liable for the Release of that Identifying Information which that Former Employee Sold to a Vancouver Criminal Gang Member


That’s all folks.  See you in two.

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

Evan D. Gestwick
[email protected]

Dan D. Kohane, Chair [email protected]
Steven E. Peiper, Co-Chair
[email protected]
Michael F. Perley
Agnieszka A. Wilewicz
Lee S. Siegel
Brian F. Mark
Scott D. Storm
Brian D. Barnas
Eric T. Boron
Robert P. Louttit
Ryan P. Maxwell
Patricia A. Rauh
Diane F. Bosse
Kyle A. Ruffner
Katherine A. Fleming
Evan D. Gestwick
Ryan P. O’Shea

Steven E. Peiper, Team Leader
[email protected]
Michael F. Perley
Scott D. Storm
Brian D. Barnas

Dan D. Kohane
[email protected]
Alice A. Trueman
Joshua M. Goldberg

Jody E. Briandi, Team Leader
[email protected]
Diane F. Bosse

Topical Index
Kohane’s Coverage Corner
Peiper on Property and Potpourri
Wilewicz’s Wide World of Coverage
Barnas on Bad Faith
Lee’s Connecticut Chronicles
Kyle’s Noteworthy No-Fault
Ryan’s Federal Reporter
Rauh’s Ramblings Storm’s SIU
Fleming’s Finest
Gestwick’s Greatest
On the Road with O’Shea
Loutit’s Legislative and Regulatory Roundup
Rob Reaches the Threshold
North of the Border



Dan D. Kohane

[email protected]

08/30/23         Giamundo v. Dunn 2nd 
Appellate Division, Second Department
Jury Determination in Underlying Action on Liability Collaterally Estops Relitigation of Liability in Subsequent SUM Claim

In December 2011, while operating a vehicle insured by State Farm, Maria Giamundo was involved in an accident and allegedly sustained serious injuries when her car collided with a car owned by the Robert Earl Dunn (“Dunn”) and driven by the Cleveland Dunn 2nd. Following the accident, Giamundo sought to collect on the supplementary uninsured/underinsured (“SUM”) coverage provided for in her automobile insurance policy.

The policy had been procured through the defendant Karen A. Sauter Insurance Agency, Inc. (“Agency”). State Farm denied Giamundo's claim on the ground that Dunn's vehicle was insured with bodily injury liability limits equal to or exceeding Giamundo's SUM coverage limits.

In or about 2012, Rose A. Smith-Dunn, who was a passenger in Dunn's vehicle at the time of the accident, commenced an action to recover damages for personal injuries against Giamundo, among others (hereinafter the personal injury action). Pursuant to Giamundo's insurance policy, State Farm retained counsel to defend Giamundo in the personal injury action.

In October 2012, Giamundo commenced this action against the Agency and State Farm. The second cause of action alleged that the defendants negligently procured and offered insufficient SUM coverage.

In January 2019, after a bifurcated jury trial in the personal injury action resulted in a verdict finding Giamundo to be 100% culpable for the accident, the defendants served an amended answer which added collateral estoppel as an affirmative defense. Giamundo served an amended complaint which asserted, inter alia, a third cause of action, alleging breach of contract against State Farm and the Agency.

Thereafter, the defendants moved, among other things, for summary judgment dismissing the amended complaint insofar as asserted against them on various grounds, including collateral estoppel arising out of the personal injury action. The defendants contended, inter alia, that the determination in the personal injury action that Giamundo was 100% culpable for the subject accident was decisive in this action because it established that Giamundo was ineligible to obtain SUM benefits in any amount in connection with the subject accident, and, in effect, would be unable to establish damages to support her negligence and breach of contract causes of action.

Giamundo opposed the motion, contending, among other things, that collateral estoppel should not apply because she lacked a full and fair opportunity to litigate in the prior action, as her attorneys in that action, who had been retained by State Farm, settled the matter before the damages trial, which prevented her from appealing the finding of liability.

The doctrine of collateral estoppel "precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity". First, there must be "an identity of issue which has necessarily been decided in the prior action and is decisive of the present action.” Second, the party to be precluded from relitigating an issue must have had a full and fair opportunity to contest the prior determination.

Here, the issue of Giamundo's culpability for the accident was determined in the personal injury action, and the identical issue is decisive with respect to Giamundo's second cause of action. A jury determined that Giamundo was 100% culpable for the subject accident, and her sole culpability for the accident precludes her from obtaining SUM benefits in any amount.


08/30/23         Rafailova v. Leading Insurance Group Insurance Co., Ltd
Appellate Division, Second Department
If You Want to Reserve a Claim Against a Carrier, Say So. Where Plaintiff Released Tenant and its Carriers from Liability Resulting from a Fall in the Building, but Did Not Preserve Rights Against the Same Insurers for Claims Against Landlord, Direct Action Against Carrier Dismissed When Plaintiff Seeks to Enforce Judgment Against Landlord

On June 16, 2012, the plaintiff allegedly sustained personal injuries when she fell in a building owned by 8610 Realty Corp. (“landlord”), and leased and occupied by GNL Pharmacy Corp (“tenant”). The plaintiff commenced an action against both. to recover damages for her personal injuries. The landlord never appeared or interposed an answer in that action, and by order dated August 12, 2013, the Supreme Court granted the plaintiff's motion for a default judgment against it. In 2015, in exchange for a payment of $150,000, the plaintiff signed a release discharging the tenant Leading Insurance Group Insurance Co., Ltd., Leading Insurance Services, Inc., other entities, and their "servants, successors, heirs, executors, administrators, and all other persons, firms, corporations, associations or partnerships, from" all past, present and future claims, demands, damages, actions, third-party actions, causes of action or suits at law or in equity, including claims for contribution and or indemnity, of whatever nature and particularly on account of all injuries, known, both to person and property, which have resulted or may in the future develop from" the plaintiff's fall on June 16, 2012, at the subject property.

Thereafter, the plaintiff sought judgment in her favor against the landlord based upon its failure to appear or interpose an answer in the personal injury action. In July 2018, after an inquest, the Supreme Court entered a judgment in favor of the plaintiff and against the landlord in the sum of $362,878 (hereinafter the judgment). The landlord. thereafter moved to vacate the order dated August 12, 2013, entered upon its default in appearing or interposing an answer, and the judgment, claiming that both the landlord and tenant had been insured under the same general liability policy by Leading Insurance Group Insurance Co., Ltd., and, due to law office error, the law firm assigned by that insurer to represent both insureds in the personal injury action had failed to interpose an answer on behalf of the landlord. The court denied the motion on the ground that the landlord had failed to demonstrate a reasonable excuse for its default in appearing or interposing an answer.

The plaintiff (now a judgment creditor) commenced a direct action against Leading Insurance Services, Inc., and KB Insurance Company, Ltd., (hereinafter together the defendants) among others, inter alia, pursuant to Insurance Law § 3420 to recover the amount of the unsatisfied judgment in her favor and against the landlord directly from the of 8610 Realty Corp.

Generally, a valid release constitutes a complete bar to an action on a claim which is the subject of the release. A release that is complete, clear, and unambiguous on its face must be enforced according to the plain meaning of its terms. Where the release is unambiguous, a court may not look to extrinsic evidence to determine the parties' intent.

Here, the release expressly discharged both Leading Insurance Services, Inc., as well as Leading Insurance Group Insurance Company, Ltd., from any liability for claims resulting from the June 16, 2012, accident. Contrary to the plaintiff's contention, the fact that the release is silent as to 8610 Realty Corp. and silent with regard to the plaintiff's ability to pursue remedies under Insurance Law § 3420 does not remove the instant action from the broad set of all past, present, and future claims against the insurers that are encompassed by the release. If the release was intended to exclude a certain type of claim or action, such as an action pursuant to Insurance Law § 3420, it could have been so provided.

