Reargument granted and complaint dismissed under PA law

Optimal Well-Being Chiropractic, P.C. v Infinity Ins. Co., 2014 NY Slip Op 51203(U)(App. Term 2d Dept. 2014)

This fact pattern asked if under PA law, the injured person who was complicit in the scheme to obtain lower priced insurance could have his first-party benefits denied.  The answer, on reargument, is yes sir.

(1) PA Law applies: “Defendant issued the automobile insurance policy in Pennsylvania to the insured, who purportedly resided in Pennsylvania, for a vehicle which was purportedly garaged in Pennsylvania. The only connection between the policy and New York State is that plaintiff’s assignor was injured while riding in the insured’s vehicle in New York. Consequently, we find that Pennsylvania law is controlling under New York’s conflict of law rules ”

(2) PA Law substantiates the disclaimer: “lthough Pennsylvania law provides for a common law right by the insurer to rescind a policy of insurance, in Erie Ins. Exchange v Lake(543 Pa 363, 375, 671 A2d 681, 687 ), the Pennsylvania Supreme Court held that an automobile insurance policy cannot be retroactively rescinded with respect to third parties who were harmed through no fault of their own. In the case at bar, during his examination before trial, plaintiff’s assignor testified that his mother, the insured, had never resided in Allentown, Pennsylvania, and that he had driven his mother to Pennsylvania for the sole purpose of renewing her automobile insurance because the insurance was cheaper in Pennsylvania than in New York. Inasmuch as the aforementioned acts of the assignor make him complicit in the fraud perpetrated by his mother, he is not an innocent third party and, therefore, rescission of the subject insurance policy is effective with respect to him.”

Good to see logic prevail.

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Legal Update (February 2026): Since this 2014 decision, Pennsylvania insurance law and New York’s choice of law principles may have evolved through legislative amendments, regulatory changes, or subsequent appellate decisions. Additionally, procedural requirements for first-party benefit disclaimers and conflict of laws analysis in multi-state insurance fraud cases may have been updated. Practitioners should verify current Pennsylvania insurance statutes and recent New York precedent regarding choice of law in cross-border insurance matters.