Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 2011 NY Slip Op 01948 (1st Dept. 2011)
I would consider this matter the most precedential no-fault case I have seen in the last 4 years. I am going to copy and past the entire decision, except for the opening paragraph.
“The motion court properly determined that plaintiff insurer may retroactively deny claims on the basis of defendants’ assignors’ failure to appear for independent medical examinations (IMEs) requested by plaintiff, even though plaintiff initially denied the claims on the ground of lack of medical necessity (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721-722 [2006]). The failure to appear for IMEs requested by the insurer “when, and as often as, [it] may reasonably require” (Insurance Department Regulations [11 NYCRR] § 65-1.1) is a breach of a condition precedent to coverage under the No-Fault policy, and therefore fits squarely within the exception to the preclusion doctrine, as set forth in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]). Accordingly, when defendants’ assignors failed to appear for the requested IMEs, plaintiff had the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued (see Insurance Department Regulations [11 NYCRR] § 65-3.8[c]; Fogel, 35 AD3d at 721-22).
It is of no moment that the retroactive denials premised on failure to attend IMEs were embodied in blanket denial forms, or that they were issued based on failure to attend IMEs in a different medical speciality from that which underlies the claims at issue. A denial premised on breach of a condition precedent to coverage voids the policy ab initio and, in such case, the insurer cannot be precluded from asserting a defense premised on no coverage (see Chubb, 90 NY2d at 199).
There is likewise no merit to defendants’ contention that the IME request notices were [*2]invalid. Plaintiff satisfied its prima facie burden on summary judgment of establishing that it requested IMEs in accordance with the procedures and time-frames set forth in the No-Fault implementing regulations, and that defendants’ assignors did not appear. In opposition, defendants failed to raise an issue of fact that the requests were unreasonable (see generally Celtic Med. P.C. v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d 13, 14-15 [2007]; A.B. Med. Servs. PLLC v USAA Gen. Indem. Co., 9 Misc 3d 19, 21 [2005]).
Defendants’ argument that plaintiff was required to demonstrate that the assignors’ failure to appear for the IMEs was willful is unpreserved and, in any event, without merit. The doctrine of willfulness, as addressed in Thrasher v United States Liab. Ins. Co. (19 NY2d 159 [1967]), applies in the context of liability policies, and has no application in the No-Fault context, where the eligible injured party has full control over the requirements and conditions necessary to obtain coverage (cf. id. at 168).
Defendants’ argument that all IMEs must be conducted by physicians is unavailing. Although Insurance Department Regulations (11 NYCRR) § 65-1.1(d) states that “[t]he eligible injured person shall submit to medical examination by physicians selected by, or acceptable to, the [insurer] when, and as often as, the [insurer] may reasonably require,” the regulations permit reimbursement for medically necessary treatment services that are rendered by non-physicians, such as chiropractors and acupuncturists, as well (see Five Boro Psychological Servs., P.C. v AutoOne Ins. Co., 22 Misc 3d 978, 979-980 [2008]).
We have considered defendants’ remaining contentions and find them unavailing.”
Now, anything found in the condition portion of the policy endorsement is considered a coverage defense. Here are the new coverage defenses that appeared overnight:
1) 30-day notice to report the loss.
2) 45-days to submit a bill
3) Attend IMEs
63 Responses
When the Court of Appeals determined Chubb, it cited breach of conditions as the keystone example of a defense not excepted from the rule of preclusion.
As the Court of Appeals provided:
The denial of liability based upon lack of coverage within the insurance agreement, as framed in part by the litigation strategy and nature of the instant dispute, is distinguishable from disclaimer attempts based on a breach of a policy condition for which timely notification by the insurer is required.
Chubb, 90 N.Y.2d at 199 (emphasis added).
