Coverage Pointers - Volume XXVI No. 11

Volume XXVI, No. 11 (No. 684)
Friday, November 8, 2024
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.

HF Coverage Pointers header

Dear Coverage Pointers Subscribers:

Do you have a situation? We love situations. Attached is this week’s issue of your favorite coverage newsletter, Coverage Pointers.  If it isn’t yet your favorite, give it time.

 

Free clip art of veterans day clipart 9 - Clipartix

 

In advance of Veteran’s Day, we take a moment to salute those who have served and are serving our thankful nation to protect our freedoms.

 

Writing an Effective New York Coverage Letter Zoom Program
December 13th at noon, Eastern

Our December 13, 2024, Zoom program on Writing an Effective New York Coverage Letter is a virtual sellout, we have well over 900 registered and we max out at 1,000 virtual seats.  We announced the program in the previous issue of CP, two weeks ago.  If you haven’t signed up, we can take a few more reservations, but then will move to a wait list. If there are companies that want to gather folks in a conference room, they will get a preference.  Of course, if there are insurers or law firms that have signed up individual registrants and now tell me that they can combine into a conference room, I’d be appreciative.  That will allow others to attend.  Let me know your pleasure at [email protected].

 

The Insurer's Duty to Settle: Bad Faith and Verdicts in Excess of Policy Limits.

At the request of Strafford, a CLE company, our coverage partner Lee S. Siegel will be presenting a live video webinar entitled, "The Insurer's Duty to Settle: Bad Faith and Verdicts in Excess of Policy Limits." Lee has extensive experience representing insurers against bad faith claims across the country and has also served as an expert witness. The program will be held on Tuesday, January 7, 2025, from 1 pm to 2:30 pm EST, and is eligible for CLE credit. The program will address the challenges and complexities policy holder and insurers face when addressing the settlement of limit-exposure claims, among other claim handling issues.

For more information or to register, go to the Strafford website or call 1-800-926-7926, and ask for The Insurer's Duty to Settle on 1/7/2025, Mention code: ZDFCA. There is a fee for this program.

 

Thanks to our Colleagues

Best Lawyers has announced the release of the 2025 Best Law Firms in the United States rankings. Hurwitz Fine is proud to have Buffalo Metropolitan Tier One rankings in 10 practice areas:

  • Commercial Litigation

  • Corporate Law

  • Elder Law

  • Insurance Law

  • Litigation – Insurance

  • Litigation – Municipal

  • Personal Injury Litigation – Defendants

  • Real Estate Law

  • Tax Law

  • Trusts and Estates

Hurwitz Fine also received Tier Two honors in Health Care LawLitigation – Labor and EmploymentMediation and Product Liability Litigation – Defendants. Tier Three honors include Employment Law – Management.

Best Law Firms rankings honor firms that have consistently demonstrated excellence in legal expertise and industry knowledge. Each firm included has been rigorously evaluated based on client feedback, peer recommendations, leadership interviews, and the depth of their practice. The result is a comprehensive guide for businesses and individuals seeking top-tier legal counsel in the United States.

The Best Law Firms dedicated research team first starts by evaluating top firms within specific practice areas, stacking them up against legal competitors in their respective metro regions. In the United States, Best Lawyers researched 127 jurisdictional practice areas, 75 national practice areas and 188 distinct metro areas.

Waving to our Newbies

We welcome a score or more of new subscribers, folks who are attending our letter writing program and were not newsletter subscribers before.

We Mourn the Passing of Elwood Edwards, a man whose voice has been in my pocket for years.

 

Image result for AOL You've Got Mail Meme

I am old school. When email comes into my iPhone, I hear Uber Driver Elwood Edwards announce it.  Who? He was the voice that was used for AOL’s YOU’VE GOT MAIL, and I still use that sound to alert me when you write.  Edwards passed away this week.  He also recorded, GOODBYE.

 

Mediation

Need a mediator for an insurance dispute? Coverage mediation is a thing!  Subject matter expertise may be useful. 

Between now and year’s end, I have about 15 mediations scheduled.  We have a little bit of room in December, but January 2025 has lots of opportunity.

Hey coverage lawyers.  Hey professionals. Have you and a friend, adversary, or lawyer for whom you 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.

 

Newsletters:      

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 V. Christopher Potenza  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 Elizabeth Midgley at [email protected] to subscribe.

 

Peiper on Property (and Potpourri):

It is long said that timing is everything in life.  Today’s missive follows that sage advice.  Today is National Men Make Dinner Day.  Unfortunately, for those of you who might have used this information to your advantage it is probably too late in the day for you to put a plan into action.  And, fortunately, for those of you who do not make dinner on the regular, you are, indeed, saved by the timing of this newsletter. 

My question, though, is do we really need a National Men Make Dinner Day?  I “make” dinner several nights a week.  A chore (if that’s the right word) I’ve split with my wife since before we got married.  My sense is that a lot of my contemporaries also prepare dinner on the regular.  The Washington Post reported in 2016 that 43 percent of men engage in home cooking.  This, presumably, is more than just grilling the random hot dog.  Maybe 43% is still too low, and we should aspire for great participation.   I don’t know, but the creation of a day to specialize something 43% of men already do seems a bit outdated.   That said, if we are to have a men cook day, perhaps we should have it run contemporaneously with National Pizza Day (February 9th, incidentally). 

Oh. You want some discussion about law too.  We have that, but its far less interesting.  We do review a good discussion of how negligence allocations can, and do, impact the viability of contractual indemnification risk transfer.  We also take a look at discovery sanction issues, and waiver of objections in arbitration demands.  Food, as it were, for your further thoughts and consideration.  No word on whether they were prepared by men or women. 

That’s it for this week.  See you in two more. 

Steve
Steven E. Peiper

[email protected]

Editor’s note: Steve forgot that today is not today, but tomorrow.  We publish on Thursday with a Friday dateline. National Men Make Dinner Day was on Thursday, which this technically is but not according to the date of the newsletter.

Friday, the “official” today, is National Tongue Twister Day, so I asked ChatGPT to give me a couple of tongue twisters with Steve’s first name and one with his last:

  • Steve swiftly served seven sizzling sausages, silently shifting slices of savory stew.

  • Sneaky Steve swiftly snatched seven sticky sweets, slipping silently so no one saw.

  • Peter Peiper packed a perfect pile of purple peppers, promptly preventing pesky pests.

  • Peiper’s purple parrot perched proudly, pecking pears in the pretty park.

 

Unburying His Wife – 100 Years Ago:

Buffalo Courier
Buffalo, New York
8 Nov 1924

Says He Was Kidnapped and
Forced to Dig Up Casket
Holding His Wife’s Corpse

Orlando, Fla., Nov. 7. – Kidnaped from his home in Dublin, Ga., early yesterday as his aged father looked on, and brought here by three men unknown to him, E.P. Dominy, twenty-one, according to the story related to the police today, was taken to the new grave of his nineteen-year-old wife and forced to dig up the coffin.

At the cemetery, Dominy said, more than a score of men surrounded him and after compelling him to open the coffin, beat him severely. Dominy was seen wandering about and taken to jail where it developed, he was wanted on a warrant charging non-support of his child. He was released on $500 bond.

 

Barnas on Bad Faith:

Every year that the Yankees do not win the World Series is a good year as a baseball fan for me, so I thank the Dodgers for their efforts and congratulate them on winning an exciting World Series (sorry Rob).  On to the baseball offseason.  Maybe the Blue Jays will try to field a competitive team this year.  We can only hope.

While baseball may be over, the sports calendar is still full of good stuff.  The NFL is at the halfway point, college football is coming to the final month of the regular season, and the NBA, NHL, and college basketball are all underway.  We even have the NASCAR championship race this weekend in Phoenix.  It has been a mixed bag for my teams so far: the Bills are doing well and look poised to win the AFC East again, and Syracuse football sits at 6-2 after a big win vs. Virginia Tech.  Unfortunately, the Sabres are near the bottom of the NHL standings again already, the Raptors look horrible, and Syracuse hoops barely squeaked by newly minted Division One crosstown rival Le Moyne in the season opener.  It can’t all be good.

I have a bad faith case from Pennsylvania for your consideration this week.  The court found that the insurer properly denied a demand for appraisal based on the policy’s suit limitation clause.  It also found that the insurer did not act in bad faith or violate the Unfair Claims Settlement Practices law by not informing the insured of the limitation clause.

Brian
Brian D. Barnas

 

How do you Meet a Worthwhile Man? – 100 Years Ago:

Buffalo Courier
Buffalo, New York
8 Nov 1924

He’s An Idealist

Dear Mrs. Wheeler:

Will you kindly give space for this letter in your column?

Girls, fellows need your help to attain a high standard of manhood. Let the purity of your womanhood be a beacon to guide us to the port of real men. When we are caught in a storm of passion and there is no light to guide us, many of us drift upon the rocks. That is why so many wrecks have come to your shores.

Today, youth bewail the lack of high standards in the opposing sex without considering their individual status in this respect. So, they drift through life vainly seeking for an ideal they do not deserve. As well might the icicle try to embrace a flame.

Girls ask how they can meet the worth-while men. Here is your answer. Earn the reputation of a beautiful pure character and they will come to you as surely as the flowers seek the light of the sun. Men and woman of strong, fine character seek a mate and friends of like nature.

Many a man denies himself pleasure during the years he earns a foothold in his chosen career. He is not doing this for himself but for his “dream-girl,” so that she may be spared the years of struggle he now suffers alone. How many girls can truthfully say they are fitting mates for such men? Yet all desire such.

 

Lee’s Connecticut Chronicles:

Dear Nutmeggers:

It’s going to be 70° today and it was almost 80° on Halloween – welcome to Fall in Connecticut. Admittedly, in between we had some 35° mornings, but the change in weather patterns continues to have real-life impacts. For example, we just got our flood insurance renewal - a 14% increase year-over year, and we’ve never had a flood claim, even after Sandy. Climate change may be up for political debate, but in the insurance world there is no debating that it is very real. Property rates continue to climb, the market continues to harden, carriers are leaving markets at record pace, and state insurers of last resort are being pushed to the limit. For example, in Florida, the governor reported that the state insurer “is not solvent.”

Humanity’s impact on climate seems to be undecided, or outright rejected, by the majority of Americans; but there’s no denying that all Americans will feel the impact of climate change in their insurance premiums, higher deductibles, reduced competition, and for the increased costs of the food they eat and the goods they buy.

Good luck with your insurance renewals and, as always, keep keeping safe.

