Thursday, December 24, 2009

Fillable New York No-Fault Forms -- NF-2 New York Motor Vehicle No-Fault Insurance Law Application for Motor Vehicle No-Fault Benefits

For the person who was looking for a fillable NF-2, New York Motor Vehicle No-Fault Insurance Law Application for Motor Vehicle No-Fault Benefits, yesterday, and others who may find fillable forms more useful than the static New York no-fault claim forms I separately uploaded and made available on this blog six weeks ago here, I've created and uploaded a fillable NF-2 application form, which you can access and download here or by clicking on the image to the left.  The PDF form can be completed and printed with any version of Acrobat Reader.   Unless someone knows a hack I don't, you'll need to have a full version of Adobe Acrobat, however, to save the filled-in form. 
 
I'll probably wait until after the New York State Insurance Department completes its revisions on Regulation 68 and the prescribed no-fault forms before creating and uploading any more fillable forms.  

Merry Christmas everyone.  Posts will be sporadic until next week.

P.S. (July 11, 2012) ~~  The complete and updated set of fillable prescribed NY no-fault forms is here

Tuesday, December 22, 2009

Subcontractor's CGL Insurer Found to Owe Primary, Noncontributory Additional Insured Coverage to Project Owner and General Contractor

CGL – ADDITIONAL INSURED – PRIORITY OF COVERAGE – PECKER IRON WORKS
William Floyd School Dist. v. Maxner
(2nd Dept., decided 12/15/2009)

When a project's general contractor and one of its subcontractors both obtain additional insured (AI) coverage for the project owner, are the AI coverages co-primary, or is one AI insurer excess over the other?  Not surprisingly, the Second Department has ruled that the answer depends on policy language.

William Floyd Union Free School District contracted with Aurora Contractors, Inc., to be the general contractor of a construction project to build a new middle school. The contract required Aurora to provide the District with primary insurance coverage.  Aurora had a policy with QBE Insurance Corp., and provided the District with a certificate of liability insurance listing it as an additional insured on that policy. Aurora subcontracted the obligation to supply kitchen equipment to Premium Supply Company.  The subcontract required Premium to provide Aurora with insurance.  Premium was insured by Royal Insurance Company of America, a division of Royal & SunAlliance, and provided Aurora with a certificate of liability insurance listing Aurora and the District as additional insureds on that policy. The Royal policy provided that additional insureds were covered "with respect to liability arising out of [Premium's] ongoing operations performed for that additional insured by the named insured at the location designated in the written contract."  Premium subcontracted some of the contracting work to Dee's Associated. Frank Maxner, an employee of Dee's Associated, allegedly was injured while performing this work.

Maxner and his wife commenced a personal injury action against the District, the middle school, and Aurora.  The District parties and their insurer, Transportation Insurance Company, then commenced this action, seeking a judgment declaring that the District plaintiffs were entitled to defense and indemnification coverage as additional named insureds under Aurora's policy with QBE. Aurora and QBE commenced a third-party action against Royal, seeking a judgment declaring that the District plaintiffs and Aurora were entitled to primary, noncontributory defense and indemnification coverage as additional named insureds under Premium's policy with Royal.  Supreme Court declared that QBE and Royal were obligated, as co-insurers, to defend the District plaintiffs in the underlying action, and QBE appealed.

In REVERSING the order appealed from, the Second Department initially held that Royal was obligated to defend and indemnify the District plaintiffs and Aurora in the underlying action because Maxner allegedly was injured while performing work encompassed within Premium's subcontract with Aurora.

On the issue of priority of AI coverages afforded by QBE and Royal, the Second Department quoted policy language:
[T]he Royal policy issued to Premium provides:
"When an additional insured is added under this provision, and the written contract, written agreement or written permit requires the insurance to be primary and noncontributory, then this insurance is primary except when the Excess Provision under condition 4. Other Insurance in Section IV Commercial Liability Conditions applies. If this insurance is primary our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the Method of Sharing provision under condition 4."
The subcontract between Premium and Aurora required Premium to provide Aurora with insurance in accordance with a sample certificate of insurance, which listed Aurora and the school district plaintiffs as additional insureds. This agreement to name them as additional insureds was an agreement to provide them with primary coverage, triggering the above provision (see Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d 391).

The QBE policy issued to Aurora provides:

"4. Other insurance
If other valid and collectible insurance is available to the insured for a loss we cover . . . our obligations are limited as follows: . . .
"b. Excess Insurance
This insurance is excess over: . . .
"(2) Any other insurance, whether primary, excess, contingent or any other basis that is valid and collectible insurance available to you as an additional insured under a policy issued to:
(a) A contractor performing work for you."
Under this provision, there is no question that QBE's named insured coverage for Aurora was excess over Royal's AI coverage for Aurora, but what about with respect to the District plaintiffs?  Could the "you" in the QBE policy's excess insurance provision be construed to apply to the District plaintiffs?  Citing the Court of Appeals' 2003 decision in Pecker Iron Works, the Second Department concluded it could and held:
Contrary to the plaintiffs' contention, this provision applies to the school district plaintiffs, as well as to Aurora. In the absence of unambiguous contractual language to the contrary, an additional insured "enjoy[s] the same protection as the named insured" (Pecker Iron Works of N.Y. v Traveler's Ins. Co., 99 NY2d at 393). The additional insured endorsement which provides for primary coverage for additional insureds does not vitiate this provision. The endorsement and the policy must be read together "and the words of the policy remain in full force and effect except as altered by the words of the endorsement" (Penna v Federal Ins. Co., 28 AD3d 731, 732, quoting County of Columbia v Continental Ins. Co., 83 NY2d 618, 628). Since the school district plaintiffs and Aurora are additional insureds under the Royal policy issued to a subcontractor, the QBE policy provides them with coverage excess to that provided to them under the Royal policy.

Further, the QBE policy provides that when its insurance is excess, QBE will have no duty to defend the insured if another insurer has such duty. Accordingly, the Supreme Court should have granted those branches of QBE's cross motion, made jointly with Aurora, which were for summary judgment on the third-party complaint declaring that Royal is obligated to defend and indemnify the school district plaintiffs and Aurora in the underlying action on a primary, noncontributory basis, and that the coverage provided by QBE is excess to that provided by Royal. Upon searching the record, we award summary judgment to QBE declaring that it is not obligated to defend the school district plaintiffs and Aurora in the underlying action unless no other insurer is obligated to defend those parties in the underlying action.
For an excellent analysis of this decision, head over to Jon Lichtenstein's Let's Talk Coverage blog

Monday, December 21, 2009

Return to Panasia Estates -- First Department Holds that Bad Faith Not Needed for Recovery of Consequential Damages Against Insurer

COMMERCIAL PROPERTY – CONSEQUENTIAL DAMAGES – BAD FAITH – BI-ECONOMY – MOTION TO AMEND COMPLAINT
Panasia Estates, Inc. v. Hudson Ins. Co.
(1st Dept., decided 12/15/2009)

Since February 2008, when the New York Court of Appeals issued its groundbreaking, 5-2 decisions in Bi-Economy Mkt., Inc. v. Harleysville Ins. Co. of N.Y., 10 NY3d 187 (2008) and Panasia Estates, Inc. v. Hudson Ins. Co., 10 NY3d 200 (2008), first-party insurance litigants and commentators have debated whether, under the rulings of those decisions, an insured must allege and prove that its insurer acted in "bad faith" in denying payment of first-party property insurance benefits in order to recover consequential damages for the allegedly wrongful denial of coverage or inadequate payment.

In Panasia Estate's first return to the Appellate Division since the Court of Appeals issued its decisions, the First Department, Appellate Division, has now answered that question in the negative, holding that a claim for consequential damages against an insurer does lie absent bad faith.

Panasia Estates brought this action to recover insurance proceeds it alleged were due from its commercial property insurer, Hudson Insurance Company, in connection with losses Panasia allegedly sustained when rain infiltrated the roof of its building while repairs were being undertaken to the roof.  At the lime of the loss, Panasia had a property insurance policy in effect with Hudson that included builders risk coverage.  After the loss, Hudson allegedly investigated and denied Panasia's claim, having determined that the loss was excluded as having been the result of repeated water infiltration over time and wear and tear rather than a risk covered under the builders risk provisions of the policy.  In its original complaint, Panasia alleged that Hudson had breached its insurance contract and engaged in bad faith dealings in conducting its investigation of the loss and reaching its conclusion that the policy did not cover Panasia's loss.  Panasia contended that it was entitled to the amount it claimed as losses under the policy, the additional, reasonably foreseeable costs and expenses it incurred as a result of Hudson's alleged bad faith breach of the insurance contract, and legal fees Panasia had incurred.

