Is a New York Property Insurer Obligated to Disclose Copies of Its Adjuster and Expert Reports Prior to Litigation?

Client's Question:

Are we required to provide a copy of our expert’s report to an insured when we send formal denial or after if they request? We have one now that the NYS DFS is involved and was questioning why we did not provide a copy of our roofer’s report and our adjuster’s reports to the insured’s public adjuster when he asked for them.

My Answer:
Nothing in New York insurance laws or regulations requires an insurer to provide copies of its adjuster’s and/or expert’s report either with the insurer’s denial or upon the insured’s request. If the DFS is saying there is such a requirement, they’re wrong, and I would insist that they provide the legal authority for such a statement. Only copies of written estimates of damages prepared by or for the insurer must be provided to insureds upon request. New York Insurance Law § 3407-a provides:

No property/casualty insurance policy or contract shall be issued or issued for delivery on a risk located or resident in this state insuring against damage to the insured's real property unless it contains in substance the following provision or a provision which is equal or more favorable to the insured:  a provision that in the event of a pending claim for damage to real property, upon request, the insurer shall furnish to the insured's representative, designated in writing, or if none has been designated, to the insured, a copy of any written estimate or estimates of the cost of damages to real property resulting from the loss which the insurer has independently prepared for its own purposes, or had prepared on its behalf for its own purposes, specifying all appropriate deductions, within thirty days after the request or preparation, whichever is later, of such estimate or estimates.  An insurer shall not be required to provide an estimate on claims for damages to real property unless it has independently prepared one or had one prepared on its behalf for the insurer's own purposes.

Some public adjusters take the position that if the insurer’s or independent adjuster’s damages estimate is based, even in part, on an expert’s report, the insurer is obligated by extension under § 3407-a to disclose a copy of the expert’s report with the estimate. I disagree. I don’t think 3407-a, which is very clear in its reference to “any written estimate or estimates of the cost of damages to real property”, can be read to also include expert reports.

Of course, if the coverage denial is litigated, the insured will be entitled to discover any non-privileged materials the insurer relied upon to reach its coverage and indemnity decisions. Given that, some PAs, policyholder attorneys, and DFS examiners argue that if the insurer eventually will be required to disclose its adjuster and expert reports, it should disclose them prior to litigation. This is another argument I don’t agree with, and it certainly doesn’t find any support in statutory, regulatory, or case law.

Your Answer:
In the comments, please.

~~Editor's Note July 20, 2020 

LinkedIn Poll Results:
Here are the results of the LinkedIn poll I ran on this question:

Answer                             # Votes                %
YES.                                      5                   14%
NO.                                       16                  46%
IT DEPENDS.                       14                  40%

Denial of No-Fault Benefits Based on Biomechanical Injury Causation Analysis Report Upheld in AAA Arbitration & Master Arbitration

AMERICAN ARBITRATION ASSOCIATION – NO-FAULT – BIOMECHANICAL EXPERT OPINION – USE OR OPERATION – CAUSAL RELATIONSHIP – EMG/NCV TESTING 

Matter of Arbitration between Scott A. Croce, DC, PC/Erie County Chiropractic aao [Assignor] and Preferred Mut. Ins. Co.
(Arbitrator Fred Lutzen, dated 3/28/2019)
(Master Arbitrator Marilyn Felenstein, dated 7/15/2019)

Mura & Storm associate Ryan Mura was privileged to represent Preferred Mutual Insurance Company (PMIC) in this American Arbitration Association mandatory no-fault arbitration matter.

PMIC denied payment of the applicant's EMG/NCV testing billing based on the "Biomechanical Injury Causation Analysis" peer review report of expert biomechanist Dr. Jacqueline M. Lewis, Ph.D., which had concluded:

1.  On May 18, 2017, [IP/Assignor] was the driver of a 2011 Buick LaCrosse that was traveling in the Walgreens parking lot (3288 Main Street), in Buffalo, New York, when contact occurred between the rear of a 2001 Ford Focus and the front of her vehicle. 