Lee
Lee S. Siegel

[email protected]

 

Turkey Prices Drop – 100 Years Ago:

The Buffalo News
Buffalo, New York
8 Nov 1924

Lower Prices for Turkey
To Rule for Thanksgiving

Retail Rate Is Now 48 Cents a Pound, Four Cents under Last Year’s Quotation.

Turkey prices will be lower this year, it is said on the markets, but not so much lower than last year as to bring the popular holiday bird with the reach of all.

The Thanksgiving price has not yet been established, but the retail market Saturday morning averages 48 cents a pound. This price is about four cents under last year’s holiday quotation, which leads to the prediction that the price at Thanksgiving time will be in the neighborhood of 45 cents. Last year turkey brought 53 cents a pound at the November feast day.

Despite announcement from New York that the recent cut of ten cents a pound there led dealers to prophecy the end of war-time poultry prices, local dealers say it is too early to predict fatal prices of an article as unstable as the gobbler. A sudden influx of the birds in the middle of November will cause a drop in prices which will not last when the small supply is exhausted.

It is admitted, however, that a good, firm supply would, without question, bring an appreciable reduction in prices. Another week, it is said, and the price will be fixed which will in all probability prevail until after Thanksgiving.

 

Ruffner’s Road Review:

Dear Readers,

I have two cases this week. The first involves a No-Fault claim and the insurer’s motion for summary judgment on the basis of (1) failure of claimants to attend EUOs, (2) the failure of the claimant that did attend an EUO to sign their transcript, and (3) material misrepresentations with respect to the insured’s garaging address at the time of application. In the second case, the Appellate Division considered an appeal from a lower court decision regarding whether there was a triable issue of fact as to whether the plaintiff suffered a serious injury within the meaning of Insurance Law § 5102(d).

Go Bills,

Kyle
Kyle A. Ruffner

[email protected]

 

Haven for Unfortunate Women – 100 Years Ago:

Buffalo Courier
Buffalo, New York
8 Nov 1924

SCHWAB SEEKS HAVEN FOR
UNFORTUNATE WOMEN

Seven proprietors of soft drink places before Mayor Schwab in license revocation proceedings were granted sixty days prohibition yesterday. Alfread H. Holsenburg, who has a soft drink place at No. 125 Sycamore street, was one of them.

Testimony was to the effect that women visited Holsenburg’s place. The Mayor said that unfortunate women have a right to go somewhere, and added he intends to ask charity organizations to help such women. He criticized uplifters for trying to drive “these unfortunates around like stray dogs.”

 

Ryan’s Federal Reporter:

Hello Loyal Coverage Pointers Subscribers:

Our latest foster dog, Poppy, recently underwent surgery on various growths that have plagued her for some time. She went from an old dog seemingly on the end of her leash to a spry (yet reserved) lover with a new lease on life. Any dog lovers out there looking for your next pup? Nothing quite like a housebroken, veteran dog who tells you when she is hungry or needs some outside time but will sleep on the couch the rest of the day. She wants nothing more than to curl up next to you after a long day at the office.

This edition, I have a rather simple write-up on a Second Circuit Summary Order outlining the rules of the road for late notice coverage denials in the first-party property insurance context.

Until next time,

Ryan
Ryan P. Maxwell

[email protected]

 

History of Golf – 100 Years Ago:

The State Journal
Frankfort, Kentucky
8 Nov 1924

Scotland Made Game of
Golf National Pastime

Three months before the Pilgrim fathers left Deftshaven James VI approved the contract for the first municipal golf links at St. Andrews, Scotland. Golf may have stated in Holland, where a game called “kolf,” a cross between golf, hockey, and bowling, was played on the ice, within covered courts and even in churchyards. If the scotch did import the sport they changed it greatly. “Link” for example is the scotch term referring to rolling close-cropped shore fields which have become the model for all golf courses. “Bunkers” are really cut banks such as are found along a graded country road. Such banks with sand pits are natural to the Scotch shore. St. Andrew’s cut banks are now artificially created on golf links wherever golf is played. For many years, the original Scotch course consisted of 11 holes, a match being two rounds, or 22 holes, but in 1764 it was decided to eliminate two holes, so today the standard course is in multiples of nine. – National Geographic Society.

 

Storm’s SIU:

Hi Team:

What an awesome win for the Dodgers in the World Series and the Bills against the Dolphins!

One case this week: In RICO Action, the Court granted Insurer's Motion for Preliminary Injunction in Part by Enjoining Providers, Related Individuals and Entities that Treated PIP Claimants from Proceeding with Pending Arbitrations and from Initiating New Arbitrations and State-Court Proceedings.  It’s lengthy so I just provided the Headnotes, and link should you be interested in reviewing it.

More cases in two weeks.  See you then,

Scott
Scott D. Storm

[email protected]

 

A Leg is Only Worth $12,000 – 100 Years Ago:

Buffalo Courier Express
Buffalo, New York
8 Nov 1924

YOUTH WINS $12,000
VERDICT AGAINST I.R.C.

A supreme court jury yesterday returned a verdict awarding Frank Kirisits, seventeen years old, of No 268 Watson street $12,000 against the International Railway company for the loss of his left leg. The lad was struck by a one-man streetcar at William and Adams streets last March.

 

Fleming’s Finest:

Hi Coverage Pointers Subscribers:

Recently, a group of us attended the WNY Women’s Foundation’s What She’s Made Of event. It was exciting to hear the keynote speaker, Kathrine Switzer, talk about her experience as the first woman to officially enter and run the Boston Marathon and empowering women through running.

This week’s case comes from the Delaware Supreme Court. Two spouses had policies with identical limits with the same carrier, and when the wife and her son were in an accident with an uninsured drunk driver, the Court considered whether the husband and the son’s guardian ad litem could combine or stack the policies. The court determined that the highest limit of liability across the policies was the coverage provided by one policy as primary with the second policy providing excess coverage.

See you in a fortnight,

Kate
Katherine A. Fleming

[email protected]

 

Cursing is (a) Fine – 100 Years Ago:

The Tablet
Brooklyn, New York
8 Nov 1924

FINED FOR CURSING

Charged with using vile and boisterous language and causing a crowd to collect on Main street. Flushing, during the early morning hours, Tony Mogola, 44, of 53 Main street, Flushing, was fined $10 by Magistrate Thomas Doyle in the Flushing Court Tuesday.

 

Gestwick’s Garden State Gazette:

Dear Readers:           

I am one of the “unidentified” columnists to which Mr. O’Shea refers in his note. I, too, attended the Sabres v. Senators smackdown—I mean, hockey game—and sent my colleague a text that read, “[H]ow about those Sabres, eh?” At the time of that text, the score was 4-1 Sabres. Moments after hitting “send,” the Sabres scored again, making it 5-1. The next morning, I came to learn that I had sent the message to Mr. O’Shea’s now-broken cell phone. Rumor has it he threw it onto the ice in frustration. As a Senators fan, he’s not too familiar with what to throw on the ice when.

I have a doozy for you this week. A New Jersey federal court dismissed a case, finding that it was not ripe for decision, because the carrier admitted, in its complaint, that it would need to conduct discovery to confirm its coverage position. The relief sought in the Complaint was like any other—a declaration that the carrier has no duty to indemnify the insured. The Court held that there was no present case or controversy because no finding of liability had been made against the insured in any of the underlying actions, making it premature to decide on indemnity, and because the “main purpose” for bringing the action was to take advantage of the discovery procedures.

That’s all for this edition. Until next time.

Evan
Evan D. Gestwick

[email protected]

 

Hot Words – 100 Years Ago:

The Tablet
Brooklyn, New York
8 Nov 1924

WORD “CREMATE” AN INSULT.

Vienna, Oct. 21. – “Aw, go and have yourself cremated,” said Anton Meyer to Frau Witheimine Scheibeiberger, in the course of a dispute last week.

Frau Scheibeiberger promptly appealed to the court, which has just decided that the remark was a criminal insult, and fined Meyer.

 

O’Shea Rides the Circuits:

Hey Readers,

It was a bludgeoning. I refer to the Sabres v. Senators game I personally witnessed only two nights ago. A “quality” Sabres team defeated the Ottawa Senators 5-1, after which I cried for an hour on the way home. The tears were mostly from comments received from two unidentified columnists.

In other news, I have a short unpublished decision from the Ninth Circuit involving whether alleged sexual abuse could be considered an “occurrence” or “accident.” The insured believed a misconception regarding consent triggered coverage. The Appellate Court took an adverse position to the insured’s argument.

Until Next Time,

Ryan
Ryan P. O’Shea

[email protected]

 

How Old? – 100 Years Ago:

The Los Angeles Times
Los Angeles, California
8 Nov 1924

WIFE ADMITS FIBBING

Marriage Annulled On Ground of Age After Court Reprimand

Mary H. McKee told a fib when she signed her application for a license to marry James B. McKee. As a result, she got an annulment and a scolding from Judge Summerfield yesterday. She said she was of age when she wasn’t.

“The same code of laws that requires me to annul this marriage also makes you liable to punishment for perjury, young lady,” the court reminded her. “Personally, I think you deserved any discomfort caused by your marriage.”

McKee spent all her money and wouldn’t buy her any clothes, was the burden of her complaint.

 

Rob Reaches the Threshold: 

Dear Readers,

I WILL NOT BE TAKING ANY QUESTIONS REGARDING ANY BASEBALL TEAM FROM NEW YORK OR THE WORLD SERIES. THANK YOU.

In all seriousness, what a freakin' ride in October. Objectively, as a baseball fan, the World Series was awesome -- even if it only went 5 games. I lived and (mostly) died on every pitch. Every game was close. Heroes were made (Freeman), Heroes didn't show up until approximately middle of Game 4 (Judge), Heroes did nothing and got a ring (Ohtani), and Heroes apparently never learned they need to cover first base as a pitcher on a ground ball to the right side (Cole). All I know is, even with the heartbreak, this Yankees season was one I'm glad I experienced.

Closing thoughts: (1) Pay Soto a billion dollars; and (2) I will be naming my first son Giancarlo - he will not run but will exclusively hit home runs. 

For this installment, we return to the Second Department who examined whether or not a plaintiff's submissions in opposition to defendants' motion for summary judgment sufficiently created triable issues of fact to whether she sustained a serious injury under Insurance Law Section 5102(d). 

I hope you all enjoy the read.

Rob
Robert J. Caggiano

[email protected]

 

Booze in DC – 100 Years Ago:

Buffalo Courier
Buffalo, New York
8 Nov 1924

3 Moonshine Stills
Discovered in Thin
Shadow of Capitol

Washington, Nov 7. - Within a block of the capitol and directly opposite the house building, police today found three moonshine stills, 1,000 gallons of mash and large quantity of brandy.

