Westchester Medical Center v. GEICO 

In reversing Judge Cozzens from Nassau County Supreme Court, the Appellate Division ruled, "The plaintiff, Westchester Medical Center, as assignee of Arianna Thrasher (hereinafter the appellant), made a prima facie showing of entitlement to judgment as a matter of law by submitting evidence in admissible form that the prescribed statutory billing form had been mailed to and received by the respondent insurer, which failed to either pay or deny the claim within the requisite 30-day period (see Insurance Law § 5106[a]; 11 NYCRR 65-3.8 [c];....The respondent's contention that there was a complete absence of coverage that could be asserted as a basis for disclaimer notwithstanding its failure to comply with the 30-day rule set forth in Insurance Law § 5106(a) and 11 NYCRR 65-3.8(c) (see generally Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 N.Y.2d 274; Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 N.Y.2d 195; Zappone v. Home Ins. Co., 55 N.Y.2d 131), is improperly raised for the first time on appeal, and, therefore, is not properly before this Court. "

Are SUM (Supplementary Underinsured Motorist) benefits available to a plaintiff who agrees to resolve the underlying case against the primary tortfeasor through arbitration with the maximum recovery at the policy limit of the culpable party? What if plaintiff's counsel puts the SUM carrier on notice of their intention to resolve the underlying case at arbitration with "High/Low" parameters? What if the SUM carrier declines to grant consent and plaintiff's counsel, on behalf of the injured party, brings an action to compel the SUM carrier to consent to the high-low arbitration and to direct the SUM carrier to proceed to arbitration of the petitioner's claim for SUM benefits?

Ducz v. Progressive Northeastern Ins. Co. (Docket Number 2012-09509), decided on January 29, 2014 by the Appellate Division, Second Department, answers a responding "No" to Plaintiff's attempt to resolve the case through arbitration, "As a condition precedent to the obligation of the insurer to pay under the supplementary uninsured/underinsured motorists insurance coverage, the limits of liability of all bodily injury liability bonds or insurance policies applicable at the time of the accident shall be exhausted by payment of judgments or settlements" (Insurance Law § 3420[f][2][A] ). Contrary to the petitioner's contention, she failed to establish that she exhausted the alleged tortfeasor's policy through settlement (see Garcia v. State Farm Ins. Co., 232 A.D.2d 488, 489, 648 N.Y.S.2d 340; cf. Matter of State Farm Mut. Auto. Ins. Co. [ Perez ], 94 A.D.3d 1314, 1315-1316, 942 N.Y.S.2d 688). Therefore, the Supreme Court properly denied that branch of the petitioner's motion, which was to compel the respondent to proceed to arbitration of the petitioner's claim for SUM benefits. The Supreme Court also properly denied that branch of the petitioner's motion which was to compel the respondent to consent to the high-low arbitration between the petitioner and the alleged tortfeasor's insurer, as that relief may not be sought in a CPLR article 75 proceeding (see CPLR 7503). "  

Read the case  here. 

The tragic fire at the Deutsche Bank building on August 18, 2007, resulted in the death of two New York City Firefighters. Judge Shirley Werner Kornreich, of New York County Supreme Court issued a decision on January 16, 2014 on an Insurance Disclaimer issued by Hudson Specialty Insurance Company for coverage on claims resulting from this fire. 

Under the Hudson Policy, the insurer was obligated to "pay on behalf of the insured those damages for bodily injury or property damage ... that the insured becomes legally obligated to pay ... [i]f the damages result from a pollution condition at any site where any insured ... is performing ... any contracting or remediation operations," subject to certain conditions (Hudson Policy, part I[A] ). 

A "pollution condition" was defined as "the discharge, dispersal, release or escape of smoke, vapors, fumes, acids, alkalis, toxic chemicals liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water which results in bodily injury or property damage" (Hudson Policy, part II). 