Editor’s Note: As I read this decision, I was predicting that result. Plaintiff had taken a default judgment against the landlord, who failed to appear in the lawsuit. However, since the plaintiff has released the tenant and the insurer (the same insurer that insured the landlord), plaintiff turned judgment debtor could not reach the insurer to get additional policy proceeds. Of course, plaintiff can go after the landlord for other assets if any exists.


Steven E. Peiper

[email protected]

08/23/23         Henry v. City of New York
Appellate Division, Second Department
Court Dismisses Negligence Claim Against Driver Who Was Stopped at Red Light

Plaintiff allegedly sustained injury when she was involved in a multi-car collision at an intersection in Brooklyn. Apparently, defendant Venuza collided with a NYPD patrol car in the intersection, and the force of the collision then directed Venuza’s vehicle into two others that were stopped at the red light. Plaintiff was a passenger in one of the vehicles stopped at the intersection.

So, of course, the plaintiff filed suit not only against Ms. Venuza but also the NYPD. She also sought damages from the drivers of the two vehicles parked at the red light, including the vehicle in which she was riding as a passenger.

When both moved for summary judgment arguing that they were appropriately stopped and awaiting the light to change, the Supreme Court, Kings County found a question of fact and kept both defendants in the lawsuit. On appeal, the Second Department injected reason into this case and found, as a matter of law, the defendants had met their respective burdens by demonstrating that they, in fact, were not violating any traffic laws by simply abiding by the traffic signal. The claims against both were accordingly dismissed.


Agnes A. Wilewicz

[email protected]

See you in September.


Brian D. Barnas

[email protected]


08/28/23         Turner v. CMFG Life Insurance Company
United States Court of Appeals, Eleventh Circuit
Insurer’s Lack of Payment of Claim During 60 Day Demand Period Was Not Bad Faith Per Se under Georgia Law

Turner's wife passed away on November 22, 2019. Four months earlier, she had fallen and hit her head on the corner of her kitchen island, which led to her eventual death. At the time of her death, she was covered by two life insurance policies issued by CMFG, both listing her husband as the beneficiary. Both policies insured Turner against “accidental death,” defined as a death “resulting from an injury, and occurring within 1 year of the date of the accident causing the injury.”

CMFG paid Turner in full under both policies. However, there was a dispute regarding the timing. CMFG received Turner's initial claims forms and his wife's death certificate on April 14, 2020. CMFG's claims examiner reviewed Turner's file on May 14 and requested additional documentation the same day. On May 20, CMFG received 1,044 additional pages of medical records from Turner. On June 5, CMFG sent Turner's file to an outside nurse consultant for review, to determine whether Turner's wife's death was covered by the insurance policies. The nurse returned a report the same day, opining that Turner's wife's death was not caused by an accident, which would render Turner ineligible for any insurance payout.

CMFG did not immediately act on this recommendation. Instead, a claims examiner re-reviewed Turner's file for evidence of a qualifying accident. CMFG also attempted to contact the doctor who had certified Turner's wife's death, to no avail. On August 31, CMFG referred Turner's claims to a medical consulting firm for another opinion. Due to a technical error, Turner's claims were not actually submitted to the consulting firm until September 16, and the report was received one month later. It found that Turner's wife's death was caused by a qualifying accident: her fall and resulting head injury. That same day, CMFG's claims examiner recommended that Turner's claims be paid—Turner's payments were sent on October 30.

In the meantime, on July 17, Turner, frustrated with the pace at which CMFG was processing his claims, sent CMFG two demand letters, one for each policy. The letters cited O.C.G.A. § 33-4-6 and requested that payment be made within sixty days. That did not happen. Turner brought suit alleging that CMFG had exceeded the statutory period in bad faith, entitling him to statutory penalties.

Under § 33-4-6, an insurance company that fails to make a payment on a covered claim within sixty days faces a penalty only if its nonpayment was motivated by bad faith. The court found that Turner failed to raise a genuine dispute of material fact as to whether the claim was not timely paid in bad faith.

Turner argued that CMFG’s failure to respond to his demand letters within sixty days of receipt was evidence of bad faith. However, the record did not support Turner’s argument that CMFG ignored his letters. CMFG's notes indicated employees of CMFG received and responded to calls and emails from Turner and his attorney both before receipt of the letters and during the sixty-day period. Turner also cited no legal authority supporting an inference of bad faith from failure to respond to a demand letter.

The court concluded that having already commenced an investigation into Turner's claims well before receiving his demand letters—an investigation which continued through the entire sixty-day statutory period—CMFG's alleged failure to reply had no logical bearing on whether its nonpayment was conducted in bad faith.

In addition, it was undisputed that CMFG had an expert report indicating the claim was not payable at the time of the demand letter. Despite this, CMFG sought a second opinion. Accordingly, there was a disputed question of fact regarding the merits of the claim and a reasonable ground to contest payment, which precluded a finding of bad faith. The Eleventh Circuit also concluded that the district court properly refused to consider CMFG's alleged violations of the Georgia Unfair Claims Settlement Practices Act as evidence of bad faith.

Ultimately, Turner's position amounted to an argument that failure to pay a claim within the statutory period alone constitutes bad faith per se. The court found that this was an untenable reading of the statute, writing the requirement of bad faith out of the cause of action altogether, conflating it with the separate element of nonpayment. A bad faith refusal is a “frivolous and unfounded refusal” to pay—not merely a refusal for any reason at all.


Lee S. Siegel

[email protected]

08/15/23         Busch v. Gorbachevskiy
Superior Court of Connecticut, Stamford
Forced-Placed Insurance Is Not a Defense in a Failure to Procure Claim

In a lengthy analysis of the distinction between collateral source recoveries and the failure to mitigate, the trial court concluded that the plaintiff’s recovery from the lender’s forced-placed insurance is not an off-set against any potential recovery from the defendant.

Let’s put this in some context. The plaintiff is a homeowner, suing the defendant agent for the failure to obtain homeowner’s insurance. The plaintiff’s home suffered a catastrophic fire resulting in hundreds of thousands of dollars in damages. The plaintiff claims that it was not until after the fire that he became aware that there was no coverage in place. Fortuitously, the lender maintained a forced-insurance package that applied coverage retroactively, at the plaintiff’s expense and which named the plaintiff as an additional insured. The forced- insurance policy paid almost $6000,000 to repair the structure (although presumably not ALE or EE coverage).

The plaintiff is suing the defendant for failure to procure coverage. The defendant filed a motion in limine to include as trial evidence the forced-place insurance recovery. As the court summarized, the defendant advanced many theories why this is competent evidence, chiefly arguing that it should be a defense to the plaintiff’s claim. The plaintiff opposed, arguing that the recovery is a common law collateral source recovery which is not an off-set under the Connecticut tort reform statute. See CGS § 52-225a et seq.

The court held that the forced-place insurance recovery is not a defense to liability—it is not a mitigation of damages. “The court adheres to the bright-line ruling that damages were fixed as of the date of loss (fire) and that mitigation of damages only pertains to conduct of the plaintiffs after incurring the loss – the extent to which they did or could take reasonable measures to limit their losses. The lender's invocation of its right to obtain force-placed coverage, after the loss, does not come within the scope of mitigation of damages by the plaintiffs. The insurance benefits received by the plaintiffs, as a result of the force-placed coverage, are collateral source benefits, and are not properly subject to characterization as mitigation. Simplistically, the defendants seek to transform the passive receipt of a benefit into an act of mitigation.”