Of course, the only No-Fault conditions in existence at the time the Court of Appeals determined Chubb– as in the present– were/are the “conditions precedent” under the Mandatory Personal Injury Protection Endoresment. Thus, the Court of Appeals in Chubb was necessarily referring to the same conditions as this Court found to be beyound the rule of preclusion.
We pointed this out in the underlying briefs, yet the App. Division, curiously, failed to address Chubb in its proclomation.
Of course, the App Div. 1st also stands against the App Division Second Department, which also finds breaches of conditions to be subject to the rule of preclusion, thereby following Chubb.
We also pointed out this 2nd Dept. authority, which the Court also failed to address in its decision. For example, Westchester Med. Ctr. v. Lincoln Gen. Ins. Co., 2009 N.Y. Slip. Op. 2589 [2nd Dept 2009](nonapperance at EUO subject to rule of preclusion); N.Y. & Presbyterian Hosp. v. Eagle Insurance Co., 17 A.D.3d 646, 646-647 [2nd Dept 2005][“The defendant is precluded from asserting the defense of the hospital’s untimeliness in this action pursuant to Insurance Law § 5106 [a]”]).
Under the First Departments new case wherein any condition breach is no longer subject to the rule of preclusion, the rule of preclusion has virtually no effect and there is little reason for the No-Fault insurer to comply with the no-fault claims procedure. I would be shocked if the Court of Appeals did not grant leave.
I find this difficult to say. I am a defene attorney but I agree
with Sun Tzu. His quotations from Chubb are completely accurate. Accordingly, I believe that the decision of the Appellate Divison, First Department is wrong and contrary to the Court of Appeals decision in Chubb. I also believe that this decision will be reversed by the Court of Appeals. If not, no-fault has been turned on its head
I am a defense attonrey but Sun Tzu is right. This decision is contrary to Chubb and I beleive that it will be reversed on appeal. If not, no-fault will take a completely differenct direction.
I have seriously studied no-fault for the last ten years and the decsion of the First Department turns no-fault on its head.
“I am a defense attonrey but Sun Tzu is right. This decision is contrary to Chubb and I beleive that it will be reversed on appeal. If not, no-fault will take a completely differenct direction.
I have seriously studied no-fault for the last ten years and the decsion of the First Department turns no-fault on its head.”
The man tells it like it is. The App. Division’s determination cannot be reconciled with any Court of Appeals case regarding the rule of preclusion– they are all expressly premised upon Chubb. It’s the most amazing appellate decision I have seen in No-Fault, however nonchalantly delivered by this Court.
It is never fun being on the losing end of an appellate case that you feel you should win. But as long as you made all of the applicable arguments, then you can sleep at night knowing you did the best you could. The COA may want nothing to do with this since they have decided about half a dozen PIP cases in the last 5 years.
Mr. Lustig:
I have a three questions for you.
-As a defense attorney, can you say that this case is wrong online, and then argue that it is correct in court?
-Could a plaintiff attorney show the judge that you disagree with this case? OR
-Will you advocate that your clients defenses are precluded despite the existence of this decision?
I don’t see how the Court of Appeals wont take this. The decision appears to allow for an assignor who is not the insured to cause the insured’s policy to be void ab initio.
For those of us that are not as smart as the rest of ya:
What does “a denial premised on breach of a condition precedent to coverage voids the policy ab initio…” mean?
And why did the court state “for the No-Fault claims allegedly assigned to defendants” in the first paragraph?
“-As a defense attorney, can you say that this case is wrong online, and then argue that it is correct in court? ”
Hello Rogak….
And of course, Lustig can rely on law in court that he disagrees with in reality. It’s about to be sub judice in either respect.
Since this case virtually eliminates the rule of preclusion in No-Fault, contrary to the Court of Appeal’s consistent and recent rulings, I think they will take it. Those are the No-Fault cases the Court of Appeals historically takes.
I would imagine the Court of Appeals will be surprised at this decision being issued only three years after it determined Fair Price, for example.