The entire third floor of an old residence, which in its day had been an exclusive home in the then fashionable section, was devoted to distilling prune and peach mash into a hybrid but powerful concoction.

 

LaBarbera’s Lower Court Library:

Dear Readers:

I usually have some trouble adjusting to changing the clocks. This year, I actually had a smooth transition. The same cannot be said for anyone else in my house. Ordinarily early risers, the dogs start to stir around four a.m. The past few days the wakeup call has moved to two-thirty, or three. Thankfully, I am a heavy sleeper. Unfortunately for my boyfriend, he is not.

This week I am reporting on a case involving an insurer’s denial of No-Fault claims, after an investigation revealed that a material misrepresentation was made on the application for automobile insurance. 

Until next time…

Isabelle
Isabelle H. LaBarbera

[email protected]

 

A Centurion Appears – 100 Years Ago:

Middletown Times Herald
Middletown, New York
8 Nov 1924

102-YEAR-OLD WOMAN
APPEARS IN COURT IN
ESTATE SETTLEMENT

MONTECELLO, Nov. 8. – what is believed to be a county record was established her Monday when Mrs. Mary Moroney, 102 years of age, appeared in Surrogate’s court here Monday. Not only is she thought to be the oldest person in the county, she was in court in connection with proceedings in the estate of her husband who died some 28 years ago.

 

Lexi’s Legislative Lowdown:

Dear Readers,

Last weekend I traveled to the big city to watch my best friend run the New York City Marathon. It was so amazing to watch her accomplish something she worked so hard for! I am now feeling extra inspired – perhaps there is a marathon in my future!

If you were wondering when artificial intelligence would reach insurance legislation – I believe the answer is soon. This week’s column addresses potential legislation to regulate the use of artificial intelligence by insurers who issue accident and health insurance.

Thanks for reading.

Lexi
Lexi R. Horton

[email protected]

 

Return from the Dead – 100 Years Ago:

The Brooklyn Daily Times
Brooklyn, New York
8 Nov 1924

Adrenalin Restores Child of Three,
After Two Doctors Pronounce Her
Dead, Following Tonsil Operation

An injection of adrenalin into the heart if a 3-year-old child, who had been pronounced dead by two physicians, brought life back into the body yesterday. While adrenalin has at times been used successfully to bring life back to an infant, it is believed this is the first time a child as old as 3 has been successfully revived.

The feat was performed yesterday afternoon by Dr. Henry Schuhmann, of 492 McDonough street, and the child, that showed no signs of life for five minutes, is Hulda Matthews, colored, whose parents live at 1940 Pacific street. Dr. Schuhmann operated on the girl at Memorial Hall Dispensary and Hospital, 345 Ralph avenue, near Atlantic avenue, yesterday morning, removing her tonsils and adenoids.

Following the operation the child was apparently doing well and Dr. Schuhmann left her for a few minutes. Returning in less than ten minutes, Dr. Schuhmann found two other physicians of the hospital and nurses working over the child, that was apparently lifeless. There were no heartbeats or respiration. Application of artificial respiration and other means of reviving the child has failed.

Dr. Schuhmann immediately ordered the nurses to bring him adrenalin and he injected twenty drops into the heart. The child responded and less than thirty seconds after the injection and several minutes later has completely revived.

Later in the morning, when the parents of the child, Samuel, and Amy Matthews, called, the child was able to talk to them. The parents expect to take the child out of the hospital today.

 

North of the Border:

At the eleventh hour, on the eleventh day of the eleventh month of each year we remember the end of the First World War. We call this day Remembrance Day or Armistice Day (‘armistice’ is Latin for to stand (still) arms). Each year, I think about the altruistic young men who fought and died by the thousands in that war. I also think about the events of the 20th Century that followed their death that seems to have left the era of idealism in tatters.

It’s up to us now.

Heather
Heather A. Sanderson
Sanderson Law
Calgary, Alberta, Canada

[email protected]

 

Headlines from this week’s issue, attached:

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

  • In a Peculiar DJ, Additional Insured’s Actions to Compel CGL Carrier to Pay First Party Claim, before Claim has been Adjudicated, is Dismissed.

  • Insurer Improperly Relied upon Insured’s Statement to Deny an Obligation to Defend when Complaint Alleged Facts within Coverage.  Could the Carrier Rely on a Statement in a Bill of Particulars?

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

  • Question of Fact on Protection Efforts Exception to Vacancy Exclusion

  • Discovery Sanction Against Employer for Discarding Ladder From Which Plaintiff Fell

  • Lack of Savings Language Results in Dismissal of Contractual Indemnity Claim

  • Engagement with Arbitration Proceedings Results in Waiver of Ability to Move to Stay it Under Article 75

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

  • Insurer Did Not Act in Bad Faith or Violate Unfair Claim Settlement Practices by Rejecting Appraisal Request after Suit Limitation Clause had Run or by Not Informing Insureds of Limitation Clause

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

  • State Law Trumps Health Insurer’s Subrogation Right Against Tortfeasor

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner

[email protected]

  • Insurer Summary Judgment Motion Granted on Basis of Breach of Conditions Precedent to Coverage of Claimants

  • Appellate Court Reverses Lower Court, Holding There Was a Triable Issue of Fact as to Whether the Plaintiff Suffered a Serious Injury

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell

[email protected]

  • Three-Month Delay in Insured’s Notice of Property Loss Found Unreasonable as a Matter of Law

     

STORM’S SIU
Scott D. Storm

[email protected]

  • In a RICO Action, the Court Granted Insurer's Motion for Preliminary Injunction in Part by Enjoining Providers, Related Individuals and Entities That Treated PIP Claimants from Proceeding with Pending Arbitrations and from Initiating New Arbitrations and State-Court Proceedings

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

  • Spouses’ Polices Ambiguous Where They Permitted Stacking but Limited Recovery to One Policy with the Highest Limit Where Two or More Vehicles Owned or Leased by Persons Residing in Same Household Issued by Same or Affiliated Insurers

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick

[email protected]

  • Court Finds No Case or Controversy in Declaratory Judgment Action Brought, in Part, to Obtain Discovery to Better Assess its Coverage Determination

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea

[email protected]

  • Subjective Misconception of Consent Does Not Qualify as an Accident or an Occurrence

     

ROB REACHES the THRESHOLD
Robert J. Caggiano

[email protected]

  • Second Department Reverse Granting of Defendants’ Summary Judgment Motion Dismissing the Complaint on the Ground that Plaintiff Did Not Sustain a Serious Injury Pursuant to §5102(d) Where Plaintiff’s Experts’ Submissions Raised Triable Issues of Fact in Opposition

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera

[email protected]

  • Court Upheld Insurer’s Denial of Payment to Medical Providers on No-Fault Claim Based on Material Misrepresentation on Application Regarding Named Insured and Ownership of Insured Vehicle

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton

[email protected]

  • A Proposed Act to Amend Insurance Law to Regulate the Use of Artificial Intelligence for Utilization Review

 

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada

[email protected]

  • In Canada, the Entitlement to Damages, as Well as the Calculation of Those Damages is a Substantive Legal Right, That is Governed by the Law of the Province Where the Right to Those Damages Arose

 

We will see you in two weeks.  Keep the faith.

Dan

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 and New Jersey.

In addition, Dan D. Kohane is a Foreign Legal Consultant, Permit No. 0119144, 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.


NEWSLETTER EDITOR
Dan D. Kohane

[email protected]

ASSOCIATE EDITOR
Agnes A. Wilewicz

[email protected]

COPY EDITOR
Evan D. Gestwick

[email protected]

 

INSURANCE COVERAGE/EXTRA CONTRACTUAL LIABILITY TEAM
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

Ryan P. Maxwell

Kyle A. Ruffner

Katherine A. Fleming

Evan D. Gestwick

Ryan P. O’Shea

Isabelle H. LaBarbera

Lexi R. Horton

 

FIRE, FIRST PARTY AND SUBROGATION TEAM
Steven E. Peiper, Team Leader
[email protected]

Michael F. Perley

Scott D. Storm

Brian D. Barnas

 

NO-FAULT/UM/SUM TEAM
Dan D. Kohane
[email protected]

Kyle A. Ruffner
[email protected]

 

APPELLATE TEAM
Jody E. Briandi, Team Leader
[email protected]

 

Topical Index

Kohane’s Coverage Corner

Peiper on Property and Potpourri
Barnas on Bad Faith

Lee’s Connecticut Chronicles

Ruffner’s Road Review

Ryan’s Federal Reporter

Storm’s SIU

Fleming’s Finest

Gestwick’s Garden State Gazette

O’Shea Rides the Circuits

Rob Reaches the Threshold

LaBarbera’s Lower Court Library

Lexi’s Legislative Lowdown

North of the Border

 

KOHANE’S COVERAGE CORNER
Dan D. Kohane
[email protected]

11/07/24       CGreen, LLC v. Quantum Impact Steel, LLC
Appellate Division, Third Department
In a Peculiar DJ, Additional Insured’s Actions to Compel CGL Carrier to Pay First Party Claim, before Claim has been Adjudicated, is Dismissed.

CGreen. a subcontractor, was named as an additional insured on a commercial general liability insurance policy issued by defendant Next First Insurance Agency, Inc. to the insured, defendant Quantum, a sub-subcontractor engaged to erect and install a pre-engineered metal building. One of the partially constructed metal buildings built by Quantum collapsed, causing significant damage. In October 2022, plaintiff notified Next First of the collapse but received no response.

In December 2022, CGreen commenced the present action against both Quantum and Next First, alleging, as relevant here, a third cause of action directly against Next First. This single cause of action seeks a declaration that Next First is in breach of the policy and that it be ordered to pay the policy amount to CGreen.  Indeed, the argument was made that because CGreen was an additional insured for liability coverage purposes, the AI carrier was compelled to provide first party property coverage.  Peculiar indeed

The policy provides that "we will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies". Thus, the policy expressly limits Next First's liability to those sums that plaintiff has become legally obligated to pay. Here, the complaint lacks any allegation that plaintiff has been found legally obligated to pay any damages. Furthermore, contrary to plaintiff's contention, its status as an additional insured does nothing to expand the extent of Next First's coverage beyond damages owed by plaintiff by way of judgment or settlement.

Note, this was not a complaint seeking a defense or indemnity for a third-party liability claim, but indeed for direct physical loss sustained by the insured

Although plaintiff advises that several actions pertaining to this matter are currently pending against it, an injured claimant has a direct cause of action against an insurer only after that party first obtains a judgment against the insured and it remains unsatisfied for 30 days (see Insurance Law § 3420 [a] [2]). It is undisputed that plaintiff — the insured — is not now the subject of any such judgment or settlement. As a result, it has failed to fulfill the condition precedent to a direct suit against Next First.

