Application of North Carolina does not bode well

Matter of Metropolitan Prop. & Cas. Ins. Co. v Anthony, 2019 NY Slip Op 03662 (1st Dept. 2019)

“Contrary to petitioner’s contention, it was not permitted under North Carolina law to rescind the insurance policy ab initio after the accident involving an uninsured motorist had occurred. North Carolina insurance law prohibits rescission after an accident of any insurance “required” to be offered (see NC Gen Stat § 20-279.21[f][1]). This provision applies to prohibit rescission based on fraud in the application for insurance (see Odum v Nationwide Mut. Ins. Co., 101 NC App 627 [1991], review denied 329 NC 499 [1991]). Uninsured motorist coverage, which is required by statute to be included in all automobile insurance policies, is a “required” type of coverage (see Bray v North Carolina Farm Bur. Mut. Ins. Co., 341 NC 678 [1995]). “

I did the research on this a few years ago and this has been the law forever in North Carolina. Why under a choice of law anyone would think differently beats me? Not a wise appeal.

But I mention this because even though North Carolina is a med-pay state, assume this hypothetical. North Carolina policy and New York accident. Choice of law means NC law applies. Most insurance policies have a contractual deemer clause in them. Alternatively, Ins Law 5107 is the statutory deemer provision. Injured person is guilty of material misrepresentation, but seeks PIP benefits.

Since NY PIP benefits would be “required”, it would seem to follow that under NC law, the carrier would have to provide the benefits. Met Life would have been better off honoring the claim here and perhaps arguing that arbitration is not permitted under the policy. While the First Department would not accept this argument, the Second Department would.


Charles Deng Acupuncture, P.C. v 21st Century Ins. Co., 2018 NY Slip Op 51815(U)(App. Term 2d Dept. 2018)

“Moreover, even if defendant had established that Florida law applies here, defendant relied upon an annexed payment log to demonstrate that policy limits in the amount of $10,000 had been exhausted; however, the affidavits submitted by defendant failed to establish that the payment log constituted evidence in admissible form (seeCPLR 4518 [a])”

Oh the business record rule.  Carriers need to make sure in the rare instance this issue comes up, the prefatory paragraph “2” business record syllogism is present.

Also, if you alleged that Florida law applies and you lose, get ready for $800 an hour attorneys fees.

VA substantive law; NY Procedural law

Acupuncture Now, P.C. v GEICO Ins. Co., 2018 NY Slip Op 51084(U)(App. Term 2d Dept. 2018)

“While defendant asserts that Virginia law applies to this case, as the insurance policy had been obtained in Virginia, and it insured a Virginia resident and vehicle, defendant failed to demonstrate that it had mailed its cancellation notice in accordance with its office practices and procedures (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]) “by registered or certified mail,” as required by the applicable statute (Va. Code Ann. § 38.2-2208 [A] [1] [a]). Consequently, the Civil Court should have denied the branch of defendant’s cross motion seeking summary judgment dismissing the complaint on the ground that defendant had properly cancelled the policy and that there was, therefore, no coverage at the time of the accident at issue.”

What is interesting here is that Civil Courts will apply substantive law from sister states but then apply NY procedural law.  This has been displayed many times (this is nothing new).  It appears “mailing” is procedural at best.

Policy voided

Utopia Equip. Inc. v Ocean Harbor Cas. Ins. Co., 2018 NY Slip Op 50080(U)(App. Term 1st Dept. 2018)

“Defendant’s submissions included an affidavit of its claims manager and other proof demonstrating that a rescission notice was sent to the assignor-insured and that defendant had tendered a check for premiums paid within a reasonable time after discovery of the grounds for rescinding the policy (see Utopia Equip., Inc. v Infinity Ins. Co., 55 Misc 3d 126[A], 2017 NY Slip Op 50332[U] [App Term, 1st Dept 2017]; Hu-Nam-Nam v Infinity Ins. Co., 51 Misc 3d 130[A], 2016 NY Slip Op 50391[U] [App Term, 2d, 11th and 13th Jud Dists 2016]). Defendant was not required to establish the basis for the retroactive rescission, but rather had the burden of establishing that it complied with the law of the sister state which permits retroactive rescission (see Utopia Equip., Inc., v Infinity Ins. Co., 2017 NY Slip Op 50332[U]).

In opposition to defendant’s prima facie showing, plaintiff failed to raise a triable issue of fact as to the validity of the retroactive rescission of the policy in accordance with Florida law (see Hu-Nam-Nam v Infinity Ins. Co., 2016 NY Slip Op 50391[U]).”