“It is never fun being on the losing end of an appellate case that you feel you should win. But as long as you made all of the applicable arguments, then you can sleep at night knowing you did the best you could.”
I’m very angry over this, for obvious reasons. But don’t worry. It is far from over. In fact, this is simply when the real work begins. These are the times that seperate the pretenders from the advocates. A massive opportunity has arisen, a good case with very damning facts for the carrier is about to be before the Court of Appeals, and the right people are on the task. I predict this will not stand, and the Court of Appeals will learn a thing or two about recent carrier misconduct in the process.
This was a very bad case for the First Dept. to pick assuming it wanted to ignore Chubb and permanently except condition violations from the rule of preclusion.
You had a good run at the First Department. You had A&S/Allstate and Interboro/MVAIC… Well, heck, you cannot win them all.
There are two ways to look at this decision (in my opinion):
1. It means what it says. If so, then when any PIP claimant fails to show for two properly scheduled IMEs, then the policy — not just the PIP endorsement — is void. Ab initio. That means no PIP benefits, no liability coverage, for anybody. Why? Because if the POLICY is void, there is no basis on which to pay anybody anything.
2. It doesn’t mean what it says. In other words, the Court “meant to say” that when a PIP claimant no-shows twice, the policy is void AS TO THAT CLAIMANT ONLY.
The problem with Option 1 is that it runs counter to V&T Section 313 and its progeny, which prohibit retroactive cancellation or voiding of auto policies.
The problem with Option 2 is that there is no way a policy can be void as to only one person. A void policy is like a dead horse: nobody can ride it. Also, I don’t think that the argument “the court didn’t understand the implications of what it said” flies very well.
This decision cannot be re-written. It can only be followed or reversed.
In the meantime, let the games begin.
We all know what it means. The “policy” provides coverage to all occupants of the vehicle – the so-called third-party beneficiaries of the contract of insurance. So there is a “policy” for each Claimant in the vernacular of the Bay Shore Court. I analogize this from the Material Misrepresentation in the procurement context, where the policy is deemed “void ab initio” as to each person who made the material misrepresentations or aided/abetted/conspired to make same. There would still be coverage for innocent bystanders. Of course, interestingly, the Second Department has considered this is a precludable defense.
I simply tell it like it is. I am not afraid to tell the truth. The decsion is wrong and is contrary to the holding in Chubb. The Court did not give a thorough analysis which is obvious by its statement that the policy is void ab inition which, as we all know, is contrarty to Section 313 of the Vehicle and Traffic Law and numerous cases. However, nothing I say here will bar me from advocating a different position in Court.
Interesting take on it, JT: a “policy” for each claimant. That doesn’t exactly comport with the definition of “policy” in any other context of insurance practice.
“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master – – that’s all.”
— Lewis Carroll, “Through the Looking Glass”
Yes, well, Insurance Law 5107 and the other provisions of the mandatory endorsement allow this fiction to apply in PIP.
Insurance Law 5107 brings us even further through the looking glass. How, for example, do we reconcile 5107 with the fact that an “eligible injured person” does not include an out-of-state resident injured in an out-of-state vehicle while being operated in New York, if, under 5107, that vehicle is deemed to provide New York PIP?
If a California vehicle, being operated in Brooklyn, strikes a South Carolina resident who happens to be a pedestrian who just exited his South Carolina vehicle and is crossing Flatbush Avenue for some delicious Jamaican food, that South Carolina pedestrian qualifies for PIP. However, if that same person is in his South Carolina vehicle, struck by that same California auto on Flatbush Avenue, he does not qualify for New York PIP.
At least, that’s how I read it.
Curioser and curioser.
Larry, do you have any Appellate cases on point with regard to your last statement – or are you coming up with this through a reading 3.12?
Larry, do you have any Appellate cases on point with regard to your last statement – or are you coming up with this through a reading 3.12?
Let me explain why I believe that the decision is wrong.