2.  The subject incident is consistent with a Delta-V of less than 6.4 miles per hour, and more comparable to 2.5 miles per hour with an average acceleration of less than 1.7g, and more comparable to 0.65g for the subject Buick in which [IP/Assignor] was seated. 

3.  The accelerations experienced by [IP/Assignor] were within the limits of human tolerance, and were comparable to those experienced during various daily activities. 

4.  Had the subject incident been sufficient to initiate occupant motion, [IP/Assignor] would have moved primarily forward relative to the subject Buick's interior. 

5.  There is no injury mechanism present in the subject incident to account for [IP/Assignor]'s claimed cervical spine injuries. As such, a causal relationship between the subject incident and the claimed cervical spine injuries cannot be made. 

6.  There is no injury mechanism present in the subject incident to account for [IP/Assignor]'s claimed thoracic spine injury. As such, a causal relationship between the subject incident and the claimed thoracic spine injury cannot be made.  

7.  There is no injury mechanism present in the subject incident to account for [IP/Assignor]'s claimed lumbar spine injuries. As such, a causal relationship between the subject incident and the claimed lumbar spine injuries cannot be made.  

8.  There is no injury mechanism present in the subject incident to account for [IP/Assignor]'s claimed bilateral knee injuries. As such, a causal relationship between the subject incident and the claimed bilateral knee injuries cannot be made.

In finding that PMIC had demonstrated by a preponderance of credible evidence that the assignor's claimed injuries did not arise out of the use or operation of a motor vehicle, AAA No-Fault Arbitrator Fred Lutzen held:

I find that Respondent's expert has sufficient scientific and technical knowledge, and is competent based on her credentials and experience to provide the aforementioned opinion. The report appears to be based on sufficient facts or data, is the product of reliable principles and methods, and Dr. Smith has applied the principles and methods reliably to the facts of this case (see, FRE 702). 

The 14-page report provides an extremely detailed analysis, which includes calculating the IP/Assignor's weight, speed of the vehicle, vehicle damages, and other relevant factors. Dr. Smith concludes that the vehicle was traveling approximately 2.5 mph, and that any impact would have produced acceleration that was comparable to or less than typical activities of daily living. She concludes that the reported injuries were not caused by the accident. 

Applicant's counsel argued that the medical records and reports establish a causal connection between the disputed treatment and the accident. I have reviewed all of the evidence submitted. Without additional evidence, like the IP/Assignor's own statement adequately explaining the injury onset and causality, Dr. Smith's accepted opinion is not sufficiently rebutted.The records alone are not sufficiently persuasive to overcome the extremely detailed, comprehensive, and convincing expert opinion by Dr. Smith. 

I find that the preponderance of credible evidence presented in this case supports that the IP/Assignor's EMG/NCV testing performed on 9/7/17 was unrelated to the accident that occurred on 5/18/17, and that the purported injuries did not arise out of the use or operation of a motor vehicle.

The applicant filed for master arbitration, and AAA No-Fault Master Arbitrator Marilyn Felenstein, in AFFIRMING Arbitrator Lutzen's award, found:

Arbitrator Lutzen, in his award, explained why he reached his conclusion that the claimed injuries could not have been caused by the claimed incident. He refer to the police report and the photographs attached thereto and notes that the police report indicated “no injury reported and no visible injury seen”. He notes the facts of the accident and discusses in detail the report by Dr. Lewis. The arbitrator found Respondent’s expert to be qualified to make the analysis regarding causation and found that Applicant had failed to rebut the expert’s conclusion. 

It is clear that a lower arbitrator has the authority to assess the facts and apply the relevant case law. He had the right to determine what evidence would be considered, including the expert report submitted by Respondent. I have carefully reviewed the parties’ briefs and the record on appeal. The arbitrator’s findings were within the arbitrator’s sound discretion and rational interpretation of the evidence and I find no reversible error within my purview as a Master Arbitrator. Per 11 NYCRR 65-4.5[o][1], the arbitrator shall be the judge of the relevance and materiality of the evidence offered. It would be improper for me, as a Master Arbitrator, to conduct a de novo review of the case and I cannot substitute my interpretation or my view as the weight or credibility of the evidence over that of the lower arbitrator. 