Next, plaintiff, citing Insurance Law § 3420 (d) (2), contends that Next First is precluded from denying insurance coverage based on its failure to disclaim. This statutory provision pertains to death or bodily injury arising out of a motor vehicle accident or other type of accident occurring within this state. Plaintiff's third cause of action against Next First alleges property damage only; thus, this statute is inapplicable.

Editor’s note: Odd, indeed.

 

11/06/24       Zupko Painting, Inc. v. Utica First Insurance Company
Appellate Division, Second Department
Insurer Improperly Relied upon Insured’s Statement to Deny an Obligation to Defend when Complaint Alleged Facts within Coverage.  Could the Carrier Rely on a Statement in a Bill of Particulars?

Zupko Painting, Inc. (“Zupko”), contracted with the defendant Utica First for ongoing operations coverage related to Zupko's ongoing construction projects. The insurance policy provided that under certain circumstances, Utica First was obligated to defend Zupko. However, the policy contained an exclusion entitled "Exclusion of Injury to Employees, Contractors, and Employees of Contractors" (hereinafter the employee exclusion), which provided that the policy did not cover "bodily injury to any employee of any insured . . . if such claim for bodily injury arises out of and in the course of his/her employment . . . by or for any insured, for which any insured may become liable in any capacity."

On November 21, 2018, Rene Orlando Jara, an employee of Zupko, allegedly slipped and fell on a recently waxed floor of premises where Zupko was performing contracting work. Jara subsequently commenced a personal injury action in which Zupko was later named as a defendant. Upon learning of the underlying action, Zupko requested that Utica First defend Zupko in the underlying action pursuant to the policy.

Utica First conducted an investigation to determine whether Zupko was entitled to coverage under the policy. As part of the investigation, Aguirre, a senior claims examiner for Utica First, spoke on the phone with Zupko's principal and owner, Zubovic. In an affidavit, Aguirre averred that during their conversation, Zubovic stated that Jara was a full-time employee of Zupko at the time of Jara's accident and that Jara was injured in the course of his employment. Zubovic later clarified in his own affidavit that he was out of the country on the day of Jara's accident and that when he spoke to Aguirre on the phone, he did not have any first-hand knowledge of the information he provided.

Based upon its investigation, Utica First determined that Zupko was barred from coverage under the employee exclusion because Jara was injured in the course of his employment.

In January 2022, Zupko commenced this action against Utica First and another defendant. In the second cause of action asserted against Utica First, Zupko sought, inter alia, a judgment declaring that Utica First is obligated to defend Zupko in the underlying action. In the third cause of action asserted against Utica First, Zupko alleged, among other things, that Utica First acted in bad faith by declining Zupko coverage under the policy and sought punitive damages.

Subsequently, Utica First moved to dismiss the complaint insofar as asserted against it.

Upon a motion to dismiss for failure to state a cause of action, a court may reach the merits of a properly pleaded cause of action for a declaratory judgment where no questions of fact are presented by the controversy. Under such circumstances, the motion . . . should be treated as one seeking a declaration in the defendant's favor and treated accordingly.

A duty to defend its insured arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy.  If the allegations are even potentially within the language of the insurance policy, there is a duty to defend. In determining whether there is a reasonable possibility of recovery under the policy, parties are bound by the "four corners of the complaint" rule, under which "courts of this State have refused to permit insurers to look beyond the complaint's allegations to avoid their obligation to defend and have held that the duty to defend exists if the complaint contains any facts or allegations which bring the claim even potentially within the protection purchased"(even where "facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered). However, a court may look to judicial admissions in the insured's responsive pleadings in the underlying tort action or other formal submissions in the current or underlying litigation to confirm or clarify the nature of the underlying claims.

To be relieved of its duty to defend on the basis of a policy exclusion, the insurer bears the heavy burden of demonstrating that the allegations of the complaint [in the underlying action] cast the pleadings wholly within that exclusion, that the exclusion is subject to no other reasonable interpretation, and that there is no possible factual or legal basis upon which the insurer may eventually be held obligated to indemnify the insured under any policy provision.

Here, Utica First failed to demonstrate that Zupko was barred from coverage under the employee exclusion of the policy. Utica First was limited to looking at the four corners of the complaint in the underlying action to establish that the employee exclusion applied here. Accordingly, Utica First improperly relied on Zubovic's alleged admissions as attested to by Aguirre in arguing that there was no reasonable possibility that it owed Zupko a defense. Additionally, Jara's statement in his bill of particulars in the underlying action that he was employed by Zupko was insufficient to demonstrate that his accident occurred in the course of his employment.

The evidentiary material submitted by Utica First conclusively established that it did not act in gross disregard of Zupko's since it carried out an investigation and disclaimed coverage under the policy based on information then believed to be true.

Editor’s note: We do have trouble with the court disallowing admission of the Bill of Particulars of employment as a bill of particulars is merely an amplification of the pleadings in the complaint.

 

PEIPER on PROPERTY (and POTPOURRI)
Steven E. Peiper

[email protected]

10/31/24       ARCPE1, LLC v. Pub. Serv. Mut. Ins. Co.
Appellate Division, First Department
Question of Fact on Protection Efforts Exception to Vacancy Exclusion

The claim involves interior water damage caused by frozen and subsequently burst pipes which caused leaks in sprinkler and water service lines.  In response, Public Service referenced the policy’s vacancy exclusion which removed coverage for water damage located in a premises that was vacant.  The trial court granted the application for summary judgment, and the instant appeal followed.

On appeal, the First Department agreed that the vacancy exclusion, particularly that part addressing water damage, applied to damage to the water supply lines.  However, regarding the damage to sprinklers, the Court found a question of fact.  That question was whether the original building owner sufficiently protected the sprinkler system in compliance with an exception to broader vacancy exclusion.  Unfortunately, the Court does not tell us what the exception is, or how it was worded. 

In any event, we are advised that plaintiff submitted proof that the sprinkler system was protected from freezing; in part using a “dry pipe” system that was supplemented with an electric heater system.  Although defendant’s expert offered theories as to why water was permitted to enter the “dry pipe” system, he was unable to explain why those pipes retained the water long enough for it to expand under freezing conditions.  Having failed to dispositively overcome plaintiff’s offered proof on the protections in place on the sprinkler system, the Court denied summary judgment on that particular portion and remanded the matter back to the trial court on a question of fact.

 

10/30/24       Vaccaro v. ESRT Empire State Building, LLC
Appellate Division, First Department
Discovery Sanction Against Employer for Discarding Ladder From Which Plaintiff Fell

Plaintiff alleges he sustained injuries when he fell from an A-frame ladder while in the course of his employment.  He later sued ESRT, and ESRT commenced a third-party action against Development.  Unfortunately for Development, it elected to discard the ladder after the incident involving plaintiff.

ESRT moved for discovery sanctions, including the striking of Development’s Answer to the Third-Party Complaint.  Because the destruction of the ladder was “at least negligent,” the Court ruled that preclusion of evidence was the proper discovery sanction.  It declined to strike Development’s Answer.  In so holding, the Court noted that because Development was aware the plaintiff fell from the ladder, and that there was a reasonable possibility of litigation, it should have been noticed that it had a duty to preserve the apparatus. 

 

10/30/24       Rogers v. Peter Scalamandre & Sons, Inc.
Appellate Division, Second Department 
Lack of Savings Language Results in Dismissal of Contractual Indemnity Claim

Another interesting Labor Law matter, but we again fix our focus on the indemnity issues.  Plaintiff was employed by Certified.  Certified was retained as the carpentry subcontractor by Scalamandre, who served as the general contractor for the jobsite.  Plaintiff was injured while in the course of using a boom lift at the jobsite.  When plaintiff named Scalamandre as a defendant in the instant lawsuit, Scalamandre, in turn, commenced a third-party action against Certified seeking contractual indemnification. 

Certified eventually moved for summary judgment seeking dismissal of the contractual indemnity claim on the basis that it violated General Obligations Law, Section 5-322.1 The clause at issue extended to “all losses and claims … whatsoever … which may be brought on account of injuries …”  The clause also did not contain any savings language like “fullest extent permitted by law” or the like.  Thus, by its own terms, the Court concluded the clause contemplated Scalamandre being indemnified for its own negligence.

While the failure to include savings language is not always fatal, here Certified also demonstrated that Scalamandre’s maintenance of the boom lift in which plaintiff was working was substandard.  Thus, because Scalamandre will have some percentage of negligence attached to it, it follows that the entire clause is in violation of the General Obligations and, as such, is voided and unenforceable. 

Regarding the insurance procurement obligations of Certified, the Court did not dismiss those apparent obligations.  Certified failed to demonstrate that it procured insurance naming Scalamandre as an additional insured.  Certified, apparently, argued that Scalamandre’s decision to procure insurance for itself precluded a claim for breach of the duty to procure insurance.  The Court, rightly in our opinion, explained that the existence of coverage might be a basis for limiting damages, it does not absolve Certified’s failure to meet the terms and conditions of the contract in the first place.

 

10/24/24       Emps. Ins. Co. of Wausau v. Dominion Ins. Receivables, LLC
Appellate Division, First Department
Engagement with Arbitration Proceedings Results in Waiver of Ability to Move to Stay it Under Article 75

Wausau commenced this action under Article 75 seeking to stay arbitration proceedings initiated by Dominion.  Due to Wausau’s actions prior to the application for a stay, the Court ruled that any attempt to avoid binding arbitration had been waived.  This included, apparently, Wausau’s selection of an arbitrator, negotiation of arbitration procedures, and the acceptance of an umpire to resolve the dispute if a resolution could not be brokered by the selected arbitrators. 

 

BARNAS on BAD FAITH
Brian D. Barnas

[email protected]

10/23/24       Houtz v. State Farm Fire and Casualty Company
United States District Court, Eastern District of Pennsylvania
Insurer Did Not Act in Bad Faith or Violate Unfair Claim Settlement Practices by Rejecting Appraisal Request after Suit Limitation Clause had Run or by Not Informing Insureds of Limitation Clause

On July 18, 2021, the Houtzes home at 753 Claire Road Warminster, PA was damaged in a fire. The Houtzes were insured by State Farm at the time and provided notice to State Farm of their losses. State Farm accepted coverage of the loss and issued the first payment to the Houtzes in August 2021 based on an estimate provided by the Houtzes’ public adjuster. State Farm made additional payments in September 2021 and March 2022.

