Tuesday, November 24, 2015

Replacement Cost Coverage Denied to Insured Who Did Not Replace the Dwelling Within Two Years or Show That His Actual Repair/Replacement Costs Exceeded the Insurer's ACV Payment

Mateyunas v. Cambridge Mut. Fire Ins. Co.
(Sup. Ct., Queens Co., decided 7/16/2015)

Plaintiff's residence was damaged in a fire in 2011 while insured under a policy of homeowners insurance issued by the defendant.  Under the policy defendant was obligated to pay no more in replacement cost coverage than the least of:
(a) the limit of liability under the policy that applied to the building;
(b) the replacement cost of that part of the building damaged for like construction and use on the same premises; or
(c) the necessary amount actually spent to repair or replace the damaged building.
An appraisal of plaintiff's dwelling loss was conducted, resulting in an appraisal ACV award of $400,008.90, and a RCV award of $451,232.98.  At some unspecified time prior to the two-year anniversary of the fire defendant paid a total of $415,232.98 to the plaintiff for his dwelling loss.  Plaintiff did not, however, repair or replace the damaged dwelling prior to the two-year fire anniversary. He sued just within that two-year period, however, alleging that defendant owed him more monies under the dwelling, personal property, and ALE coverages of his policy with defendant.  Both plaintiff and defendant moved for summary judgment.

In GRANTING the defendant insurer's motion for summary judgment with respect to plaintiff's dwelling loss claim, the Supreme Court held:
Defendant has paid plaintiff the amount of $415,232.98 on plaintiff’s claim for loss to his dwelling, and asserts that no further amount is due, as plaintiff has been paid the actual cash value of the dwelling as determined by the umpire. Defendant contends that the language of the Policy permits the withholding of the difference between the actual cash value and the replacement cost until the repair or replacement is completed, because only at that time could defendant ascertain whether the actual cash value or the amount spent on repairing or replacing the property is the lesser amount to which plaintiff is entitled. Defendant further contends that the replacement of the dwelling was not completed within the two-year-from-date-of-loss period required by the Policy, and that plaintiff has not demonstrated the actual cost of the replacement to be in excess of the amount already paid to plaintiff. Plaintiff contends that he is entitled, by the unreserved terms of the policy, to the replacement amount as set by the umpire; that the two-year period is unreasonable and he was entitled to notification by defendant of such limited period; and that his actual expenses exceeded the amount already paid to him, as evidenced by the bills, checks and credit card receipts he included, for the first time, in his opposition/reply papers.  
*  *  *  *  *
The court agrees with the moving parties herein that the Policy terms regarding dwelling loss are unambiguous. Pursuant to the Policy, plaintiff would be entitled to payment, of up to the amount of the replacement cost loss, upon his completion of the replacement of the dwelling within two years and his submission of proof of the costs of replacement in excess of the actual cash loss to the dwelling. Otherwise, plaintiff would be entitled only to the actual cash loss to the dwelling, which amount has already been received by plaintiff. Plaintiff’s contention that he is entitled to the stated replacement cost loss recovery purely by reason of his having maintained a “replacement loss” policy is without merit. Plaintiff does not deny that he failed to complete the replacement of the dwelling within the requisite two-year period, nor has he shown that his expenses incurred in replacing the dwelling exceeded the amount already paid to him. His introduction of the untimely, unexplained, and unsworn-to photocopies of bills, checks and credit card statements are inadmissible to evidence entitlement to summary judgment (see CPLR 3212 [b]; Seidman v Industrial Recycling Props., Inc., 52 AD3d 678 [2008]; see also CPLR 4533[a]; Daguerre S.A.R.L. v Rabizadeh, 112 AD3d 876 [2013]; Matell Contracting Co., Inc. v Fleetwood Park Development, LLC, 111 AD3d 681 [2013]). Plaintiff has failed to submit an affidavit of a person with first-hand knowledge of the facts, and counsel’s reply affirmation herein, made without asserting any personal knowledge of the facts, did not satisfy the statutory requirements of CPLR 3212, because it did not serve as a vehicle to submit admissible documentary evidence[.] 
The court denied both parties' motions for summary judgment with respect to plaintiff's ALE claim, holding that neither party carried its burden of eliminating all material issues of triable fact.

Note:  this is an unreported decision from a trial-level New York state court.  Cite and rely on it accordingly.

9 Assignees + 6 MVAs + 2 Defenses = 9 Separate Actions -- Severance Granted

Austin Diagnostic Med., P.C. v Mercury Cas. Co.
(App. Term, 2nd Dept., decided 11/13/2015)

Plaintiff provider commenced this action to recover first-party no-fault benefits as assignee of nine individuals. The complaint alleged separate causes of action for each assignor. Defendant insurer moved pursuant to CPLR 603 to sever the second through ninth causes of action into separate actions, arguing that the nine causes of action arose out of six separate motor vehicle accidents and that each of the nine causes of action involves different questions of fact and law. Civil Court denied defendant's motion.

In REVERSING Civil Court's order and granting Mercury's motion to sever, the Appellate Term held:
Defendant's answer clearly places at issue with respect to each assignor, among other things, the necessity and reasonableness of the particular medical services rendered and whether the amount sought to be recovered in each cause of action exceeded the amount permitted by the workers' compensation fee schedule. The facts relating to each claim are therefore likely to raise few, if any, common issues of fact (see Radiology Resource Network, P.C. v Fireman's Fund Ins. Co., 12 AD3d 185 [2004]). 

Monday, November 23, 2015

No-Fault Insurer Establishes EUO No-Show Defense on Summary Judgment Motion

Palafox PT, P.C. v State Farm Mut. Auto. Ins. Co.
(App. Term, 2nd Dept., decided 11/12/2015)

What must a no-fault insurer demonstrate to establish its prima facie case when moving for summary judgment on an assignor EUO no-show defense?  Three things:
(1) that it twice duly demanded an EUO from the provider's assignor; 
(2) that the assignor twice failed to appear; and
(3) that the insurer issued a timely denial of the claims arising from the provider's treatment of the assignor. 
The provider in this case argued that defendant State Farm was not entitled to summary judgment because it had not responded to plaintiff's discovery demands on the reasonableness of State Farm's EUO requests.  The Appellate Term disagreed:
A party who contends that a summary judgment motion is premature is required to demonstrate that discovery might lead to relevant evidence or [that] the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the movant (Cajas-Romero v Ward, 106 AD3d 850, 852 [2013]; see CPLR 3212 [f]). Here, in support of their contention that the [insurer's] motion was premature, the [providers] did not establish what information they hoped to discover that would demonstrate the existence of a triable issue of fact" (113 AD3d at 597).  
Similarly, in the instant case, plaintiff did not establish what information it hoped to discover that would demonstrate the existence of a triable issue of fact (cf. American Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441 [2015]).

Wednesday, November 18, 2015

Not UM and SOL

Matter of American Transit Ins. Co. v. Rosario
(1st Dept., decided 11/17/2015)

If your insured's New York lawsuit against the Pennsylvania liability insurer of the tortfeasor's vehicle was dismissed for lack of  personal jurisdiction, is that vehicle uninsured?  And what's the statute of limitations for making a UM coverage claim?

Rosario allegedly was injured in a 2004 motor vehicle accident in Bronx County with Carela, who was insured by American Independent Insurance Company, a Pennsylvania corporation.  Rosario brought a personal injury action action and in 2009 obtained a default judgment against Carela.  In 2012 Rosario sued American Independent in Bronx County Supreme Court under New York Insurance Law § 3420(a)(2) to collect on her default judgment against Carela.  In 2013 American Independent's motion to dismiss Rosario's direct action was granted on the ground that Rosario lacked personal jurisdiction over American Independent.

Rosario then made and demanded arbitration of her claim for uninsured motorists (UM) coverage benefits from her own auto insurer, American Transit, claiming that the 2013 dismissal of her direct action against American Independent rendered the Carela vehicle "uninsured".  American Transit commenced this special proceeding for a permanent stay of Rosario's UM claim arbitration, arguing that the applicable six-year limitations period had expired. Supreme Court rejected that argument and denied the petition, leading to this appeal.

