The New York Assembly has submitted a Bill (Senate No. S. 7518; Assembly No. 10739) sponsored by Senator Thompson and Assemblyman Titone which could radically change the definition "serious injury" from the current form found in Section 5102(d) of the New York State Insurance law. Clearly the New York Legislature is reacting to the 2005 Court of Appeals decision in Pommells v. Perez, 4 NY3d 566 (2005) and its progeny which once again attempted to form a bright line definition in conformity with the Legislative intent following the 1973 enactment of the "Comprehensive Automobile Insurance Reparations Act". As Helen of Troy had the face that launched 1000 ships, the New York No-Fault definition of serious injury has launched more motions and Appellate decisions over the last 37 years than an Army of Lawyers could conquer. The new bill adds to the current definition the following categories:

1. A  partial  or complete  tear  or  impingement  of a nerve, tendon, ligament, muscle or cartilage; injury to any part of the spinal column that results in injury to an intervertebral disc; impingement of  the  spinal  cord,  spinal canal,  nerve,  tendon  or  muscle.
2. Total or partial loss of use of a body  organ,  member,  function  or  system.
3. A surgical  procedure to any injured part of the body;
4. The addition of the words " any other" to the definition "any other permanent consequential limitation of use of a body organ [or],  member,  function or  system;  any  other  significant  limitation of use of a body organ,   member, function or system; or [a] any other medically determined injury or impairment of a permanent or non-permanent nature which prevents  the injured  person  from  performing substantially all of the material acts which constitute such person's usual and customary daily activities  for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment."
   

In addition the legislation issued the following mandate, "a finding of serious  injury  under  any of the above enumerated categories in this definition shall be a sufficient basis for an award for past  and/or  future damages."

The legislation also seeks to eliminate the frequent use of summary judgment motions with the following direction, " issues of fact and sufficiency of the evidence. Whether an injury qualifies as a serious  injury  pursuant  to  subsection  (d)  of section  five  thousand one hundred two of this article shall be a question of fact. Where evidence is offered as  to  (a)  whether  an  injury qualifies as a serious injury pursuant to subsection (d) of section five thousand  one  hundred two of this article, or (b) the causation of such  an injury, the sufficiency of such evidence shall be determined  by  the trier of fact. Sufficiency and weight of evidence offered, including but not  limited  to  that  pertaining  to  qualitative  and/or quantitative assessment of injury, shall be reserved for the trier of fact."
 
The Act, by its terms would take effect immediately and would apply to all actions pending or commenced after the effective date. The sponsors' memorandum sets for the following justification for enactment of this new bill. "The proposed amendments would curtail summary dismissal of legitimate cases involving significant injuries not objectively verifiable when the law was originally enacted in 1977. The Courts have been flooded with countless motions and extensive appellate practice on the issue of whether a serious injury was sustained, resulting in unfair and contradictory decisions and the dismissal of meritorious claims.  Injured parties in one Judicial Department may have their case dismissed as "non-serious" while in another Judicial Department a case with similar facts is permitted to proceed. "
 
An interesting postscript on this story comes from the Buffalo News in a story published on May 10, 2010 entitled, "Thompson legislation stirs new controversy". State Sen. Antoine M. Thompson has his own personal injury claim pending following a 2007 motor vehicle accident where the Senator claims a 25% tear to his rotator cuff. When asked if the motor vehicle accident and subsequent lawsuit affected this legislation, Senator Thompson was quoted as saying, "It's only a coincidence."  The face of personal injury litigation would certainly change with passage of this litigation. One would hope the Governor gives this bill a hard look and seeks advice from all quarters, including the New York State Insurance Department Superintendent, Jim Wynn.

The Court of Appeals decision in Fair Price Medical Supply Corp v. Travelers Indemnity Co., 10 NY3d 556, 860 N.Y.S.2d 471 [2008], stands for the proposition that failure to comply with the 30 day time period to pay or deny a claim precludes a defense that the durable medical equipment billed for by the provider was never delivered to the plaintiff -assignor.

The Court of Appeals held, "While preclusion requires Travelers to pay a no-fault claim it might not have been obligated to honor if timely disclaimed, the same can be said of any policy defense subject to preclusion. Moreover, although there may be some merit to Travelers' protest that a 30-day (plus potential tolling) window is generally too short a time frame in which to detect billing fraud, any change is up to the Legislature.

"Fair Price" (supra) left many a defense attorney shaking their head. Most of the defense bar sided with Judge Smith in his dissent when he stated, "Travelers asserts, with support in the record, that it is being asked to pay for medical supplies that were never delivered to the patient it insured. I would hold that, if indeed the basis for Fair Price's claims is nonexistent, those claims are outside the coverage of the policy, and Travelers' defense is therefore not barred by its failure to meet the deadlines imposed by Department of Insurance regulations."