Roughly one year later, in March 2023, Plaintiffs provided State Farm with an estimate for additional losses, for which State Farm issued another payment in May 2023. The May 2023 payment led to a dispute between the parties regarding the loss amount, prompting the Houtzes to seek an appraisal on July 13, 2023. One day later, State Farm denied the appraisal request, claiming it was time-barred by the policy's suit limitation provision.

The Houtzes commenced this lawsuit alleging breach of contract and bad faith claims against State Farm.  The court concluded that the suit limitation clause applied to bar coverage because the suit limitation period began to run on the date of the loss, July 18, 2021, and the lawsuit did not commence until August 14, 2023.

The court also found State Farm did not act in bad faith by rejecting the appraisal request based on the policy’s suit limitation clause.  State Farm did not lack a reasonable basis for rejecting the appraisal request. 

The court also concluded that State Farm did not violate the Unfair Claims Settlement Practices law by failing to inform the Houtzes of the suit limitation provision.  Courts have concluded that a violation of the UCSP may support a bad faith claim but does not itself amount to bad faith per se.

The UCSP requires insurers to provide notice to unrepresented claimants of impending contractual or statutory time limits when an insurer seeks to continue settlement negotiations.  The court concluded this provision was not applicable. First, the provision only applies where insurers seek to “continue negotiations for settlement of a claim,” but there is no indication that State Farm sought to continue negotiations with the Houtzes.  The Houtzes reentered into communications with State Farm in approximately March 2023, once the suit limitation had already run. The Houtzes alleged no facts to suggest that settlement negotiations were ongoing past March/April 2022, nor that State Farm sought to continue them. Even assuming State Farm had continued settlement negotiations, the provision only applies where insurers are negotiating “directly with a claimant,” whereas the Houtzes worked with a public adjuster, a role not covered under the Act's definition of claimant.

 

LEE’S CONNECTICUT CHRONICLES
Lee S. Siegel

[email protected]

10/23/24       Papp v. Hedgerow Properties, LLC
Superior Court of Connecticut, Waterbury
    
State Law Trumps Health Insurer’s Subrogation Right Against Tortfeasor

Always an important consideration for insurers is what meets the definition of a collateral source set-off. Here, the trial court rules that benefits paid by private health insurers to an injured plaintiff qualify as a collateral source and, significantly, that a Connecticut state law prohibiting subrogation precludes the carriers from reimbursement from the judgment against the tortfeasor.

Here, Papp was injured in a slip and fall accident at the defendant's property in Winstead, Connecticut. Following a jury trial, Papp was awarded $4.9 million in damages, including $513,391.66 in medical care expenses. The jury found that Papp was 25% at fault. Post-verdict, the court reduced the verdict to $3.675 million, accounting for Papp’s share of liability.

On post-trial motions, the defendant asked the court to further reduce the portion of the award for medical care expenses, claiming that they are a collateral source set-off. The plaintiff objected, arguing that the private health insurance contracts gave the health insurers a right of subrogation against a tortfeasor, precluding any reductions. According to the decision, one of the policy’s provided, in part, “Subrogation - We have the right to recover benefits paid for a member's health care services when a third party causes the member's injury or illness to the extent permitted under state and federal law and the member's benefit plan.”

The court found for the defendant, holding that the medical insurance payments were “without question” a collateral source. Further, the court held that CGS § 52-225(c)’s an anti-subrogation language trumps the health insurance contractual language. “Unless otherwise provided by law, no insurer ... providing collateral source benefits ... shall be entitled to recover the amount of any such benefits from the defendant or any other person or entity as a result of any claim or action for damages for personal injury ... regardless of whether such claim or action is resolved by settlement or judgment.” Importantly, only federal collateral source payments, such as Medicare, preempt the state law.

Significantly, the court only reduced the verdict by an additional $273,182.46, deducting 25% of the plaintiff’s liability, and deducting $111,861.29 for the plaintiff’s cost in securing the health insurance.

 

RUFFNER’S ROAD REVIEW
Kyle A. Ruffner
[email protected]

10/24/24       State Farm Mut. Auto. Ins. Co. v. Alford A. Smith, MD., et al.
Supreme Court, New York County
Insurer Summary Judgment Motion Granted on Basis of Breach of Conditions Precedent to Coverage of Claimants

State Farm brought a motion for summary judgement, arguing that the subject claims should be denied, on the basis that multiple claimants failed to appear at two scheduled examinations under oath (“EUO”). Further, State Farm argued that although one of the claimants did appear for her EUO, she failed to return a signed copy of the transcript, a breach of a condition precedent to coverage.

In addition, State Farm’s claim specialist asserted that the insured made material misrepresentations in the application for insurance regarding his residence and garaging address of the insured vehicle. Therefore, State Farm argued that a misrepresentation in an insurance application is material, voiding the policy ab initio, if, had the true facts been known, either the insurer would not have issued the policy or would have charged a higher premium.

In opposition, the Provider Defendants #1 argued that State Farm failed to demonstrate compliance with the No-Fault regulations governing providing notice of EUOs. Provider defendants #2, asserted (1) that failure to return a subscribed transcript is not grounds for summary judgment because the unsigned transcript is not inadmissible and (2) that there were issues of fact concerning the plaintiff's request for EUOs, asserting that plaintiffs EUO requests were improper since they requested documents by a date certain.

The Court noted that the Appellate Division, First Department has upheld that the failure to appear for an EUO requested in a timely fashion by the insurer is a breach of a condition precedent to coverage and voids the policy ab institution. The coverage defense applies to any claim and is not determined on a bill-by-bill basis. See, PV Holding Corp. v. AB Quality Health Supply Corp., 189 A.D.3d 645, 646 (1st Dep't 2020). Here, the Court determined that the EUO scheduling letters were timely requested and claimants' failure to appear at that EUO voided the policy ab initio as to all claims. Therefore, State Farm demonstrated that these claimants breached a condition precedent to coverage by failing to appear for EUOs on two separate occasions.  Furthermore, claimant Griselda Torres' failure to subscribe and return the transcript of her examination under oath (EUOs) violated a condition precedent to coverage and warranted denial of the claims.

The Court further found that the defendants failed to rebut the presumption of the mailing or receipt of the EUO letters and there was nothing in the record to suggest that the scheduled EUOs were not justified and held at a place and time that was not reasonably convenient to the assignor. Therefore, the court granted State Farm’s motion for Summary Judgment, without reaching or commenting on the issue of alleged material misrepresentations in the insured’s application for insurance.

 

10/30/24       Pacannuayan v. N.Y. City Trans. Authority, et al.
Appellate Division of the Supreme Court of New York, Second Department
Appellate Court Reverses Lower Court, Holding There Was a Triable Issue of Fact as to Whether the Plaintiff Suffered a Serious Injury

The plaintiff commenced this action to recover damages for personal injuries that she allegedly sustained in a motor vehicle accident. The defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) because of the accident. In an order entered March 31, 2023, the Supreme Court granted the defendant’s motion and the plaintiff appealed.

On appeal, the plaintiff did not challenge the Supreme Court's determination that the defendants met their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). However, the court held the plaintiff raised a triable issue of fact as to whether she sustained a serious injury to the cervical region of her spine under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d) through the affirmed report of the plaintiff's expert as well as an issue of fact as to whether the injuries to the cervical region of her spine were caused by the accident. Contrary to the defendants' contention, the plaintiff's expert neurologist adequately addressed the issue of degeneration and preexisting injuries raised by the defendants, and the plaintiffs adequately explained the gap in treatment. The plaintiff averred that she stopped treatment after her no-fault benefits were terminated and she could no longer afford to pay for treatment.

Accordingly, the Appellate Court held the Supreme Court should have denied the defendants' motion for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d). Therefore, the lower court’s decision was reversed.

 

RYAN’S FEDERAL REPORTER
Ryan P. Maxwell
[email protected]

10/30/24       Hedvat v. Chubb National Insurance Company
United States Court of Appeals, Second Circuit
Three-Month Delay in Insured’s Notice of Property Loss Found Unreasonable as a Matter of Law

Chubb insured a property owned by the Hedvats. The Hedvats’ driveway flooded in February 2022 and the Hedvats hired contractors to investigate the damage and other contractors to repair the damage. However, Chubb was not notified of any claim—specifically a claim of $1,749,885 in property damage—until approximately May 16, 2022, resulting in a denial of the claim due to late notice.

The Chubb Policy required notice of any loss must be provided “as soon as possible.” The Second Circuit noted that such language requires notice to be given “within a reasonable time in view of all of the facts and circumstances,” with any delay potentially excusable as trial so long as “a policy holder has a reasonable excuse for their delay.”

The Second Circuit found that the Hedvats notice was provided late without a reasonable excuse for same. By March 2022, the Hedvats were aware of the damage and had hired a contractor to investigate, raising a reasonable possibility that the policy was implicated, which required notice “as soon as possible.” Absent the provision of “any excuse or mitigating factor that explains their delay in notifying Chubb,” the Second Circuit found that notice was late as a matter of law, which was a condition precedent to coverage that vitiated coverage.

 

STORM’S SIU
Scott D. Storm

[email protected]

10/24/24       State Farm Mut. Auto. Ins. Co. v. Tri-Borough NY Med. Prac. P.C.
United States Court of Appeals, Second Circuit
In RICO Action the Court Granted Insurer's Motion for Preliminary Injunction in Part by Enjoining Providers, Related Individuals and Entities That Treated PIP Claimants from Proceeding with Pending Arbitrations and from Initiating New Arbitrations and State-Court Proceedings

State Farm brought action against health care providers and related individuals and entities that treated automobile accident victims, alleging they engaged in Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits and pursued baseless arbitrations and state-court proceedings to seek reimbursement of unpaid bills. The District Court granted insurer's motion for preliminary injunction in part by enjoining providers, individuals, and entities from proceeding with pending arbitrations and from initiating new arbitrations and state-court proceedings but denied injunction of pending state-court proceedings. Parties appealed.

The Court of Appeals held that:

  • preliminary injunction based on first amended complaint was still effective, and there was something left for court to do, and therefore second amended complaint did not render appeal moot;

  • irreparable harm requirement for preliminary injunction was satisfied;

  • insurer demonstrated sufficiently serious questions going to merits, as required for preliminary injunction;

  • district court did not abuse its discretion in finding that insurer demonstrated that balance of hardships tipped decidedly in its favor

  • arbitration provisions were “privately negotiated” within meaning of Federal Arbitration Act;

  • “effective vindication” exception to Federal Arbitration Act applied; and

  • expressly-authorized exception to Anti-Injunction Act applied.

