New York Civil Law

New York Court of Appeals Hears Oral Argument on Important No-Fault Issues

On February 11, 2009, the New York Court of Appeals heard oral arguments in LMK Psychological Servs. v. State Farm Mut. Auto. Ins. Co., addressing two important issues regarding New York's No-Fault Law.  I attended the oral argument; however, I wasn't as industrious as our friend Dave Gottlieb over at No-Fault Paradise.  Dave provides this play-by-play of the oral argument.

New York Court of Appeals Will Hear Oral Argument In Yet Another No-Fault Appeal

Surprisingly, the New York Court of Appeals has heard several appeals in the No-Fault Law context this Term.  Next week, the Court will address another No-Fault appeal -- Fair Price Med. Supply Corp. v. Travelers Indem. Co. (Appellate Division, Second Department Decision and Order).  The question presented on the appeal is whether an insurance carrier is precluded from interposing a defense in an action to recover assigned first-party no-fault benefits if it fails to pay or deny the claim within 30 days, where it has reason to believe that the claim fraudulently seeks reimbursement for medical supplies that were never delivered to the insured.  The Second Department held that an insurer must do so because  its proposed defense in this case is not based on a lack of insurance coverage.

For a good discussion of the Second Department Decision and Order, see No-Fault Paradise's post here.

NYCL will keep you abreast of developments in this case.

Appellate Division, Third Department Recent Decision on Attorneys' Fees in No-Fault Context

Within the No-Fault context, how should the arbitrator or court award counsel fees where a medical provider seeks reimbursement on multiple claims?  Is counsel entitled to an attorney's fee in the amount of $60 or 20% of the amount of the bill, plus interest thereon, subject to a maximum of $850 per assignor or per claim?

The New York Superintendent of Insurance states in this opinion that counsel fees should apply per assignor, not per claim.  In Alpha Chiropractic P.C. v. State Farm Mut. Auto. Ins. Co., Civil Court, Queens County (Siegal, J.), parted ways with the Superintendent and held counsel fees should apply per claim.   Civil Court, New York County in Marigliano v. New York Cent. Mut. Fire Ins. (Hagler, J.), also parted ways with the Superintendent.

Just recently, the Appellate Division, Third Department in LMK Psychological Servs. v. State Farm Mut. Auto. Ins. Co. also held that attorneys' fees should be calculated on a per claim basis.  The Court concluded that the Superintendent's interpretation was not a proper one under Insurance Law sec. 5106 and, therefore, the Court did not give the Superintendent's opinion deference.

Dave over at No-Fault Paradise makes a very poignant observation about the impact of LMK (see post here).  Because the Third Department is the only appellate court in the state to opine on the issue, all trial courts throughout the state must follow the holding until an appellate court within their Department rules otherwise.

Thank you to Jon for bringing the opinion to my attention.

New York Court of Appeals Addresses New York No-Fault Law

Today, the New York Court of Appeals in Hospital for Joint Disease v. Travelers Prop. Cas. Ins. Co. addressed whether an No-Fault insurer can raise an issue challenging the validity of an assignment of a No-Fault recipient to a medical provider where the No-Fault insurer failed to request verification of the assignment. 

The quick and dirty facts are: The No-Fault insured assigned rights to a medical provider and, in turn, the medical provider sought reimbursement pursuant to the assignment from the assignor's (the insured) insurer.  The assignment form clearly stated that the insured's signature was on file.  After the medical provider (assignee) submitted its claim to the No-Fault insurer, the No-Fault insurer did not deny or pay the reimbursement within the 30-day time period.  In its answer to the medical provider's complaint seeking reimbursement through the New York court system, the insurer challenged the viability of the assignment (essentially arguing that the assignee did not have standing to bring the claim in the first instance).