Furthermore, considering that there is case law to support the position that New York courts have specifically held that a biomechanical engineer is qualified to give opinion testimony regarding whether the force of impact in an accident could case the alleged injuries, it cannot be said that the arbitrator’s conclusion was not rational. Plate v. Palisade Film Delivery Corp., 39 AD3d 835 (2nd Dept. 20017). The request for vacatur of the award is denied. 

You can read both awards/decisions for more details.  Any questions about this matter can be directed to Ryan Mura at ryan.mura@muralaw.com.  

Summary Judgment Granted to Commercial Property Insurer on New York General Business Law § 349 Deceptive Acts and Practices Claim

COMMERCIAL PROPERTY – WATER DAMAGE – BROADENED WATER-DIRECT DAMAGE COVERAGE EXTENSION – ENGINEERING EXPERT – GENERAL BUSINESS LAW § 349 DECEPTIVE ACTS AND PRACTICES CLAIM
JD&K Assocs. LLC v. Selective Ins. Group, Inc.
(4th Dept., decided 10/07/2016)

During last month's NYSBA Law School for Insurance Professionals' Interactive Presentation with an Expert Engineer: Homeowners Insurance topic I reminded those attending about the importance of vetting the insurer's expert.

In this case, Selective had been sued, in part, for its allegedly deceptive act and practice of commissioning and using in the making its coverage decisions "Investigative Engineering Analysis Report[s]" that had been prepared and signed by someone who was not an engineer.  The plaintiff insured alleged that this was a general practice of Selective that violated New York General Business Law § 349.  Why add a GBL § 349 claim to a breach of contract action?  To recover treble damages and one's attorneys' fees for prosecuting the action if successful.

In June 2014, the Appellate Division, Fourth Department, agreed with Selective that Supreme Court had erred in denying its motion for summary judgment dismissing plaintiff's bad faith, misrepresentation and fraud cause of action, but affirmed the lower court's denial of Selective's dispositive motion to dismiss the complaint's GBL § 349 deceptive acts and practices cause of action because discovery relating to that cause of action was not yet complete, holding:

The court also properly denied that part of defendants' motion seeking summary judgment dismissing the fourth cause of action, alleging deceptive acts and practices under General Business Law § 349.  Plaintiff alleged that the Vallas employee who investigated the loss and prepared the Vallas Report was not an engineer, and that defendants misrepresented his credentials to plaintiff. Plaintiff further alleges that defendants' conduct was deceptive and part of a pattern of conduct that was not unique to plaintiff, but was directed at their policyholders generally. Certain discovery relevant to the General Business Law § 349 cause of action remains outstanding, and thus the court properly concluded that summary judgment with respect to that cause of action would be premature (see Skibinsky v State Farm Fire & Cas. Co., 6 AD3d 975, 976 [2004]; see generally Colombini v Westchester County Healthcare Corp., 24 AD3d 712, 715 [2005]). Inasmuch as punitive damages may be available under General Business Law § 349 (see Ural v Encompass Ins. Co. of Am., 97 AD3d 562, 565 [2012]; Wilner v Allstate Ins. Co., 71 AD3d 155, 167 [2010]), the court properly concluded that dismissal of plaintiff's claim for punitive damages would also be premature.