Hudson had the "right and duty to provide for the defense of the insured with respect to a claim made against the insured" 

(id.). The contract explicitly noted that it did not provide commercial general liability (CGL) coverage)." 

Hudson filed a motion to dismiss, arguing that the underlying actions do not allege injuries arising out of a "pollution condition" and, therefore, are not covered by the Hudson Policy. 

The court reiterated the current state of New York Law concerning the interpretations of insurance policies:

1.      Ambiguities as to the extent of coverage are to be resolved in favor of plaintiff, the insured (Handelsman v. Sea Ins. Co., 85 N.Y.2d 96, 101 [1994]).

2.       Hudson's duty to defend is broader than its obligation to indemnify, and it must defend if "the four corners of the complaint suggest ... a reasonable possibility of coverage" 

(Cont. Cas. Co. v. Rapid-Am. Corp., 80 N.Y.2d 640, 648 [1993] ). Nonetheless, the policy, like most contracts, is to be read "in light of common speech and the reasonable expectations of a businessperson" (Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 383 [2003] [citations omitted] ). While any ambiguity ought to be resolved in plaintiffs' favor, the law does not require the court to strain common sense or the English language to ensure that all claims against Hudson survive (see, e.g., Denihan Ownership Co. v. Commerce & Indus. Co., 37 AD3d 314, 315 [1st Dept 2007] ["plaintiff has not offered a reasonable interpretation of the exclusion in question so as to create an ambiguity"] ).

3.      Coverage provisions are not exempt from the general rule that words are presumed to have meaning (Bretton v. Mut. of Omaha Ins. Co., 110 A.D.2d 46, 49-50, 492 N.Y.S.2d 760 [1st Dept 1985]. Here Judge Kornreich ruled in favor of Hudson Specialty, "Here, URS (the owner's representative) does not advance an interpretation of the policy language which is sensible in light of common speech and the reasonable expectations of a businessperson. Even allowing the somewhat excessive stress the plaintiffs place on the stray references in two of the complaints to "toxic smoke", an allegation of injury from some sort of poisonous material is not enough to qualify for coverage; the injury must be caused by the "discharge, dispersal, release or escape" of such contaminant "into or upon land, the atmosphere or any watercourse or body of water" (Hudson Policy, part II). To read the terms "land", "atmosphere" and "watercourse or body of water" as "everywhere" would render the modifying clause misleading and useless surplusage. "

See URS Corp. v. Zurich American Ins. Co. (N.Y.Sup.), 2014 N.Y. Slip Op. 24016 annexed.

When does zealous advocacy cross the line for a defense counsel and cause a mistrial based on improper comments in summation or a line of questioning on cross-examination that the court deems prejudicial? 

Obviously there is no bright line rule in this area and in large part depends on what judge you are before. Would Judge Winslow or Judge Wexler cut you off at the knees before your cross got too far? I would say the answer to that question is a resounding yes. 

Would another judge give you enough rope to hang yourself and cause a mistrial? Well, yes that happens too. Marx v. Rosalind, decided by Judge Spinner on January 14, 2014 is worth a close look. 

In this case against the Rosalind and Joseph Gurwin Jewish Geriatric Center of Long Island, the plaintiffs claimed negligence against the nursing home for failing to properly treat the decedent who suffered decubitus ulcers, prior to her death in 2005. 

The defense, through cross-examination, tried to show the patient was difficult, had previously abused the staff and had a psychiatric admission to South Oaks Psychiatric Center. 

The court insisted that the behavior of the decent was not at issue and the questioning of the plaintiff's witnesses on a psychiatric admission, so tainted the jury, to warrant a mistrial. 

The line of inquiry defense counsel attempted was, in our view, proper, however; the problem was that the records, upon which the cross-examination was based, were not in evidence. 

Judge Spinner ruled, "The record demonstrates that Sandonato was attempting to solicit testimony from Marx, a lay witness, from a hospital record which was not in evidence, was not subpoenaed to the court and not received by the court. While the court sustained plaintiff's counsel's objections to this line of questioning four times in succession, Sandonato intentionally and repeatedly continued this line of questioning, in a manner prejudicial to the plaintiff, poisoning the jury, resulting in a mistrial." 