In 2006, Hudson moved for partial summary judgment; “...dismissing all of Plaintiff's bad faith allegations and all prayers for consequential, extra-contractual, or incidental damages or attorneys [sic] fees[.]”  New York County Supreme Court Justice Karen Smith granted Hudson's motion only to the extent of precluding Panasia from asserting any claims for legal fees incurred in the prosecution of its action, and in 2007 the First Department unanimously affirmed, holding:
An insured may recover foreseeable damages, beyond the limits of its policy, for breach of a duty to investigate, bargain for and settle claims in good faith (Acquista v New York Life Ins. Co., 285 AD2d 73 [2001]). The court's denial of defendant's application to dismiss plaintiff's claims for consequential damages from the alleged breach of such a duty was proper. Defendant has not shown that the proffered exclusion for "consequential loss" was an applicable provision under this policy.  "Consequential loss" and "consequential damages" are not synonymous, as suggested by defendant.
The First Department granted Hudson leave to appeal to the Court of Appeals, and in a 5-2 decision, the Court of Appeals affirmed, holding:
The courts below properly rejected Hudson's contention that it was entitled to judgment as a matter of law because consequential damages are not recoverable in a claim for breach of an insurance contract. As we explained in Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y. (10 NY3d 187 [2008] [decided today]), consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were" 'within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting' " (at 192, quoting Kenford Co. v County of Erie, 73 NY2d 312, 319 [1989]). Here, the courts below failed to consider whether the specific damages sought by Panasia were foreseeable damages as the result of Hudson's breach. Because the record before us is not fully developed on that issue, such claim must be considered by Supreme Court.
Following the Court of Appeals' decision in February 2008, Panasia moved to amend its complaint to add a separate cause of action for consequential damages based on Hudson's alleged breach of contract.  Although New York Supreme Court Justice Milton Tingling granted Panasia's motion, in referring to and interpreting the Court of Appeal's Bi-Economy ruling, Justice Tingling's decision stated that "[t]hese type of damages are to be called consequential damages and are triggered solely by a breach of contract in bad faith."

Both Panasia and Hudson appealed to the First Department, which REVERSED the order appealed from and denied Panasia's motion for leave to amend it complaint as duplicative and unnecessary:
Plaintiff is correct in arguing that the motion court erred by stating that consequential damages do not lie for breach of an insurance contract absent bad faith, since the determinative issue is whether such damages were "within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting" (Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 192 [2008] [internal quotation marks and citation omitted]; see Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 [2008]). However, the motion to amend the complaint should not have been granted since the breach of contract claim that plaintiff sought to add was duplicative of its existing claim for breach of the implied covenant of good faith (see Canstar v Jones Constr. Co., 212 AD2d 452, 453 [1995]). Furthermore, contrary to defendants' contention, plaintiff's claim for consequential damages in its cause of action for breach of the implied covenant of good faith was not insufficiently pled. The reference to such damages as "special" in Bi-Economy Mkt. (10 NY3d at 192) was not intended to establish a requirement of specificity in pleading.
Two points can be drawn from the First Department's most recent decision:
  1. At least in the opinion of the First Department, it is not necessary for an insured to allege or prove "bad faith" in order to recover consequential damages against its insurer.
  2. The alleged consequential damages need not be specifically pled in a complaint to state a claim for such damages.  
It is interesting to this coverage attorney to note that yet undecided in this case is "whether the specific [consequential] damages sought by Panasia [in this action] were foreseeable damages as the result of Hudson's breach", a determination the Court of Appeals expressly directed Supreme Court to make.  In his March 2009 decision, Justice Tingling procedurally sidestepped that determination: 
The awarding of these damages are [sic] not before the court at this time.  In the case at bar Plaintiff is moving to amend the Complaint to assert a cause of action for consequential damages under the aforementioned holdings.  There is no need for the court to examine whether  the claim will be successful at this juncture or whether same is viable.  The court simply decides whether the plaintiff meets its burden in demonstrating that its proposed amended pleading is sufficient under the current state of the law.
Presumably left for another day and another motion is the question of whether the specific consequential damages Panasia seeks in this action -- the particularization of which can be obtained via various discovery mechanisms -- are viable as "foreseeable damages", i.e., were within the contemplation of Panasia and Hudson at the inception of the insurance policy on which Panasia has sued.  In my opinion, those who would argue that Panasia Estates stands for the general proposition that consequential damages are recoverable in all types of insurance policy contexts regardless of the coverages afforded and types of consequential damages claimed, would be grossly overreading the Court of Appeals' holding in this case.  In light of the Court of Appeals' explicit direction to Supreme Court in its Panasia Estates ruling, the decision of any court that has not made that required threshold determination -- whether consequential damages were foreseeable as being within the contemplation of the insured and insurer at the inception of the policy-- is arguably defective and subject to being upset on appeal.

Sunday, December 20, 2009

Insured Failed to Establish Actual Cash Value under New York's "Broad Evidence Rule" to Warrant Summary Judgment

PROPERTY – BROAD EVIDENCE RULE – ACTUAL CASH VALUE – MOTION TO AMEND ANSWER
Tyson v. Tower Ins. Co. of N.Y.
(2nd Dept., decided 12/15/2009)

While the plaintiff's 2-family house was under contract to sell, it was badly damaged by a fire. Nevertheless, plaintiff allegedly sold the property after the fire at the original, pre-fire contract price. On plaintiff's insurance claim, the parties disputed the amount due under plaintiff's policy. Plaintiff commenced this action seeking damages for breach of contract, and eventually moved for summary judgment.  Tower opposed plaintiff's motion and cross-moved for leave to amend its answer to assert an affirmative defense that the plaintiff had breached the policy's concealment or fraud condition.  Supreme Queens denied the motion and the cross motion, and later denied plaintiff's motion for leave to reargue and renew her prior motion for summary judgment.

In affirming the denial of plaintiff's motion, the Second Department ruled that plaintiff had not established the actual cash value of her loss, which she was required to do since the fire damage had not been repaired:
Contrary to the plaintiff's contentions, the Supreme Court properly denied her motion for summary judgment on the complaint because she failed to meet her initial burden of establishing her prima facie entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320, 324; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). Under the so-called "broad rule of evidence" applicable here, the plaintiff failed to establish the "actual cash value" of the loss, a burden she was required to carry under the policy since the fire damage had not been repaired (see Gervant v New England Fire Ins. Co., 306 NY 393, 398; McAnarney v Newark Fire Ins. Co., 247 NY 176, 184; Mazzocki v State Farm Fire & Cas. Corp., 1 AD3d 9, 12; Incardona v Home Indem. Co., 60 AD2d 749, 750). Further, the Supreme Court properly denied the plaintiff's motion for leave to renew her motion, since she did not offer a reasonable justification for failing to present in her initial motion the documentary evidence offered in support of renewal (see CPLR 2221[e]; Renna v Gullo, 19 AD3d 472).
In MODIFYING the order appealed from to grant Tower's cross motion to amend its answer, the Second Department held:
The Supreme Court erred, however, in denying the defendant's cross motion for leave to amend its answer. Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit (see CPLR 3025[b]; Lucido v Mancuso, 49 AD3d 220, 222). The defendant sought to amend its answer to include as an affirmative defense that the plaintiff had breached the policy's "[c]oncealment or fraud" condition. Contrary to the plaintiff's contention, the proposed amendment was not patently devoid of merit. Therefore, with no showing of prejudice or surprise resulting directly from the defendant's delay in seeking leave, the court should have granted the defendant's cross motion for leave to amend its answer.
It's not often that we see a reference to the Court of Appeals' 1928 decision in McAnarney v. Newark Fire Ins. Co. and its "broad evidence rule" in a reported decision.  Thirty-six years later, in Gervant v. New England Fire Ins. Co., the Court of Appeals stated:
[T]he "actual cash value" of premises under a standard fire insurance policy in this State cannot be arrived at by receiving evidence of replacement cost less depreciation only. Rather, the trier of fact should listen to all pertinent evidence on the subject."
With actual cash value being derived from "all pertinent evidence" on the issue, one wonders what quantum of evidence would suffice to warrant summary judgment.  Evidently some amount more than plaintiff submitted on her initial motion for summary judgment in this case. 