After discovery was complete, Selective again moved for summary judgment on the GBL § 349 cause of action, and Supreme Court again denied that motion, instead granting plaintiff's cross motion to amend that cause of action.  Selective appealed and the Fourth Department unanimously REVERSED Supreme Court's order, finding that Selective had established as a matter of law that its conduct in this case was not consumer-oriented (the first of the three required elements of a GBL § 349 claim) and that, in any event, plaintiff was not injured as a result of the allegedly deceptive act or practice (the third of the three required prima facie elements).  The Fourth Department explained: 

We agree with defendants that they met their initial burden of establishing as a matter of law that their conduct was not consumer-oriented. It is well settled that, although the conduct need not be repetitive or recurring to qualify as consumer-oriented, a plaintiff "must demonstrate that the acts or practices have a broader impact on consumers at large" and, thus, "[p]rivate contract disputes, unique to the parties, . . . [do] not fall within the ambit of the statute" (Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25; see New York Univ. v Continental Ins. Co., 87 NY2d 308, 321). Defendants established that the conflict here stems from "a private' contract dispute over policy coverage and the processing of a claim which is unique to these parties, not conduct which affects the consuming public at large" (New York Univ., 87 NY2d at 321). Indeed, the record establishes that defendants' decision to disclaim coverage was based on the particular facts concerning the nature of plaintiff's property damage and the language in the policy (see Security Mut. Life Ins. Co. of N.Y. v DiPasquale, 283 AD2d 182, 182, lv dismissed 97 NY2d 653, 700), and that the alleged deceptive practice here, i.e., defendants' use of the report from a non-engineer in disclaiming coverage, had the potential to affect only a single commercial property loss claim between plaintiff and defendants (see Canario v Gunn, 300 AD2d 332, 333). Contrary to plaintiff's contention, the information concerning defendants' prior use of Vallas' investigative services contained in the affidavit of defendants' in-house complex claims counsel, which was based upon his personal knowledge, established that defendants had not implemented any type of practice of hiring an unqualified site investigator and then misrepresenting his or her qualifications to render an investigative report as a method of deceiving unsuspecting policyholders and improperly disclaiming coverage. We further conclude that the fact that defendants may have disclaimed coverage based in part on reports drafted by Vallas in a few commercial property cases closed within the last 15 years is insufficient to raise a material issue of fact whether the allegedly deceptive practice was standard or routine such that it potentially affected similarly situated consumers (cf. Oswego Laborers' Local 214 Pension Fund, 85 NY2d at 26-27; North State Autobahn, Inc. v Progressive Ins. Group Co., 102 AD3d 5, 14), or whether the alleged conduct had a broad impact on consumers at large as contemplated by the statute (see Anesthesia Assoc. of Mount Kisco, LLP v Northern Westchester Hosp. Ctr., 59 AD3d 473, 479-480). Furthermore, we reject plaintiff's contention that the court properly determined that the investigator's deposition testimony indicating that he prepared a significant number of engineering analysis reports for defendants in the past raises a material issue of fact whether the allegedly deceptive conduct impacted consumers at large. The underlying inference supporting that determination is that, if the investigator had prepared other reports for defendants, then defendants must have also misrepresented the investigator as an engineer to other policyholders, and such an inference is purely speculative and unsupported by the evidence in the record (see generally Edelman v O'Toole-Ewald Art Assoc., Inc., 28 AD3d 250, 251, lv denied 7 NY3d 706; Drepaul v Allstate Ins. Co., 299 AD2d 391, 392-393; Teller v Bill Hayes, Ltd., 213 AD2d 141, 149, lv dismissed in part and denied in part 87 NY2d 937). 