The Headnotes in this lengthy case include the following:

Health care providers are prohibited by the New York No-Fault Act's implementing regulations from paying or receiving kickbacks in exchange for patient referrals or in connection with the performance of professional services.

Preliminary injunction based on first amended complaint (FAC) was still effective, and there was something left for court to do, and therefore second amended complaint (SAC) did not render appeal moot, in automobile insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals; although SAC added 16 defendants and provided further details about alleged fraudulent scheme, SAC borrowed heavily from FAC, newly-added defendants did not meaningfully alter substantive basis of appeal because they were either closely associated with or controlled by existing defendants or provided unnecessary treatments under scheme. 

Court of Appeals reviewed first amended complaint only on basis that district court granted preliminary injunction based on it, in its opinion to determine its propriety in automobile insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals, although second amended complaint did not divest Court of appellate jurisdiction.

Abuse of discretion review applied to district court's decision to grant preliminary injunction in automobile insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals.

De novo review applied to district court's interpretation of Federal Arbitration Act (FAA) and Anti-Injunction Act (AIA), in automobile insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals.

Irreparable harm requirement for preliminary injunction was satisfied, in automobile insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated massive and highly complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme involving predetermined treatment protocols to justify unnecessary treatment across myriad of providers, kickbacks for patient referrals, and violations of licensing laws to fraudulently obtain New York no-fault benefits, by global and intertwined nature of fraud that effectively was obscured in fragmented state-court proceedings and arbitrations due to incomplete factual record, risk of inconsistent judgments, frustration of declaratory judgment relief, possible preclusive effect, parties in midst of thousands of pending arbitrations, and defendants likely initiation of new arbitrations and lawsuits to recover unpaid claims. 

A preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.  To obtain a preliminary injunction, a party must show (1) irreparable harm; (2) either a likelihood of success on the merits or both serious questions on the merits and a balance of hardships decidedly favoring the moving party; and (3) that a preliminary injunction is in the public interest.

Because under the “serious questions” standard a party moving for a preliminary injunction would have to demonstrate both serious questions on the merits and a balance of hardships decidedly favoring the moving party, the overall burden is no lighter than the one the party bears under the “likelihood of success” standard.

The irreparable harm requirement is the single most important prerequisite for the issuance of a preliminary injunction; therefore, this requirement must be satisfied before the other requirements for an injunction can be considered.

To make the irreparable harm showing, the party moving for a preliminary injunction must demonstrate that absent a preliminary injunction it will suffer an injury that is neither remote nor speculative, but actual and imminent, and one that cannot be remedied if a court waits until the end of trial to resolve the harm.

Irreparable harm exists, as required for a preliminary injunction, where, but for the grant of equitable relief, there is a substantial chance that upon final resolution of the action the parties cannot be returned to the positions they previously occupied.

Where there is an adequate remedy at law, such as an award of money damages, a preliminary injunction is unavailable except in extraordinary circumstances.

The party moving for a preliminary injunction must show that there is a continuing harm that cannot be adequately redressed by final relief on the merits and for which money damages cannot provide adequate compensation.

State-court judgments can have a preclusive effect in federal courts.  Res judicata and collateral estoppel apply to issues resolved by arbitration where there has been a final determination on the merits, notwithstanding a lack of confirmation of the award.

Courts determining the preclusive effect of arbitrations consider whether the procedures employed adequately protected the rights of the parties and whether an arbitrator's decision and rationale can be determined with clarity and certainty.

To establish irreparable harm, the party moving for a preliminary injunction must show a continuing harm that cannot be adequately redressed by final relief on the merits.

Summary orders do not have precedential effect when they do not set out the factual background of the case in enough detail to disclose whether its facts are sufficiently similar to those of a subsequent unrelated case to make the summary ruling applicable to the new case.

The “serious questions” standard for a preliminary injunction, which also is known as the “fair ground for litigation” standard, permits a district court to grant a preliminary injunction in situations where it cannot determine with certainty that the moving party is more likely than not to prevail on the merits of the underlying claims, but where the costs outweigh the benefits of not granting the injunction.

By not requesting evidentiary hearing on preliminary injunction motion in district court, health care providers and related individuals and entities that treated automobile accident victims forfeited their right to evidentiary hearing, in automobile insurer's action against them, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals. 

Although there generally should be an evidentiary hearing when essential facts are in dispute, a party may waive its right to an evidentiary hearing on a motion for a preliminary injunction.

District court did not abuse its discretion in determining that record before it was sufficient to allow it to decide, without hearing and solely on papers before it, that there was fair ground for litigation, on automobile insurer's motion for preliminary injunction in action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals; although court could have cultivated fuller record by conducting evidentiary hearing, it had greater flexibility to resolve motion on papers when it relied on “serious questions” standard as opposed to more rigorous “likelihood of success” standard. 

The “serious questions” standard allows courts to assess the merits of a claim at the preliminary injunction stage by affording considerable flexibility in the face of varying factual scenarios and the greater uncertainties inherent at the outset of particularly complex litigation; put another way, this standard accommodates the needs of the district courts in confronting motions for preliminary injunctions in factual situations that vary widely in difficulty and complexity.

Court applying the “serious questions” standard on a motion for preliminary injunction has the discretion to rely on the pleadings and accompanying affidavits, particularly when a party has not requested an evidentiary hearing, to resolve the motion, provided the movant has raised questions going to the merits so serious, substantial, difficult and doubtful, as to make them a fair ground for litigation and thus for more deliberate investigation.

A trial court's determination on a motion for a preliminary injunction to not hold an evidentiary hearing is reviewed for abuse of discretion.

Insurer demonstrated sufficiently serious questions going to merits, as required for preliminary injunction in action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals, where insurer alleged in substantial detail in 159-page first amended complaint, that providers and related individuals and entities participated in elaborate Racketeer Influenced and Corrupt Organizations (RICO) Act scheme spanning several years, through web of interconnected relationships, illegal financial arrangements tying many of them together, medically unnecessary treatment and services provided to patients, and unauthorized ownership or operation of medical facilities by some of them.

District court did not abuse its discretion in finding that insurer demonstrated that balance of hardships tipped decidedly in its favor, allowing for preliminary injunction in action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals; although providers and related individuals and entities faced some hardship as relatively small companies or individual medical providers, their alleged hardships of economic impact could be remedied by monetary damages should they later prevail and insurer faced thousands of arbitrations and state-court proceedings absent an injunction.

When considering whether the movant for a preliminary injunction has demonstrated that the balance of hardships tips decidedly in its favor, a court must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.

The balance-of-hardships factor in the preliminary injunction analysis is related to the irreparable harm requirement as both consider the harm to the parties with the relevant harm being that which (a) occurs to the parties’ legal interests and (b) cannot be remedied after a final adjudication, whether by damages or a permanent injunction.

The balance of the hardships reached by the district court, on a motion for a preliminary injunction, falls squarely within its discretion. 

A court considers whether a preliminary injunction is in the public interest, which concerns the public consequences in employing the extraordinary remedy of injunction.

Detecting and preventing insurance fraud was in public interest, allowing for preliminary injunction in action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals; New York's No-Fault regime was aimed at ensuring prompt compensation for victims of automobile accidents without regard for fault, insurers were integral components of that expedited regime as they were uniquely positioned to combat depletion of public resources caused by fraudulent claims for No-Fault benefits, and New York required most insurers to implement anti-fraud measures by preparing plans “for the detection, investigation and prevention of fraudulent insurance activities” in the state. 

District court did not abuse its discretion by not requiring insurer to post security, after insurer succeeded on its motion for preliminary injunction in action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex Racketeer Influenced and Corrupt Organizations (RICO) Act scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals; even if other district courts sometimes required insurers to post bond in actions involving no-fault benefits, finding that providers could readily collect damages from insurer if they prevailed did not involve error of law, clearly erroneous factual finding, or decision outside of permissible range.

Courts have the discretion to not require any security at all when granting a preliminary injunction, depending on the specific circumstances.

The security requirement for a preliminary injunction is designed to assure the enjoined party that it may readily collect damages from the funds posted in the event that it was wrongfully enjoined, and that it may do so without further litigation and without regard to the possible insolvency of the plaintiff. 

De novo review applied in insurance fraud case to contention by New York health care providers and related individuals and entities that treated automobile accident victims that Federal Arbitration Act (FAA) prohibited injunctions barring them from instituting or proceeding with arbitrations, since issue was question of law. 

The purpose of the Federal Arbitration Act (FAA) was to reverse the longstanding judicial hostility to arbitration agreements that had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts.

A two-part test is applied to determine the arbitrability of claims, considering (1) whether the parties have entered into a valid agreement to arbitrate, and, if so, (2) whether the dispute at issue comes within the scope of the arbitration agreement.

Insurer and insureds consented to automobile liability policies that included arbitration provisions, and therefore those provisions were “privately negotiated” within meaning of Federal Arbitration Act (FAA), as required for it to be valid and enforceable; although arbitration provision was mandated by New York law, insurer chose to do business in New York and therefore agreed to be bound by its laws, including No-Fault Act, and insurer and insureds knowingly agreed to enter into insurance policies that included provision to arbitrate certain disputes regarding No-Fault benefits. 

An obligation to arbitrate can be based only on consent, because like any other contract, a party cannot be required to arbitrate a dispute that it has not agreed to arbitrate.

A person gives up the right of access to a court of law in favor of arbitration only by making a commitment to arbitrate, such as by entering into an agreement to arbitrate or by entering into a relationship which is governed by an agreement to arbitrate.

The “privately negotiated” requirement under the Federal Arbitration Act (FAA), which is aimed at ensuring that persons are subjected to arbitration only if they have consented to arbitrate, is intended to protect parties who may have been coerced or defrauded into forgoing their opportunity to bring claims in court, not to render arbitration agreements invalid simply because they were mandated by state insurance law.

The crux of the “privately negotiated” requirement under the Federal Arbitration Act (FAA) ensures that parties consent to arbitration and they are not coerced or defrauded into agreeing to arbitrate. 

Arbitration would have denied insurer of effective vindication of its federal statutory claims under Racketeer Influenced and Corrupt Organizations (RICO) Act, and therefore “effective vindication” exception to Federal Arbitration Act (FAA) applied, allowing pending arbitrations to be stayed and any new arbitrations to be enjoined, in insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated massive and complex RICO scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals, since thousands of allegedly baseless arbitrations helped to further alleged scheme that was impossible to detect on individual case basis.