In REVERSING Supreme Court's order and granted the petition for a permanent stay of arbitration, the Appellate Division, First Department, held that the applicable six-year statute of limitations had expired:
A claim for UIM benefits is governed by the six-year statute of limitations applicable to contract actions (see Matter of De Luca [Motor Veh. Acc. Indem. Corp.], 17 NY2d 76, 79 [1966]). The claim accrues either when the accident occurs or when subsequent events render the offending vehicle uninsured (Matter of Allstate Ins. Co. v Morrison, 267 AD2d 381, 381 [2d Dept 1999]). Since there is more than a six-year lapse between the accident and the demand for arbitration, respondent must show that a later accrual date than the accident date is applicable, and that due diligence was used to determine whether the offending vehicle was insured on the date of the accident (id. at 381-382). Respondent failed to make this showing. 
The First Department also held that a dismissal of a direct action against the tortfeasor vehicle's liability insurer does not render that vehicle "uninsured":
Supreme Court's ruling that there was no personal jurisdiction over American Independent in New York was not an event that rendered the offending vehicle uninsured within the meaning of Insurance Law § 3420(f)(1) (see American Tr. Ins. v Barger, 13 Misc 3d 386, 389 [Sup Ct, NY County 2006]). Rather, it was simply a ruling that respondent could not pursue its action against American Independent in a New York court (accord Matter of Government Empls. Ins. Co. v Basedow, 28 AD3d 766 [2d Dept 2006]; Matter of Eagle Ins. Co. v Gutierrez—Guzman, 21 AD3d 489 [2d Dept 2005]). Because no event rendered the offending vehicle uninsured, the statute of limitations for respondent's UIM claim began to run on the date of the accident, May 6, 2004, and expired six years later. Accordingly, respondent's demand for UIM arbitration, filed on or about February 10, 2014, was untimely and the arbitration should be permanently stayed.

Sunday, November 15, 2015

Form Over Substance Does Matter -- Having Not Asserted Collateral Estoppel as an Affirmative Defense, No-Fault Insurer Is Denied Dismissal of Provider's Recovery Action

Downtown Acupuncture PC v. State Wide Ins. Co.
(NYC Civ. Ct., Kings Co., decided 10/22/2015)

In 2010, State Farm Mutual Automobile Insurance Company commenced a declaratory judgment action in Nassau County Supreme Court against Downtown Acupuncture PC and other PCs purportedly owned not by licensed professionals but by Valentina Anikeyeva, In 2013, Supreme Court granted State Farm's motion to strike the defendant PCs' answer in that action based on the defendants' non-compliance with a so-ordered discovery stipulation and, based on the defendants' default in pleading, further granted judgment to State Farm, finding that
the overwhelming evidence indicates that the P.C. defendants were not owned and controlled by a licensed acupuncturist, therefore rendering them ineligible to receive reimbursement, and to collect payment on outstanding claims. Additionally, a billing provider which utilizes an independent contractor to provide the services in question, is not a "provider" of the services in question and is not entitled to recover direct payment of assigned no-fault benefits from the defendant insurer. 
In July 2015 the Second Department affirmed that decision, finding that the defendant PCs had failed to demonstrate reasonable excuse for their default in complying with the terms of the conditional order and a meritorious defense to the complaint. 

In this 2004-commenced action, defendant State Wide Insurance Company moved on the eve of trial in late 2014 to dismiss this action based on the doctrine of collateral estoppel, arguing that the Nassau County Supreme Court order and judgment in the State Farm DJ action precluded plaintiff from arguing that it was entitled to receive no-fault benefits.  

Noting that a New York no-fault insurer's Mallela defense is not subject to preclusion "and hence is non-waivable", Kings County Civil Court Judge Katherine Levine nevertheless denied State Wide's dismissal motion, holding:  
This Court cannot even entertain defendant's request for collateral estoppel until it seeks to amend its answer to raise Mallela as a defense and hence create an apparent identity of issues between the DJ action and the instant matter. In the same motion to amend it can also assert collateral estoppel. After defendant formally moves to amend, plaintiff will be afforded the opportunity to argue how it would be prejudiced by such a motion. The Court is quite dubious that plaintiff will be able to show any prejudice or surprise since the Appellate Term noted as early as 2012 that "(t)here exists a rich history of litigation, involving a multitude of cases before the Appellate Term, in which health care facilities allegedly owned by Ms. Anikeyeva have been asked to supply Mallela discovery." Lexington Acupuncture PC, supra, 35 Misc 3d at 49 (Golia, J. concurring). However, sometimes form over substance does matter and plaintiff must be afforded the opportunity to argue prejudice or disclaim the apparent identity of issues.
Justice delayed is justice denied?  Probably not in this case, given Judge Levine's expressed dubiousness. I see a motion to amend and dismiss coming.  

Saturday, November 14, 2015

Denial of Personal Auto Liability Coverage Based on Bodily Injury to Resident Relative of Insured Exclusion Upheld

Harrell v. State Farm Ins. Co.
(3rd Dept., decided 11/12/2015)

State Farm insured George Birdwell under a personal auto policy.  The policy excluded liability coverage for "bodily injury to: . . . c. any other person who both resides primarily with an insured and who: (1) is related to that insured by blood, marriage or adoption."  Birdwell also had a personal umbrella policy with State Farm.

Birdwell son, William Harrell, was involved in a two-car motor vehicle accident while driving Birdwell's car.  Harrell's wife, who was then pregnant with the couple's child, was a passenger in the Birdwell vehicle at the time. Thereafter, Trina Harrell commenced a personal injury action, individually and on behalf of the Harrell's child, against the driver of the second vehicle.  Eventually William Harrell and George Birdwell were joined as defendants in that lawsuit and sought liability coverage from State Farm.

Citing the BI to resident relative exclusion, State Farm denied liability coverage to Harrell and Birdwell, and they commenced this declaratory judgment action.  On cross motions for summary judgment Supreme Court granted judgment to State Farm and plaintiffs appealed.

In AFFIRMING judgment to State Farm, the Appellate Division, Third Department, agreed that Birdwell's auto policy unambiguously excluded liability coverage for injuries to the child:
Plaintiffs concede that they both qualify as "an insured" as defined in the policy. At the time of the accident, the child resided primarily with Harrell, who is her father. Thus, as the child both resided primarily with an insured and is related to that insured, there is no coverage for her injuries for either plaintiff (see Pfoh v Electric Ins. Co., 14 AD3d 777, 779 [2005], lv denied 4 NY3d 711 [2005]). This determination necessarily defeats the related claim under the umbrella policy. Accordingly, we find no error in Supreme Court's holding that defendant was not obligated to defend or indemnify plaintiffs under either of the subject policies.
The unborn child was residing with William Harrell, who qualified as an "insured" under his father's policy because Harrell was permissively operating the covered or insured auto.  Hence, the exclusion applied.

Bodily Injury Recovery from Non-Motor Vehicle Defendant Reduces SUM Coverage Recovery

Redeye v. Progressive Ins. Co.
(4th Dept., decided 11/13/2015)

Condition 11 of the prescribed New York Supplementary Uninsured/Underinsured Motorists (SUM) Endorsement (11 NYCRR § 60-2.3[f]) provides
11.  Non-Duplication: This SUM coverage shall not duplicate any of the following: 
(a) benefits payable under workers' compensation or other similar laws;
(b) non-occupational disability benefits under article nine of the Workers' Compensation Law or other similar law;
(c) any amounts recovered or recoverable pursuant to article fifty-one of the New York Insurance Law or any similar motor vehicle insurance payable without regard to fault;
(d) any valid or collectible motor vehicle medical payments insurance; or
(e) any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds.
Plaintiff was a pedestrian who was injured after a vehicle operated by a drunk driver collided with a parked vehicle, which was propelled into plaintiff and two other pedestrians. Plaintiff commenced an action against the driver of the vehicle as well as a fire company that allegedly served the driver alcoholic beverages prior to the accident, and he received a settlement from both, the cumulative total of which exceeded plaintiff's SUM coverage limit with Progressive.

Contending that only his settlement from the vehicle's driver should reduce his SUM recovery, plaintiff claimed SUM coverage benefits from Progressive.  Progressive denied the SUM claim on the ground that plaintiff's SUM coverage was exhausted by the recovery from both the driver and the fire company, prompting plaintiff to commence this action.  Progressive moved for summary judgment, which Supreme Court granted.