The court ordered a hearing on sanctions to be imposed in this matter. The case is likely to be seen shortly in the Appellate Division, if the matter is not resolved. (see Maraviglia v. Lokshina (92 A.D.3d 924, N.Y.A.D. 2 Dept., 2012), decided by the Second Department in 2012. 

In this medical malpractice action, defense counsel made remarks on summation that the plaintiff's treating physician and the plaintiff were "working the system." 

He also commented that the injured plaintiff's treating physician testified "at an enormous amount of Workers [Compensation] proceedings" and was the "go-to" doctor in Suffolk County for patients who wished to stop working. 

By contrast, counsel vouched for the credibility of the defendant's expert witness by thanking "God there are people like [him] who are the stop gap." 

During cross-examination of the plaintiff's expert anesthesiologist, counsel for the defendants twice referred to the medical center where this doctor performed certain procedures as a "parking lot". 

Here, a defense verdict was overturned and the case settled before trial in 2013. 

Read the decision here. 

Rebates paid by an insurance broker to the insured are generally prohibited by statute. Insurance Law section 2324(a), prohibits insurance brokers from paying "either as inducement to the making of insurance or after insurance has been effected, any rebate from the premium which is specified in the policy, or ... any valuable consideration or inducement of any kind, directly or indirectly, which is not specified in such policy or contract ..." in the context of property/casualty insurance, but not, inter alia, accident and health insurance (see Insurance Law (hereinafter "Ins. Law") § 2302(a) excluding some forms of insurance from the provisions of Article 23, which regulates insurance rates so as to avoid discrimination (see Ins. Law § 2301). Various other statutes prohibit rebating in the context of other types of insurance (see, e.g., § 4224((b)-(c)) (accident and health insurance); § 6409 (d) (title insurance); § 6504(b)(1)(mortgage insurance); § 6904 (g) (financial guaranty insurance).

The purpose of the anti-rebate statutes is to ensure that insurance providers, including brokers, "provide insurance in a non-discriminatory manner to like insureds or potential insureds, and to prohibit such an insurer or insurance producer from providing an insured or potential insured with any special benefit not afforded to other insureds or potential insureds" in those areas of insurance that are covered by statute (see Circular Letter of March 3, 2009, from the State of New York Insurance Department, cited by defendant).

Hirsch Wolf & Co., (Wolf) an insurance broker, tried to persuade his client to place workers' compensation insurance in a specific program, the Health Insurance Trust of New York (HITNY). 

When the client expressed concerns that the program may be subject to a retroactive adjustment, Wolf guaranteed that if any adjustment occurred, he, or his company, would pay 50% of any retroactive adjustment for the 2003-2004 policy year. 

As a result of this guarantee, plaintiffs placed their workers' compensation coverage with HITNY for the 2003-2004 year and in subsequent years. 

When the HITNY became insolvent the Workers' Compensation board ordered retroactive assessments and the client sued the broker to collect on the guarantee. Wolf argued that the guarantee is unenforceable as illegal, because it violates provisions of the New York Insurance Law prohibiting an insurance broker from selling a policy to a client with the promise that he will refund or rebate a portion of the premium.

On January 14, 2014 Judge Demarest of New York County Supreme Court decided the issue in Cliffside Nursing Home Inc. v. Estate of Wolf (42 Misc.3d 1213(A)). 

In a fatal error to the motion, counsel failed to include a copy of the policy which was the subject of the case. Judge Demarest denied the motion stating, "The vice is not in the giving of a rebate, inducement, or consideration, but the giving of any rebate, inducement, or consideration not specified in the policy. As copies of the insurance policies have not been produced, the court is unable to make a determination as to the legality or illegality of the guarantee."   

Read the decision here.