The effective vindication doctrine, which is a judge-made exception to the Federal Arbitration Act (FAA) that invalidates, on public policy grounds, arbitration agreements that operate as a prospective waiver of a party's right to pursue statutory remedies, serves as a way to reconcile the FAA with all the rest of federal law and prevent arbitration clauses from choking off a plaintiff's ability to enforce congressionally created rights; therefore, the exception furthers the purposes of the FAA, which reflects a federal policy favoring the enforcement of valid contracts for arbitration that is, arbitration as a streamlined method of resolving disputes, not as a foolproof way of killing off valid claims.

The effective vindication doctrine, which is a judge-made exception to the Federal Arbitration Act (FAA) that invalidates, on public policy grounds, arbitration agreements that operate as a prospective waiver of a party's right to pursue statutory remedies, stems from the principle that other federal statutes are on equal footing with the FAA.

The effective vindication doctrine, which is a judge-made exception to the Federal Arbitration Act (FAA) that invalidates, on public policy grounds, arbitration agreements that operate as a prospective waiver of a party's right to pursue statutory remedies, applies in rare cases where an arbitration agreement prevents parties from effectively vindicating their statutory rights.

Federal statutory claims under Racketeer Influenced and Corrupt Organizations (RICO) Act can be the subject of arbitration agreements generally.

The Anti-Injunction Act (AIA) furthers the objective of permitting state courts to try state cases free from interference by federal courts by generally prohibiting injunctions of pending state-court proceedings subject to narrowly tailored exceptions. 

The effective vindication doctrine, which is a judge-made exception to the Federal Arbitration Act (FAA) that invalidates, on public policy grounds, arbitration agreements that operate as a prospective waiver of a party's right to pursue statutory remedies, intends to balance the liberal federal policy favoring the enforcement of valid arbitration agreements with the recognition that other federal statutes are on equal footing with the FAA, and it does so by permitting interference with arbitration in limited circumstances. 

Racketeer Influenced and Corrupt Organizations (RICO) Act created uniquely innovative federal remedy that did not exist at common law and Congress modeled civil RICO on Clayton Act which was exclusive federal remedy, favoring application of expressly-authorized exception to Anti-Injunction Act (AIA) to insurer's action against health care providers and related individuals and entities that treated automobile accident victims, alleging they operated complex RICO scheme to fraudulently obtain New York no-fault benefits by, inter alia, providing unnecessary treatment and services and kickbacks for patient referrals, so that providers and related individuals and entities could be preliminarily enjoined from proceeding with hundreds of already-pending state-court cases. 

The Anti-Injunction Act (AIA) does not prevent a federal court from restraining a party from instituting future state proceedings.

The Anti-Injunction Act (AIA) reflects the dual system of federal and state courts, and its core message is one of respect for state courts.

Any doubts as to the propriety of a federal injunction against state court proceedings should be resolved in favor of permitting the state courts to proceed, since the Anti-Injunction Act (AIA) is limited only by the three specifically defined, narrow exceptions.

Application of the Anti-Injunction Act (AIA) is a question of law that is reviewed de novo. 

For the exception under the Anti-Injunction Act (AIA) to apply, which allows federal courts to enjoin state-court proceedings when expressly authorized by Act of Congress, Congress must have created a specific and uniquely federal right or remedy, enforceable in a federal court of equity, that could be frustrated if the federal court were not empowered to enjoin a state court proceeding.

A concurrence controls a majority opinion when it takes the narrowest ground to decide the case.

The exception under the Anti-Injunction Act (AIA), which allows federal courts to enjoin state-court proceedings when expressly authorized by Act of Congress, applies in unusual cases involving a pattern of baseless state-court proceedings that further a violation of a relevant federal statute. 

Exclusive federal jurisdiction is not required to conclude that Congress intended to create a uniquely federal right or remedy, to apply the exception under the Anti-Injunction Act (AIA), which allows federal courts to enjoin state-court proceedings when expressly authorized by Act of Congress. 

 

FLEMING’S FINEST
Katherine A. Fleming

[email protected]

10/29/24       Ginsberg v. Harleysville Worcester Ins. Co.
Delaware Supreme Court
Spouses’ Polices Ambiguous Where They Permitted Stacking but Limited Recovery to One Policy With the Highest Limit Where Two or More Vehicles Owned or Leased by Persons Residing in Same Household Issued by Same or Affiliated Insurers

Two spouses insured their cars with separate but nearly identical insurance policies from the same carrier. In a car crash with an uninsured drunk driver, the wife died, and her son was seriously injured. The husband and the child’s father as guardian ad litem sought uninsured motorist coverage from both policies. The statute at issue limited recovery to the one policy with the highest limit of liability where two or more vehicles owned or leased by persons residing in the same household are insured by the same insurer or affiliated insurers. Both policies had identical limits, and the spouses and son were all covered under both policies as members of the same household. The carrier agreed to pay the limit for one policy. The insureds were not allowed to combine or stack the policies. The husband and the son’s guardian both signed a release to recover under the wife’s policy.

When the plaintiffs sued for breach of contract, the Superior Court agreed with the carrier that the Insurance Code limited coverage to one policy and dismissed the complaint. The court concluded that the law was intended to prevent stacking of all policies issued by the same carrier as long as the anti-stacking provision is in the contract.

The Delaware Supreme Court reversed and remanded, holding the Insurance Code does not prohibit combining or stacking under/uninsured coverage policies by the same carrier to insureds in the same household. Instead, the code requires that the court limit coverage to “the highest limit of liability” set by either insurance policy. Here, in their “Other Insurance” provisions, both policies allowed stacking. But the policies also provided that, when the same or affiliated carriers provide coverage to insureds in the same household, the coverage is limited to the policy with the “highest limit of liability.” In each policy, the two policy provisions conflicted, so the court determined that the policies were ambiguous and interpreted the policies in favor of the insureds. The “Other Insurance” provisions with their permissive stacking provisions provide the “highest limit of liability.” Thus, the court determined that the highest limit of liability across the policies was the coverage provided by one policy as primary with the second policy providing “excess” coverage.

 

GESTWICK’S GARDEN STATE GAZETTE
Evan D. Gestwick

[email protected]

 

10/28/24      Century Indem. Co. a/s/o CCI Ins. Co. a/s/o Ins. Co. of N. Am. v. The Diocese of Trenton et al.
District Court of New Jersey
Court Finds No Case or Controversy in Declaratory Judgment Action Brought, in Part, to Obtain Discovery to Better Assess its Coverage Determination

In 2019, the New Jersey Legislature passed the Child Victims Act, a statute reviving the otherwise-expired statute of limitations applicable to claims of childhood sexual abuse. After the passing of the statute, tens of thousands of claims were brought nationwide, against school districts, dioceses, the Boy Scouts and Girl Scouts, and many other organizations.

After the passage of the CVA, dozens of claims were brought against the Diocese of Trenton, New Jersey. The alleged periods of abuse ranged from 1957 to 1972. During that time, Century insured the Diocese under general liability insurance policies. Once the CVA lawsuits were tendered to Century for consideration of coverage, Century began providing a courtesy defense to the Diocese under a reservation of rights. This reservation allowed Century to continue its investigation and potentially withdraw from the defense and deny indemnity at a later time, if evidence was found suggesting the lack of coverage for the claims.

Century brought this action seeking, in part, a declaratory judgment that it had no obligation to indemnify the Diocese. In its Complaint, Century mentioned that, while the Diocese had provided it with some information regarding the applicability of coverage, it needed to take formal discovery from the Diocese to perform a full coverage analysis.

The Diocese moved to dismiss the complaint for lack of subject-matter jurisdiction, on the ground that Century did not plead a valid case or controversy, and that the case was not ripe for decision. Under federal procedural law, the dispute must be sufficiently concrete (i.e., ripe) to maintain the case. In other words, federal courts do not decide issues that rest upon contingent future events that either may not occur as anticipated, or that may not occur at all. The controversy must be real, and not hypothetical, to maintain a case in federal court.

Here, the Court noted that Century referenced a need to conduct discovery in order to obtain more information to allow it to continue assessing its coverage position. The Court went so far as to hold that Century’s “ultimate intent” of bringing the action was this mission—to obtain discovery. For this reason, the Court dismissed the case, finding that there was no valid case or controversy. The Court noted that the case would ripen after the Diocese sought indemnification, upon a finding of liability in the underlying CVA cases.

Editor’s Note: Oh boy. Carriers bring declaratory judgment actions all the time, seeking judicial permission to withdraw from a defense they are currently providing to their insured, and a declaration that they also have no duty to indemnify. Most often, these are (and should be) brought before a finding of liability is made against the insured in the underlying tort action. Century did not request a declaration allowing it to withdraw from the defense—if it had, perhaps the result would have been different. Anyway, isn’t the point of discovery to confirm the parties’ respective legal positions? Find me a lawyer who has never had their view of a case altered by something they learned during discovery. I’d agree that if the sole purpose is to take advantage of the discovery procedures, and no actual, immediate relief is sought, there is probably no controversy. But here, Century asked for a declaration of no indemnity. Since when are carriers required to wait on a determination of liability before asking for this?

 

O’SHEA RIDES the CIRCUITS
Ryan P. O’Shea

[email protected]

11/05/24       Lior Abraham v. State Farm Gen. Ins. Co.
United States Court of Appeals, Ninth Circuit
Subjective Misconception of Consent Does Not Qualify as an Accident or an Occurrence

This matter looks to California state claims for breach of contract, contractual bad faith, and declaratory relief involving sexual assault claims asserted against State Farm’s insured, Abraham.

The district court granted State Farm summary judgment for lack of an “occurrence” or “accident.” Two policies were in play, a Renters Policy and a Personal Umbrella Liability Policy. Both were issued by State Farm. State Farm denied and disclaimed coverage for Abraham’s alleged sexual assault.

Abraham consented there were questions of fact as to whether he intended to hurt the victim and whether the victim consented to his advances. The Court of Appeals disagreed. The appellate court noted that an “occurrence” or “accident” in California is an unexpected, unforeseen, or undesigned happening. It reasoned that where an insured’s intended acts result in an injury, the act is not an accident merely because the insured did not intend to cause the injury.

Buttressing the court’s analysis is the fact that the insured’s subjective intent, under California law, is irrelevant; and an insured’s mistaken belief regarding consent does not turn a voluntary act into an accident. Apparently, Abraham presented no legal authority for his argument that a reasonable mistake regarding consent would convert his intentional act into an accident.

Instead, the Court looked to cases that held the exact opposition, Quan v. Truck Ins. Exch., 67 Cal. App. 4th 583, 599 (1998); and Lyons v. Fire Ins. Exch., 161 Cal. App. 4th 880, 889 (2008). Nor did the court find Abraham presented any evidence that California would overturn or modify this rule.