Instead, the court advised the defendants that they could file a post-verdict motion to have the court consider the potential, “if any, impact, of the insurance payments…”


Kyle A. Ruffner

[email protected]

08/24/23         Matter of Fill Rx. NY, Inc. v. LM Gen. Ins. Co.
Supreme Court, New York County
Court Upholds Master Arbitrator Award, Denying Petitioners Claim for No Fault Benefits for Reimbursement of Pharmaceutical Products

Petitioner Fill RX NY, Inc., as assignee of Sheila Molina, brought this action to vacate an award of a master arbitrator, which had affirmed an American Arbitration Association (AAA) arbitration award, denying the petitioners claim for no-fault benefits to reimburse the petitioner for drugs and pharmaceutical products furnished to Molina after an automobile accident. The petitioner requested that the court remit the matter to a different arbitrator for reconsideration or enter judgment in its favor and against the respondent in the sum of $4,151.53, along with interest at rate of 2% from the date that it submitted a demand to arbitrate until entry of judgment.

After Molina was injured in a motor vehicle accident with the respondent, the petitioner provided her with pharmaceutical products, totaling $4,151.53. Molina assigned the petitioner her claim to recover no-fault benefits, after which the petitioner made a claim upon the respondent for reimbursement of that sum. The respondent processed the claim and rejected it, asserting that the amount requested was not in accordance with applicable statutory and regulatory fee schedules, and that the limits of coverage under the policy already had been exhausted. The petitioner sought arbitration of the claim before the AAA, arguing that the respondent was not entitled to rely on the exhaustion defense because the subject invoice should have been paid before any of Molina’s other health- care claims that the respondent insurer received subsequent to the petitioner’s claim.

The lower arbitrator concluded that claims timely denied by an insurer do not hold a place in the priority-of-payment queue ahead of subsequently filed claims that were approved and paid by the insurer. The lower arbitrator therefore upheld the insurer’s exhaustion-of-benefits defense and found in favor of the respondent insurer, rejecting the petitioner’s claim for benefits. The petitioner sought review of the award before a master arbitrator. In a March 20, 2023, award, the master arbitrator affirmed the initial arbitration award, holding that the award could not reasonably be considered arbitrary, capricious, or incorrect as a matter of law. Therefore, the petitioner brought this proceeding pursuant to CPLR 7511.

The court explained that the grounds specified in CPLR 7511 for vacatur of an arbitration award are exclusive and it is a well-established rule that an arbitrator’s rulings, unlike a trial court’s, are largely unreviewable. An arbitration award may be vacated pursuant to CPLR 7511(b)(1)(iii) where an arbitrator exceeded his or her power, including where the award violates strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power. Where, as here, arbitration is compulsory (see Insurance Law § 5105), closer judicial scrutiny of the arbitrator’s determination is required under CPLR 7511(b) than that applicable to consensual arbitrations. To be upheld, an award in a compulsory arbitration proceeding must have evidentiary support and cannot be arbitrary and capricious.

The court concluded that the master arbitrator’s determination was not incorrect as a matter law. As the master arbitrator noted, there is a split in appellate authority on the issue of priority of claims in the face of the potential exhaustion of the limits of a no-fault insurance policy. The First Department has held that claims that are timely denied by an insurer do not hold a place in the priority-of- payment queue ahead of subsequently filed claims that were paid by the insurer, thus exhausting available coverage (see Harmonic Physical Therapy, P.C. v Praetorian Ins. Co., 47 Misc 3d 137[A]). The Second Department has held that fully verified claims are payable in the order they were received, and that there was no merit to an insurer’s contention that it need not pay the denied claim because its payment of subsequent claims had the effect of exhausting the available coverage (see Alleviation Med. Servs., P.C. v Allstate Ins. Co., 55 Misc 3d 44, 45 [App Term, 2d Dept, 2d, 11th, & 13th Jud Dists 2017], affd other grounds 191 AD3d 934 [2d Dept 2021]).

The court held that the rule articulated in Harmonic Physical Therapy expressly has been applied by courts on numerous occasions to permit insurers to invoke the exhaustion defense under circumstances identical to those presented in the instant matter. For example, courts have held that insurers are not precluded from paying other legitimate claims subsequent to the denial of another provider’s claim. See Allstate Fire & Cas. Ins. Co. v Branch Med., P.C., 2022 NY Slip Op 50277[U], *1, 2022 NY Misc LEXIS 1365, *2]. In addition, an insurer may reject a claim submitted by an injured party’s assignee for no-fault benefits where the insurer requested additional verification, by means of an examination under oath, but neither the injured party nor the assignee appeared for the examination. Verified claims are entitled to priority over any unverified claims.

Accordingly, the court held that the master arbitrator’s award was not contrary to law or arbitrary and capricious, and he therefore properly affirmed the lower arbitrator’s award. Therefore, the petition to vacate the master arbitrator’s award was denied.


Ryan P. Maxwell

[email protected]

08/29/23         Union Mutual Fire Ins. Co. v. OHR Makif LLC
Southern District of New York
Insurer’s Ground for Rescission was not Waived Absent Requirement to Verify or Investigate Information Provided by the Insured

In November 2017, OHR Makif LLC applied for a commercial insurance policy (the “Policy”) for premises located at 888 Home Street, Bronx, New York 10459 (the “Premises”) from Union Mutual Fire Insurance Company (“UMFI”). Using substantially the same application, OHR renewed its coverage again the following year.

UMFI issued OHR the Policy on November 29, 2017, and approved renewal of the Policy under the same terms the following year. Both applications provided that if certain “unacceptable risks” were on the Premises, UMFI would automatically be entitled to the “issuance of a Notice of Cancellation for Underwriting reasons” as an exercise of its right of recission.

The Underwriting Guidelines defined “unacceptable risk” to include any time an applicant responded “yes” to “any Preliminary Application Question............................... ”

However, in filling out the applications, OHR twice responded “No” to the following question: “Are there any outstanding HPD Class C violations of fire, safety, health, environmental, building or constructions codes at the proposed location? (Or similar violations for risk outside of NYC.)” Thereafter, OHR electronically signed the applications and certified that it had read and understood the provisions thereof and that all information therein was true. Had these questions been answered “No,” UMFI’s automated underwriting system would have rejected the risk and the Policy would not have been issued, let alone renewed.

In September 2018, Ramon Roman sued OHR for injuries allegedly suffered on premises controlled by OHR in early 2018. UMFI was notified and it assigned a defense to OHR in that action.

Isaac Nazar, the sole member of OHR, was deposed on February 6, 2020. Nazar testified that there were outstanding Class C violations on the Premises, and he knew of them at the time of application in 2017. Nazar said his knowledge was based on public New York City Building Department records, which he saw on the internet. By correspondence dated June 9, 2020, UMFI disclaimed coverage by reference to Nazar's statements, returned the Policy premium to OHR, and served notice that the insurance contract had been rescinded, voiding the policy ab initio.

This declaratory judgment action ensued in February 2022. Following discovery, UMFI moved for summary judgment, seeking a declaration that its rescission was valid, and that coverage was unavailable. The SDNY agreed.


“UMFI produced detailed and unambiguous Underwriting Guidelines (which OHR does not contest); those Guidelines are substantiated; and [UMFI’s underwriting] affidavit explaining the code-based reasons for materiality offers even stronger evidence of materiality than in other cases, where courts were not confronted with the automation interface employed [on behalf of UMFI]. This uncontradicted evidence establishes beyond genuine dispute that it would have been impossible to issue OHR the same policy had it answered ‘Yes.’”