Innocent third-party under PA law

Island Life Chiropractic, P.C. v Infinity Group, 2017 NY Slip Op 27040 (App. Term 2d Dept. 2017)

I do not normally post about PA-NY choice of law issues on here, but I have seen a trend of appeals where Infinity has gotten a little too “trigger happy” in disclaiming coverage.  This is the second or third case I have recently seen on this issue.  Parenthetically, PA has hourly attorneys fees when a claim is “wrongfully” disclaimed.  I am trusting my memory on that one – not taking the time to research- but this case should spawn a $10,000 attorney fee for Island Life, provided they make a prima facie case in accordance with PA law.

“Under Pennsylvania law, an insurer has a common-law right to rescind a policy of automobile insurance (see 40 P.S. §§ 991.2002, 991.2004; Erie Ins. Exch. v Lake, 543 Pa 363, 375, 671 A2d 681, 687 [1996]; Klopp v Keystone Ins. Cos., 528 Pa 1, 595 A2d 1 [1991]). The Pennsylvania Supreme Court has held, however, that while an automobile insurance policy may be retroactively rescinded as to an insured who has made a material misrepresentation, the policy may not be retroactively rescinded with respect to third parties “who are innocent of trickery, and injured through no fault of their own” (see Erie Ins. Exch. v Lake, 543 Pa at 375, 671 A2d at 687). In the case at bar, the papers defendant submitted in support of its motion set forth no facts tending to demonstrate that the assignor was anything other than an innocent third party. Consequently, defendant failed to establish its prima facie entitlement to summary judgment dismissing the complaint as a matter of law.”


Rescission not upheld

Daily Med. Equip. Distrib. Ctr., Inc. v Allstate Ins. Co., 2017 NY Slip Op 50029(U)(App. Term 2d Dept. 2017)

“Inasmuch as defendant’s cross motion papers failed to demonstrate that a rescission notice was sent to the insured, or that defendant had returned, or tendered, all premiums paid to the insured within a reasonable period of time after defendant’s discovery of the grounds for rescinding the policy, defendant failed to show, prima facie, that it had voided the policy ab initio pursuant to Florida law (see W.H.O. Acupuncture, P.C. v Infinity Prop. & Cas. Co., 36 Misc 3d 4, 6-7 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012], citing Leonardo v State Farm Fire [*2]and Cas. Co., 675 So 2d 176, 179 [Fla Dist Ct App, 4th Dist 1996]). Consequently, defendant’s cross motion for summary judgment dismissing the complaint was properly denied.”

This is the interesting issue we find in these void ab initio jurisdictions.  Was the premium returned within a reasonable time after the discovery of the fraud?

Georgia Law and New York law on material misrepresentations

JCC Med., P.C. v Infinity Group, 2016 NY Slip Op 26439 (App. Term 2d Dept. 2016)

(1) It is uncontroverted that defendant had issued a Georgia automobile insurance policy to the brother of plaintiff’s assignor, “effective from August 28, 2010 through August 28, 2011,” who had made various representations to defendant in his insurance application, including that he resided in Georgia, that the insured vehicle was garaged in Georgia, and that the assignor was an adult who resided in his Georgia household and also drove the insured vehicle.

(2) “Upon a review of the record, we find that defendant failed to show that there is a conflict between the laws of Georgia and New York with respect to the retroactive rescission of an automobile insurance policy which has been issued to a natural person for a private passenger vehicle, as both states prohibit the retroactive rescission of such a policy (see Vehicle and Traffic Law § 313; Matter of Government Empls. Ins. Co. v Nichols, 8 AD3d 564 [2004]; Matter of Eagle Ins. Co. v Singletary, 279 AD2d 56, 58 [2000]; see also Geogia Code Ann §§ 33-24-44, 33-24-45; Sentry Indem. Co. v Sharif, 248 Ga 395, 282 SE2d 907 [1981]; Liberty Ins. Corp. v [*2]Ferguson, 263 Ga App 714, 589 SE2d 290 [2003]; FCCI Ins. Group v Rodgers Metal Craft, Inc., 2008 WL 2951992, *7-8 [MD GA, July 28, 2008, No. 4:06-CV-107 (CDL)]; cf. T.J. Blake Trucking, Inc. v Alea London, Ltd., 284 Ga App 384, 643 SE2d 762 [2007] [the insurance policy was not issued to “a natural person” and, therefore, the policy could be retroactively rescinded pursuant to Georgia Code Ann § 33-24-7]).”

The plight of the innocent Assignor who entered a vehicle not knowing that it embodied the misrepresentation.