In AFFIRMING summary judgment to Progressive, the Appellate Division, Fourth Department, rejected plaintiff's argument that Progressive improperly reduced his SUM coverage by the amount he had received in settlement from the fire company's general liability insurer:
Supreme Court properly granted defendant's motion for summary judgment seeking, inter alia, to dismiss the complaint. Plaintiff does not dispute that the SUM coverage is properly reduced by the amount he recovered from the driver's insurer. He contends, however, that it was improper to reduce the SUM coverage from the amount he received from the fire company under its general liability insurance policy. We reject that contention. Condition 11 (e) of the SUM endorsement under defendant's policy provided that SUM coverage "shall not duplicate . . . any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds." Here, the payment plaintiff received from the fire company's insurer was for bodily injury damages, and thus the amount of SUM benefits available to plaintiff was properly reduced by that amount (see Weiss v Tri-State Consumer Ins. Co., 98 AD3d 1107, 1110-1111).
Condition 6 of the prescribed SUM endorsement also provides:
6.  Maximum SUM Payments: Regardless of the number of insureds, our maximum payment under this SUM endorsement shall be the difference between:
(a) the SUM limits; and
(b) the motor vehicle bodily injury liability insurance or bond payments received by the insured or the insured's legal representative, from or on behalf of all persons that may be legally liable for the bodily injury sustained by the insured. 
The SUM limit shown on the Declarations is the amount of coverage for all damages due to bodily injury in any one accident.3 (The SUM limit shown on the Declarations for “Each Person” is the amount of coverage for all damages due to bodily injury to one person. The SUM limit shown under “Each Accident” is, subject to the limit for each person, the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident).4
Plaintiff also argued that the SUM endorsement of his policy with Progressive was ambiguous because Condition 11 conflicted with Condition 6 of that endorsement.  In rejecting that argument, the appellate court held:
Contrary to plaintiff's contention, the policy is not ambiguous and condition 11 does not conflict with condition 6 of the SUM endorsement (see generally Dean v Tower Ins. Co. of N.Y., 19 NY3d 704, 708; White v Continental Cas. Co., 9 NY3d 264, 267). Condition 6 provides that the maximum payment under the SUM endorsement is the difference between the SUM limit and any payments received from a motor vehicle bodily injury liability policy. It does not state that the difference is "the" SUM payment that is to be given to plaintiff, but rather it states that the difference is the "maximum" payment, which the average insured would understand to mean that it could be further reduced (see generally Dean, 19 NY3d at 708). Condition 6 and condition 11 together resulted in a reduction in the SUM benefits available by the total settlement received by plaintiff in his prior action.
Maximum is not the.  The is not maximum.  Got it.

I'm Legal, So to Speak

Twenty-one years ago today I unlocked the door of a single room on the 21st floor of the Rand Building and began the (ad)venture that has become Mura & Storm, PLLC.  With an inventory of 20 environmental coverage files and an SBA loan from HSBC collaterized by my already first- and second-mortgaged duplex in Amherst, New York, I hung out my shingle, having overnight announced to as much of the insurance world as I then had fax numbers for that the Law Office of Roy A. Mura was open for and accepting new business.  I was almost eight years an admitted lawyer at that point, confident only in two things:  (1) my family's support; and (2) the insurance coverage craft I had practiced since completing my two-year appointment as a confidential law assistant to the Appellate Division, Fourth Department, in Rochester in 1988.  I was very fortunate to have worked under and with some of the very best insurance coverage lawyers in Buffalo.

Thankfully, the dance that had brung me to that point continued, and those 20 files grew to over 6,000 to date, sustaining the many lawyers, paralegals and support staff individuals who called and continue to call the Law Office of Roy A. Mura, and then Mura & Storm their place of work.  In spite of its comparatively lower hourly billing rates, I chose the insurance coverage and defense shingle because I have always loved insurance coverage work.  That I became an insurance coverage lawyer isn't surprising, I suppose, having grown up reading William Safire's "On Language" column in the New York Times every Sunday.  Being a linguaphile and grammarian have long suited me.

So to the past and present clients and supporters of the (ad)venture originally known as the Law Office of Roy A. Mura, I say thank you.  We truly and deeply appreciate that you have enabled us to reach the law firm legal drinking age.  Cheers.  And another round, please.

Tuesday, November 3, 2015

Defending the Insured's Default Without Disclaiming Dooms the Declaratory Judgment Action

Montpelier US Ins. Co. v. 240 Mt. Hope Realty Co.
(SDNY, decided 10/22/2015)

I can see and understand what the insurer was trying to do here, but by not immediately disclaiming for late notice, it in effect conceded coverage.

12/07/12     tenant's pit bull bites a child attending a birthday party at the insured premises
01/07/13     insured served with summons and complaint
07/08/13     default judgment granted against insured
08/19/13     insurer (MUSIC) receives first notice of the incident, claim, suit and default
11/18/13     defense counsel retained by MUSIC succeeds in vacating the default
05/15/14     Appellate Division, First Department, reverses the vacatur and reinstates the default
06/12/14     MUSIC sends letter to insured reserving MUSIC's right to disclaim based on late notice
08/12/14     MUSIC commences declaratory judgment action in state court
02/13/15     MUSIC recommences DJ action in federal court

New York Insurance Law § 3420(d)(2) provides:
(2) If under a liability policy issued or delivered in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.
In GRANTING the insured's cross motion for summary judgment, the District Court agreed that MUSIC was required to defend and indemnify the insured the underlying personal injury action action due to MUSIC's failure to disclaim coverage in a reasonably timely fashion as required by Insurance Law § 3420(d)(2):
Time begins to run for purposes of such disclaimer when the insurer knows the grounds for its entitlement to disclaim. See First Fin. Ins. Co. v. Jetco Contracting Corp., 1 N.Y.3d 64, 66 (2003) ("[O]nce the insurer has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage, it must notify the policyholder in writing as soon as is reasonably possible."); accord Liberty Ins. Underwriters Inc. v. Great Am. Ins. Co., No. 11-CV-6973 (DLC), 2012 WL 2359876, at *6 (S.D.N.Y. June 20, 2012). And where Section 3420(d)(2) applies, the insured need not show prejudice from the delayed disclaimer; instead, the only question is whether the delay was "unreasonable." See Adams v. Chi. Ins. Co., 49 F. App'x 346, 349 n.** (2d Cir. 2002) (summary order); Jewish Cmty. Ctr. of Staten Island v. Trumbull Ins. Co., 957 F. Supp. 2d 215, 236-37 (E.D.N.Y. 2013) (citing cases); KeySpan Gas E. Corp. v. Munich Reinsurance Am., Inc., 23 N.Y.3d 583, 590 (2014) (noting that 3420(d)(2) "creates a heightened standard for disclaimer that depends merely on the passage of time rather than on the insurer's manifested intention to release a right as in waiver, or on prejudice to the insured as in estoppel" (internal quotation marks omitted)); First Fin. Ins., 1 N.Y.3d at 67 n.2 (noting that, under Section 3420(d)(2), "prejudice is of no legal relevance"). 
 Here, MUSIC had knowledge of sufficient facts to disclaim coverage when it received notice of the default judgment on August 19, 2013. At that point, MUSIC would indisputably have been entitled to disclaim on the ground that Defendants' notice was untimely and that MUSIC was prejudiced by the delay; in fact, there is an "irrebuttable presumption of prejudice" that applies when, as here, an insurer receives notice of a claim only after the insured's liability has been determined. See N.Y. Ins. Law § 3420(c)(2)(B). But MUSIC elected not to disclaim coverage and did not make any reservation of its right to disclaim coverage, instead taking up Defendants' defense in the underlying lawsuit; indeed, it did not disclaim coverage until nearly ten months later, on June 12, 2014. (See Compl. ¶¶ 30, 34; Defs.' Mem. 4, 6). That ten-month delay, with no explanation, is comparable to — indeed, longer than — unexcused delays that the Second Circuit and other courts have held to be unreasonable as a matter of New York law. See, e.g., Bluestein & Sander v. Chi. Ins. Co., 276 F.3d 119, 122 (2d Cir. 2002) (nine months); Adams, 49 F. App'x at 349 (eight months); First Fin., 1 N.Y.3d at 66 (forty-eight days); West 16th St. Tenants Corp. v. Pub. Serv. Mut. Ins. Co., 736 N.Y.S.2d 34, 35 (1st Dep't 2002) (thirty days); Colonial Penn Ins. Co. v. Pevzner, 698 N.Y.S.2d 310, 310 (2d Dep't 1999) (forty-one days); Hartford Ins. Co. v. Nassau Cnty., 46 N.Y.2d 1028, 1029-30 (1979) (two months); Allstate Ins. Co. v. Gross, 27 N.Y.2d 263, 266-67 (1970) (seven months); see also, e.g., N.Y. State Ins. Fund v. Mt. Vernon Fire Ins. Co., 371 F. App'x 207, 210 (2d Cir. 2010) (amended summary order) (discussing cases involving unexplained delays of two months and forty-eight days); cf. O'Dowd v. Am. Sur. Co. of N.Y., 3 N.Y.2d 347, 355 (1957) ("It is clear that when an insurer defends an action on behalf of an insured, in his stead, with knowledge of facts constituting a defense to the coverage of the policy, it is thereafter estopped from asserting that the policy does not cover the claim."). It follows that MUSIC must defend and indemnify Defendants and the latter are entitled to summary judgment. 
MUSIC unsuccessfully argued that its time to disclaim did not begin to run until the First Department, Appellate Division, reinstatement the default against the insured in the underlying personal injury action:
As the New York Court of Appeals has explained, in enacting Section 3420(d), the New York State Legislature "intended to expedite the disclaimer process, thus enabling a policyholder to pursue other avenues expeditiously." First Fin. Ins., 1 N.Y.3d at 68. Thus, the "timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage." Id. at 68-69 (internal quotation marks omitted) (emphasis added). Here, MUSIC first learned of the grounds for denial of coverage on August 19, 2013, when it received notice of the underlying lawsuit and the default judgment entered against Defendants. See, e.g., West 16th St. Tenants Corp., 736 N.Y.S.2d at 35 (holding that an insurer's thirty-day delay in disclaiming coverage was unreasonable as a matter of law because the lack of timely notice by the insured "was obvious from the face of the notice of claim" and the insurer "had no need to conduct an investigation before determining whether to disclaim"). At bottom, MUSIC's argument is that it was in the interest of Defendants for it to provide a defense until the appellate process ran its course. But that argument is effectively the same as the policy argument rejected by the New York Court of Appeals in First Financial Insurance Co. See 1 N.Y.3d at 69 (rejecting an argument that delays to explore other sources of insurance for policyholders "should be encouraged because they are for the benefit of the insured," explaining "that they may also be in the insurer's interest in reducing its ultimate risk, and further may detrimentally delay the policyholder's own search for alternative coverage"). And ultimately, in analyzing whether an insurer gave timely notice of its intent to disclaim coverage, it makes more sense to look at the delay in giving such notice and the reasons (or lack thereof) for that delay than it does to the results of litigation thereafter, which could conceivably take months or years to resolve.
In New York, the timeliness of a liability insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for the disclaimer of liability or denial of coverage.  Write that down.  Or memorize it.

