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 The Pennsylvania Supreme Court has held, however, that while an automobile insurance policy may be retroactively rescinded as to an insured who has made a material misrepresentation, the policy may not be retroactively rescinded with respect to third parties “who are innocent of trickery, and injured through no fault of their own” (see Erie Ins.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.

 

AAA is licensed to transact business in NY – and recission not allowed

Flushing Traditional Acupuncture, P.C. v Auto Club Ins. Assn., AAA Mich., 2016 NY Slip Op 26125 (App. Term 2d Dept. 2016)

(1) “Despite defendant’s assertions that it does not write insurance policies or conduct business in New York, it is uncontroverted that defendant’s New York certificate of authority states that defendant is licensed to engage in specified insurance business in New York. Consequently, defendant was authorized to do business in New York State, and, pursuant to Insurance Law § 1212 (a), an insurer authorized to do business in the state must appoint the Superintendent of Insurance as its agent for service of process “in any proceeding against it on a contract delivered or issued for delivery, or on a cause of action arising, in this state” (emphasis added). Inasmuch as the cause of action in the case at bar arose in New York, we find that the service of process upon the Superintendent of Insurance was sufficient to acquire jurisdiction over defendant (see Insurance Law § 1212 [b]).”

(2) “Michigan law allows for the rescission of a motor vehicle insurance policy based on fraud or a material misrepresentation in the application for insurance (see Titan Ins. Co. v Hyten, 491 Mich 547, 817 NW2d 562 [2012]; Gagnon v Citizens Ins. Co., 2013 WL 331548, *6 [Mich App, July 30, 2013, No. 146818], app denied 494 Mich 883, 834 NW2d 503 [2013]; Lakes States Ins. Co. v Wilson, 231 Mich App 327, 586 NW2d 113 [1998]). However, Michigan has generally denied an insurer’s right to rescind a policy of insurance in order to avoid payment of no-fault benefits to an innocent third party”

Therefore: order of Civil Court reversed.

 

 

An appeal for the sake of an appeal?

Great Health Care Chiropractic, P.C. v Infinity Group, 2016 NY Slip Op 50257(U)(App. Term 2d Dept. 2016)

“In order to prevail on its motion for summary judgment dismissing the complaint, defendant was required to demonstrate that the insurance policy at issue had been validly cancelled in accordance with Pennsylvania law (see generally Compas Med., P.C. v Infinity Group, 46 Misc 3d 146[A], 2015 NY Slip Op 50219[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; W.H.O. Acupuncture, P.C. v Infinity Prop. & Cas. Co., 36 Misc 3d 4 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Although defendant’s motion papers contained a supporting affirmation by defense counsel and accompanying documents, and purported to include an affidavit by defendant’s litigation specialist, in fact, the affidavit of defendant’s litigation specialist was not included.”

I do not understand why this was appealed?

Choice of law – Florida prevails allowing retroactive recission

Compas Med., P.C. v Infinity Group, 2016 NY Slip Op 50042(U)(App. Term 2d Dept. 2016)

Florida law prevails again, and the decision makes sense.  I imagine of Plaintiff procured an affidavit from Assignor and raised an issue of fact, this case would have been tough on defense to prove.  And, do not forget about Florida Attorney fees.

“The vehicle involved in the accident at issue, which occurred in New York, was being driven by plaintiff’s assignor, the daughter of the policyholder. At the time of the accident, the vehicle was insured by defendant under a Florida automobile insurance policy. After defendant’s investigation into the accident revealed that the insured had not resided at the Florida address listed on the insurance application and that the vehicle had not been garaged at that Florida address, defendant rescinded the policy, ab initio, pursuant to Florida Statutes Annotated, title 37, § 627.409, which permits retroactive cancellation of an insurance contract if there has been a material misrepresentation in an application for insurance.

In order to show that it properly voided a motor vehicle policy ab initio, in accordance with Florida law, an insurer must demonstrate that it had given notice of the rescission to the insured and that it had returned or tendered, within a reasonable time after the discovery of the grounds for avoiding the policy, all premiums that had been paid (see Leonardo v State Farm Fire and Cas. Co., 675 So 2d 176, 179 [Fla Dist Ct App, 4th Dist 1996]; see also United Auto. Ins. Co. v Salgado, 22 So 3d 594, 600-601 [Fla Dist Ct App, 3d Dist 2009]). As defendant demonstrated, through the supporting affidavit of its senior litigation specialist and accompanying documents, that it had fully complied with the foregoing requirements, defendant’s prima facie entitlement to summary judgment was established (see W.H.O. Acupuncture, P.C. v Infinity Prop. & Cas. Co., 36 Misc 3d 4[App Term, 2d, 11th & 13th Jud Dists 2012]).”

Failure to comply with PA law

New Way Med. Supply Corp. v Infinity Group, 2015 NY Slip Op 51880(U)(App. Term 2d Dept. 2015)

“In Pennsylvania, in order for an insurance policy to be cancelled due to the nonpayment of premiums, the “notice of cancellation must be in strict accordance with the provisions of Act 68. An insurance policy may be cancelled by mailing to the named insured, at the address shown in the policy, a written notice of cancellation. If the notice sets forth a time period in which intervening action may negate the cancellation, the cancellation shall not become effective until the expiration of the time period” (Nationwide Ins. Co. v Pennsylvania Ins. Dept., 779 A2d 14, 17 [Pa Cmmw 2001]; see Donegal Mut. Ins. Co. v Pennsylvania Dept. of Ins., 694 A2d 391 [Pa Cmmw 1997]; see also 40 P.S. § 991.2006). Inasmuch as defendant failed to attach a copy of the insurance policy, or the declaration page of the policy, to its motion papers, it is impossible to determine whether the notice of cancellation was mailed to the insured “at the address shown in the policy” (40 P.S. § 991.2006). Consequently, defendant failed to establish as a matter of law that the insurance policy had been properly cancelled as of May 12, 2011 in accordance with [*2]Pennsylvania law and that, therefore, no coverage existed when the accident in question occurred on May 19, 2011.”

Does defense counsel have to refund the carrier when they make this type of mistake?