Alev Med. Supply, Inc. v Progressive Ins. Co., decided on May 3, 2010 by Judge Hirsch of the Nassau County District Court, addresses a valiant but unsuccessful attempt by Progressive Insurance Company to combat fraud. Progressive sought a deposition of Valadimir Alexsandrovich to inquire about his relationship to a company called Bener Wholesale, Inc. Progressive claimed that Bener Wholesale, Inc does not really exist and that "Bener" was formed to generate invoices for medical supplies and equipment for Alev Medical Supply, Inc. and other providers so that the provider could bill no-fault and other insurance carriers. Under the regulations, a provider of medical equipment is permitted to charge a no-fault insurance carrier 150% of the documented cost of the equipment to the provider. 11 NYCRR 68 Part E (b)(1). Regulation 11 NYCRR 65 - 3.5 provides the insurance carrier the right to seek verification of the claim. Regulation 11 NYCRR 65-1.1] allows for an examination under oath. Both provisions extend the 30 day period pending verification.

Judge Hirsch noted, "The entire purpose of the verification process is to provide the insurance carrier with the opportunity to seek additional information and time to review a claim before the carrier is required to pay or deny the claim. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., (supra). Here, Progressives' attempt to gain EUO fails on several grounds. First, Bener Wholesale, Inc. was not a party to the action and Progressive failed to demonstrate the special circumstances required to obtain discovery from a no-party under CPLR 3101(a)(4). Second, Progressive did not raise a "Malella" defense as an affirmative defense in its answer. (Practice Note: Raise the " Malella" defense on all DME (durable medical equipment) first party claims). In the end Judge Hirsch ruled, "The no-fault law is designed to insure prompt payment of claims of medical claims arising from automobile accidents.... Permitting a defendant to conduct discovery on defenses it is precluded from raising at trial would defeat this goal."

Rolf Ohlhausen sounds like an interesting guy. He is an architect, in his 70's, lives in Manhattan on the Upper West Side and rides a motorcycle around town. On September 14, 2005 he got on his motorcycle and was headed downtown to the New School where he was enrolled in a philosophy course. A confluence of events on that day will now tie Rolf to an important case on the issue of proximate cause.

A police officer was in pursuit of a robber that morning in Greenwich Village. Around 10:00 am Officer Murray was in a radio patrol car with lights and sirens on, traveling North on West 4th Street. He stopped for a red light on West 10th Street and was ready to continue North. At the same time Jeffrey Whaley was driving  a New York City Transit Authority bus eastbound on West 10th Street. Mr. Whaley had the green light but when he saw the police car with lights and sirens on, he stopped, and waived the officer through the intersection. The police officer did not immediately proceed, but rather, moved into the intersection and stopped again just north of the bus, using the bus as a shield, and turned his siren off. He was hoping to catch the robber running southbound on 7th Ave.  After a 15-20 second pause he continued across the intersection. At the same time our architect/philosophy student was eastbound on West 10th street on his motorcycle with the light in his favor. He saw the bus but not the patrol car and heard no siren. We all know what happened next. There was no philosophy course that day for Mr. Ohlhausen and Rolf thereafter became a plaintiff. 

Ohlhausen v. City of New York 898 N.Y.S.2d 120 decided on April 01, 2010 by the Appellate Division, First Department, reversed the decision of the Supreme Court, New York County (Judge Donna Mills) and dismissed the case against the New York City Transit Authority. The Court addressed prior case law which held liability against a motorist for gesturing another to cross the road, "While we are sympathetic to the Transit Authority's suggestion that a driver yielding the right of way to another should be able to gesture to the other individual simply to confirm his intention to stop and wait for him or her to cross, without incurring liability for another motorist's negligence, we decline its invitation to revisit a rule that is by now well-established law in this State: In appropriate circumstances, a driver may incur a duty to another by gesturing that it is safe to cross the road. We also reject the Transit Authority's suggestion that the gesturing driver's duty does not extend to the third party and that the third party's lack of knowledge, and therefore non-reliance on, the gesture, precludes a finding of proximate cause." Here the Court addressed the issue, "may the driver's negligent gesture be treated as a proximate cause of an accident when the party injured in the collision is not the driver who relied on the gesture, but another individual injured in the collision who was unaware of the gesture?"
 
In the end, the Court agreed with the Transit Authority, that under this fact pattern, proximate cause was not established as there was a sufficient lapse of time and a change in circumstances, enough to make the hand gesture by the bus driver, irrelevant to the ultimate cause of the accident.

We look forward to continuing to keep you informed about substantive issues of insurance defense law in 2010.

 

If you have any questions or comments about our newsletter "iNews" please contact Frank Scahill, Managing Partner, at fscahill@psnylaw.com.