In response, OHR was unable to create an ambiguity as to the definition of “Class C violations” in the application. This was first because when an insured party challenges rescission by an insurer, it must actually suggest “more than one meaning” of the relevant term and explain why its conduct reasonably falls within it. However, OHR never actually identified or even plausibly alleged another interpretation of “UHD Class C Violations.” Additionally, under New York law, ambiguity is judged from the standpoint of the reasonable insured party, including any familiarity with trade and customary usage like that used in the commercial real estate industry. And “outstanding Class C Violations” is well known in the commercial real estate industry of New York City and represents a customary usage, referring to violations of Class C as determined by New York City regulators.

Although the SDNY rejected various arguments asserted by OHR outright, its discussion of OHR’s waiver argument is worth a look. OHR argued that UMFI “waived any right it may have had to rescind [OHR's] insurance policy because the information was a matter of public record and it learned of the purported misrepresentations during [an] inspection of the property more than a year and a half before” this lawsuit. In rejecting this argument, the SDNY noted that “it is the burden of the insured to make accurate representations on an application for insurance such that ‘[a]n insurer is not required to verify or investigate information provided by the insured.’” And “[w]hile true that in some instances an insurer would be deemed having waived recission for not correcting an error in an application, those cases in the New York courts concern the special situation when there is sufficient evidence that the insurer had actual knowledge of the truth.” Here, “[t]here is no evidence … suggesting actual knowledge on the part of, or actual notice to, UMFI.”

Thus, it was “irrelevant how long UMFI took to initiate the litigation because New York law is clear that an insurers’ alleged negligence in not making further inquiry is not the equivalent of knowledge such that for UMFI to have waived its recission right for the Policy (which would not have been issued but for OHR's material misrepresentations)  something  more—something  tantamount  to  notice—is

required.” UMFI acted promptly upon learning of Nazar's testimony to retain investigators and ascertain the truth. Accordingly, UMFI did not waive its right to rescind in the event of a material misrepresentation by OHR in is applications for the Policy.

Maxwell’s Minute Entry: Kudos to Hurwitz Fine’s own Brian Barnas on this win! Now, if the softball team could only convince him to hit the batting cages in the off-season, he might very well be unstoppable. Time will tell…


Patricia A. Rauh

[email protected]

On parental leave.


Scott D. Storm

[email protected]


07/31/23  Loann T. Phan-Kramer, et al. v. American States Ins. Co.
United States District Court, E.D. Pennsylvania.
Bad Faith Statute Does Not Extend to an Insurer's Conduct During Litigation While Acting as a Legal Adversary. A Distinction Exists Between Conduct as a Legal Adversary and Conduct as an Insurer. Bad Faith Claim Also Dismissed Due to the Two-Year Statute of Limitations. Acts of Bad Faith that Relate to the Initial Denial of Coverage are not Entitled to a Separate Statute of Limitations, Continuing Coverage Denials Relate to the Initial Denial.

[Abridged] Plaintiffs filed suit alleging, among other things, statutory bad faith under 42 Pa. C.S.A. § 8371. Plaintiffs now seek leave to file a second amended complaint to save their bad faith claim from dismissal. But no amendments could save the claim. To the extent it is based on a denial of coverage, the statute of limitations bars the claim. And Pennsylvania's bad faith statute does not extend to an insurer's conduct during litigation while acting as a legal adversary.

On April 15, 2016, an underinsured motorist rear-ended Plaintiff. She suffered a full thickness tear of her rotator cuff, as well as other neck and back injuries. At the time of the accident, American States insured Plaintiff, including underinsured motorist ("UIM") benefits. After suing then settling with the other driver, Plaintiff notified American States of the UIM insurance claim. They sent the American States's adjuster a complete set of all of Mrs. Phan-Kramer's medical records, as well as depositions and expert reports produced in the lawsuit against the other driver.  These  reports  showed  future  losses  between  $322,884.00 and $349,582.00.

On June 28, 2019, the American States's adjuster sent correspondence to Plaintiffs that stated in relevant part: "I have had the opportunity to review the medical records you sent for Loann Kramer. Her injury does not appear to have a value over the underlying limits of $100,000.00; therefore, we will not be making an underinsured motorists bodily injury offer. Please discuss with your client." Less than three weeks after receiving the denial letter, Plaintiffs sued American States for breach of contract and loss of consortium.

Plaintiffs allege that, throughout the course of that litigation, American States's adjusters and in-house legal counsel represented that they were reevaluating Plaintiffs' UIM insurance claim as Plaintiffs presented new treatment records and evidence of work limitations. However, Plaintiffs concluded that American States had not been reevaluating the claim when American States's expert witness issued a report in the litigation on October 28, 2020. The report considered only early records of Mrs. Phan-Kramer's treatment, not any of the evidence of ongoing treatment Plaintiffs had provided throughout the litigation. Plaintiffs also allege that American States exerted influence on its expert to make false conclusions in his report and testimony that would support American State's low valuation of the UIM insurance claim.

Plaintiffs' UIM case proceeded to trial and the jury returned a $480,000.00 verdict in Plaintiffs' favor. The verdict was molded to reflect the $100,000.00 bodily injury liability limits and delay damages of $21,048.36. American States satisfied the verdict.

Plaintiffs have now sued American States again for its handling of the UIM claim and conduct in the previous litigation. After Plaintiffs filed their Complaint, American States removed the case to this Court. Plaintiffs then amended their Complaint as a matter of right to avoid a motion to dismiss. The Amended Complaint asserts three counts: Count I — Bad Faith Pursuant to 42 Pa. C.S.A.

§ 8371; Count II — Breach of Contract/Good Faith and Fair Dealing; and Count III — Loss of Consortium. American States answered Plaintiffs' Amended Complaint and informed Plaintiffs' counsel of its intent to file a motion for judgement on the pleadings.

Plaintiffs' Motion For Leave To File Second Amended Complaint followed. Plaintiffs' Motion seeks to add facts to support their bad faith claim. Specifically, they seek to expound upon Defendant's assurances that the UIM claim would be reevaluated when Plaintiffs presented new evidence, Defendant's refusal to reevaluate Plaintiffs' UIM claim, and Defendant's interactions with its expert and Plaintiffs during litigation.

To survive a motion to dismiss for failure to state a claim on insurance bad faith, Plaintiffs must plead that American States lacked a reasonable basis to deny benefits under the insurance policy and that American States knew of or recklessly disregarded its lack of a reasonable basis. Plaintiffs' proposed amendment seeks to add facts that would support two overarching bases for the bad faith claim: (a) Defendant's continued unjustified denial of the UIM insurance claim; and (b) Defendant's conduct during litigation. Neither basis can survive a motion to dismiss, so amendment is futile.

Plaintiffs' proposed amendment based on the continued denial of Plaintiffs' UIM claim is futile because the statute of limitations bars the claim. The statute of limitations on a bad faith claim under 42 Pa. C.S.A § 8371 is two years. The statute begins to run when the insurer first refuses to pay the claim.

American States first refused to pay Plaintiffs' UIM claim on June 28, 2019, when the insurance adjuster sent Plaintiffs a letter that stated American States "will not be making an underinsured motorists bodily injury offer." Plaintiffs understood this letter to be a denial of coverage—they filed a lawsuit for the denial of their claim less than three weeks after the letter. Plaintiffs also knew the facts giving rise to their argument that the denial was unfounded. They had submitted evidence showing future loss three times greater than the policy limit. The statute, therefore, began to run on June 28, 2019, and expired on June 28, 2021. Plaintiffs did not file this action until March 3, 2022. So, their bad faith claim based on denial of coverage is barred by the statute of limitations.