Even assuming, arguendo, that there is an issue of fact whether defendants' conduct was materially misleading, we nonetheless further agree with defendants that the record establishes that plaintiff was not injured as a result of the allegedly deceptive act or practice. "[W]hile the statute does not require proof of justifiable reliance, a plaintiff seeking compensatory damages must show that the defendant engaged in a material deceptive act or practice that caused actual, although not necessarily pecuniary, harm" (Oswego Laborers' Local 214 Pension Fund, 85 NY2d at 26; see generally Small v Lorillard Tobacco Co., 94 NY2d 43, 55-56). Here, the submissions establish as a matter of law that the alleged misrepresentation of the investigator's credentials, and/or any reliance on the conclusions set forth in the report, did not cause actual harm to plaintiff. With respect to the claimed injury arising from the disclaimer of coverage, the record establishes that defendants' decision was based upon the factual observations contained in the report, i.e., that the depressions in the concrete slab were caused by settling of the fill with water discharge from a drain pipe as a contributing factor, coupled with defendants' interpretation of the policy exclusions as applied to those facts. The disclaimer was wholly unrelated to any misrepresentation made by defendants to plaintiff regarding the investigator's credentials. That conclusion is further supported by the fact that defendants erroneously continued to disclaim coverage even after the policy extension applicable to certain water damage was brought to their attention (see JD&K Assoc., LLC, 118 AD3d at 1402-1403). To the extent that plaintiff contends that it suffered actual harm because it was compelled to retain a professional engineer to investigate the cause of the property damage, that decision resulted from defendants' adherence to the disclaimer given its interpretation of the policy despite the investigator's factual observations that supported coverage under the applicable policy extension (see id.). We note that the factual findings in the report are not challenged by plaintiff and are essentially indistinguishable from the findings made by plaintiff's professional engineer. We thus conclude that plaintiff's alleged injuries were caused by a disclaimer made on the basis of the undisputed factual circumstances of the property damage and defendants' adherence to its erroneous interpretation of the policy language, and did not result from any misrepresentation to plaintiff about the investigator's credentials (see Amalfitano v NBTY, Inc., 128 AD3d 743, 746, lv denied 26 NY3d 913).

Important case.  Be sure to read it through if your job includes the oversight or direct handling of litigated first-party property coverage disputes.

Court Grants Motion to Exclude Insurer's Computer Fire Modeling Expert's Testimony

PROPERTY – HOMEOWNERS – FIRE INVESTIGATION – COMPUTER FIRE MODELING – ADMISSIBILITY OF EXPERT TESTIMONY – FRYE HEARING
Santos v. State Farm Fire & Cas. Co.
(Sup. Ct., Nassau Co., decided 6/28/2010)


Plaintiff moved pursuant to Frye v. United States, 293 F. 1013 (DC Cir. Ct. Apps.1923) to exclude the testimony of State Farm's defense computer fire modeling expert witness, Dr. Jozef Urbas.  At the time the motion was made, plaintiff contended that Dr. Urbas utilized the computer fire modeling to determine the origin and cause of a fire that occurred at plaintiff's premises in Bethpage, New York, on January 20, 2006. The court ordered a Frye Hearing.

Pursuant to the Frye test, expert testimony based on scientific principles or procedures is admissible only after a principle or procedure has gained general acceptance in its specified field (People v Wesley, 83 NY2d 417, 422 [1994]). A particular procedure need not be unanimously indorsed by the scientific community but must be generally accepted as reliable (Id. at 423). The Frye test emphasizes "'counting scientists' votes," rather than verifying the soundness of a scientific conclusion (Parker v Mobil Oil Corp., 7 NY3d 434, 447 [2006]).

In 1993 the United States Supreme Court decided Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 US 579 which, in federal courts, displaced the Frye general acceptance standard based upon the Federal Rules of Evidence. The Frye general acceptance test, however, continues to be the standard for determining reliability and admissibility of expert testimony in New York (see People v. Wesley, 83 NY2d at 433).

The burden of proof is on the party challenging the evidence to make a prima facie showing that it is a novel theory which is not generally accepted (Matter of Seventh Jud. Dist. Asbestos Litig., 9 Misc 3d 306, 311-312 [Sup. Ct. Wayne Co. 2005]). The burden then shifts to the proponent of the evidence to show by a fair preponderance of the credible evidence that there is sufficient general acceptance of its reliability (Id.).

Eugene J. West, retired investigator for the New York City Bureau of Fire Investigation (the Fire Marshal's Office), testified for the plaintiff that in his capacity as a fire investigator he would get many requests to utilize computer fire modeling but would decline to use it as part of the official investigation, stating that: "We can only speculate as to what was the composition or the exact construction of a room or the type of materials that were used, especially if those things are no longer available to us."