Monday, November 2, 2015

Health Care Provider's Voluntary Discontinuance Without Prejudice Conditioned on Payment of No-Fault Insurer's Attorneys' Fees for Defending Discontinued Action

Walden-Bailey Chiropractic aao Harvey Siegel v. Erie Ins. Co.
(App. Term, 2nd Dept., decided 10/19/2015)

Plaintiff commenced this action in Queens County Civil Court and litigated it for three years before making an oral application for a discontinuance without prejudice.  Over defendant's objection, the court granted plaintiff's application.  Defendant Erie Insurance subsequently moved to modify the civil court's order to provide that the discontinuance was with prejudice and for attorneys' fees and sanctions. The court denied Erie's motion, and it appealed.

In MODIFYING the order appealed from to grant that part of Erie's motion that had sought attorneys' fees, the Appellate Term, Second Department, held:
Generally, courts are reluctant to compel a party to litigate (see DuBray v Warner Bros. Records, 236 AD2d 312, 314 [1997]), and it is well settled that courts have the discretion to grant a motion for discontinuance, without prejudice, if no special circumstances exist, such as prejudice to a substantial right of the defendant or other improper consequences (see Tucker v Tucker, 55 NY2d 378, 383 [1982]; GMAC Mtge., LLC v Bisceglie, 109 AD3d 874, 876 [2013]; Wells Fargo Bank, N.A. v Fisch, 103 AD3d 622, 622 [2013]; Mathias v Daily News, 301 AD2d 503, 504 [2003]; Valladeres v Valladares, 80 AD2d 244, 257-258 [1981], mod on other grounds sub nom Tucker v Tucker, 55 NY2d 378). "Unlike a motion for change of venue which involves the affirmative selection of another forum, a court in granting discontinuance merely makes it possible for the action to be brought elsewhere" (Urbonowicz v Yarinsky, 290 AD2d 922, 923 [2002] [citations omitted]). However, motions for discontinuance should not be used to enable plaintiffs to "do indirectly what they are not permitted to do directly" (Katz v Austin, 217 App Div 217, 218 [1946]; see also DuBray v Warner Bros. Records, 236 AD2d at 314).  
In support of the branch of its motion seeking to vacate or modify the February 6, 2013 order, defendant did not provide any information regarding the arguments that had been made before the Civil Court in support of, and in opposition to, plaintiff's oral application. Despite the fact that plaintiff subsequently commenced an action against defendant in the Civil Court, Bronx County, to recover the same no-fault benefits as sought herein, defendant's argument—that plaintiff sought the discontinuance because it did not have a witness to provide testimony establishing its billing and wanted to commence an action in the Civil Court, Bronx County, where a witness allegedly is not required to establish billing—is not supported by the record, which indicates that a trial had yet to commence in the case at bar. The record does not establish that plaintiff expressed its intention to discontinue the Queens County action in order to commence an action in Bronx County (cf. DuBray v Warner Bros. Records, 236 AD2d at 314). Consequently, defendant did not establish that plaintiff indirectly sought to do what it was not permitted to do directly, i.e. change venue, when it moved for discontinuance.  
Notwithstanding the foregoing, inasmuch as it is uncontroverted that defendant had defended the instant action for three years during which time it had made numerous motions, engaged in discovery practice, and repeatedly appeared in court, defendant is entitled to recover the reasonable attorney's fees it incurred in its defense of the instant action up to the date of discontinuance, in order to eliminate any possible prejudice attributable to the discontinuance (see Carter v Howland Hook Housing Co., Inc., 19 AD3d 146,146-147 [2005]). We pass on no other issue.
Bottom line:  plaintiff health care provider gets to discontinue its Queens County Civil Court action without prejudice and recommence it in Bronx County Civil Court BUT it must pay Erie's attorneys' fees for defending the Queens County Civil Court action for three years.

"Continuous Input" Not Required for Public Adjuster Who Provided "Valuable Services"

Public Adjustment Bureau, Inc. v. Greater New York Mut. Ins. Co.
(1st Dept., decided 10/29/2015)

When an insured hires a public adjuster but the claim is not resolved short of a lawsuit that an attorney for the insured eventually settles, is the public adjuster still entitled to its agreed-upon compensation percentage of the insured's recovery?  It is if it performed "valuable services" for the insured.

Section 25.10(b) of New York's insurance regulations (Title 11 NYCRR), entitled "Right to compensation", states:
(b) If a public adjuster performs no valuable services, and another public adjuster, insurance broker (in accordance with section 2101[g][2] of the Insurance Law) or attorney subsequently successfully adjusts such loss, then the first public adjuster shall not be entitled to any compensation whatsoever. 
Following a partial collapse of a garage at the Seward Park Housing Complex on January 15, 1999, defendant Seward Park Housing Corp. made a claim to its insurer, defendant Greater New York Mutual Insurance Company (GNYMIC), for repair/rebuilding costs. To help with its insurance claim, Seward Park retained plaintiff, Public Adjustment Bureau, Inc. (PAB), a licensed public adjuster. Seward Park's retainer agreement with PAB stated that PAB would "perform valuable services, to include preparation and submission of claim detail and to advise and assist in the adjustment of the loss," and would be paid "seven percent of the amount of loss and salvage . . . when adjusted or otherwise recovered."

Following extensive first-party coverage litigation Seward Park eventually settled with GNYMIC in May 2010, but disputed its obligation to pay PAB its fee.  PAB commenced this action against Seward Park and GNYMIC to collect its percentage fee of Seward Park's settlement recovery.  Seward Park moved and PAB cross-moved for summary judgment. Supreme Court granted Seward Park's motion, dismissing PAB's complaint, but in 2012 the First Department, Appellate Division, reversed that order and reinstated the complaint, holding that the question of whether PAB performed "valuable services" for Seward Park presented a question of fact.

This lawsuit returned to Supreme Court and was eventually tried to a jury, which found in favor of PAB.  Supreme Court granted Seward Park's post-trial motion for judgment notwithstanding the verdict, reasoning that PAB's services were limited to a futile initial attempt to settle with GNYMIC and that none of PAB's work was used in the trial against GNYMIC or to obtain the ultimate settlement. Supreme Court expressed the view that "valuable services" "must consist of continuous input that contributed to the settlement or adjustment of the claim," and concluded that PAB made no such continuous input. PAB appealed (again).

In REVERSING the Supreme Court's judgment and reinstating the jury's verdict, the First Department found no basis in New York Insurance Law or the related regulations for the trial court's imposition of the requirement that a public adjuster provide "continuous input" in the settlement process to be entitled to its fee. Instead, the First Department concluded that when viewed in the light most favorable to PAB, evidence presented at the trial
could lead rational jurors to find that although PAB was not directly involved in the trial against [GNYMIC], it had provided "valuable services" in connection with the ultimate settlement of Seward Park's insurance claim. These services could have included the preparation of the initial claim forms, the retention of a firm to investigate the damage and repairs, meeting with that firm and with architects, engineers, and counsel to discuss the claim, communicating with the insurance company regarding those repairs, and making [PAB senior adjuster Gerald] Scheer — who was deposed — available to testify at the trial. From this, the jury could have rationally concluded that PAB's work before trial constituted a valuable contribution to the trial and to the ultimate settlement, if only by preserving Seward Park's claims and aiding in the damages assessment and investigation.
In rejecting Seward Park's argument that PAB's work could not be deemed valuable because it did not directly procure or contribute to the lawsuit or the ultimate settlement, and because Seward Park could have settled its claim without PAB's input, the First Department noted that PAB was undisputedly involved in Seward Park's substantial compliance with all policy requirements, "which is a prerequisite for an insurer's obligation to pay under the policy [.]"