In 1973, automobile insurers clamored for no-fault reform because they wanted to eliminate bodily injury lawsuits. In exchange for the elimination of lawsuits except in the case of serious injury, auto insurers were required to pay first party claims. No-fault insurer’s could still contest these claims but within a short time frame, 30 days.
However, Chubb did recognize that there are a certain limited classes of cases that are outside the 30 day limitation period. The “Exceptional Exemption” applied to cases where there was a lack of coverage or situaions that were completely outside the policy and never in the contemplation of the parties, i.e, staged accident, policy cancellation.
This exemption should not apply to conditions precedent, such as notice, IMEs and EUOs. As stated by the Court of Appeals, in these situations there is a real accident and a real policy of insurance and the EIP has sustained real injuries. While the Court of Appeals has thrown no-fault insurers a bone with regard to interst and attorney’s fees, they have zealously guarded the 30 day rule and have refused to extend the exemption to a variety of situations. See Hosptial for Joint Diseases and Fair Price.
Also, the Court of Appeals will have to take this case as there is a split between the First and Second Departments regarding whether the failure to comply with a condition precednt is a non-precludable defense. See the decision of the Second Department in Westchester General Hospital v. Lincoln General holding that the defense of EUO no show is subject to preclusion.
Unless no-fault is about to take an abrupt turn that, in my opinion, will not be good in the long run for either the plaintiff’s bar and yes, defense lawyers, I predict this decision will be reversed by the Court of Appeals.
Mitch Lustig
Unle
I will be quite blunt. People who do not attend medical examinations or examinations under oath tend not to be the most sympathetic of cases out there. There is an escape hatch to the IME and EUO defense, namely that the IME or EUO was unreasonable. It is nice from a jurisprudential standpoint to see our state move closer to the majority approach of no-fault. From a business standpoint, well I think Mitch hit the nail on the head.
Don’t forget that these decisions are not fomented in a vacuum. The Appellate Division Justices are quite aware of the glut of no-fault cases on the 5th floor at 851 Grand Concourse. They are also quite aware that their Appellate Term has made the Bronx the venue of choice for no-fault litigation. I would also sense that they are angry at the Plaintiff’s bar for reasons that Justice Mckeon discussed awhile back in the Tristate matter. I am not casting any dispersions because both sides engage in litigation strategies similar to those that were seen in Tristate. But, I will admit that I was shocked by this decision and there is now a split between the Second Department and the First Department.
Do I think the Court of Appeals will reverse assuming they want to get involved with this case? I have my suspicions, but to outright say that they will reverse is a bit presumptuous. The First Department is regarded as the most respected Department of the Appellate Division. We are not dealing with the Third Department and LMK. So, we shall see how this issue plays out at the Appellate Terms and other Appellate Divisions. What would the Fourth Department say? Will some Buffalo City Court litigator please appeal a County Court order to the Appellate Division, Fourth Department?
This decision can be justified simply as applying to “conditions precedent” as opposed to “exclusions”. Look at the PIP endorsement. Under “Conditions”, the first paragraph clearly states, “No action shall lie against the Company unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage.” Sounds clear enough. Problem is, that we have all become jaded as a result of the twisted manner in which various Courts have wrestled with the PIP endorsement since Presbyterian in 1997. Presbyterian, as some may remember, involved an alcohol intoxication “exclusion” defense, and as such would be precludable under Cirucci rationale. By contrast, this by its terms is a violation of a condition precedent. If the COA, which does what it wants and justifies it as it see fit, chooses to walk its way back from the Fair Price debacle (thats another story, how any entity can be forced to pay for goods or services never provided based on a technicality baffles common sense) it now has an opening. I realize that many of the points raised by others here as to why this decision is problematic are valid, but this is not a slam dunk reversal.
A “condition precedent” is still a policy condition. As per Chubb, Presbyterian v Maryland and Zappone, a breach of a policy condition is still not a lack of coverage.