Compliance with CPSC Minimum Standards Does Not Automatically Relieve Product Manufacturer or Importer of State Common Law Liability

HOMEOWNERS – SUBROGATION – PRODUCTS LIABILITY – DEFECTIVE DESIGN
Nationwide Ins. Co. v. New York Lighter Co., Inc.
(2nd Dept., decided 12/15/2009)

Nationwide and its policyholders, Frank and Allison Maloney, commenced this action after a fire destroyed the policyholders' home.  The fire was accidentally started by the Maloneys' then-four-year-old son, who allegedly obtained a beer-bottle-shaped lighter from his mother's purse and ignited the lighter in the living room.

Plaintiffs sued the lighter's alleged manufacturer, New York Lighter Company, Inc., and retailer, contending, among other things, that the lighter's design was defective because the lighter was not child-resistant.  New York Lighter Company moved for summary judgment dismissing the complaint against it.  Dutchess Supreme denied the motion. 

In MODIFYING the order and granting that part of New York Lighter Company's motion that sought dismissal of the plaintiffs' breach of express warranty cause of action, the Second Department held:
In support of its contention that the lighter at issue was not defectively designed, NYL refers to documents and deposition testimony reflecting that, in 1997—four years before the fire that led to this action—its imported bottle-shaped lighters met the minimum standard for cigarette lighters set by the federal Consumer Products Safety Commission. Contrary to NYL's contention, however, "compliance with this minimum standard [does not] automatically relieve a manufacturer or importer of state common law liability" (Colon v BIC USA, Inc., 136 F Supp 2d 196, 208; see Liquore v Tri-Arc Mfg. Co., 32 AD3d 905; Mercogliano v Sears, Roebuck & Co., 303 AD2d 566). In light of NYL's failure to make a prima facie showing of entitlement to judgment as a matter of law with respect to the design defect issue, the burden of proof never shifted to the plaintiffs, and summary judgment was properly denied (see Alvarez v Prospect Hosp., 68 NY2d 320, 324).

The plaintiffs' claims predicated on breach of the implied warranties of merchantability and fitness for a particular purpose also properly survived the motion (see Bradley v Earl B. Feiden, Inc., 8 NY3d 265, 273).

NYL, however, was entitled to summary judgment dismissing so much of the third cause of action as alleged a breach of an express warranty. In response to NYL's denial that an express warranty was made to the Maloneys, the plaintiffs failed to raise a triable issue of fact (see Weiss v Polymer Plastics Corp., 21 AD3d 1095, 1097; Davis v New York City Hous. Auth., 246 AD2d 575, 576; cf. Catalano v Heraeus Kulzer, Inc., 305 AD2d 356, 358).

New York Vehicle with $25K/$50K Limits Deemed Uninsured in Comparison to North Carolina Mandatory Minimum Limits of $30K/$60K

UM/SUM – AUTO – NORTH CAROLINA POLICY
Matter of State Farm Mut. Auto. Ins. Co. v. Gray
(2nd Dept., decided 12/15/2009)

State Farm insured the respondent's vehicle under a North Carolina personal auto policy with $100,000 per person/$300,000 per accident bodily injury liability limits.  The respondent was injured in an auto accident that occurred in New York; AIG National Insurance Company insured the tortfeasor's vehicle under a New York personal auto policy with $25,000/$50,000 BI liability coverage limits.

With State Farm's consent, the respondent settled her personal injury claim against the tortfeasor for the per person BI coverage limit of $25,000.  State Farm subsequently advised its insured that since her policy contained only uninsured but not underinsured motorist coverage, it was closing its file because there was no further claim to adjust. Thereafter, Gray made a demand to arbitrate her claim for uninsured/underinsured motorist benefits under her North Carolina policy, and State Farm commenced this special proceeding to permanently stay the arbitration. Supreme Nassau granted the petition and permanently stayed the arbitration.

In REVERSING the order, denying State Farm's petition and dismissing the proceeding, the Appellate Division, Second Department, held:
  • the uninsured motorist provision of State Farm's policy defined an uninsured motor vehicle as one to which a "policy applies at the time of the accident; provided its limit for liability is less than the minimum limit specified by the financial responsibility law of North Carolina"; the minimum limits in North Carolina are $30,000 per person/$60,000 per occurrence;  in this case, since the tortfeasor's policy limit of $25,000 per person/$50,000 per accident "is less than the minimum limit specified by the financial responsibility law of North Carolina [emphasis added]," the tortfeasor's vehicle was deemed to be uninsured under the language of the uninsured motorist provision of State Farm's policy issued to the respondent's husband;  and
  • because State Farm's documents submitted in support of its petition failed to failed to demonstrate that the named insured had been offered but rejected underinsured motorists coverage in writing on a prescribed form as required by North Carolina law, the Grays' policy was deemed to include underinsured motorist coverage. 

Monday, December 14, 2009

Evidence of Distracted Driving Warrants Discovery of Defendant's Cell Phone and Laptop Air Card Records and Deposition of Corporate Defendant's IT Employee

NEGLIGENCE – PERSONAL INJURY – DISCOVERY OF CELL PHONE AND WIRELESS AIR CARD RECORDS – DISTRACTED DRIVING
Detraglia v. Grant
(3rd Dept., decided 12/10/2009)

This isn't an insurance coverage case, but I've blogged occasionally about distracted driving, so I thought I'd post this.

Traditional rules of paper discovery have necessarily evolved to accommodate digital information and media.  Our electronic footprints include use of cellular telephone and other wireless devices, and when those devices are used while driving, their use presents a possible explanation for why an accident may have occurred under otherwise ideal driving conditions.  But must there be some evidence of distracted driving before discovery of the driver's cell phone or wireless device records are discoverable under New York State law?  The Third Department seems to think so.

Robert D. Grant Jr. was driving a vehicle owned by his employer, Hawkeye, LLC, when he collided with a vehicle driven by defendant Krystina Detraglia. According to the accident report, the accident occurred at 2:57 P.M. on March 13, 2006.  Plaintiff, the parent of one of the two injured passengers in Detraglia's vehicle, commenced this action in May 2007 against, among others, Grant and Hawkeye.  During discovery, plaintiff demanded that defendants produce billing records for all three of Grant's cellular telephones and the Verizon wireless air card for his company-issued laptop computer for the date of the accident between 12:00 P.M. and 4:00 P.M.  These technological devices were all in Grant's vehicle at the time of the accident, although Grant testified at his deposition that he was not using any of them when the accident occurred. Plaintiff also sought to depose Vincent Franzone, Hawkeye's information technology employee, concerning the whereabouts of these devices and Hawkeye's policies relating to storage and retention of technology records and equipment. Upon defendants' refusal to comply with these demands, plaintiff moved to compel disclosure. Saratoga County Supreme Court partially granted the motion by requiring defendants to produce the records for the three cellular telephones and wireless air card for the date of the accident between 1:00 P.M. and 3:30 P.M., and to produce Franzone for a deposition.  Defendants appealed.

According to the New York Law Journal's report of this decision, Hawkeye and Grant refused to provide the records from the electronic devices, arguing that in the absence of testimony from eyewitnesses that Grant was actually using the cell phones when the crash occurred, the discovery request amounted to a violation of his right to cell phone privacy under 47 U.S.C. §222 and 18 U.S.C. §1039[b].  Counsel for defendants argued that the same expectation-of-privacy principles regarding cell phone conversations also applied to communications over the laptop computer Grant was carrying when the crash occurred.  Defense counsel urged the Third Department to adopt the rule set by Queens County Supreme Court Justice Martin Ritholtz in Morano v Slattery Skanska, Inc., 18 Misc 3d 464 (Sup.Ct., Queens Co., 2007), in which the court held that "the mere fact that a defendant was in the possession of a cell phone at the time of an accident, without any witness testimony as to it being used at that time, would not entitle the plaintiff to said defendant's cell phone records, since such a discovery request would amount to nothing more than a fishing expedition[.]"