Seward Park also unsuccessfully argued that PAB failed to establish that but for PAB's conduct, Seward Park would not have recovered against its insurer, the First Department observing that "neither the Insurance Law nor the retainer agreement requires a 'direct and proximate link,' or the actual procurement of a settlement. Each requires merely that the public adjuster provide 'valuable services' in connection with a settlement."

Tuesday, October 27, 2015

New Jersey Automobile Medical Fee Schedule Held to Apply to New York No-Fault Claim

Surgicare Surgical Assoc. v National Interstate Ins. Co.
(App. Term, 1st Dept., decided 10/8/2015)

It's not that the care for persons injured in New York motor vehicle accidents is better in New Jersey.  It's that some providers think the New York Workers' Compensation Fee Schedule does not apply to health care services rendered in New Jersey and they get to charge New York no-fault insurers whatever they want for such services.  An appellate-level court in New York has finally addressed this issue, holding:
where a reimbursable health care service is performed outside the State of New York in a jurisdiction that has enacted a medical fee schedule prescribing the permissible charge for the service rendered, an insurer may properly rely on such fee schedule to establish the "prevailing fee" within the meaning of 11 NYCRR 68.6, and demonstrate compliance therewith by payment in accordance with that fee schedule.
Plaintiff's patient was injured in in a New York motor vehicle accident but treated at plaintiff's New Jersey location. Plaintiff billed defendant National Interstate $10,800 for arthroscopic knee surgery, but National Interstate paid only $5,996.67 in accordance with the New Jersey Automobile Medical  Fee Schedule.  Plaintiff brought this action for the $4,803.33 difference between the billed and paid amounts.  Bronx County Civil Court GRANTED National Interstate's CPLR 3211 motion to dismiss the complaint, and plaintiff appealed.

In AFFIRMING, the order appealed from, the Appellate Term, First Department, first noted that New York Insurance Regulation (11 NYCRR) § 68.6 provides that "[i]f a professional health service reimbursable under Insurance Law § 5102(a)(1) is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider."  The appellate court then cited and relied on a 2003 opinion letter of the then-New York State Insurance Department (who remembers those?) in holding:
Significantly, the Superintendent of Insurance issued an opinion letter stating that the reimbursement amount under section 68.6 "is determined by the permissible cost" in the out-of-state location (Guatemala) (see Ops Gen Counsel NY Ins Dept No 03-04-03 [Apr 2003]). The Superintendent's interpretation is entitled to deference, since it is neither irrational nor unreasonable, nor counter to the clear wording of a statutory provision (see LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009]). Indeed, the Superintendent's reliance upon the "permissible cost" in the foreign jurisdiction is consistent with [*2]the legislative purpose underlying Insurance Law § 5108 and implementing regulations - to "significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium" (Goldberg v Corcoran, 153 AD2d 113, 118 [1989], appeal dismissed 75 NY2d 945 [1990]). 
Applying section 68.6 as interpreted by the Superintendent, the "prevailing fee in the geographic location of a provider" is the "permissible" reimbursement rate authorized in the foreign jurisdiction. Here, the permissible rate authorized in New Jersey for the services rendered by plaintiff is set forth in New Jersey's no-fault statute and applicable fee schedule. Allowing plaintiff to bill at a rate significantly higher than the permissible charges in the New Jersey fee schedule would undermine the purpose of Insurance Law § 5108, and thwart the core objectives of the No-Fault Law - "to provide a tightly timed process of claim, disputation and payment" (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 319 [2007][citation omitted]), to "reduce the burden on the courts and to provide substantial premium savings to New York motorists" (Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854, 860 [2003]).
Contrary to plaintiff's claim, the omission of the term "fee schedule" from the regulation does not indicate that its exclusion was intended. Construed within the context of the regulation, whose scope and application broadly extends to all geographic locations outside the State of New York, the legislature's use of the comprehensive term "prevailing fee," rather than the less inclusive term "fee schedule," comports with common sense and the reality that the different jurisdictions have not unanimously adopted a no-fault regime, and/or uniformly based the permissible reimbursement charge upon a medical fee schedule.
Plaintiff provider also argued that National Interstate's excessive fee/fee schedule defense was precluded because it was not raised within 30 days of defendant's receipt of the plaintiff's bill.  In rejecting that argument, the appellate court further held that "since the services here were rendered after April 1, 2013, the defense of excessive fees is not subject to preclusion (see 11 NYCRR 65-3.8[g][eff Apr. 1, 2013)."

On the same day (October 8, 2015), the Appellate Term, First Department, issued a similar decision in Cliffside Park Imaging & Diagnostic v Travelers Ins. Co., holding that "[i]nasmuch as the health services underlying plaintiff's no-fault claim were rendered in New Jersey, defendant may properly rely upon the New Jersey fee schedule to establish the 'prevailing fee' within the meaning of 11 NYCRR 68.6[.]"

Monday, October 26, 2015

George Campbell Painting Reprised

Endurance Am. Specialty Ins. Co. v. Utica First Ins. Co.
(1st Dept., decided 10/8/2015)

New York Insurance Law § 3420(d)(2), where applicable, requires that written notice of a disclaimer or denial be sent "as soon as is reasonably possible ... to the insured and the injured person or any other claimant."

Since 2012 when the First Department issued its decision in George Campbell Painting, liability insurers doing business in New York have been on notice, and on guard, that a disclaimer or denial which implicates Insurance Law § 3420(d)(2) -- one for bodily injury or death claims based on either the applicability of a policy exclusion or the breach of a policy condition -- should not await the methodical completion of the insurer's coverage investigation where at least one exclusion-based or condition-based ground for disclaiming or denying coverage is already apparent or known.  To wait to disclaim or deny until the insurer completes its coverage investigation under such circumstances is to risk having the declination challenged and found to to have not been "as soon as [was] reasonably possible" in violation of § 3420(d)(2).

This case effectively arguably extends or enlarges the preclusive impact or scope of George Campbell Painting, at least in the First Department.  New York commercial general liability insurers take note.

Plaintiff Endurance American Specialty Insurance Company insured contractor Adelphia Restoration Corporation.  Defendant Utica First Insurance Company insured subcontractor CFC Contractor Group, Inc.  The Utica First policy contained a blanket additional insured endorsement providing additional insured coverage to entities for which CFC was required to procure additional insured coverage under a written agreement executed prior to a loss.  However, the Utica First policy also contained a broad exclusion for bodily injuries sustained by employees of any insured, or by contractors or employees of contractors "hired or retained by or for any insured."

October 16, 2011 -- employee of CFC allegedly injured on the job
November 16, 2011 -- Utica First receives first notice of accident from Rockville Risk Management, TPA for Endurance (Adelphia)
November 21, 2011 -- Utica denies defense/indemnification overage to CFC; letter copied to Rockville but not to Adelphia
May 10, 2012 -- Rockville tenders Adelphia's defense and indemnity to Utica First, noting that CFC had contracted with Adelphia, but does not provide copy of contract
November 20, 2012 -- Rockville again tenders Adelphia's D&I to Utica First; requests response to tenders
January 25, 2013 -- Rockville sends copy of contract between Adelphia and CFC to Utica First
January 28, 2013 -- Utica First receives copy of contract
January 29, 2013 -- Utica First denies D&I coverage to Adelphia based on employee exclusion

Adelphi conceded that on its face, the employee exclusion in Utica First's policy with CFC precluded coverage to it and to CFC; however, Adelphi contended that the timing of Utica First's disclaimer to it precluded Utica First from denying it coverage. The First Department agreed:
Utica's disclaimer of liability for coverage by letter dated November 21, 2011 to its named insured, defendant CFC, did not constitute notice to additional insured Adelphi under Insurance Law § 3420(d)(2) (see Sierra v 4401 Sunset Park, LLC, 24 NY3d 514 [2014]). Further, although Utica knew by November 21, 2011, at the latest, that the employee exclusion applied to the employee's alleged accident, Utica did not immediately disclaim coverage on that basis; it instead waited to disclaim coverage until January 29, 2013 — one day after it had received the contract that triggered the blanket endorsement. However, Insurance Law § 3420(d) "precludes an insurer from delaying issuance of a disclaimer on a ground that the insurer knows to be valid . . . while investigating other possible grounds for disclaiming" (George Campbell Painting v National Union Fire Ins. Co. of Pittsburgh, PA, 92 AD3d 104 [1st Dept 2012]; see also City of New York v. Northern Ins. Co. of N.Y., 284 AD2d 291 [2d Dept 2001], lv dismissed 97 NY2d 638 [2001]).  
If Adelphi was not entitled to coverage because of the employee exclusion, it did not matter one way or the other whether it was an additional insured under the CFC/Utica policy, and Utica therefore did not need to investigate Adelphi's status in order to disclaim coverage under the exclusion (see George Campbell Painting, 92 AD3d at 111-112). Indeed, given its statement that it would not indemnify "our insured or any other party for any judgment awarded," Utica must have known that the employee exclusion was effective not only as to CFC but also as to Adelphi, and therefore, Utica should have immediately disclaimed to Adelphi on that basis. Thus, Utica's investigation as to whether Adelphi was an additional insured was insufficient as a matter of law as the basis for a disclaimer.
Practice Pointer:  When it appears a policy exclusion applies broadly to negate coverage to the named insured and all other persons or entities, issue the declination not only to the named insured, but also directly and separately to those persons or entities who may have claims to coverage under the policy, regardless of whether it is known for certain that those persons or entities qualify as insureds or additional insureds.  