The Majority held that the insurer (assignee) failed to request verification of the assignment in a timely fashion or to contest the assignment in a timely fashion and, therefore, was precluded from raising the assignment issue.  Interestingly, the Court noted that assuming that the plaintiff was required to demonstrate the validity of the assignment to make a prima facie showing,  an assignment form stating that the signature was on file sufficed to meet the initial burden.  Judge Pigott dissented, stating that the insurer cannot be precluded from waiving an issue regarding assigment because the issue raised a threshold standing issue.

Notes from Oral Argument for Raffellini v. State Farm Mut. Auto. Ins. Co.

As New York Civil Law wrote in a prior post, the New York Court of Appeals heard oral arguments earlier this month in Raffellini v. State Farm Mut. Auto. Ins. Co.  The issue on the appeal is: Does an injured plaintiff have to establish he or she sustained a "serious injury" under Insurance Law sec. 5102 to recover supplementary underinsurance motorist coverage (SUM) from his or her insurance carrier?

I attended the oral argument and was impressed by both the appellant's and respondent's counsel.  For those of you who missed the oral argument, the following is a summary of my notes:

Appellant’s counsel began his argument on behalf of State Farm by stating that the statutory framework of Insurance Law § 3420(f)(1) and (2)(A) demonstrate the “serious injury” requirement in both the uninsured motorist coverage and  supplementary underinsured motorist contexts.  Chief Judge Kaye asked counsel to explain his position given section 3420(f)(1) explicitly required a “serious injury” showing where section 3420(f)(2)(A) did not.  Counsel explained that section 3420(f)(2)(A) was not written in a vacuum.  Counsel also pointed out that section 3420(f)(2)(A) incorporated the language of section 3420(f)(1) because section 3420(f)(2)(A) language began with the phrase, “[a]ny such policy.”  Judge Ciparick seemed to reject that interpretation, observing that such general language is always contained in statutes.  Judge Ciparick also seemed to question the fairness aspect of requiring the plaintiff/insured to demonstrate a “serious injury,” commenting that SUM benefits are purchased for an additional premium, the coverage is optional, and the benefits act as excess coverage.

Judge Read asked appellant’s counsel whether there was any logic for the Court to require a “serious injury” showing for section 3420(f)(1) and not for section 3420(f)(2)(A).  Counsel stated that there was no logic supporting such divergent treatment.  Judge Read followed up her question, asking about State Farm’s position regarding the plaintiff/insured’s settlement with the underinsured tortfeasor (State Farm did not respond to its insured’s request for authorization to accept the settlement and, thus, it was deemed that State Farm authorized the settlement).  Judge Read then asked whether State Farm would protest settlements with underinsured tortfeasors in future cases if the Court decided against State Farm.  Counsel answered that he most likely would advise State Farm to respond to its insureds’ request for authorization.  Judge Smith then asked rhetorically, “What would you do?  Tell the [insured] not to settle?” 

Judge Smith then asked about the res judicata impact of a “serious injury” finding in the underinsured motorist part of the case.  Appellant’s counsel stated that it was State Farm’s position that the SUM insurer would not be bound under the doctrine of res judicata by the finding of “serious injury” and that the plaintiff/insured would have to demonstrate “serious injury” in seeking SUM benefits.  Judge Ciparick then replied, “Would you be forcing a trial on the serious injury [issue]?”

Prior to respondent’s counsel setting out his argument on behalf of Mr. Raffellini, Chief Judge Kaye asked him to explain the logic for section 3420(f)(1) including the “serious injury” requirement but section 3420(f)(2)(A) not doing containing such language.  Counsel argued that the two sections were completely separate.  The crux of counsel’s argument was that a “serious injury” finding was implicit where the underinsured tortfeasor’s carrier paid the plaintiff/insured the policy limits.  He reasoned that the plaintiff/insured had to convince the underinsured tortfeasor’s carrier that the plaintiff sustained a “serious injury” to justify the carrier paying the policy limits.  As such, a settlement demonstrated a “serious injury” finding and the plaintiff did not have to demonstrate for a second time to the SUM insurer that he or she sustained a “serious injury” to receive SUM benefits.  Chief Judge Kaye noted that if the “serious injury” finding was implicit when a settlement with the underinsured tortfeasor’s carrier was reached, what was the harm with just making a “serious injury” showing explicit in a SUM endorsement.  Counsel answered that doing so would require two showings of serious injury, and he argued that such a requirement was an unnecessary obstacle to the plaintiff/insured receiving SUM benefits.