In rejecting the defendants' privacy arguments and affirming the lower court's order insofar as it compelled defendants to produce the cell phone and wireless air card records for an in camera inspection and its IT employee for a deposition, the Third Department held:
Although disclosure is limited to information that is material and necessary to the prosecution or defense of an action, the discovery statutes are liberally construed and trial courts are "afforded broad discretion in managing disclosure" (American Assoc. of Bioanalysts v New York State Dept. of Health, 12 AD3d 868, 869 [2004]; see CPLR 3101 [a]; Andon v 302-304 Mott St. Assoc., 94 NY2d 740, 746 [2000]). The record here contains information indicating that Grant may have been distracted immediately prior to the accident. There is also conflicting evidence concerning his possible use of the laptop computer in his vehicle. Grant testified at his deposition that the laptop was in a bag, either behind his seat or in the passenger seat, that he never used it while driving, and that while driving he never left it strapped to the computer desk bolted to the vehicle. The tow truck driver who arrived at the scene submitted an affidavit stating that he saw the laptop on the vehicle's computer desk, with the screen flipped up and turned on, indicating recent use. This conflicting evidence raised questions as to whether Grant used any technological devices while driving, rendering the records relevant to the question of his negligence. Accordingly, Supreme Court did not abuse its discretion in determining that the records were subject to disclosure (see Andon v 302-304 Mott St. Assoc., 94 NY2d at 747; Czarnecki v Welch, 23 AD3d 914, 915 [2005]). Disclosure of the records should be limited to a narrow time frame surrounding the accident, namely 2:30 P.M. to 3:30 P.M. (see McMahon v Aviette Agency, 301 AD2d 820, 821 [2003]; Morano v Slattery Skanska, Inc., 18 Misc 3d 464, 475 [2007]). However, the records should be provided for the court to review in camera, with the court providing the parties only relevant information redacted to protect defendants' privacy interests (see Morano v Slattery Skanska, Inc., 18 Misc 3d at 475).

The telephones and laptop that Grant possessed on the date of the accident were upgraded for newer models, the original devices were returned to Hawkeye and those originals possibly contained information concerning whether they were in use at the time of the accident. Thus, Supreme Court correctly determined that Franzone's deposition could reveal material information (see Walsh v Liberty Mut. Ins. Co., 289 AD2d 842, 843 [2001]).
This decision appears to mark the first New York state court appellate treatment of the issue of whether and under what circumstances cell phone records are discoverable in personal injury actions.  Had there been no evidence that the driver was using his cell phones or laptop prior to the accident, it is questionable whether the Third Department would have upheld the order compelling discovery of the associated records.  One certainly could argue that the Third Department's specific mention of the "conflicting evidence" of such possible use means that some evidence of cell phone or laptop use at the time of or just prior to an accident is required before a New York state court may compel discovery of the driver's cell phone or wireless air card records.

Sunday, December 13, 2009

Sunday Grammaring -- Judge to Lawyers: Use Regular Grammatical English

Most lawyers are poor writers.  Poor at regular writing and poor at legal writing, the latter requiring both good regular writing and analytical skills.  Analysis aside, the body of routine legal writing is fat with verbosity and rife with punctuation and grammar mistakes.  Practicing law doesn't necessarily make one a better writer.  Instead, in many cases it seems to make one worse.

Auto mechanics, carpenters, and electricians who misuse their tools suffer injury or unemployment.  The same can't be said of lawyers and their misuse of words.  As inexplicable as it may seem, profitability as a lawyer does not depend on mastering the rules of syntax and semantics.  But "legalese" is a criticism, not a compliment, my professional colleagues.  Like it or not, how lawyers write, and how they're perceived to write, negatively affect our collective public image. 

Who cares?  Some judges do.  Like United States Bankruptcy Judge Robert Kressel from Minnesota.  Last week he sent out guidelines for lawyers submitting proposed orders to him.  Some of those guidelines address and exhort lawyers to use to "use regular grammatical English as much as possible."  That lawyers practicing in Judge Kressel's court apparently had not been using "regular grammatical English" is understood, but not understandable, prompting the judge's issuance of guidelines such as these:
Guideline No. 5 – Quotation Marks and Parenthesis

Do not include quotation marks or parenthesis (sic) to indicate a shortened version of a name. For example, the common reference in the first sentence to First National Bank of Minneapolis (“Movant”) is wordy, somewhat ungrammatical, unnecessary, and certainly clutters up the order. Please don’t do it.

Guideline No. 6 – Capitalization

Lawyers apparently love to capitalize words. Pleadings, including proposed orders, are commonly full of words that are capitalized, not quite randomly, but certainly with great abandon. Please limit the use of capitalization to proper names. For example, do not capitalize court, motion, movant, debtor, trustee, order, affidavit, stipulation, mortgage, lease or any of the other numerous words that are commonly capitalized.

Guideline No. 7 – Use of articles

Lawyers apparently disfavor articles, both definite and indefinite. Use the articles “the,” “a,” and “an” as appropriate. Write the way you would speak.  So, “the debtor,” not “debtor,” “the trustee,” not “trustee.”

Guideline No. 8 – And/Or

Never use “and/or.”

Guideline No. 9 – Superfluous Words and Phrases

Eliminate superfluous words. They serve no purpose other than to make the document sound more legal, which is exactly the opposite of the goal that I am trying to accomplish. Examples of such words are: “hereby,” “herein,” “in and for,” “subject,” “that certain,” “now,” “that,” “undersigned,” “immediately,” “heretofore entered in this case,” “be, and hereby is”–the list goes on and on. Compare the meaning of “Now, therefore, it may be and is hereby ordered that:” with “It is ordered:”

A good opening line for an order would read something like: This case came before the court on the motion of First National Bank seeking relief from the automatic stay. Referring to it as “this case” is the most accurate and succinct description. It is unnecessary to refer to it as “matter,” “proceeding,” “proceedings,” “that certain,” “subject,” or “above titled.”  If the order is for an adversary proceeding, then refer to it as “this adversary proceeding.”

Refer to the automatic stay, simply as the automatic stay, not the automatic stay of actions. Do not refer to an order granting relief from the automatic stay as an order for relief. An order for relief is something entirely different.  In addition to superfluous words, watch for superfluous and wordy phrases.  Examples include referring to a motion as “filed with the court” or an “order heretofore entered in this case. How about “order?”

Guideline No. 12 – Undersigned.

Never use the word “undersigned.”

Guideline No. 16 – Plurals and Possessives

Keep plurals and possessives straight and consistent. Know when to use debtors (plural), debtor’s (singular possessive), and debtors’ (plural possessive). Make sure the verb matches the subject of the sentence.

Guideline No. 17 – Its and It’s

Please use the possessive noun “its” and the contraction “it’s” correctly.
Judge Kressel must really abhor the word "undersigned", as it made his dishonorable mention in both Guidelines 9 and 12.  But judge, you may wish to consider the following for Order Preparation Guidelines v2.0:
Guideline No. 1 – Electronic Format

Submit Aall proposed orders must be submitted in electronic form, It should be converted directly from Word or WordPerfect to PDF.  It Do not create them should not be created by scanning them it from their its original Word or WordPerfect form.   If they are it is scanned, I cannot make additions or changes. As an aside, although scanning documents is acceptable under our local rules and orders, I it is highly discouraged it because since a scanned document it takes up a much greater amount of more space than a document that is created and then converted directly into a PDF document.
Remember, judge:  eschew the passive voice.  It weakens everyone's writing, including yours.  And more than one parenthesis are parentheses.  You need a verb in the last phrase of Guideline 7, lose the comma in the first sentence of Guideline 11, and "its" in Guideline 17 is a possessive pronoun, not a noun, judge.  Other than these persnickety points, however, your guidelines are a clarion call to lawyers to write better, clearer, and cleaner product.  Boilerplate be damned.  Wouldn't it be something if lawyers someday were recognized for how they thought and problem-solved, rather than for how they sounded?  Daily I try to not "sound like a lawyer".  Blogging helps.

In a comment over at the always excellently written Simple Justice, on a post regarding "3Ls" (third-year law students) teaching legal writing to "1Ls" (first-year law students), lawyer/blogger Carolyn Elefant summed it up most elegantly:
[G]ood legal writing takes time. * * * I read the latest books and blogs on it, [and] I pay attention to the well written briefs that come through my door.  Great legal writing is such a joy to behold, a combination of analytical acumen and art. I think those who minimize it are unable to recognize it.
Lawyers practice law; they should practice their writing, both regular and legal, as well.  Lots and lots.  And with such practice the words they will need to convey clever, clear and convincing legal thoughts should become smaller, both in count and syllables.  Fewer words also require less punctuation and encourage simpler grammatical constructions.  All beautiful things.

According to the "Suicide" puzzle found in Lateral Logic Puzzles, college professors Henry, a philologist, and his wife Ann, a physicist, after having being implicated in the defalcation of college funds, were found dead in their home beside a typewrtten note:  "This is the only way out for Ann and I."  A responding police officer (and @GrammarGirl follower) instantly rejected the notion that Henry had killed his wife and then himself.  Why?  Would the officer have thought the same if Henry had been a lawyer?