If there is a split between two Appellate Division Departments, I’m sure the Court of Appeals will hear the case. Especially when one Department violates several Court of Appeals decisions.
Not only does Unitrin v Bayshore violate Chubb, Presbyterian and Zappone, it also violates Lentini by allowing a breach of policy condition to apply to a claim that has already been denied. Lentini says that once a claim is denied, the insurer cannot create grounds for refusal to pay.
I totally agree with Alan Elis. A condition precednt is a policy condition that must be denied in a timely disclaimer. It is not a lack of coverage defense. Notice is also included in the PIP Endorsement as a condition precedent. Notice has never been thought of or understood as a non-precludable defense. We only have become jaded because of the Court of Appeals decisions in Chubb, Presbyterian and Fair Price.
Mitch Lustig
“If the COA, which does what it wants and justifies it as it see fit, chooses to walk its way back from the Fair Price debacle (thats another story, how any entity can be forced to pay for goods or services never provided based on a technicality baffles common sense) it now has an opening.”
Barry, in Fair Price, coverage was triggered by the occurance of an underlying motor vehicle accident resulting in injury to the assignor. The Court of Appeals has been consistent on this point since it made it clear the rule of preclusion applies to No-Fault claims. If you don’t like Fair Price, you just don’t like the rule of preclusion.
But that does not address the merits of the rule. Without said rule, the entire regs would be rendered virtually meaningless and an exercise in folly– if all claim defenses are not subject to preclusion, why on earth would any carrier timely process no-fault claims attendant to the regulations? They would simply sit on all claims they know to be valid and lodge a previously secreted “coverage” defense when sued.
If the carrier did not commence sitting on meritoreous claims, it would be placed at a competitive disadvantage with the other carriers.
It is called 24% interest Sun. I get 0.9% at the bank. I think 5% on a five year CD. My 401(k) is probably even with what it was before the crash a few years ago; however, I am not known for my investment prowess. So to those that read this: do not ask me for stick tips. Anyway I digressed.
24% per annum is an impetus to pay timely. Win or lose on a late denial, you owe interest. Win on the merits – you get an attorney fee. Lose on the merits – well you have another 500,000 opportunities to try again. I know that sounds harsh, but that is the general rule of law in the real world.
I will add that the App Divisions ruling also encourages the carrier to make unwarranted IME and EUO demands after numerous valid bills have been submitted to it, in a manner manufactured for noncompliance.
There is a reason the carrier is outsourcing these demands to a firm unknown to the assignor. When the assignor receives an envelope from an unknown source, and the letter inside is on tiny 9 point print, the notice is manufactured in a manner so that it will be discarded as junk mail.
In the case at bar, the carrier issued six IME demands, requiring the co-habitating assignors to be at different towns at the same time, failing to consolidate any appointments. None of the exams were in the assignors’ own town. The carrier failed to provide the necessary warning regarding provision of travel expenses and lost wages in at least one critical follow-up notice. The follow-up exam demands were short served– one provided only five days notice.
Moreover, immediately after Appellant issued a blanket denial of claim (invalid) premised upon failure to attend chiro IME, it held the Chiro IME of one of the assignors. Thus, this Court ruled that the carrier was proper for denying the Chiro claim for failure to attend IME’s even though the Chiro IME was attendant.
At the same time, counsel called in to reschedule the remaining IME’s to a more convient date/time. Between the attendance at one IME and the call from the attorney, cooperation was clear. The carrier simply refused this request– made literally a few days after the missed follow-up dates– relying on its corrupt notices and the notion that “two strikes and your are out” under Fogel. The Appellate Divison put their stamp on this method of operating.
I have not even begun to touch on the issues regarding the carrier’s notice and gamesmanship here. It’s just bad.
Were there affidavits or other admissible evidence presented in your moving papers before Supreme Court? Also, if what you are saying is true, then why didn’t Supreme Court find a triable issue of fact as to the reasonableness of the IMEs?