Plaintiffs' arguments that they did not know of Defendant's denial are unpersuasive. First, the letter is not equivocal. It does not say American States "will not be making an underinsured motorists bodily injury offer at this time." It says American States will not make an offer. A settlement offer is negotiation; a denial letter closes negotiation. Second, the fact that American States made settlement offers to end litigation is distinct from its denial of the insurance claim. Settlement offers during litigation do not admit liability, their purpose is to end litigation. While we all presume that plaintiffs sue insurers because they think they have a good faith basis to do so, the reality is that they also do so because litigation creates pressure to settle, without regard to the merits of the claim. So, when American States made an offer to settle the first lawsuit, that offer did not indicate that the claims handling was still underway. It just showed that American States put a price on avoiding litigation.

Plaintiffs also argue that Defendant's ongoing refusals to reevaluate Plaintiffs' UIM claims were new acts of bad faith, entitled to their own separate statute of limitations. But acts of bad faith that relate to the initial denial of coverage are not entitled to a separate statute of limitations. And continuing coverage denials relate to the initial denial. Therefore, the statute began to run with Defendant's initial coverage denial, and the same statute of limitations continues to apply.

Plaintiffs' proposed amendment based on American States's conduct in the litigation between them is futile because conduct as a legal adversary cannot be the basis for a statutory bad faith claim. Section 8371 provides a remedy for bad faith conduct by an insurer in its capacity as an insurer and not as a legal adversary in a lawsuit filed against it by an insured". A distinction exists between conduct as a legal adversary and conduct as an insurer. Plaintiffs take issue with American States's use of an allegedly biased expert witness, American States withholding information from that expert to influence his report and testimony during litigation, and American States failing to offer a settlement until the eve of trial in the first case. American States did not do any of this as an insurer, though. It acted as a legal adversary. The expert at issue in this case was employed for the purposes of litigation, not claim investigation.

Plaintiffs conflate American States's conduct as a legal adversary with its role as an insurer. American States acted as a legal adversary when it made settlement offers to end litigation and in its use of its expert witness. Any remedy for the alleged misconduct during litigation was sanctions. And nothing that Plaintiffs submitted to American States after its initial claim denial, including during the pendency of the lawsuit, gave American States a basis to reconsider its decision to deny Plaintiffs' UIM claim. Attempts to include facts in support of a bad faith claim at this point are futile.


07/13/23 Liberty Mut. Ins. Co., et al. v. Nordigay Anderson, et al.
Supreme Court, New York County.
An Exception to the 30-Day Preclusion Rule Exists Where the Ground for Denying the Claim is a Lack of Coverage in the First Instance. But the Denial of a No-Fault Claim on the Ground That the Policyholder Made Material Misrepresentations in Obtaining the Policy Does Not Come Within this Preclusion Exception.

[Abridged] In this no-fault-insurance coverage action Liberty Mutual denied the no-fault-benefits claims of the alleged injured person, defendant Nordigay Anderson, and the other defendants, medical-provider-assignees of Anderson's, on the ground that Anderson had materially misrepresented the insured vehicle's garaging address and the identity of the vehicle's operators. Liberty Mutual has brought this action for a judgment declaring that it has no duty to pay those claims.

Liberty Mutual now moves without opposition for default judgment under CPLR 3215 against non-answering defendants. The motion is denied.

No-fault benefits claims must be paid or denied "[w]ithin 30 calendar days after proof of claim is received." (11 NYCRR 65-3.8[c].) Proof of claim "shall include verification of all of the relevant information requested pursuant to section 65-3.5 of this Subpart," such as requests that an injured person or medical-provider- assignee appear for an examination under oath (EUO). (Id. § 65-3.8[a][1].) an insurer's failure to deny a claim within that 30-day period will generally preclude the insurer from asserting a defense against payment of the claim.

An exception to this preclusion rule exists where the ground for denying the claim (or defending against a claim to payment) is a lack of coverage in the first instance. But the denial of a no-fault claim on the ground that the policyholder made material misrepresentations in obtaining the policy does not come within this preclusion exception.

In short, Liberty Mutual may not raise material misrepresentations as a defense to the no-fault claims at issue in this action unless it denied those claims within 30 days after receiving proof of claim.

Liberty Mutual first sought verification from Anderson, in the form of an EUO, by letter dated June 29, 2021. Liberty Mutual conducted that EUO on July 12, 2021. Liberty Mutual later interviewed Anderson's father (the vehicle operator named on the policy) on August 3, 2021; and issued claim denials two days later, on August 5.

Thus, it appears on this record that Liberty Mutual denied the claims at issue within two days after obtaining the additional verification that it sought from Anderson and her father. That chronology, though, does not resolve the crucial question whether the 30-day period to pay or deny ran before Liberty Mutual first sought that verification on June 29. That is, if Liberty Mutual received benefits claims more than 28 calendar days before issuing the EUO request letter on June 29, 2021, the August 5, 2021, denial would be untimely with respect to those claims.

Liberty Mutual has not established on this motion that its denials were timely with respect to each of the defendants against whom it seeks default judgment. At most, Liberty Mutual has submitted a delay letter that it sent on June 4, 2021, to defendant Good Samaritan Hospital Medical Center; and Liberty Mutual's counsel represents in an affirmation that delay letters were also sent "to the medical provider defendants who had submitted NF-3s or bills" as of early June 2021. But a delay letter that does not itself request verification from the recipient will not toll the 30-day pay-or-deny period. On this record, therefore, Liberty Mutual has not established the facts constituting its claims against the non-appearing defendants.


07/25/23 Cadaret Grant & Co. v. Great American Ins. Co.
United States District Court, E.D. New York.
Letter Providing Coverage Counsel's Legal Opinion Protected from Disclosure by the Attorney-Client Privilege. The Question is Whether Counsel is Acting as an Investigator of a Claim (the Job of a Claims Adjuster) or Providing Legal Advice to a Client. For the Work Product Doctrine to Apply, the Material at Issue Must Have Been Prepared by a Party or Their Representative in Anticipation of Litigation. Conversely, Protection Does Not Exist for Documents that are Prepared in the Ordinary Course of Business or That Would Have Been Created in Essentially Similar Form Irrespective of the Litigation.


[Abridged] Plaintiff commenced this action for breach of contract and declaratory judgment seeking coverage under the terms of a Financial Institution Bond issued by Defendant. Presently before the Court is Cadaret's motion to compel the production of documents withheld from discovery by GAIC on the grounds of the attorney-client privilege and the work product doctrine. After the parties submitted a letter outlining their positions, the documents at issue were submitted to this Court for in camera review. The full privilege log was presented to the Court with those documents still at issue highlighted for the Court's convenience. Upon review of the documents at issue, and for the reasons set forth below, the motion to compel GAIC to disclose the documents at issue is granted in part and denied in part. In particular, only the letter dated March 22, 2021, described in the privilege log as a letter "providing coverage counsel's legal opinion" for which attorney-client and work product protection is claims need not be produced. That document is covered by the attorney-client privilege. GAIC fails to sustain its burden of showing that any other document is privileged, and all must therefore be produced.

Cadaret seeks coverage for losses suffered by its clients at the hands of an individual who has pled guilty and accepted civil responsibility with respect to his activity while working as a representative of Cadaret. As a result, Cadaret sustained the losses for which it presently seeks coverage.

Cadaret provided notice to GAIC of a potential loss under the terms of the Bond which arose as a consequence of Cadaret's settlement of several client claims. By letter dated April 22, 2021, GAIC denied covered for Cadaret's claimed losses. This matter commenced approximately eight months later, on December 1, 2021. The documents at issue herein were generated prior to this date.

The individuals whose names appear on the documents are: (1) Timothy Markey ("Markey") a claims adjuster working for GAIC; (2) Michael Graziano, Esq. ("Graziano") an attorney working as outside counsel for GAIC at the law firm of Eckert Seamans ("Eckert"), and (3) John Ellison, Esq. ("Ellison") an attorney working for Cadaret at the law firm of Reed Smith.