Thank you, Judge Kressel, for the nudge.   And hat tip to the Lawyerist for reporting.  Come back on Sundays for more grammaring.

Friday, December 11, 2009

Denial of Summary Judgment to Property Insurer on its Material Misrepresentation Defense Affirmed

COMMERCIAL PROPERTY – MATERIAL MISREPRESENTATION – SUMMARY JUDGMENT
Classon Realty Corp. v. Tower Ins. Co. of N.Y.
(2nd Dept., decided 12/8/2009)

It's tough winning summary judgment on a fraud/material misrepresentation defense during a first-party action.  Intent to defraud and materiality are issues that often involve questions of fact, requiring a trial.  Such was the case in this matter. 

Tower denied first-party property coverage to the plaintiff based , at least in part, on what Tower contended were the insured's material misrepresentations during Tower's investigation of the insured's claim.  The insured commenced this breach of contract action against Tower, and Tower moved for summary judgment on its material misrepresentation defense.

In AFFIRMING Kings Supreme's denial of Tower's motion, the Second Department held:
The proponent of a motion for summary judgment must establish its entitlement to judgment as a matter of law by demonstrating that there are no triable issues of fact (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853). The defendant failed to demonstrate that there are no triable issues of fact regarding whether the plaintiff insured made material misrepresentations during the defendant's investigation of the plaintiff's claim (see Christophersen v Allstate Ins. Co., 34 AD3d 515; Fine v Bellefonte Underwriters Ins. Co., 725 F2d 179, 183, cert denied 469 US 874). Accordingly, the Supreme Court properly denied the defendant's motion for summary judgment dismissing the complaint.
Christophersen involved a fraudulent claim exaggeration defense.  Allstate contended that the insured had attempted to defraud Allstate by including inaccurate information in his sworn proofs of loss.  In affirming the motion court's denial of Allstate's request that it search the record and award it summary judgment, the Second Department reiterated several principles applicable to first-party property insurers' fraud and material misrepresentation defenses:
A policy of insurance is vitiated where the insured has " 'willfully and fraudulently placed in the proofs of loss a statement of property lost which he did not possess, or has placed a false and fraudulent value upon the articles which he did own' " (Saks & Co. v Continental Ins. Co., 23 NY2d 161, 165 [1968], quoting Domagalski v Springfield Fire & Mar. Ins. Co., 218 App Div 187, 190 [1926]). However, "unintentional fraud or false swearing or the statement of any opinion mistakenly held are not grounds for vitiating a policy" (Sunbright Fashions v Greater N.Y. Mut. Ins. Co., 34 AD2d 235, 237 [1970], affd 28 NY2d 563 [1971]). While there is no question that the plaintiff gave the defendant Allstate Insurance Company (hereinafter Allstate) inaccurate information in his original proof of loss statements, a triable issue of fact exists as to whether the plaintiff thereby intended to defraud Allstate (see e.g. St. Irene Chrisovalantou Greek Orthodox Monastery v Cigna Ins. Co., 226 AD2d 624 [1996]; cf. Pipo Bar & Rest., Inc. v Certain Underwriters at Lloyd's at London, 15 AD3d 556, 557 [2005]; Rickert v Travelers Ins. Co., 159 AD2d 758, 760 [1990]).

Further, a triable issue of fact exists regarding whether the plaintiff's other alleged misrepresentations were sufficiently material to warrant the denial of coverage under the policy. Indeed, "[t]he issue of materiality is generally a question of fact for the jury [and] . . . [c]onclusory statements by insurance company employees . . . are insufficient to establish materiality as a matter of law" (Parmar v Hermitage Ins. Co., 21 AD3d 538, 540-541 [2005]; see Lenhard v Genesee Patrons Co-op. Ins. Co., 31 AD3d 831 [2006]).

Second Department Affirms Summary Judgment to Landlord & Landlord's Insurer in Declaratory Judgment Action by Tenant

CGL – QUALIFICATION AS INSURED – FAILURE TO PROCURE INSURANCE – DELAYED MOTION FOR LEAVE TO AMEND COMPLAINT
American Cleaners, Inc. v. American Intl. Specialty Lines Ins. Co.
(2nd Dept., decided 12/8/2009)

American Cleaners leased premises from Koncal Associates Limited Partnership, an entity related to Konover & Associates, Inc.  The plaintiff's name and mention of New York's Navigation Law in this decision imply that there may have been some type of outdoor pollution event impacting groundwater.  American Cleaners presumably sought coverage from Konover & Associates' commercial liability insurer, American International Specialty Lines Insurance Company, and brought this declaratory judgment action against AISLIC and the Konover defendants for liability coverage.

AISLIC and the Konover defendants moved for summary judgment and "on the eve of trial", American Cleaners cross-moved to amend its complaint to assert causes of action sounding in breach of contract, common-law indemnification, and indemnification under New York's Navigation Law.  Orange Supreme granted the defendants' motions for summary judgment and denied plaintiff's cross motion.

In AFFIRMING summary judgment to AISLIC, the Second Department held:
The Supreme Court properly granted the motion of the defendant American International Specialty Lines Insurance Company (hereinafter American International) for summary judgment. "The four corners of an insurance agreement govern who is covered and the extent of coverage" (Sixty Sutton Corp. v Illinois Union Ins. Co., 34 AD3d 386, 388; see Stainless, Inc. v Employers Fire Ins. Co., 69 AD2d 27, 33, affd 49 NY2d 924). Moreover, where a third party seeks the benefit of coverage, the terms of the policy must clearly evince such intent (see Stainless, Inc. v Employers Fire Ins. Co., 69 AD2d at 33). Here, by submitting the subject policy of insurance, which lists the defendant Konover & Associates, Inc., as the only named insured, American International demonstrated, prima facie, that the plaintiff was not entitled to a declaration of coverage. In opposition, the plaintiff failed to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557).
Also agreeing that the lower court had properly granted the Konover defendants' motion for summary judgment, the Second Department ruled:
The Konover defendants demonstrated their prima facie entitlement to judgment as a matter of law by submitting a lease executed by Koncal Associates Limited Partnership, as landlord, and the plaintiff, as tenant, which did not obligate them to name the plaintiff as an additional insured. In opposition to this showing, the plaintiff failed to raise a triable issue of fact.
Finally, the Second Department concluded that the trial court had "providently" exercised its discretion in denying the plaintiff's eve-of-trial cross motion for leave to amend its complaint to assert additional causes of action:
Furthermore, the court providently exercised its discretion in denying the plaintiff's cross motion, made on the eve of trial, for leave to amend the complaint to add causes of action sounding in breach of contract, common-law indemnification, and indemnification under the Navigation Law. "Generally, [i]n the absence of prejudice or surprise to the opposing party, leave to amend a pleading should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit'" (Morris v Queens Long Is. Med. Group, P.C., 49 AD3d 827, quoting G.K. Alan Assoc., Inc. v Lazzari, 44 AD3d 95, 99, affd 10 NY3d 941; see CPLR 3025[b]; Sampson v Contillo, 55 AD3d 591; Lucido v Mancuso, 49 AD3d 220; Trataros Constr., Inc. v New York City School Constr. Auth., 46 AD3d 874, 874). "However, where the application for leave to amend is made long after the action has been certified for trial, judicial discretion in allowing such amendments should be discrete, circumspect, prudent, and cautious'" (Morris v Queens Long Is. Med. Group, P.C., 49 AD3d at 828, quoting Clarkin v Staten Isl. Univ. Hosp., 242 AD2d 552, 552). "Moreover, when . . . leave is sought on the eve of trial, judicial discretion should be exercised sparingly" (Morris v Queens Long Is. Med. Group, P.C., 49 AD3d at 828; see Comsewogue Union Free School Dist. v Allied-Trent Roofing Sys., Inc., 15 AD3d 523, 525; Rosse-Glickman v Beth Israel Med. Ctr.-Kings Hwy. Div., 309 AD2d 846). "In exercising its discretion, the court should consider how long the party seeking the amendment was aware of the facts upon which the motion was predicated, whether a reasonable excuse for the delay was offered, and whether prejudice resulted therefrom" (Cohen v Ho, 38 AD3d 705, 706). The Supreme Court properly weighed all of these considerations, including the plaintiff's failure to proffer a reasonable excuse for the delay, in denying the plaintiff's cross motion.