Sunday, August 30, 2015

Google Scholar Lately?

Four days.  It took me only four days back in November 2009 to hear and blog about the then beta Google Scholar for case law research.  I was impressed with Google Scholar then, and almost six years later I remain impressed.  More so than ever, in fact.

FREE.  Case law research.  All state and federal court jurisdictions. No direct Shepardizing feature (for subsequent case history) or perfect citator feature, but did I mention FREE?

For the uninitiated, scholar.google.com will bring you to a landing page that defaults to searching articles and patents (the original Google Scholar birthday suit), not case law.  Click the "Case law" radio button, select your courts, and type your search in natural language.  Google search commands work in Google Scholar.  If you want to search case law in only New York state courts, you can select only those courts.  I've created a bookmark for only those jurisdictions and you can, too.  If you want to search both state and federal courts (less the Second Circuit Court of Appeals) in New York, here's that bookmark.

What court opinions are included in the Google Scholar databases?  Here's what Google Scholar says about that:
Currently, Google Scholar allows you to search and read published opinions of US state appellate and supreme court cases since 1950, US federal district, appellate, tax and bankruptcy courts since 1923 and US Supreme Court cases since 1791. In addition, it includes citations for cases cited by indexed opinions or journal articles which allows you to find influential cases (usually older or international) which are not yet online or publicly available. 
Legal opinions in Google Scholar are provided for informational purposes only and should not be relied on as a substitute for legal advice from a licensed lawyer. Google does not warrant that the information is complete or accurate.
Let's say we were researching New York state court cases addressing the question of whether the absolute pollution exclusion applies indoors.  In the New York state court database, we would search:  "absolute pollution exclusion" indoors.  And in 0.02 secs (on my computer, at least) Google Scholar would return 17 results, the first of which would be the New York Court of Appeals' 2003 decision in Belt Painting Corp. v. TIG Ins. Co.:

Your search terms are highlighted in the excerpted text and beneath the search result are hyperlinks for the (number of) cases citing Belt Painting Corp. nationwide, how the case has been cited by those cases, cases related in issue to the result case, a quick citation generator (in Bluebook format even), and a link to save the case to your "My library" if you are logged on to your Google account (assuming you have a Google account).

Once you have run a search and opened a case, Google Scholar provides a rudimentary (and still free) substitute for Shepard's Citations.  For the New York insurance coverage seminal case of Albert J. Schiff Assoc. v. Flack, for example, clicking the "How cited" link in the upper left-hand corner of the case's reading page reveals this:

The "How this document has been cited" section gives snippets of text from cases that cite to the case search result, Schiff Assoc. v. Flack in this example, grouped into .  Additional citing decisions can be found in the "Cited by" column, and the "Related documents" section provides additional case decisions of potential relevance.

No doubt the biggest drawback to Google Scholar is its inability directly to determine whether a found case has been affirmed, reversed or modified on appeal.  The best way of doing so within Google Scholar if your case result is from a court above which an appeal could be taken is to run another search using the case result's case name and review the search results to see whether there has been any appellate treatment of that case.  So, for example, if you came across the Third Department, Appellate Division's 1981 decision in Zappone v. Home Ins. Co., and wanted to see whether that case had received any appellate treatment, you could run "Zappone v. Home Ins. Co." in Google Scholar and would see that the Third Department's order was affirmed by the New York Court of Appeals in 1982.  Or pay for a subscription of LexisNexis, Westlaw, Bloomberg, or the like.  Which is probably a good idea anyway if you are going to cite the case result in a legal memorandum or brief.

With the understanding and appreciation of the fact that Google Scholar's citator feature is less than perfect, Google Scholar still provides a (very) cost-effective alternative to paying for access to a subscription-based legal research service either directly or through paid counsel.  I commend Google Scholar to every group of legal and non-legal professionals I speak to, and continue to be surprised by the number of insurance industry people who either don't know of or don't use Google Scholar. I won't lie; Google Scholar is where I start my legal research.  It is especially useful for doing insurance coverage legal research.  I simply put a policy phrase between quotations marks and run searches in the relevant jurisdictions.  Easy-peasy.

Want to follow a particular legal case decision or issue, or be notified in the event certain policy language appears in any future case?  Google Scholar has an "alert" feature.  Search the case name or issue or policy language in the databases (state or federal jurisdictions) you want Google to use for your alert and then click "Create alert" (the envelope icon for visual learners) at the bottom of the search result page's column to create your alert.  Ever wonder how I stay "up" so to speak on certain areas of law?  Google Alerts and Google Scholar Alerts are two ways.

Google Scholar began as many thing Googley -- as an experiment.  For as long as it remains FREE, enjoy it.  And use it.  And for the especially curious or appreciative, head over to the blog of one of Google Scholar's two creators, Anurag Acharya.  Thank you, Anurag.

The tweeted birth announcement:

Deservedly proud.  Exceptionally good work, Google folks.

Are you using Google Scholar for case law research?

Wednesday, August 26, 2015

Intoxication, Stabilization, and Necessary Emergency Health Services

In July 2010, the New York State legislature passed a law -- Chapter 303 of the Laws of 2010 -- amending the mandatory PIP endorsement's intoxication exclusion by requiring New York no-fault insurers to pay for "necessary emergency health services rendered in a general hospital" to persons injured as a result of operating a motor vehicle while in an intoxicated condition or while the person's ability to operate the vehicle is impaired by the use of a drug.  That law took effect on January 26, 2011 and earlier that month I blogged here about that new law taking effect.  

Yesterday one of my no-fault insurer clients asked me a question about what qualify as necessary emergency health services that eventually led me back to my January 2011 posting for an answer.  The question was this:  
Question:  The named insured driver did not seek or receive any emergency services at the time of a motor vehicle accident. He claimed he was told by the police that he refused treatment at the scene. He was instead arrested, and taken to the police station, fingerprinted, charged with driving while intoxicated, and released to home. The insured claimed he did not recall any conversation with the police or ambulance crew, nor did he recall the accident.  Three days after the accident he went via ambulance  from his home to the emergency room of a local hospital, where he was diagnosed with and treated for a mild concussion and multiple soft tissue injuries before being released back to home.  The injuries relate to the motor vehicle accident.  Are the ambulance and ER bills considered necessary emergency health services?
Answer:  No.
As I pointed out in my January 2011 posting, the then-New York State Insurance Department in its Circular Letter No. 4 (2011) said:
For the purposes of compliance with Chapter 303, the Department interprets “necessary emergency health services” to mean services rendered to a person by or under the supervision of a physician, paramedic, or emergency medical technician to treat the onset of sudden pain or injury and to stabilize the person, provided the person is transported directly from the scene of the motor vehicle accident to the general hospital.  Pursuant to this interpretation, once the sudden pain or injury is treated and the person is stabilized, (generally in the emergency room) the no-fault insurance coverage ceases.  In order to facilitate timely payment, a hospital should specify what portion of the bill consists of “necessary emergency health services.”  If the hospital does not specify what portion consists of “necessary emergency health services,” then a no-fault insurer may request this information.  (Bolding, underlining and highlighting added.)   
If the insurer could prove that the claimant’s injuries were sustained “as a result of operating a motor vehicle while in an intoxicated condition”, the ambulance and ER bills could be denied as not being “necessary emergency health services” because: (1) the services were not “to stabilize” the person; and (2) there was no transport from the accident scene to the hospital.  