The documents at issue reveal that as early as April of 2019, GAIC had retained outside counsel Graziano to discuss claims under the Bond. Thus, in an email dated April 8, 2019, a Senior Financial Product Claims Representative at GAIC wrote to Graziano advising him that Markey had yet to receive a POL from Cadaret. It also advised Graziano that Cadaret had been settling with many defrauded victims, and that he wanted to make sure that Graziano was apprised of the background of this matter prior to GAIC's receipt of the POL's.

The bulk of the documents at issue are emails exchanged between Markey and Graziano between February 27, 2020, and February 12, 2021, which reveal Graziano's involvement in GAIC's investigation of Cadaret's claims. These emails include Markey's transmission of information regarding Cadaret's claims to Graziano and those asking that Graziano draft, for Markey, correspondence to be sent under Markey's name to counsel for Cadaret.

The remaining documents at issue are an email transmitting a draft of GAIC's coverage position, a seventeen-page letter dated March 22, 2021, from Graziano to Markey containing Graziano's legal opinion regarding coverage, and two emails following that letter. The final documents at issue are those stating Graziano's intent to forward the denial of coverage letter to Ellison by the end of the week of April 26, 2021, and an email proposing dates and times for a call with Reed Smith.

GAIC submitted a detailed privilege log. The Log discloses the date of each document and its recipients. It also contains a description of the type and subject matter of each document, as well as the particular privilege claimed. The first twenty documents described in the Log (which were generated prior to GAIC's denial of coverage) claim attorney-client privilege; the last four (consisting of the March 22, 2021, letter from Graziano to Markey and related emails) clam protection under both the attorney-client privilege and the attorney work product doctrine. On June 20, 2023, pursuant to an order of this Court, all documents at issue were provided to this Court for in camera inspection. Upon review of the parties' positions and the documents at issue, and for the reasons set forth below, the Court directs that GAIC produce all documents except for the March 22, 2021, letter from Graziano to Markey.

The law of the State of New York governs the issue of whether or not the attorney- client privilege applies. Federal law applies to the question of whether the work product doctrine applies. Whatever the claim, the burden is on a party claiming the protection of a privilege to provide evidence establishing the essential elements of the privileged relationship.

As to the attorney-client privilege, New York law provides that the party claiming privilege bears the burden of showing: "the existence of an attorney-client relationship, a communication made within the context of that relationship for the purpose of obtaining legal advice, and the intended and actual confidentiality of that communication."

New York courts are often faced with deciding claims of attorney-client privilege in the context of insurance coverage disputes. In particular, such courts have been called upon to decide claims of privilege with respect to documents generated between outside counsel and insurance company claims adjusters. Central to such privilege decisions is the issue of whether outside counsel is performing the role of a claims investigator, or that of an attorney offering legal advice. Documents reflecting claims investigation activities are subject to discovery even if those activities were performed by an attorney.

Where, as here, a court must decide whether documents generated between a claims adjuster and outside counsel are privileged the question is whether counsel is acting as an investigator of a claim (the job of a claims adjuster) or providing legal advice to a client. The latter class of documents is protected by the attorney client privilege; the former is not.

Application of the work product doctrine is governed here by Federal law. That doctrine, codified in Rule 26(b)(3) of the Federal Rules of Civil Procedure is "intended to preserve a zone of privacy in which a lawyer can prepare and develop legal theories and strategy with an eye toward litigation, free from unnecessary intrusion by his adversaries." For the work product doctrine to apply, the material at issue must have been prepared by a party or their representative "in anticipation of litigation". Fed. R. Civ. P. 26(b)(3)(A). Conversely, protection does not exist for "documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the litigation."

Like cases involving claims of attorney-client privilege, a number of cases deciding application of the work product doctrine arise in the context of documents that discuss insurance claims. Courts have routinely held that documents created during any part of a factual investigation to arrive at a claim decision are prepared in the ordinary course of an insurer's business and are not protected by the work- product privilege. There may, however, "come a point when an insurance company's activities shift from the regular and ordinary course of business to activities taken in "anticipation of litigation". "An insurer may demonstrate that it had reached this tipping point by presenting specific competent proof that it possessed a resolve to litigate when the documents were created.'"

When deciding questions regarding the prospect of litigation the court must bear in mind that it is the "routine business of insurance companies to investigate and evaluate claims." Such companies may engage counsel on a routine basis, or only in cases involving large claims. The issue is not, however, the size of the potential claim but whether there is a prospect of litigation at the time that the document was generated. Facts relevant to deciding the claim of privilege include the date counsel was engaged and the date the claim was denied.

GAIC claims that the first twenty of the documents highlighted in the Log are protected by the attorney-client privilege. All of these documents are emails exchanged prior to the March 22, 2021, letter explaining denial of coverage under the Bond. Without applying a bright-line approach rooted only in the date that GAIC denied coverage, the Court's review of these documents results in a holding that none of the first twenty documents are protected by the attorney-client privilege.

First, many documents are nothing more than transmittal emails that either refer to requests for information, or the forwarding or downloading of such information. More importantly, while these first twenty documents reflect communications between  GAIC  claims  representative  Markey  and GAIC  outside  counsel Graziano, they demonstrate work performed by Graziano as a claims investigator rather than as legal counsel. They reflect discussions between Markey and Graziano, typically led by Markey, which culminate in typical requests for information regarding Cadaret's claims. Such documents reveal counsel working in an investigatory role.

The Court need not describe in detail the contents of each of the twenty documents for which only the attorney-client privilege is claimed. This is because the Court finds, with respect to all of these documents, that Graziano was acting as a claims investigator and not supplying legal analysis. Therefore, the Court holds that none of the first twenty documents in the privilege log (for which only the attorney-client privilege is claimed) are within the privilege. They must all therefore be produced.

GAIC claims both attorney-client and work product protection for the last four documents listed in the Log. As to these documents, the Court holds that only the letter from Graziano to Markey dated March 22, 2021, falls within the claim of privilege. Unlike the documents above, this document shows Graziano's legal analysis and opinions. It contains legal advice and is therefore primarily legal, rather than investigatory in nature. It is covered by the attorney client privilege. The document preceding this legal opinion is an email that is akin to a cover letter transmitting the legal opinion. It contains no legal analysis and is not privileged. Similarly, the remaining documents, although prepared after the March 22, 2021, letter, are not privileged.


Katherine A. Fleming

[email protected]


08/24/23         Farley v. P&P Construction, Inc.
Supreme Court of Kentucky
Under Kentucky Law, Medical Providers Must Not Delay in Tendering Billings Even Where there has not Been a Determination of Liability.

Daniel Farley was injured while working as a section foreman for P&P Construction Inc. (P&P) when an air hose for a mine pump exploded, causing fractures to his left leg. Farley underwent three surgeries to repair these fractures. Farley’s injury was indisputably work-related, and Kentucky Employers Mutual Insurance (KEMI), P&P’s worker’s compensation carrier, accepted the claim and began paying temporary total disability (TTD) benefits and—with certain exceptions—paying Farley’s medical expenses. Farley also sought treatment at ARH Daniel Boone Clinic (ARH) for “post-traumatic stress disorder and mood disorder.” Since ARH did not timely submit the bills within 45 days of treatment, KEMI rejected them pursuant to Kentucky Revised Statute (KRS) 342.020(4). KRS 342.020(4) states, “[t]he provider of medical services shall submit the statement for services within forty-five (45) days of the day treatment is initiated and every forty-five (45) days thereafter, if appropriate, as long as medical services are rendered.” For the same reason, KEMI also rejected billings from Harlan ARH Hospital/Gram Resources (Gram Resources) for imaging services performed.