Lack of Factual Basis in Treating Chiropractor's Opinion on Medical Necessity Fails to Raise Triable Issue of Fact

NO-FAULT – MEDICAL NECESSITY – FACTUAL BASIS OF MEDICAL OPINION
Innovative Chiropractic, P.C. a/a/o Jose Ovalles v. Travelers Ins. Co.
(App. Term, 2nd Dept., decided 12/1/2009)

Travelers appealed from Queens Civil's denial of its cross motion for summary judgment dismissing the fourth and fifth causes of action of plaintiff's complaint.  The Civil Court held that an issue of fact existed as to the medical necessity of the services that formed the basis of those causes of action.

In REVERSING the order and granting summary judgment to Travelers on the two causes of action, the Appellate Term, Second Department, held that plaintiff's submission of an affidavit from the treating chiropractor which did not set forth any facts to support his conclusion that the billed services were medical  necessary failed to raise a triable of issue of fact, warranting summary judgment:
In support of its cross motion, defendant annexed an affidavit and a peer review report from the chiropractor who performed the peer review, which established a lack of medical necessity with respect to plaintiff's $425.44 claim. In opposition thereto, plaintiff's treating chiropractor submitted an affidavit in which he merely stated that the treatment was medically necessary, without setting forth any facts to support the conclusion. Consequently, plaintiff's opposition papers failed to raise a triable issue of fact as to medical necessity (see Bronze Acupuncture, P.C. v Mercury Ins. Co., 24 Misc 3d 126[A], 2009 NY Slip Op 51219[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). Accordingly, defendant's cross motion for summary judgment dismissing plaintiff's fifth cause of action should have been granted (see Continental Med., P.C. v Mercury Cas. Co., 22 Misc 3d 134[A], 2009 NY Slip Op 50234[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; CPT Med. Servs., P.C. v New York Cent. Mut. Fire Ins. Co., 18 Misc 3d 87 [App Term, 1st Dept 2007]).

Practice pointer:  Unsworn or factually unsupported affidavits will not suffice to raise a triable issue of fact in opposition to a motion for summary judgment.

Wednesday, December 9, 2009

Lying About Who Else Was in the Car Doesn't Void No-Fault Coverage in the Opinion of the Appellate Term, Second Department

NO-FAULT – FRAUD – ASSIGNOR'S MISREPRESENTATION ABOUT DAUGHTER'S PRESENCE IN VEHICLE – SUMMARY JUDGMENT
Excel Radiology Servs., P.C. a/a/o Candida Vinas Perez v. Clarendon Natl. Ins. Co.
(App. Term, 2nd Dept., decided 12/1/2009)

This is an another example of how the no-fault train has derailed off the fraud track.

In Nationwide Mut. Ins. Co. v. Graham, 275 AD2d 1012 (4th Dept. 2000), the Appellate Division, Fourth Department, held that the insured's "failure to make fair and truthful disclosures in reporting the incident constitute[d] a breach of the cooperation clause of the insurance policy as a matter of law", disqualifying him from liability coverage under the policy.  The Fourth Department reiterated that principle in Nationwide Mut. Ins. Co. v Posa, 56 AD3d 1143 (4th Dept. 2008), holding that the insured's Posa's "failure to make fair and truthful disclosures in reporting the [accident] constitute[d] a breach of the cooperation clause [and the fraud and misrepresentation clause] of the insurance policy as a matter of law[.]"  More recently, in AA Acupuncture Service, P.C., a/a/o Dupont-Desir Ivrose v. Safeco Ins. Co. of Amer., 25 Misc3d 30 (App. Term, 1st Dept., 2009), the Appellate Term, First Department, noted that "an insurer may assert misrepresentation or fraud as an affirmative defense in an action by an insured to recover benefits under the policy".

But not in no-fault?  Lying about how an accident occurred or whether another no-fault claimant was actually in the vehicle at the time of the reported accident is not coverage-disqualifying conduct in breach of an auto policy's cooperation and fraud/misrepresentation conditions?  Apparently not in the opinion of the Appellate Term, Second Department, it isn't.

Clarendon National apparently denied $1,791.73 in billings from the plaintiff provider based, at least in part, on its belief that plaintiff's assignor had lied about her daughter being in the insured vehicle at the time of the reported accident.  Although the decision does not indicate whether the daughter also made a no-fault claim to Clarendon, presumably she did, otherwise the mother's misrepresentation would be irrelevant.  Queens Civil granted judgment in favor of the plaintiff provider, and Clarendon appealed.

In affirming the Civil Court's order granting summary judgment to plaintiff, the Appellate Term, Second Department, ruled that since Clarendon was not contending that no accident occurred at all, or that the accident was staged, the assignor's alleged misrepresentation regarding her daughter's presence in the vehicle was irrelevant to the assignor's no-fault claim:
On appeal, defendant characterizes its defense as one based upon fraud and relies solely on A.B. Med. Servs. v State Farm Mut. Auto. Ins. Co. (3 Misc 3d 130[A], 2004 NY Slip Op 50575[U] [App Term, 9th & 10th Jud Dists 2004]), in which the Appellate Term for the Ninth and Tenth Judicial Districts held that the insurer "establish[ed] the existence of a triable issue of fact as to whether there was a lack of coverage because the alleged injuries did not arise from an insured incident (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997])." In the case at bar, defendant has not alleged that no motor vehicle accident occurred or that the accident was staged. Rather, defendant contends that it raised a triable issue as to whether the assignor's daughter was in the car at the time of the accident. However, contrary to defendant's contention, the assignor's alleged misrepresentation of the presence of her daughter in the car is irrelevant to the question of whether the assignor's injuries arose from an insured incident. Accordingly, as defendant failed to demonstrate the existence of a triable issue of fact in opposition to plaintiff's motion for summary judgment, the judgment is affirmed.
While I agree with the Appellate Term that lying about another no-fault claimant being in the vehicle is irrelevant to the narrow question of whether the liar's injuries were caused by the accident, such a lie is relevant to the insurer's investigation of who may be entitled to no-fault benefits for that accident and should bear some negative consequence on the liar's no-fault claim.  Otherwise, what incentive is there to each claimant to tell the truth?  Shouldn't there be one?  Why should the fraud in part, fraud in whole rule not apply to no-fault?  Someone please don't tell me it's because there's no fraud/misrepresentation condition in the PIP endorsement.

Let's say the assignor was driving, and it was a single vehicle accident.  The mother puts the daughter in the vehicle, giving the daughter a potential personal injury claim against the mother.  It would be an aberrant result indeed if the mother's lie about her daughter being in car -- and we're assuming for the sake of this point that it can be proven that the daughter was not in the car -- had no consequence on the mother's no-fault claim under the mother's personal auto policy, but negated liability coverage to the mother under that same policy with respect to her daughter's fraudulent personal injury claim in accordance with the Fourth Department's decisions in Nationwide v. Graham and Nationwide v. Posa.  Does that trouble anyone other than me?

Monday, December 7, 2009

Announcing a New Blog -- Arbiters of NY No-Fault

Dave Gottlieb's got three.  Now I have two.  Blogs, that it. 


Over this past weekend I created a new blog that will post and discuss just New York no-fault arbitration awards/decisions and issues.  Announcing Mura & Storm's second venture into the blogosphere -- Arbiters of NY No-Fault, which can be found at the easy-to-remember domain http://nynofaultarbitration.com.  My associates, Bethany Mazur and Scott Mancuso (awaiting admission), will be the primary authors of this new blog, and I'll chime in from time to time.  Our hope is to provide digests of interesting and important arb awards, as well as to track and report stats on each AAA no-fault arbitrator and master arbitrator.  Over time, our database of awards by arbitrators and issues should be a resource to our no-fault insurer clients.  Please let us know in what ways we can make this new blog most useful to you who work in the New York no-fault arbitration arena. Check back in a few weeks when we hope to have a decent amount of materials uploaded to the new blog, which is hosted on a WordPress platform and has several, very easy ways of subscribing to content. 

New York State Insurance Department Unchanges Its Mind -- Withdraws Circular Letter No. 21 (2009) Regarding New York HCRA & No-Fault Insurance Surcharge


This may be a new record for the shortgevity of a NYSID circular letter.  Circular Letter No. 21 (2009), issued on September 16, 2009, has been withdrawn effective December 7, 2009.  That's a shelf life of only 81 days.