Mr. West stated that computer fire modeling was never generally accepted as an investigative tool by the New York City Fire Department.  It was his opinion that computer fire modeling is not generally accepted in the fire investigative community and cannot be used to determine the cause of a fire.  Although computer fire modeling was used in the World Trade Center investigation, it was used for illustrative purposes.  Mr. West explained that there is a caveat by the National Fire Protection Association ("NFPA") that the program is essentially as good as the information put into it.

In support of the introduction of the computer fire modeling evidence, Dr. Urbas testified the NFPA endorses the use of fire modeling in fire dynamics in the use of fire investigation.  Dr Urbas further testified that the underlying equations and laws of physics have been generally accepted in the fire science community and that they have been generally accepted as reliable in computer fire modeling.

State Farm's counsel explained that Dr. Urbas was not coming into court to state the cause and origin of the fire but rather to apply the computer dynamics to see how the fire would spread.  Dr. Urbas testified that the results of the fire modeling established that there was a time line that matched a particular origin of the fire, that the damage in the building corresponded to the results of the modeling and that the determination of fire dynamics in that particular theory [the time line] is generally accepted for that purpose.  The computer fire modeling essentially verified the hypothesis as to the ignition source or cause of the fire.  Dr. Urbas "never said it's accepted for determining the origin of the fire" and acknowledged that although "[i]t can help determining the cause", " it cannot be the sole method of determining the cause" of a fire.

After hearing the testimony of both parties' experts, Nassau County Supreme Court Justice Thomas Phelan granted plaintiff's motion to exclude the computer fire modeling testimony:

The NFPA Users Manual for 921 states: "To conduct valid modeling and testing it is important that the investigator gather data that is as accurate and complete as possible."  Dr. Urbas agreed that the concept "garbage-in-garbage-out" was applicable (p. 73).  Here, the input was based upon regulatory agency tables [for furniture, floors, walls, etc.]*, measurements taken by Dr. Urbas, his inspection of the damage and his reliance upon information received from fire investigators from the insurance company.  Dr. Urbas never spoke with the homeowner, the Nassau County fire officials or local firefighters.  Dr. Urbas testified that he was unaware that there were paint thinners and solvents in the area where the fire started and that such knowledge would have thrown off the entire calculation (p. 75).

Fire modeling carries with it a 15 to 20 percent margin for error assuming all conditions are correct but could be as high as 80 percent depending upon the real conditions (pp. 76-77).  Dr. Urbas acknowledged that there could be a difference between the material represented in a table and the actual material at the fire scene (p. 83). "If the input in the model is correct then the output is correct" (p. 96).  Dr. Urbas' testimony indicated that incorrect input could lead to inaccurate results.

Bearing in mind that the court's role as gatekeeper is "counting scientists," the court finds that defendant did not present sufficient evidence to establish that there is a consensus in the fire investigation community that computer fire modeling is generally accepted as reliable. "The long-recognized rule of Frye v. United States (supra) is that expert testimony based on scientific procedures is admissible but only after a principle or procedure has gained general acceptance' in its specified field" (People v. Wesley, 83 NY2d at 422).  Here the specified field is fire investigation. The issue before the trier of fact in this particular lawsuit involves when and how the fire started.  Defendant failed to meet its burden of proving that its expert's use of computer fire modeling was generally accepted in the fire investigation community (Cumberbatch v. Blanchette, 35 AD3d 341, 342 [2d Dept. 2006]). Although defendant's expert may support a case for the acceptance of computer fire modeling in the regulatory/design community, it does not support a conclusion that it is generally accepted in the fire investigation community. 

It is important to understand that Justice Phelan did not hold that computer fire modeling is scientifically unreliable and never admissible in a civil arson case; he merely held that in this particular case, State Farm did not submit sufficient evidence to convince him that computer fire modeling was generally accepted in the fire investigation community.

And as late as the mid-nineteenth century, some still believed that the earth was flat.