Later, Farley filed his initial workers’ compensation claim. The parties negotiated a settlement in which P&P and KEMI provided a lump sum payment to Farley, but P&P and KEMI only remained liable for reasonable, necessary, and work-related medical expenses causally related to the left leg injury. During the proceedings, the ALJ determined the 45-day rule in KRS 342.020(4) did not apply until after an award is made in the claim establishing a work-related injury has occurred. Notably, no party disputed that Farley had suffered a work-related injury, and P&P had already paid, and never objected to paying, the vast majority of Farley’s incurred medical bills prior to the settlement. The worker’s compensation board affirmed the ALJ’s decision and found that the 45-day requirement only applied after a determination of compensability of a claim by an ALJ. P&P appealed to the Kentucky Court of Appeals. The Court of Appeals agreed with P&P, holding that the Board misconstrued the statute based on its plain language.

Farley appealed to the Kentucky Supreme Court, arguing that KRS 342.020 should be read to extend the 45-day deadline for submission of bills until after an award because (i) precedent supported this interpretation, (ii) the Court had “tacitly approved” of the Board's ruling in another decision, and (iii) the Legislature would have amended KRS 342.020 if it had disagreed with the Board’s long- standing posture on the question.

The Court disagreed, noting that the time restriction was unambiguous and required a provider to submit billing statements within 45 days after treatment. The Court reasoned that the plain language of the statute affords no other construction than that the provider “shall” submit the statement for services within forty-five days of treatment, and no language in the statute limits the application of this 45-day rule to a period of time post-award. Rather, the date of treatment triggers the start of the 45-day period for a provider to submit its billing to the employer or insurer.

The Court also disagreed that precedent supported the Board’s ruling that the 45- day requirement only applied post-award, and the Court felt that allowing medical providers to withhold their billings for indefinite period of time from consideration and payment by the employer, its insurer, the ALJ, and even their patients, would upend the statutory and regulatory framework of the workers’ compensation adjudicatory process, the billing processes for providers, and the adjustment processes for obligors. Accordingly, the Court affirmed the appellate court’s decision based on the language of the statute and opined that if the statute requires change, the arguments by the Board or providers regarding the narrow timeframe of the 45-day window for the submission of medical billings must be made to the legislature.


Evan D. Gestwick

[email protected]


08/24/23  Emp.’s Ins. Co. of Wausau v. Harleysville Preferred Ins. Co.
New York State Supreme Court, County of Queens
Bodily Injury Cannot be Said to “Arise Out of Ownership, Maintenance, or Use of a Covered Auto” Absent a Causal Relationship Between the Auto and the Injury

Harleysville issued a commercial business automobile insurance policy to Hellman, the subcontractor retained to perform certain electrical work with respect to a construction project. One of Hellman’s employees had arrived on the scene in a boom truck, where he proceeded to park said truck and remove jersey barrier poles. When finished, the claimant stepped off the truck, and in so doing, stepped on a loose and unsecured rebar, twisting his knee. The claimant initiated an underlying action against Tully, the general contractor, for various violations of the New York State Labor Law. This action followed.

This action was commenced to determine the coverage obligations owed by Harleysville, the commercial auto insurer of Hellman, the subcontractor, to Tully, the general contractor. The trade contract between Tully and Hellman required, in pertinent part, that Hellman procure various types of liability insurance, including a commercial business auto policy, and name Tully as an additional insured thereon. Hellman did so.

The insuring agreement of the Harleysville commercial business automobile policy provided, in pertinent part, that Harleysville would pay all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applied, caused by an accident, and resulting from the ownership, maintenance, or use of a covered auto. Harleysville’s main contention was that the claimant’s injuries did not result from the ownership, maintenance, or use of the boom truck as an automobile, since the claimant fell only after it had been parked for ten to twenty minutes prior. In opposition, Wassau argued that Harleysville failed to include this basis for denying coverage in its answer.

In New York, insurance denial letters must promptly apprise the claimant, with a high degree of specificity, of the grounds upon which the disclaimer is based. The effect of failing to include a basis for denying coverage with sufficient specificity, generally, is that such basis is deemed waived. However, crucially, where the carrier’s defense is that the claim falls outside the scope of the policy in the first instance—that is, that the claim falls outside the scope of the insuring agreement, not that the claim falls into an exclusion—such a defense is not waived merely by failing to include it in the disclaimer letter.

Noting the above, the Court took up Harleysville’s argument that the claim fell outside of the scope of liability coverage under its policy. In so considering, the Court noted the four-part test used to determine whether an accident arises from the use or operation of a covered automobile: (1) whether the accident arises out of the inherent nature of the automobile; (2) whether the accident arises within the natural territorial limits of the automobile; (3) whether the actual use, loading, or unloading of the automobile was terminated; and (4) whether the automobile merely contributed to causing the injury, rather than actually producing it.

The Court explained that the use of the motor vehicle must be “closely related” to the injury, and that the injury must result from the intrinsic nature of the motor vehicle. The Court also noted that the vehicle does not necessarily need to be the proximate cause of the injury, but rather, that negligence in the use of the vehicle must be shown, and that such negligence must be a cause of the injury.

In applying the test, the Court noted that the underlying action did not allege negligence with regard to the use of the boom truck, but instead alleged that the accident occurred due to Tully’s negligence in maintaining the loose and unsecured rebar upon which the claimant stepped. The Court continued its analysis by noting that the claimant’s injuries did not occur until after he stepped off the truck, once he was finished removing the jersey barrier poles, and only occurred as a result of stepping off the faulty rebar. The Court concluded that the claimant’s injuries were caused by the faulty rebar, and that the boom truck itself may have contributed to the accident, but did not cause it.

Since there were no allegations that the boom truck itself was used negligently, the Court found no causal relationship between the boom truck and the accident. Accordingly, the Court found no duty to defend or indemnify Tully on the part of Harleysville.

Editor’s Note: Recall that this case started off with an argument that Harleysville could not even rely upon its argument that the accident fell outside of the scope of coverage. Only after the Court found that this argument was unavailing did the Court decide that it was, in fact, the winning argument. While it is fairly well-settled that the coverage defense that the insuring agreement is not triggered in the first instance is not waived by virtue of failing to timely raise it, why not avoid the question altogether by including it in a disclaimer anyway?



ON the ROAD with O’SHEA
Ryan P. O’Shea

[email protected]


8/23/23           Matter of Benalcazar v. Motor Veh. Acc. Indem. Corp.
Appellate Division, Second Department
Trial Court Failure to Hold a Hearing on Identity of Purported Hit and Run Results in Finding of Issue of Fact


On August 19, 2016, Petitioner was involved in a motor vehicle accident as a passenger in a livery cab with another vehicle that immediately fled the scene. She was then transported by ambulance to a hospital with a lower back injury. She filed a petition pursuant to Ins. Law Sec. 5218 to commence an action against the Motor Vehicle Indemnification Corporation (“MVAIC”). MVAIC opposed the petition on the grounds that the Petitioner failed to comply with Ins. Law Sec. 5218(b)(5), which requires that “all reasonable” efforts were made to ascertain the identity of the owner and operator of the livery cab. The trial court denied the petition.

On appeal, the Second Department reversed looking to Matter of Quiridumbay v Motor Veh. Acc. Indem. Corp., 176 AD3d 717, 718 (2d Dept. 2019), which held “[i]f the court, after a hearing, is satisfied, inter alia, all reasonable efforts have been made to ascertain the identity of the motor vehicle and of the owner and operator and either the identity of the motor vehicle and the owner and operator cannot be established, then it may issue an order permitting an action against MVAIC.”