This question made me curious to know whether the question of what constitute "necessary emergency health services" has come up and been decided in any reported New York court cases or in any New York no-fault arbitrations conducted under the auspices of the American Arbitration Association.  So off to Google Scholar (New York state court cases) and the AAA's No-Fault Award Service page I went.  

What I found surprised me.  Somewhat.  

The term "necessary emergency health services" does not appear in any reported New York state or federal court decisions.  Not before or after January 2011.  Not at all.  

The term does, however, appear in 15 AAA New York no-fault arbitration decisions or awards, all decided since Chapter 303 of the Laws of 2010 went into effect.  Digested in chronological order (oldest to newest), here are those awards:

     (Arbitrator Kent L. Benzinger, Esq., dated 11/27/11)

Although Geico submitted ER records listing "an ETOH level of 232" for the assignor, the arbitrator concluded that Geico failed to carry its burden of proving that: (1) the assignor was intoxicated at the time of the accident; and (2) such intoxication was the proximate cause of the assignor's injuries.  The arbitrator noted that the assignor's vehicle was rear ended in the accident and assignor was not charged with DWI:
In the instant case, the hospital record contains a diagnosis of “ETOH intoxication” and the handwritten notation of ETOH level of 232. However, the record contains no information as to how and when the blood was obtained or even the units of measurement of the final level.  Although ETOH in this country is usually measured in mg/dl or milligrams per deciliter which would convert to a BAC of .232 – far above the legal limit - this arbitrator will not speculate as to the method of collection of blood, the procedures taken, or the units of measurements. The hospital record does not contain any lab sheets noting CBC blood tests, values or interpretation. 
In addition, the record contains no evidence that any claimed intoxication was the proximate cause of the accident. The Assignor claims his vehicle was rear-ended which is also noted in the police accident report. Through a reference key accompanying the MV104a police accident report, the police officer did not list intoxication as a contributing factor as to the accident in boxes 21 and 22 pertaining to the Eligible Injured Party. The police report also does not list any VTL or criminal charges for intoxication. Finally, the Respondent/Carrier has failed to rebut Assignor’s claims and has not submitted evidence of any convictions or even pending charges for Driving While Intoxicated or alcohol involvement. 
The billing at issue was not for "necessary emergency health services" (NEHS).  The term appeared in the arbitrator's quotation of Insurance Law § 5103(b)(2).  Award to the applicant.

     (Arbitrator Sandra Adelson, Esq., dated 11/13/13)

Geico denied payment to applicant hospital "because the patient was operating the motor vehicle in an intoxicated condition.”  Award to the applicant based on the arbitrator's conclusion that
[t]he evidence specifically noted that the arbitration record did not definitively establish that the patient was injured as a result of operating the vehicle while in an intoxicated condition. The police report indicated that the patient was unable to speak. There was no basis to ascertain if the patient was injured as a result of operating the vehicle while in an intoxicated condition. The police report documentation that the patient was not able to speak supports the foregoing proposition.  Additionally, the patient did not plead to intoxication. Furthermore, a review of the hospital records indicates that the patient was receiving emergency care at applicant hospital. The applicable law states that “that an insurer shall not exclude such person from coverage with respect to necessary emergency health services rendered in a general hospital.”
The assignor has plead guilty to operating a vehicle ability impaired by alcohol, not to DWI.

     (Arbitrator Paul Israelson, Esq., dated 5/22/13)

Although applicant's claim totaled $21,687.50, at the outset the arbitrator noted:
[P]ursuant to 11 NYCRR 65-1.1(1)(g), in the event the respondent has demonstrated that the injured person was intoxicated at the time of the subject automobile accident then the applicant would be entitled to payment for only “necessary emergency health services”.
At to the “necessary emergency health services” provided by the applicant to the injured person, the applicant has provided an invoice for emergency room services totaling $6,332.28. The respondent has not provided any evidence to rebut the applicant’s assertion that the cost of the emergency room services totaled $6,332.28, therefore, that is the amount the applicant should receive for providing “necessary emergency health services” to the injured person in the event the respondent has demonstrated that the injured person was intoxicated at the time of the subject automobile accident.
In sharp and irreconcilable contrast to what Arbitrator Benzinger (above) concluded what not sufficient evidence of intoxication, Arbitrator Israelson found:  
Concerning whether or not the injured person was intoxicated at the time of the subject automobile accident, the respondent has produced the applicant’s 8/31/11 emergency room record bearing a handwritten note: “Alcohol Intox” in the section entitled, “IMPRESSION”. As well, the respondent has produced the applicant’s 8/31/11 Consultation Report, where it states on page two, under the section entitled “ASSESSMENT”, “EtOH intoxication.” In light of this evidence, it is clear that the applicant concluded that the injured person was intoxicated while in their emergency room. In that the police report for the subject automobile accident states that the accident took place on 8/31/11 at 10:22 pm and the applicant’s emergency room records note 8/31/11 at 10:55 pm as the date and time for the “IMPRESSION” “Alcohol Intox”, I conclude that this evidence demonstrates that the injured person was intoxicated at the time of the subject automobile accident.
Award to applicant for $6,322.28.

     (Arbitrator Vincent Esposito, Esq., dated 6/18/13)

Applicant sought payment of fee schedule-reduced billings totaling $9,685.89.  Geico timely requested verification by asking the applicant to specify which of the services billed were for "stabilization" purposes and which of the services were not.  Applicant did not respond.  On that basis, the arbitrator dismissed the claim without prejudice:
The respondent has submitted proof to show that the injured party was operating a vehicle while intoxicated. In spite of this, the No Fault Law section 5103 provides that a respondent would still be responsible for “necessary emergency health services.” This has commonly been referred to as stabilization. The respondent, in a timely manner, asked the applicant to specify which of the services were for stabilization purposes and which of the services were not. The applicant has not replied. The Insurance Department of the State of New York by Circular Letter #4 dated January 12, 2011 discusses this situation. The letter provides in part that if the hospital does not specify what portion consists of “necessary emergency health services” than a No Fault insurer may request this information. It is thus clear that the verification requests were proper. Since they have not been complied with, this proceeding is premature because until all verification is supplied a respondent is under no duty to pay or deny a claim.
     (Arbitrator Pamela H. Hirschhorn, Esq., dated 10/9/13)

Geico denied payment of applicant hospital's billing because “No-Fault benefits are excluded to Operators under the influence of drugs.”  Applicant argued that NEHS are not excluded even if the assignor was intoxicated and that intoxication was the proximate cause of the assignor's injuries.  After applicant filed for arbitration, Geico sent the hospital's billing
out for review to its claims support services.  It appears that the claims support representative had no medical qualifications or professional coding certification as evidenced by the letter issued by this service in July, 2013. The claim’s representative indicated that the injured person was “stabilized” in the emergency room at some point prior to discharge and that the allowable fee is $2,069.19. However, respondent failed to submit any peer review or competent medical proof in support of this determination. Respondent’s claims representative’s determination does not constitute prima facie proof that the services were billed in excess of fee schedule. See, Cornell Medical, PC v. Mercury Casualty Co., 24 Misc.3d 58, 884 NYS2d 558 (App. Term 2d, 11th & 13th Dists. 2009). This arbitrator further notes that pursuant to the circular letter issued by the Insurance Department of the State of New York on January 12, 2011, if the hospital bill does not specify what portion consists of “necessary emergency health services,” then a no-fault insurer’s remedy is to request that information from the hospital that rendered the services. See, Circular Letter no. 4, No-Fault Intoxication Coverage: Chapter 303 of the Laws of 2010, State of New York Insurance Department (January 12, 2011). It is clear from a review of the record that respondent failed to issue any requests for additional verification upon receipt of the within billing. See, 11 NYCRR 65-3.5 (b); 11 NYCRR 65-3.6 (b). For all the foregoing reasons, respondent failed to establish prima facie, that the fees charged by applicant are not in accordance with fee schedule.
Award to applicant for its claimed amount of $5,429.19.

     (Arbitrator Walter P. Higgins, Esq., dated 10/22/13)

In dispute were applicant hospital’s bills in the amount of $25,295.80, amended to the DRG rate of
$14,633.79, for hospital services provided to assignor.  The assignor was involved in an automobile accident on 11/17/11 when the vehicle he was driving struck a pole. He either walked one block to his home or drove his vehicle the one block to his home, and then lost consciousness. About 10 or 12 hours later, either he left a message with his estranged wife who called one of his friends to check on him, or he called the friend. The friend then took him to Glen Cove Hospital where he was transferred to the applicant hospital. He sustained small right sided rib fractures, right second metacarpal fracture, jaw and three tooth fractures as well as facial lacerations, and was admitted to the hospital.