Action Against Property Insurers Dismissed Based on Finding of No Collapse

COMMERCIAL PROPERTY – COLLAPSE – NO ABRUPTNESS – WEAR & TEAR EXCLUSION – DETERIORATION EXCLUSION – EXPERT OPINION FROM AN ARCHITECT
Rapp B. Props., LLC v. RLI Ins. Co.
(1st Dept., decided 9/15/2009)

Plaintiff sought payment from their commercial property insurers for damage to its building's south wall as a result of collapse, an allegedly covered peril, which occurred "[o]n or about July 19, 2005 and continuing thereafter."  The complaint cited damage consisting of "severe cracking, bulging, splaying and displacement of the exterior brick facade."  The insurers disclaimed coverage on the ground that the damage was "due to wear & tear and gradual deterioration not collapse."  The policy's additional coverage provisions defined collapse as respects buildings as follows:

a.  Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose;

b.  A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse;

c.  A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building;

d. A building that is standing or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.

Plaintiff sued its insurers and two entities that had installed an outdoor sign that allegedly contributed to the failure of the building's south wall.  New York Supreme denied the parties' respective motions for summary judgment and all parties appealed.

In MODIFYING the order to grant the insurers' motion for summary judgment dismissing plaintiff's complaint against them, the First Department held:

The interpretation of an unambiguous provision of an insurance contract is a question of law for the court (White v Continental Cas. Co., 9 NY3d 264, 267 [2007]. Accordingly, regardless of the cause or causes of the damage, it was error for the court to deny the insurers' motion, because there was no collapse within the meaning of the policies. Michael H. Rappaport, plaintiff's managing member, testified that the building and its south wall were still standing three months after the damage was observed in July 2005. Standing alone, Rappaport's testimony suffices to belie any claim that the wall's collapse was "abrupt" within the meaning of the additional coverage provisions. John Paul Murray, plaintiff's architect, observed displacement of brick masonry units and opined that there was an "imminent risk that the wall would completely collapse." In light of subparagraph b above, which excludes imminent collapse from the definition, Murray's affidavit does not bring the occurrence within the coverage of the policies. In Rector St. Food Enters., Ltd. v Fire & Cas. Ins. Co. of Conn. (35 AD3d 177 [2006]), this Court held that a building that was "shown to have had two-to-three-inch-wide cracks in its facade and was sinking, out of plumb, and leaning" did not meet a materially identical definition of collapse. Rappaport's affidavit is also unavailing insofar as he claims to have discovered that bricks had fallen from the inside of the wall where it was covered by sheetrock and tile. As noted above, the wall was still standing. Tellingly, Rappaport describes the condition as hidden "decay," a phenomenon which, by definition, does not occur abruptly.  

The appellate court did affirm that part of the lower court's order that had denied the outdoor sign installer defendant's motion for summary judgment.  The First Department held that the plaintiff's architect's opinion that the tension created by tightly stretching the sign against its fasteners contributed to the failure of the south wall created a triable question of fact regarding the sign defendants' alleged negligence, precluding summary judgment to the sign defendants.  In rejecting those defendants' argument that the plaintiff's architect was not qualified to offer an opinion regarding the sign and the tension its attachment created on the south wall, the appellate court held:

The profession of architecture involves "the application of the art, science, and aesthetics of design and construction of buildings ... including their components and appurtenances ... wherein the safeguarding of life, health, property and public welfare is concerned" (Education Law § 7301).

"Skillful and Thorough" Cross Examination of Insurer's Ortho Expert Is Not Rebuttal Evidence of Medical Necessity

NO-FAULT – MEDICAL NECESSITY – EXPERT PROOF – BIAS
Andrew Carothers, M.D., P.C. a/a/o Sabrina Defares v. GEICO Indem. Co.
(NYC Civil Ct., Kings Co., decided 8/20/2008)

Suit over an $879.73 MRI bill, denied based on a peer review. At trial, in an effort to carry its initial burden of proving that the MRI was not medically necessary, GEICO called orthopedic medicine expert "Dr. Bazos" (Andrew?) as its chief and only witness.