The appellate court reasoned the trial court should not have denied and dismissed the petition without first having a hearing. The court found Petitioner had made numerous phone calls and sent a letter to the livery cab operator, JT Trans Inc. (“JT Trans”), but learned that JT Trans did not own any vehicles. Further, Petitioner’s counsel affirmed that he searched the NYS DMV records for police accident reports containing TLC, TC, or livery plates for the date of the accident, but none of the reports pertained to Petitioner’s accident. Counsel also made FOIL requests for police reports and the ambulance call report, as well as a request for vehicles licensed under JT Trans. The received ambulance report confirmed the accident involved a livery cab with the Petitioner being a restrained passenger and transported to the hospital.

Based on these findings, the court determined there were issues of fact as to whether the Petitioner’s efforts to ascertain the owner and operator of the livery cab were reasonable.


8/23/23           Matter of Bullock v. Motor Veh. Acc. Indem. Corp.
Appellate Division, Second Department
Incorrect Information in Police Report and no DMV Records Constitutes “All Reasonable Efforts” to Commence an Action Against MVAIC

On August 4, 2016, Petitioner allegedly suffered personal injuries, when riding a bicycle, he was struck by a motor vehicle that immediately fled the scene. After the accident, a police accident report was created based upon an eyewitness account and surveillance video footage. The police report identified the vehicle as a 2000 Ford with a Virgina license plate owned by an “Antonio Jiminez” with an address in Queens. Petitioner then attempted to serve Jiminez at the address and learned from the process server and the USPS that the address did not exist. Further, the Virgina DMV found no records related to the vehicle with the Virginia plate number. Petitioner, then filed a petition pursuant to Ins. Law Sec. 5218 for leave to commence an action against MVAIC. MVAIC opposed on the grounds the police report identified the owner and operator of the vehicle. The trial court denied the petition.

The Second Department reversed. Much like in Matter of Benalcazar, the Appellate Division detailed that a party may be permitted to commence a cause of action against MVAIC, if after a hearing, the court finds the injured party made all reasonable efforts to ascertain the identity of the owner and operator of the motor vehicle. The court found that the Petitioner met his burden by way of the police report. It reasoned the report contained incorrect information, including a non-existent address for the vehicle owner, and the Virgina DMV has no records regarding the license plate number identified on the vehicle.


Robert P. Louttit

[email protected]


08/10/23 New Law Enrolls Every NY Driver in Pricier Auto Insurance Coverage. Half Will Get No Benefit
New York Auto Rates Increased this Month Because of Spousal Liability Coverage

As of August 1, 2023, all New York car insurance providers must begin adding supplemental spousal coverage to their plans. With this coverage, if the covered spouse is the driver during an accident where they are responsible, or any other kind of accident where the party at fault has no insurance, or insufficient insurance, the spouse is entitled to the limits of the liability coverage. According to New York’s Department of Financial Services, the costs for such coverage ranges from $20 to $84 annually.

Spousal liability coverage has previously been offered as an option on New York auto policies. But the new law makes the additional coverage an opt-out provision that the insured must affirmatively decline. However, in its current form, the new law does not differentiate between unmarried and married New Yorkers. With that said, roughly half of New York State’s driving population would be mandated coverage which it would not benefit. The law will expire on July 31, 2027, unless a new law is enacted to extend it. We will monitor this new law and its effect on the insurance industry and its consumers.

Editor’s Note: The linked article is available through the Buffalo News, which requires a subscription. If you would like to view the article in full, please reach out for a courtesy copy.


Robert J. Caggiano

[email protected]

Nothing new to report here; see you in two.



Heather A. Sanderson
Sanderson Law Calgary, Alberta

[email protected]


08/15/23   Insurance Corporation of British Columbia v. Ari

By Providing a Former Employee with Opportunity to Access Policyholder Information, an Insurance Company is Vicariously Liable for the Release of that Identifying Information which that Former Employee Sold to a Vancouver Criminal Gang Member

A curious thing started happening between April 2011 and January 2012 in the Vancouver Metropolitan area. There was a series of firebombings and shootings of homes and vehicles. One of the firebombings was at the home of West Vancouver’s former police chief. They all seemed unconnected.

Investigators spent four years piecing together the mysterious reign of terror, which at first appeared to involve random victims. (Note that if this was a Law and Order episode it would been done and dusted in 60 minutes.)

An email sent in July 2011 drew the connection that concentrated police efforts. That email was sent to the Justice Institute of British Columbia and revealed that there was a connection between the attacks and that Institute.

The Justice Institute of British Columbia is a post-secondary school, located in New Westminster, British Columbia, (all within the Vancouver metropolitan area).

The Institute has three schools, or faculties, leading to four-year bachelor degrees in public safety administration, as well as emergency, and security management studies. All municipal police officers in British Columbia receive their training at the division of the school known as the Police Academy. That Academy also offers advanced police training courses, and training for security and gaming officers. The victimized families had parked their vehicles in the parking lot of the Justice Institute.

The next clue was a bag found at one victim's home with a loaded handgun and a document listing names, addresses and accurate descriptions of attacks that had occurred at other residences. DNA found in the bag matched that of Vincent Cheung, 43, of Langley, who pleaded guilty in B.C. Supreme Court to 18 of 23 counts stemming from the attacks between April 2011 and January 2012. Cheung, who had serious mental health problems as well as being a member of a local criminal gang, said ….“The paranoia got to me from all the drugs, so I got friends to tail me to make sure and see who was tailing me and we tailed them back to the justice institute. That's how I found out they were police."

But how did Cheung get the names and home addresses of those individuals he victimized? He gave the license plate numbers of vehicles in the parking-lot to an employee of the Insurance Corporation of British Columbia (ICBC).

ICBC is a Crown Corporation with a monopoly for automobile insurance in British Columbia. It also manages driver’s licencing for the Province. Therefore, every resident of British Columbia with a driver’s license or automobile insurance is required to provide personal information to ICBC.

Cheung revealed that Candy Rheaume, who he knew from selling street drugs, was employed at ICBC at the time of the firebombings as a claims adjuster. Cheung paid her $25 (and access to drugs) for each lookup relaying names, addresses, driver’s licence numbers, vehicle descriptions and identification numbers, as well as claims histories. Rheaume had no business reason to perform these lookups. Rheaume was fired and plead guilty to one count of unauthorized use of customer’s information.

A class action was initiated against ICBC for damages at common law and under the B.C. Privacy Act arising from the privacy breach. The central issue was whether ICBC was vicariously liable for the damages.

In a judgment rendered August 24, 2022, the British Columbia Supreme Court held that ICBC was vicariously liable on the basis that the attacks were not an unforeseeable intervening event, and that the attacks directly led to the damage claimed. ICBC appealed. The judgment in the appeal was rendered on August 15, 2023.

The Court of Appeal held that the trial judge did not err in finding that the information was private within the meaning of the Privacy Act. Whether a right to privacy has been breached pursuant to the Privacy Act requires consideration of the context, including the nature, incidence, and occasion of the act, the relationship of the parties, and degree of privacy to which a person is entitled. The requirement that the breach of privacy be willful and without claim of right limits the scope of potential liability. Customers had a reasonable expectation that the information they provided ICBC would only be used for legitimate ICBC business purposes, and they otherwise had the right to control use of their personal information. The employee’s conduct in selling some of the information to third parties for a criminal purpose tainted all of her actions in accessing the customers’ files without a legitimate business purpose. That Court also held that The Privacy Act does not require proof of actual damage. The judge’s determination that baseline general damages could be awarded on a class basis, without requiring individualized proof, was not in error.

Further and of significant importance the Court of Appeal found that the trial judge did not err in imposing vicarious liability on ICBC for the privacy breach. ICBC materially created the risk and provided the opportunity for this employee to commit the wrong and the employee’s conduct was sufficiently related to her authorized duties to justify the imposition of vicarious liability. Policy reasons support the imposition of liability. The Court’s reasoning on this point deserves a very close read.


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