Allstate's timely denial of payment stated "With the exception of the rendition of necessary emergency medical services by a general hospital, No-Fault coverage does not apply to a personal injury sustained by any person as a result of operating a motor vehicle while in an intoxicated condition or while his/her ability to operate such a vehicle is impaired by the use of a drug.”  In awarding payment of the amended amount to the applicant, the arbitrator concluded:  
Under Section 5103(b)(2), effective 1/26/11, ten months prior to this accident, payment is authorized for emergency health services rendered in a general hospital as defined under the New York Public Health Law § 2801(10). I find that Applicant meets the definition of a general hospital as set forth in Public Health Law § 2801(10). Thus, Respondent is responsible for “necessary emergency health services”. The bill does not distinguish between “necessary emergency health services” and services it provided on a non-emergency basis, if any. In that situation, Respondent’s remedy is to request the information from the hospital that rendered the services through the verification process. See Circular Letter No. 4, No-Fault Intoxication Coverage, New York State Insurance Department, 1/12/11. Respondent failed to issue any request for additional verification to determine if any of the services rendered were performed on a non-emergency basis. Respondent instead just denied the entire claim. Since no evidence has been submitted by Respondent that any of the services were rendered on a non-emergency basis, the denial cannot be sustained.
Even though the arbitrator knew of and cited to Circular Letter No. 4 (2011), Allstate's counsel apparently didn't subscribe to this blog or didn't find and review my January 2011 blog posting on the new law or that attorney could instead have argued that the billings were not for NEHS because, under Circular Letter No. 4 (2011), the assignor was not "transported directly from the scene of the motor vehicle accident to the general hospital".  No verification needed to draw that conclusion.

     (Arbitrator Timothy McNamara, Esq., dated 10/23/13)

Award to applicant for its billed/claimed amount of $416.68.  Although Geico provided the arbitrator with "a timely denial together with proof that the eligible injured party was intoxicated at the time of the happening of the accident", 
As can be seen [in Insurance Law § 5103(b)(2)], there is exception for emergency room treatments which compel an insurer to make payment for emergency room services notwithstanding the fact that the eligible injured party was intoxicated. 
Scratching my head to figure out why Geico denied and defended this one.

     (Arbitrator Michelle C. Entin, Esq., dated 1/10/14)
     (Arbitrator Michelle C. Entin, Esq., dated 1/10/14)

Geico's denial of the bills at issue stated that assignor was operating her motor vehicle in an intoxicated condition. Geico contended that the assignor lost control of her vehicle on ice and struck a telephone pole. A copy of the police report was submitted. The hospital records provided indicate a blood alcohol level of 220 mg/dl. Geico also submitted a causality review report by Tatiana Sharahy, M.D., which noted that the blood alcohol level was above the legal limit and which stated that the assignor was stabilized in the emergency room from a hemodynamic point of view.  In finding for the applicant, the arbitrator concluded:
Based upon the facts of this matter, inasmuch as the services at issue were rendered in the context of emergency urgent care, I find that Applicant is entitled to reimbursement for same as the services are found to be authorized for payment as per the Regulations, irrespective of the intoxication of the Assignor. Finally, as to the notation on the denial regarding billing subject to PPO rates, Respondent submits no evidence of same and accordingly this basis for denial is found to be unsubstantiated.
      (Arbitrator Paul Israelson, Esq., dated 4/17/14)

Liberty proved that the assignor's ability to operate a motor vehicle was impaired by the use of a drug (cocaine or an opiate) at the time of the accident and that that impairment was the proximate cause of the accident and assignor's injuries.  Most likely because the claim in dispute was for dates of service at the hospital starting one date after the accident and over a period of another 15 days, the award/decision does not discuss NEHS.  Claim DENIED.  

      (Arbitrator Kenneth C. Rybacki, Jr., Esq., dated 5/2/14)

The record contained an uncertified copy of a police accident report indicating that the assignor was arrested for driving while intoxicated, although citation to the law violated is not referenced in the report.  Geico requested from the applicant a copy of its ER records and a toxicology report. Geico indicated in the request that if no toxicology test was done, then Geico required written guidelines employed by the applicant regarding blood alcohol levels. If such a document did not exist, Geico required a statement from the attending physician as to why no such test was ordered.

The hospital submitted the entirety of its ER records to Geico, which received those records on 2/4/13. The records indicated that no toxicology test was done. Those records also contained the observations of the attending physicians and nurses as to their observations of the assignor. A letter sent to the respondent with the record indicated that what was sent was the entirety of the assignor’s record and that no toxicology test was performed.  Geico requested nothing more from the applicant and did not pay or deny its claim within 30 days of receiving the ER records.  For that reason, the arbitrator found in favor of the applicant.  

      (Arbitrator Teresa Girolamo, Esq., dated 5/27/14)

Upon receipt of applicant's billing for services rendered one day after the assignor's accident, Geico sent out verification letters that stated the following:
We are in receipt of your bill for treatment rendered relating to the above referenced claim. We are in possession of the police report which confirms that the claimant was charged with “Driving While Intoxicated” which emanated from the motor vehicle accident on August 19, 2012. This claim is delayed pending outcome of the criminal charges lodged against the claimant.
Not surprisingly, the arbitrator found that "the letters generated to Applicant did not toll the Respondent’s time to pay or deny this claim."  Can't just wait for related DWI criminal charges to be resolved.  Award for applicant.  

      (Arbitrator Mary Anne Theiss, Esq., dated 6/23/14)

No proof of intoxication or proximate ("contributing") cause.  Plus, the billing was for emergency room services and
based on Insurance Law §5103, provides that No-Fault coverage shall not be provided in a personal injury sustained by any person as a result of operating a motor vehicle while in an intoxicated condition. Effective January 26, 2011, §5013(b)(2) indicates that payment is authorized for emergency health service rendered in a general hospital, as defined under the New York Public Health Law, §2801(10). This provides that the Respondent is responsible for "necessary emergency health services." Additionally, see Circular Letter No. 4, No-Fault Intoxication Coverage New York State Insurance Department, 1-12-11.
Award to applicant for the claimed amount.  

      (Arbitrator Stephen Czuchman, Esq., dated 8/14/14)

Allstate delayed payment of applicant's ER billing based on not having received an NF-2 from the assignor.  
However, it is well-settled that an insurer must accept a hospital facility form NF-5 submitted on behalf of a provider of health services in lieu of a NF-2 (See, 11 NYCRR § 65-3.5(g)) and may not delay a hospital claim for the patient’s NF-2. Nyack Hosp. v. Encompass Ins. Co., 23 AD3D (2d Dept 2005). Accordingly, I find it was improper for respondent to delay the claim for a NF-2. With respect to the intoxication defense, pursuant to a 2011 Insurance Department Circular Letter, as of 1/26/11, no-fault insurers are prohibited from excluding from coverage necessary emergency health services rendered in a general hospital, including emergency health services like those at issue here. New York Department of Insurance, Circular Letter No. 4. 01-12-11. For the foregoing reasons, based on a fair preponderance of the credible evidence, I find denial of this claim is overdue. 
      (Arbitrator Lester R. Hill, Esq., dated 9/26/14)

At issue in this arbitration was whether what medical services which were provided to the intoxicated EIP to stabilize the EIP’s condition.

The EIP was involved in a motor vehicle accident on September 11, 2011. The EIP was transported to the applicant's facility from the scene of the accident and was hospitalized through September 20, 2011. The EIP pled guilty to Vehicular Assault in the First Degree and Driving while Intoxicated. The arbitrator found, based upon the toxicology reports contained in the hospital record of the applicant, that the EIP was in fact driving while intoxicated at the time this motor vehicle accident.

Allstate sought verification of the claim by asking the applicant to advise which portion the hospital bill was for NEHS.  A doctor from the applicant sent a letter advising Allstate that the EIP was transferred from the ICU unit to the hospital floor on the third day of the admission and that in the doctor's opinion the first two days of the hospital admission were for NEHS.

The applicant's one-page bill for the entire 10-day hospitalization totaled $20,924.79. When the EIP arrived at the emergency room he was unconscious and was subsequently treated for multiple fractures and a cerebral hemorrhage. The hospital bill did not delineate what services were provided, with the appropriate CPT codes, and on which dates in the hospital admission the services were provided to enable Allstate or the arbitrator to determine the appropriate reimbursement for the "necessary emergency health services".

For this reason, the arbitrator continued this case for eight weeks for the applicant to provide a breakdown of the emergency medical services that were provided in the first two dates of the admission (pursuant to the applicant's doctor's letter), the CPT codes for those procedures, and the DRG rate for those services.

Despite the arbitrator's directive, the applicant made no post-hearing submission. Without such a
submission, the arbitrator lacked information to determine what medical services were provided to the EIP that were to be reimbursed pursuant to Insurance Law 5103 for “necessary emergency
health services”.  For that reason, the arbitrator dismissed applicant's claim without prejudice.