Judge Graffeo struggled with respondent’s counsel’s argument, asking “At some point, don’t you have to demonstrate a serious injury?”  Judge Pigott followed up by explaining that the significance of a settlement can have different interpretations depending on the type of injury.  He gave the example of a broken pinky versus a herniated disc.  In the case of a broken pinky, Judge Pigott explained that there was no doubt that the plaintiff sustained a “serious injury” as explained in Insurance Law § 5102(d).  Judge Read also appeared skeptical of counsel’s “implicit showing” argument, asking “Aren’t there many reasons for settlement?”

Chief Judge Kaye asked respondent’s counsel whether the Fourth Department’s decision in Meegan was distinguishable.  Counsel stated that the Fourth Department was mistaken in its holding, and that the statute had to explicitly state that a “serious injury” showing was necessary to require such a showing.

Perhaps the most telling question came from Judge Graffeo, who asked “In order to find in your [Mr. Raffellini’s] favor, the Court must make a determination about settlement?”  The implication of Judge Graffeo’s question is that the Court would have to hold that a settlement with the underinsured tortfeasor’s carrier equated to an finding of “serious injury.”  Respondent’s counsel stated that in the case before the Court, a “serious injury” was implicit because of the settlement with underinsured tortfeasor’s carrier.

New York Civil Law will report on the Decision, which is expected be handed down in November.

Article on No-Fault and Notice to Admit

One of the most under-utilized discovery devices is the notice to admit.  During this past summer David Barshay and Dave Gottlieb (of No-Fault Paradise) wrote this excellent article (Download notice_to_admit.doc)  on the Notice to Admit in the No-Fault context.

New York Court of Appeals to Address Interplay Between SUM Coverage and No-Fault Law

The New York Court of Appeals will address the following question on October 9, 2007: Does an injured plaintiff have to establish he or she sustained a "serious injury" under Insurance Law sec. 5102 to recover supplementary underinsurance motorist coverage (SUM) from his or her insurance carrier?  The Appellate Division, Second Department in Raffellini v. State Farm Mut. Auto. Ins. Co. held that the injured plaintiff did not have to do so.  The Court of Appeals will hear oral argument on the 9th, and will likely issue a decision in November 2007.

NYCL will keep you apprised.

New York Court of Appeals Will Address Issue Regarding Serious Injury Threshold and SUM Coverage

Does an injured plaintiff have to establish he or she sustained a "serious injury" under Insurance Law sec. 5102 to recover supplementary underinsurance motorist coverage (SUM) from his or her insurance carrier?  The Appellate Division, Second Department in Raffellini v. State Farm Mut. Auto. Ins. Co. held that the injured plaintiff did not have to do so.

The Second Department on March 5, 2007 granted State Farm's motion for leave to appeal to the Court of Appeals and, therefore, the New York Court of Appeals will sort out this issue.

NYCL will keep you apprised of the developments in the appeal.

More Analysis on Nyack Hosp. v. Gen. Motors Acceptance Co.

I have posted Larry Rogak's analysis of the New York Court of Appeals' recent No-Fault decision in Nyack Hosp. v.  Gen. Motors Acceptance Co. (see prior post) in the comments section of the prior post.

You might know him as the author of the incredibly witty "No-Fault Paradise" parody song (see song lyrics), but he's also one of New York's most prolific writer on insurance issues.

Don't Call It A Comeback . . .

The sorely missed posts at It's No-Fault of New York have resumed.  Go visit Damin and his informative and witty posts on New York no-fault law.