Valentine's Day is around the corner, and somehow an Insurance Coverage issue is brought to the fore on this Day meant for lovers. Our office is presently defending a constitutional challenge to the lack of insurance coverage for spouses involved in a motor vehicle accident as an unconstitutional bill of attainder (an act of a legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a judicial trial). The United States Constitution forbids legislative bills of attainder under Article I, Section 9.

The constitutionality of this provision was affirmed by the New York State Court of Appeals in the 1983 decision of Samuel Yankelevitz v. Royal Globe Insurance Company, 59 N.Y.2d 928 (1983).  The Court in Yankelevitz indicated, "We perceive no constitutional infirmity to the provisions of Subdivision 3 of Section 167 of the Insurance Law (now codified as 3420-g) which operates to exclude coverage for liability of the insured for personal injury or property damage claims by the insured's spouse where the culpable conduct of the insureds is an issue, unless the policy expressly declares such coverage". "Plaintiff's contention that the legislature's failure to require that the insurance policy expressly give notice to the insured of this exclusion denies him due process is without merit.  The insured has ample notice of the terms of the exclusion by virtue of the statutory provision itself which is deemed included as a policy provision...Moreover, the determination of the legislature to apply this exclusion only to spouses is not violative of equal protection.  The provision is designed to discourage collusive insurance claims between spouses involved in an automobile accident.  A rational basis clearly exists to justify whatever classification may be created by the statute". 

Unquestionably, Insurance Law §3420(g) serves to bar any obligation to provide coverage for inter-spousal accidents occurring within this state when the policy was drafted.  New Amsterdam Casualty Company v. Stecker, 3 N.Y.2d 1 (1957). Insurance Law §3420(g) however, proscribes the same scenario even if the accident occurs and litigation arises outside of the state.  In discussing §3420(g), then titled Subdivision 3 of Section 167 of the Insurance Law, the Court stated that Subdivision 3 of Section 167 governs all liability insurance policies issued in this state without regard to where the accident occurs.  It is mandated into and made part of every policy of automobile liability insurance issued in this state.  The Court reasoned that the applicability of section 3420(g) hinged on traditional notions of contract law.  In rejecting the notion that the applicable law is that of the state where the accident occurred, the Appellate Court included that with regard to New York State Insurance policies, the applicable law was the law of this state and that §3420(g) was applicable to all policies issued within the state.  

Recent Appellate Court decisions affirm the applicability of the Yankelevitz decision from the Court of Appeals in 1983.  See State Farm Mutual Automobile Insurance Company v. Hawkins, 30 A.D.3d 502 (App. Div. 2nd Dept. 2006); Mathieu v. Commercial Mutual Insurance Company, 275 A.D.2d 613 (App Div. 1st Dept. 2000) where the Court indicated, "Plaintiff's challenge to the constitutionality of the marital exclusion set forth in Insurance Law §3420(g) is without merit...nor, given the plain import of Insurance Law §3420(g), do we perceive any basis for plaintiff's claim that it was the legislators intention that coverage be provided for inter-spousal liability". The Federal Court Action we are defending is before Judge Bianco in the Eastern District. Stay tuned for a decision from the Court on this novel challenge. We may find our self in the Second Circuit on this case in the months ahead.   

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Consider the case of Lucia Arzu, Plaintiff v. NYC Transit Authority, (Index No: 33018/2001) decided by Judge Katherine A. Levine on January 9, 2012 in Kings County. The Court was asked to decide whether the "undue delay" set forth in 11 NYCRR §65-3.9(d), applied to the facts of this case. Lucia Arzu filed suit against the Transit Authority on January 29, 2001 seeking recovery of PIP benefits. Issue was joined in July of 2001 and the TA served discovery demands. Four years later the TA filed a motion to preclude for failing to respond to discovery demands served in 2001. In May of 2005, the Court issued an order calling for a response to be served in 45 days. In 2010, the Transit Authority served a 90 day demand notice requiring the plaintiff to place the case on the trial calendar. So much for the summary proceeding contemplated b the No-Fault statute. The Claimant thereafter put the case on the trial calendar and sought interest at 2% per month from the date the case as placed in suit in 2001. The $25,000 initially would have grown exponentially at that rate.

Citing East Acupuncture. P.C. v. Allstate, 61 A.D. 202, 210 (2d Dept. 2009), the Court stated "Pursuant to 11 NYCRR_65-3.9(c), where the applicant does not commence litigation within 30 days of the denial of the claim or payment of benefits, the interest shall be tolled until such action is taken. Pursuant to 11 NYCRR §65-3.9(d), interest shall accrue once the applicant has submitted a dispute to arbitration of the courts "unless the applicant unreasonably delays the...court proceeding." Thus, "[f]ailure to act promptly after a denial of claim results in a toll of the statutory interest provisions, for to do otherwise would reward a recalcitrant plaintiff with a windfall of punitive interest payments and would contravene the legislative goal of promptly resolving no fault claims."

As the voice of reason Judge Levine denied the request of the claimant for 9 years of interest stating, "Here, plaintiff's delay in prosecuting the case is especially egregious. Plaintiff first waited nearly four years to respond to discovery demands resulting in defendant filing a motion to preclude plaintiff from offering evidence. Only upon receipt of this motion did plaintiff enter into a So-Ordered stipulation whereby plaintiff was to provide copies of the allegedly unpaid bills within 45 days or be precluded from offering such evidence at trial. Defendant disputes that it ever received the sought disclosure as a rationalization as to why it did not serve plaintiff with a notice to resume prosecution and file a note of issue for approximately five years. Yet, ironically, plaintiff claims that it actually mailed the sought after discovery in 2005. Hence, by its own admission, plaintiff concedes that it waited five years to resume prosecution of the case, and that it was spurred to action by being served by defendant with a notice to resume prosecution and file a note of issue. To make both the insurer and applicant equally responsible for moving the case forward would contravene both the explicit language of the regulations and the intent of the legislation."

Read more  here.