For the above reasons, the Ninth Circuit affirmed State Farm’s grant of summary judgment.

 

ROB REACHES the THRESHOLD
Robert J. Caggiano

[email protected]

10/30/24       Pacannuayan v. New York City Transit Authority, et al
Appellate Division, Second Department
Second Department Reverse Granting of Defendants’ Summary Judgment Motion Dismissing the Complaint on the Ground that Plaintiff Did Not Sustain a Serious Injury Pursuant to §5102(d) Where Plaintiff’s Experts’ Submissions Raised Triable Issues of Fact in Opposition

By way of background, this matter stems from an incident on December 12, 2018, where Plaintiff Zennia Santos Pacannuayan was a pedestrian in a crosswalk in Queens, New York, when she was struck by a New York City bus. Plaintiff sued Defendant New York City Transit Authority, amongst other entities, and its agent driver. As a result of the accident, she alleged injury to her lumbar spine, cervical spine and left shoulder. She further alleged serious injury under the following categories of Insurance Law § 5102: permanent consequential limitation of use, significant limitation of use, significant disfigurement/scarring, and ‘90/180’.

Defendants collectively moved for summary judgment to dismiss the complaint arguing Plaintiff did not sustain any claimed serious injury pursuant to § 5102(d). In support, Defendants submitted a medical report from an orthopedic physician who performed an IME of the Plaintiff, an expert radiology report, and Plaintiff’s sworn testimony from both a 50h hearing and examination before trial. At the trial level, the Supreme Court, Queens County, granted Defendants’ motion in full.

On review, the Second Department first noted that Plaintiff did not challenge in her appeal the finding that Defendants had met their initial burden of proof for summary judgment – but rather argued that her submissions in oppositions created triable issues of fact to whether she sustained a serious injury pursuant to § 5102(d). The Second Department agreed.

Specifically, Plaintiff submitted an affirmed report of an expert neurologist who sufficiently opined to both the causation of her alleged cervical spine and specific measured limitations. Additionally, the expert neurologist adequately addressed issues of degeneration and preexisting injuries which were raised by the Defendants’ experts. This report was found to adequately raise triable issues of fact as to whether Plaintiff sustained a serious injury to her cervical spine under the permanent consequential limitation of use and significant limitation of use categories of § 5102(d).

Also, the Second Department found that Plaintiff’s own affidavit submitted in opposition to Defendants’ motion sufficiently explained a gap in treatment, where she averred that she stopped treatment after her no-fault benefits were terminated and she could no longer pay for treatment.

Accordingly, the Second Department unanimously reversed the Order of the Supreme Court, Queens County, to deny Defendants’ motion for summary judgment in full. However, interestingly, this full reversal was made even though the Second Department did not address Plaintiff’s additional injury claims to her lumbar spine and left shoulder – nor the 90/180 day or significant disfigurement/scarring category assertions.  

 

LABARBERA’S LOWER COURT LIBRARY
Isabelle H. LaBarbera

[email protected]

10/16/24                  Liberty Mut. Ins. Co. v. Ortiz
New York State Supreme Court, County of New York
Court Upheld Insurer’s Denial of Payment to Medical Providers on No-Fault Claim Based on Material Misrepresentation on Application Regarding Named Insured and Ownership of Insured Vehicle

Liberty Mutual Insurance Company and LM General Insurance Company (“Plaintiff”) commenced a declaratory judgment action after receiving notice of a claim seeking reimbursement of No-Fault benefits following an automobile accident. Plaintiff sought a court declaration that it was not obligated to make payment to the various medical providers.

After an automobile accident on May 28, 2021, Erika Ortiz (the “Claimant”) submitted bills to Plaintiff seeking coverage and reimbursement under an automobile insurance policy issued by Plaintiff to the Claimant’s mother, Noemi Ortiz (the “Insured”).

After receiving notice of the claim, Plaintiffs investigated and found that the policy payments were made by Claimant, not the Insured. Following this discovery, Plaintiff requested an Examination under Oath (“EUO”) of both the Insured and Claimant. The Insured failed to appear for her EUO. Claimant appeared and testified that she purchased the insured vehicle and made policy payments through her own bank account. Claimant further testified that the Insured does not drive the car, live with the Claimant, or pay for the vehicle.

After Claimant’s EUO, Plaintiff denied coverage and any obligation to pay the bills submitted by the various medical providers, based on the Insured’s material misrepresentation in obtaining the policy.

In the declaratory judgment action, Plaintiff obtained a default judgment against the non-appearing medical provider defendants and Claimant.  After obtaining the default, Plaintiff moved for summary judgment against the remaining appearing medical provider defendants.

Plaintiff argued that the Insured had made a material misrepresentation on the application for the subject policy, and it was therefore entitled to disclaim coverage, and deny reimbursement in relation to the loss.

An insurer is entitled to deny coverage under New York Insurance Law § 3105 based on a material misrepresentation on an application for insurance. A misrepresentation is deemed material if the insurer would have refused to issue the policy had it known about the misrepresented facts.

In support of the motion for summary judgment, Plaintiff submitted an affidavit from an underwriter, explaining that had Claimant been named as an insured on the policy application, the policy would not have been issued. The affidavit stated that the Claimant had applied for a policy with Plaintiff as the only named insured, the quote would have been rejected due to the Claimant’s driving record and/or claims history.

The appearing medical provider defendants failed to offer any evidence creating an issue of fact regarding the Insured’s material misrepresentation in acquiring the policy.

As such, the court granted Plaintiff’s motion for summary judgment and upheld the denials of all claims for No-Fault benefits stemming from the May 28, 2021, automobile accident involving the Claimant. The court declared that Plaintiff had no duty to provide No-Fault reimbursement to the appearing defendants, or for any claim or bill submitted on behalf of the Claimant.

 

LEXI’S LEGISLATIVE LOWDOWN
Lexi R. Horton

[email protected]

11/06/24          New York Assembly Bill A9149
A Proposed Act to Amend Insurance Law to Regulate the Use of Artificial Intelligence for Utilization Review

Assembly Bill A9149 seeks to amend insurance law that would require notice when an insurer authorized to write accident and health insurance used artificial intelligence-based algorithms in the utilization review process.

The legislation would require that insurers submit the artificial intelligence-based algorithms and training data sets that are being used or will be used in the utilization review process to the department. The review will allow the department to certify that such algorithms and training data sets have minimized the risk of bias.

A violation of this legislation would result in (1) suspension or revocation of license; (2) refusal, for a period not to exceed one year, to issue a new license; (3) a fine of not more than $5,000 per violation; or (4) a fine of not more than $10,000 for each willful violation of this section.

 

NORTH of the BORDER
Heather A. Sanderson, K.C.
Sanderson Law
Calgary, Alberta, Canada

[email protected]

10/28/24       Hillyer v Tilley
Newfoundland and Labrador Court of Appeal
In Canada, the Entitlement to Damages, as Well as the Calculation of Those Damages is a Substantive Legal Right, That is Governed by the Law of the Province Where the Right to Those Damages Arose

The Newfoundland & Labrador’s decision in Tilley v. Hillyer clarifies Canadian law on inter-provincial claims in general and auto claims in particular.

Brenda and Brittany Tilley are residents of Newfoundland. In 2005, they boarded a bus operated by Parsons & Sons, a company that is incorporated, licensed and insured in Newfoundland. The driver of that bus was a resident of Newfoundland.

The bus traveled via ferry to Nova Scotia.  While in Nova Scotia, that bus collided with part of a bridge near Antigonish, Nova Scotia. Both Brenda and Brittany were injured.

Eventually, Brenda and Brittany sued the Parsons bus company and its driver in the Newfoundland Supreme Court (trial level) for injuries sustained in the accident in Nova Scotia. At issue was whether the law of Nova Scotia applied to their injury claims. There was a significant difference between Nova Scotia and Newfoundland as to the amount that they could recover. The Province of Nova Scotia had passed legislation limiting the possible award for general, non-pecuniary, damages in respect of the defined term “minor injuries” to C$2,500. No such limiting legislation existed in Newfoundland on the date of this bus accident. The parties applied to the Court for a determination as to whether the law of Nova Scotia (lex loci delicti) applied to the calculation of general damages for those whose injuries would be considered minor injuries under Nova Scotia law.

That application was heard in March 2022. The application judge held that the law of Newfoundland applied to the calculation of the general damages owing to all who were on the bus that day. In doing so he acknowledged that:  The leading Canadian case dealing with conflict of laws is the Supreme Court of Canada’s decision in Tolofson v. Jensen1994 CanLII 44 (SCC), [1994] 3 S.C.R. 1022;  that Tolofson has been interpreted as saying that Canadian conflicts law dictates that the substantive law of the place where a wrong occurs governs litigation arising from that wrong regardless of where the litigation takes place.  However, the procedural law --namely, the rules, directions, or other laws that facilitate a forum court’s conduct of litigation – is governed by the place where the lawsuit is brought. Is the calculation of general damages substantive or procedural?

The application judge held that the jurisdiction where the tort occurred determines whether damages are available and, if so, under what heads. This is substantive. It is the definition of a right. The forum where the litigation is occurring, in this case, Newfoundland, determines how to assess the damages under the heads that are available. This, he said, is procedural, as it is the awarding, through calculation, of a remedy.  Accordingly, the law of Newfoundland applied to determine the general damages available to these plaintiffs.

The Defendants appealed.

In a decision released October 28, 2024, the Newfoundland Court of Appeal held that the law of Nova Scotia applied to the calculation of general damages. That Court held that “it is well-established that the rights of litigating parties are matters of substantive law, and a damages award is a substantive right.  It is also well-established that procedural law is law that applies to the conduct of litigation in a forum court, for the purpose of making the machinery of the forum court run smoothly respecting the assertion and enforcement of the litigating parties’ substantive rights.” Following a thorough review of the Tolofson decision and Canadian conflict of laws between provinces, the Court of Appeal held that the calculation of general damages is substantive law, not procedural law. Accordingly, the law of Nova Scotia must be applied to the non-pecuniary, general damages claims of those involved in the bus accident who suffered what the law of Nova Scotia defines to be “minor injuries”.

This well-reasoned appeal level decision establishes that the law of the province where the entitlement to damages arose determines two key issues:

  1. The right to claim damages;
  2. The calculation of the amount of those damages.

Time will tell if this decision is appealed to the Supreme Court of Canada.

 

© Hurwitz Fine P.C. 2024
All rights reserved

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