Dr. Bazos testified that he reviewed the MRI reports and determined that the MRI performed on the assignor was not medically necessary. He stated that a MRI is necessary when there is significant clinical findings and the patient is a surgical candidate. Dr. Bazos stated that the assignor's examination was proper and well documented; that there was no indication that the assignor was a candidate for surgery; that based on the assignor's diagnosis of soft tissue injury, said injuries usually resolve within four to six weeks with a conservative course of treatment consisting of physical therapy and anti-inflammatory medication. Dr. Bazos stated that the assignor had multiple post traumatic soft tissue injuries which did not necessitate the need for a MRI. That these injuries were typical post-accident injuries and that the performance of an MRI for such injuries was a deviation from the generally accepted standard of care in the medical profession.

On cross examination, Plaintiff's counsel attempted to impeach the credibility of Dr. Bazos, claiming that in 90 percent of his peer reviews, Dr. Bazos found that MRIs were medically unnecessary. Plaintiff's counsel cross-examined Dr. Bazos concerning the number of times he testified, his understanding of the use of peer reviews, the number of peer reviews he performed, the fees charged for each peer review, and the fees he receives for his testimony at trial. Counsel also cross-examined Dr. Bazos concerning his basis for his opinion of lack of medical necessity, claiming that his opinion was contrary to the views expressed in Campbells Operative Orthopedics and that his opinion was reached based on his financial interests with GEICO.

In entering judgment for GEICO dismissing the complaint, Kings Civil Court Judge Sylvia Ash ruled:

While, it is well recognized that compensation has a direct and vital bearing on credibility, the fact that Dr. Bazos had a great deal of experience testifying on behalf of insurance companies does not alone support an inference that his opinion is not honest in this case (see Scott v. Spanjer Bros., Inc., 298 F.2d 928). Dr. Bazos' evidence cannot be disregarded simply because he is an "employee" of the Defendant. While employment or other relationship of a witness may be considered on the point of his credibility in weighing his evidence against opposing evidence, it is not by itself a sufficient reason for disregarding his testimony. Although the fact that Dr. Bazos testified on numerous cases on behalf of Insurance Companies may support the inference of bias, if direct unimpeached, uncontradicted, and reasonable testimony is shown which is consistent with Dr. Bazos' finding of lack of medical necessity, no lawful finding can be made of the existence of bias (see Arnall Mills v. Smallwood, 68 F. 2d 57). And if any bias was established it would simply go to the weight given to the testimony (see Khan v. New York State Dept. Of Health, 17 App. Div. 3d 938). To establish the existence of bias sufficient to disregard Dr. Bazos' testimony, Plaintiff would have to show that his opinion flowed from the claimed bias (see Cohen v. Mills, 271 App. Div. 2d 826).

The Court has assessed and accepted Dr. Bazos' uncontradicted expert opinion and makes the following findings: (1) his testimony was credible and convincing (2) his opinion was medically and factually supported and (3) his opinion was not based on any alleged bias. Dr. Bazos' testimony supplemented his detailed peer review report and fully and explicitly set forth his reasons for the denial. Therefore, the Court finds that Defendant has met its prima facie burden of demonstrating lack of medical necessity for the services rendered, thus shifting the burden to Plaintiff to establish medical necessity. At trial, Plaintiff did not submit any rebuttal evidence, such as the testimony of the referring physician or of its own medical expert, to establish that the services rendered to its assignor were medically necessary. Instead, Plaintiff relied solely upon its cross examination of Defendant's medical expert, Dr. Bazos. However, despite Plaintiff's counsel's skillful and thorough cross examination, he was unable to refute Dr. Bazos' testimony thus failing to meet its burden of establishing medical necessity.

Even a skillful and thorough cross examination, without affirmative proof of some kind, may not be enough. Regardless of how artful the cross examination, I've yet to see any expert change her opinion at trial and say, "You know counselor, that's an awfully good point. Nevermind what I said on direct. "