For the 81 days it was in effect, Circular Letter No. 21 (2009), entitled "The New York State Health Care Reform Act and No-Fault Insurance", expressly superseded Circular Letter No. 16 (1996) and Supplement No. 1 to  Circular Letter No. 16 (1996), which the Department withdrew on 9/16/2009.  With today's withdrawal of Circular Letter No. 21 (2009), Circular Letter No. 16 (1996) and its Supplement No. 1 presumably go back into effect.

In Circular Letter No. 16 (1996), issued November 22, 1996, the Department advised all authorized insurers writing motor vehicle insurance and motor vehicle automobile self-insurers that they were obligated, under the Health Care Reform Act (“HCRA”) set forth in New York Public Health Law § 2807-c and related provisions, to pay a surcharge to the Public Goods Pool on payments made for services rendered in general hospitals, diagnostic and treatment centers, and freestanding clinical laboratories. Supplement No. 1 to Circular Letter No. 16 (1996), issued November 21, 2003, updated the information set forth in Circular Letter No. 16 to take account of amendments to HCRA.  Both Circular Letter No. 16 (1996) and Supplement No. 1 advised insurers and self-insurers that they could offset an applicant's aggregate no-fault benefit limit for the payment of a surcharge when the surcharge was paid directly to the New York State Department of Health's (“DOH”) Office of Pool Administration.

Based on a December 30, 2008 OGC opinion (which has also been withdrawn and rescinded), the Department "changed its position" on the surcharge issue and declared in Circular Letter No. 21 (2009) that insurers and self-insurers were not allowed to offset an applicant's aggregate no-fault benefit limit by the amount of any HCRA surcharges paid directly to the DOH's Office of Pool Administration.

With the withdrawal of both the OGC Opinion No. 08-12-07 and Circular Letter No. 21 (2009), New York insurers subject to HCRA (payors pursuant to the New York State workers' compensation law, volunteer firefighters' benefits law, ambulance workers' benefit law, and the comprehensive motor vehicle insurance reparations act [article 51 of the New York Insurance Law]) may continue to reduce or offset an applicant's aggregate no-fault benefit limit by the amount of any HCRA surcharges paid directly to the DOH's Office of Pool Administration.

The Department's withdrawal of Circular Letter No. 21 (2009) should not affect the increases in HCRA surcharges enacted by the New York state legislature in its 2009-2010 State Fiscal Year Budget.  For services rendered in general hospitals, diagnostic and treatment centers, and freestanding clinical laboratories from 1/1/06 through 03/31/09, the HCRA surcharge percentages were 8.95% and 26.26% (both being owed if paid directly to the provider; just the former if paid directly to the DOH's Office of Pool Administration).

For services rendered from 4/1/09 through 12/31/11, the HCRA surcharge percentages were raised to 9.63% and 28.27%.

Insurers that did not offset or reduce an eligible insured's aggregate PIP limit by HCRA surcharge payments made in 2009 in accordance with the Department's now withdrawn OGC opinion and circular letter on the subject may wish to recalculate the available limits on the involved policies.

New York State Insurance Department Office of General Counsel Opinions for November 2009

From the NYS Insurance Department's website come these two Office of General Counsel Opinions from November 2009 relevant to property and casualty insurers doing business in New York, both involving the cancellation of regulated insurance policies.  

Cancellation of Insurance for Non-payment; Insured has Filed for Bankruptcy
OGC Op. No. 09-11-02 (November 6, 2009)

Question Presented:

Is there any provision in the Insurance Law or the regulations promulgated thereunder that prohibits an insurer from cancelling for nonpayment a marine insurance policy where the insured has filed for Chapter 11 bankruptcy protection?

Conclusion:

No.  There is nothing in the Insurance Law or regulations promulgated thereunder that prohibits an insurer from taking such an action.

Facts:

A commercial insured covered by a marine insurance policy filed for bankruptcy protection under Chapter 11 of the federal Bankruptcy Code. Following that filing, the insurer cancelled the policy for non-payment of premium. The insured’s counsel informed the insurer that the cancellation violates the “automatic stay” provided for under the federal Bankruptcy Code. The insurer then reinstated the policy as new business “until cancelled” with annual “renewal endorsements”.

Analysis:

New York Insurance Law § 3426(b) and (c) (McKinney 2006), which governs the cancellation of most commercial lines property/casualty insurance, is relevant to the inquiry. Those statutory provisions read in pertinent part as follows:
(b) During the first sixty days a covered policy is initially in effect, except for the bases for cancellation set forth in paragraph one, two or three of subsection (c) of this section, no cancellation shall become effective until twenty days after written notice is mailed or delivered to the first-named insured at the mailing address shown in the policy and to such insured's authorized agent or broker.
(c) After a covered policy has been in effect for sixty days unless cancelled pursuant to subsection (b) of this section, or on or after the effective date if such policy is a renewal, no notice of cancellation shall become effective until fifteen days after written notice is mailed or delivered to the first-named insured and to such insured's authorized agent or broker, and such cancellation is based on one or more of the following:
(1) With respect to covered policies:
(A) nonpayment of premium provided, however, that a notice of cancellation on this ground shall inform the insured of the amount due;
* * * * *
Insurance Law § 3426(b) and (c) require an insurer to provide timely notice to the insured of cancellation on grounds of nonpayment of premium. Pursuant to that statute, if an insurer wishes to cancel a liability insurance policy, it must provide the requisite written notice to the insured that specifies the reasons for the cancellation. So long as the reason is not otherwise prohibited by law, the Insurance Law does not otherwise limit an insurer’s ability to cancel for nonpayment of premium. Nothing in the Insurance Law or the regulations promulgated thereunder otherwise prohibits an insurer for cancelling a policy for non-payment of premium where the insured has filed for bankruptcy protection.

Notably, Insurance Law § 3426(l)(2) provides that Insurance Law § 3426 does not apply to policies “principally marine insurance.” That Insurance Law § 3426 does not apply to marine insurance, however, is ultimately irrelevant to the inquiry in that there is no provision of the Insurance Law or regulations thereunder that contains any prohibition on cancellations for nonpayment where the insured has filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. Therefore, insofar as the Insurance Law is concerned, an insurer is free to cancel a policy for nonpayment of premium irrespective of the insured’s bankruptcy status.

For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.

Cancellation of Workers’ Compensation Insurance Policy
OGC Op. No. 09-11-03 (November 12, 2009)

Question Presented:

May an insurer cancel an insured’s current workers’ compensation insurance policy midterm for non-payment of the expired policy’s audit premium?

Conclusion:

(Yes.)  An insurer may cancel an insured’s current workers’ compensation insurance policy midterm for non-payment of the expired policy’s audit premium, so long as the policy does not contain any limitations to the contrary, and provided that the insurer complies with New York Workers Compensation Law § 54 (McKinney 2006), and any and all other applicable laws and regulations.

Facts:

An insurance producer reported that an insurer canceled an insured’s workers’ compensation insurance policy midterm because the insured did not pay the audit premium on its most recently expired policy. The producer also reported that the insurer had provided coverage to the insured for several years, and that none of the previous audits resulted in premium change except for the most recent audit, which resulted in a very large additional premium. The producer stated that the insured disputes the accuracy of the audit results, and for that reason, refused to pay the audit premium. The insurer subsequently canceled the insured’s current policy.

Analysis:

New York Insurance Law § 3426 (McKinney 2007) sets forth, among other things, the minimum cancellation provisions applicable to most property/casualty commercial lines insurance policies. However, Insurance Law § 3426(l)(2) explicitly excludes workers’ compensation and employers’ liability coverage. Instead, the cancellation provisions for workers’ compensation insurance are governed by Workers Compensation Law § 54(5), which reads as follows:

[text omitted]

Workers Compensation Law § 54(5) imposes no limitations on the reasons that an insurer may cancel a workers’ compensation insurance policy. Thus, unlike a policy subject to Insurance Law § 3426, a workers’ compensation insurance policy may be canceled by an insurer midterm for non-payment of the expired policy’s audit premium, so long as the policy does not contain any limitations to the contrary, and provided that the insurer complies with Workers Compensation Law § 54, and any and all other applicable laws and regulations. See Insurance Department’s Office of General Counsel Opinion dated May 3, 2005.

However, an insured may invoke the right of review of rating classifications afforded by Insurance Law § 2319. That statute permits an aggrieved insured to request, in writing, a review of the rating classification(s) applied to its policy. An insured that does not receive a timely response to its request for review, or receives an adverse determination, may appeal to the Superintendent for a hearing and new decision. Insurance Law § 2319 reads as follows:

[text omitted]

Thus, the right of review provided by Insurance Law § 2319 may assist the insured here in resolving its dispute over the expired policy’s premium audit.