Innocent third-party plays out under Pennsylvania law analysis

Healthway Med. Care, P.C. v Infinity Group, 2016 NY Slip Op 51780(U)(App. Term 2d Dept. 2016)

“Although defendant’s cross motion papers set forth facts demonstrating that its insured had made misrepresentations on his insurance application and, based on these facts, defendant had rescinded the insurance policy, ab initio, in accordance with Pennsylvania law, defendant’s submissions did not conclusively establish that plaintiff’s assignor (a passenger in the vehicle) was anything other than an innocent third party. Consequently, defendant’s cross motion failed to establish, prima facie, that the insurance policy was retroactively rescinded as to plaintiff’s assignor and, thus, that defendant was entitled to summary judgment dismissing the complaint as a matter of law.”

I have to say this.  For a Court that seems to want to attack Rybak’s appellate practice, he has obtained quite a few reversals on these choice of law, policy violation and additional verification cases.  I do not necessarily agree with the verification decisions but the amount of reversals is astonishing.


New Jersey arbitration statute requires an application for Article 75 relief

St. Chiropractic, P.C. v Geico Gen. Ins. Co., 2016 NY Slip Op 26271 (App. Term 2d Dept. 2016)

“Since the insurance policy at issue contains a provision that “[t]he policy and any amendments and endorsements are to be interpreted pursuant to the laws of the state of New Jersey,” the substantive law of New Jersey applies (see Natural Therapy Acupuncture, P.C. v Geico Ins. Co., 50 Misc 3d 107 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; Bay Med., P.C. v GEICO Ins. Co., 41 Misc 3d 145[A], 2013 NY Slip Op 52084[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]). However, New York’s procedural laws control. In Natural Therapy Acupuncture, P.C. and Bay Med., P.C., this court held that dispute resolution is not mandatory pursuant to NJSA § 39: 6A-5.1 (a), as implemented by NJAC § 11:3-5.1 (a) (see also New Jersey Mfrs. Ins. Co. v Bergen Ambulatory Surgery Ctr., 410 NJ Super 270, 272-273 [2009]), which provides that a dispute regarding the recovery of no-fault benefits may be submitted to dispute resolution upon the initiative of either party to the dispute. Similarly, the insurance policy in question provides that a matter may be submitted to dispute resolution “on [*2]the initiative of any party to the dispute.” However, the existence in a contract of an option to arbitrate in the event of a dispute is not a ground to dismiss the complaint in a court action based on that dispute. Rather, where one party commences a court action, the adverse party may seek to exercise the arbitration clause by moving to compel arbitration. If that motion is granted, the court stays the action pending arbitration (see CPLR 7503 [a]).”

This is the 5th time GEICO has challenged Plaintiff’s on the arbitration clause contained in the Motor Vehicle Code of the State of New Jersey  (NJSA title 39), and they continue to fail to move to dismiss through making an Article 75 challenge.  The result never changes,

Massachusetts law applies

Renelique v Metlife Auto & Home, 2016 NY Slip Op 51075(U)(App. Term 2d Dept. 2016)

“Insofar as is relevant to the present case, while Massachusetts law provides for payment of personal injury protection (PIP) benefits up to $8,000 for one person in any one accident (Mass Gen Laws Ann ch 90, § 34A), it further provides that, notwithstanding the $8,000 limitation, payment of PIP benefits in excess of $2,000 is not required where “such expenses have been or will be compensated, paid or indemnified pursuant to,” among other things, a health insurance policy (Mass Gen Laws Ann ch 90, § 34A; see Dominguez v Liberty Mut. Ins. Co., 429 Mass 112, 112-113 [1999]). Furthermore, an injured party is required to cooperate in enabling the insurer to obtain “needed information to assist in determining the amounts due. Noncooperation of an injured party shall be a defense to the insurer in any suit for benefits authorized by this section” (Mass Gen Laws Ann ch 90, § 34M).

Defendant established, prima facie, through its no-fault litigation representative, that plaintiff’s assignor had failed to comply with the terms of the applicable insurance policy by failing to submit a health insurance affidavit stating whether he was covered by a health insurance plan. The affirmation of plaintiff’s counsel and the affidavit of plaintiff’s owner were insufficient to raise a triable issue of fact in opposition. We note that plaintiff’s remaining arguments on appeal are unpreserved for appellate review.”

I would have to assume the motor vehicle accident did not occur in New York or New Jersey, which have deemers well above and beyond the $8,000/$10,000 in benefits that the Massachusetts policy in question contains.  It also goes to show that in these states with lower policy limits and probably r and c fee schedules, the most expedient way to handle these claims is to exhaust the policy and to wash ones hands from these claims.