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.

New York State Insurance Department Office of General Counsel Addresses Minimum and Maximum Attorneys' Fees Under LMK

Those of you who attended the LMK Psychological Webinooner back in April may recall this poll:
Of the four possible interpretations of LMK's impact on future cases, which one do you think the courts ultimately will choose?
12% Per cause of action
62% Per accident/injured person/provider/action
21% Per accident/injured person/provider
3% Per accident/injured person
2% None of the above. I have something else in mind.
Add the NYSID's Office of General Counsel to the 62% of you who thought that the Court of Appeals' ruling on attorneys' fees in LMK Psychological Servs., P.C. v. State Farm Mut. Auto. Ins. Co. should be applied on a per accident/assignor/provider/action basis.

Students of no-fault will recall that in LMK, the Court of Appeals relied heavily on the NYSID Office of General Counsel's Opinion of October 8, 2003, in which the OGC had opined that attorneys' fees in no-fault matters should be based on the aggregate of all bills for each eligible insured disputed in a single action or arbitration, and not based on a "per bill" basis.

But what if there is more than one provider or more than one assignor/injured person treated by a single provider in a single action or arbitration?  What are the minimum and maximum attorneys' fees recoverable under the Court of Appeals' ruling in LMK?  The OGC has now addressed those questions and opined:
  1. In actions or arbitrations in which there are multiple providers, each prevailing provider is entitled to a minimum attorney's fee of $60.  
  2. In actions or arbitrations in which there is a single provider but bills for multiple assignors/injured persons, the prevailing provider is entitled to an attorney's fee ($60 up to 20% of the award capped at $850) for each injured person that the provider treated.

Limitations on No-Fault Attorney Fees  
OGC Op. No. 09-11-05 (November 30, 2009)

Questions Presented:

1.     When one or more no-fault assignee health care providers contest the denials or partial payments issued by an insurer for bills submitted for health services rendered to an assignor injured person eligible for no-fault benefits under a motor vehicle insurance policy in a single legal proceeding in arbitration or court which results in an award of benefits to one or more of the health care providers, is each health care provider entitled to a minimum attorney fee based upon the aggregate sum of all bills awarded reimbursement to each provider in that legal proceeding?

2.     Where the legal proceeding involves more than one person injured in the same motor vehicle accident, all of whom are treated by the same assignee health care provider, how is the attorney fee determined?

Conclusion:

1.     Yes, in a single no-fault legal proceeding, each assignee health care provider of a person injured in a motor vehicle accident is entitled to a minimum attorney fee based upon the aggregate sum of all bills awarded reimbursement to each provider in the proceeding.
2.     In a single no-fault legal proceeding, the assignee health care provider is entitled to an attorney fee, subject to the limitations set forth in Article 51 of the New York Insurance Law and the regulations promulgated thereunder, for each injured person that the provider treated.

Facts:

The inquiry is of a general nature, without reference to particular facts.

Analysis:

11 NYCRR § 65-4.6 (Regulation 68-D) establishes the amount of attorney’s fees reimbursable by an insurer and sets forth limitations on the amount of attorney’s fees that an insurer may be required to pay for services necessarily performed in the resolution of no-fault disputes.

When an attorney of an applicant for benefits commences a court action or initiates arbitration to resolve a claim dispute and receives an award of benefits, 11 NYCRR § 65-4.6(c) establishes that “the minimum attorney’s fees payable pursuant to this subpart shall be $60.” Furthermore, 11 NYCRR § 65-4.6(e) states that “for all other disputes subject to arbitration,” which includes the initiation of court actions to resolve payment disputes, “the attorney’s fee shall be limited as follows: 20 percent of the amount of first party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850.” Thus, the attorney fee is 20% of the amount of no-fault benefits awarded from the total number of individual bills disputed in either a court action or arbitration (subject to a minimum fee of $60 and a maximum fee of $850), regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured. The calculation is discussed in greater detail in OGC Opinion 03-10-04 (October 8, 2003). The New York Court of Appeals recently confirmed this method of determining attorney fees “based on the aggregate of all bills for each insured” in LMK Psychological Servs., Pc.C. v. State Farm Mut. Auto. Ins. Co., 12 N.Y.3d 217, 223 (2009).

Since the attorney fee is limited to 20% of the first-party benefits awarded by an arbitrator or court to a health care provider, subject to the $850 cap, each health care provider treating the same injured person is entitled to a minimum attorney fee based upon the aggregate sum of all bills awarded reimbursement. Thus, the attorney fee in each legal proceeding is generally limited to a $60 minimum and $850 maximum for the total amount of first-party benefits awarded in the proceeding to each health care provider for health services provided to the same eligible insured person.

This calculation is also applied to the award of first-party benefits for each injured person’s claim in a given legal proceeding to determine the attorney fees that a health care provider may receive. When a health care provider receives an award of benefits in a single legal proceeding for claims resulting from the treatment of more than one person injured in the same motor vehicle accident, so that there are multiple assignors, the same calculation is applied to the total award of first-party benefits for health services rendered to each injured person in the legal proceeding in order to determine the amount of attorney fees the provider may receive, so that the provider is entitled to an attorney fee for each of the injured persons that provider has treated. Thus, each fee would be calculated as 20% of the total amount of benefits awarded to the provider in the same legal proceeding, subject to the $850 cap, based upon the aggregate claims for health services rendered to each injured person.

For further information, you may contact Principal Attorney Lawrence M. Fuchsberg at the New York City office.

Thursday, December 3, 2009

Outing Blog Comment Spammers, Starting with All States Public Adjusters

Over at the always excellent New York Personal Injury Law blog, Eric Turkewitz has adopted the policy of outing law firms' blog comment spammers and their clients.  Comment spammers troll the Internet and drop poorly written and usually wholly unrelated comments with hyperlinks to their clients' websites onto blog posts in the hopes that comments aren't moderated and the blog's readers will click through to their clients' websites and patronize them.  Or, at the very least, that their clients' websites will receive a higher Google page ranking from the click-throughs.

In the 18 months it's been up, Coverage Counsel has seen its share of comment spam.  Most comment spam comes from offshore and far away places and continents, as it seems, from my experience at least, that many website owners and companies outsource their blog comment spamming to Asians with computers, Internet access, and a marginal grasp of the English language.

More than a year ago I started moderating comments, in part to spare you readers the nuisance of comment spam such as not so well-disguised solicitations for Florida DUI attorneys, rental car companies, insurance sales websites, and British escort services (yes, that's right, but I can't remember into what post that spam was inserted, pun intended).  This morning at 12:53, however, I received another piece of comment spam that has motivated me to adopt the Turk's policy of outing comment spammers, or at least ones working for insurance industry clients.

From an IP address in New Delhi, India, via a Google search of "public adjusters site: blogspot.com", came this bit of comment spam (links neutralized with NoFollow to ensure that no Google juice flows to the client company):
Mritunjay Kumar Singh has left a new comment on your post "Westchester Public Adjuster Companies Fined":
Hi, I was looking for information regarding PUBLIC ADJUSTER. i found your post more informational-- I hope it will help many more as me.
Public Adjusters
Insurance Claims Adjuster
Public Insurance Adjusters
public adjusters florida
Found my post about public adjusters being fined for illegal conduct more informational?  About public adjusters?  Really?  Well, in a certain respect, I guess I did, too.  And I hope, as well, that my post helps many more than me.  We can agree on that. 

Mr. Singh describes himself as a "Link Builder and SEO professional" (sic), albeit one with a lean résumé, and his client, as evidenced by the four links all pointing back to the same website is the person-less All States Public Adjusters, purportedly headquartered in Hollywood, Florida.

In the opinion of one, anyone looking to hire a public adjuster should think twice about a hiring a company that outsources blog comment spam to a person who then drops spam onto a post about public adjusters being fined for illegal conduct.  Very nice.  And so honorable.  All States Public Adjusters -- when you read this, and you eventually will because you apparently think link building and SEO is important, you should rethink your SEO strategy.  And tell your blog comment spammer, Mr. Singh, to stay away from my URL.  I know how SEO works, too, but you won't love my linking.

Postscript (Mon., 7 December 2009) ~ Mr. Singh from New Delphi paid a 5 minute and 27 second visit to this post this morning at 5:21 a.m., Buffalo time, via a "importance of public adjusters" Google search.  What, no comment?