My letters are not in 9 point type. We use 12 – and I am still using Tahoma which sticks out. I am too lazy to reformat the templates to Times New Roman and, in any event, Tahoma grew on me. Much of the verbiage is in capital letters. The letters are sent certified and regular mail. EUO’s are always scheduled in the county where the Claimant resides. Please do not indict all of us based upon the practices of some carriers or their counsel.
I am offended as are many of the defense counsel who read this. Many of us do the right thing.
And as you are aware, both sides are guilty of the gamesmanship.
This reminds me of when the plaintiff’s bar argued that the Fair Price decision overruled Malella and the independent contractor defense.
I’m not sure the COA every directly ruled on whether IMEs/EUOs are subject to preclusion. I agree with Barry’s analysis that there are problems with Chubb and its reference to Presbyterian, which explicitly deals with a policy exclusion (intoxication) rather than a condition precedent to insurer liability.
Sun Tzu will certainly be going “all in” for the plaintiff’s bar if the COA accepts this appeal! The defendant’s bar is playing with house money.
“This reminds me of when the plaintiff’s bar argued that the Fair Price decision overruled Malella and the independent contractor defense.”
We did not argue that to the Court of Appeals. Jeff H. was not alone there.
“Were there affidavits or other admissible evidence presented in your moving papers before Supreme Court?”
EBT testimony of carrier claims rep who admitted carrier received call attempting to reschedule, and that it failed to issue its exam notices in Spanish to the assignors even though they had Hispanic names, “this is America.” Further, admitted that it was error to fail to include necessary notice regarding wages/lost earnings.
Notably, the carrier learned that the assignors needed a translator at the Chiro IME they held, yet, even after learning this, still refused the timely call to reschedule and still failed to issue the notices in Spanish. Everything was very clear regarding what they did to these assignors.
To conclude, under this decision, assuming the insurer can manufacture even a single missed IME regarding numerous IME demands– using all of the above schemes at the same time– then all claims under the policy are invalidated. This decision invites and massively encourages wanton “IME” fraud, amoung other things.
No carrier will be able to compete if it behaves in forthright fashion under the App Division’s new scheme.
Pardon my naivete here. But if the facts are as starkly underhanded as you intimate them to be – and I am not saying they aren’t – then why have two Courts now ruled adversely to your client? The Supreme Court I would imagine did not do a Civil Court I am not reading the papers sfo right? The Supreme Court actually took the papers on submission and wrote an order after reading the submissions, would I be correct? I am just curious. The facts you present – some of them – really bother me to be honest. Creating an anticipatory breach probably borderlines on bad faith, assuming one is actionable. I mean this is what you are suggesting. In my opinion, you should probably send a formal complaint with all of your proofs to Chris Maloney or Larry Fuchsberg at the Insurance Department.
JT,
This case started in Sup. Ct. I’d bet that it was a declaratory judgment action.
Solomon, the trial court judge, ruled in their favor. Unless, I’m missing something, App. Div was the first court to rule against them.
Pardon my naivete here. But if the facts are as starkly underhanded as you intimate them to be – and I am not saying they aren’t – then why have two Courts now ruled adversely to your client?
Regarding a case of clear error, the most positive spin I could put on this for the benefit of the instant Supreme Court and the App Div First Department is that they handle very very few first-party cases and are naive. We will disprove your “two strikes and you should be out” suggestion in short order, and I will use your post as added motivation in that respect.
Sun,
You’re a good advocate, and I do respect you. I think you aware of that. There is no need to disprove me – I just share my thoughts to whoever wants to read them. Your inner fortitude and desire to protect your clients’ and the plaintiffs’ bar’s interest will be your motivation.
For what it is worth, here is the Supreme Court decision. I found it online: http://decisions.courts.state.ny.us/fcas/fcas_docs/2010JUL/3001155862007003SCIV.pdf
my mistake about who won at Sup. Ct. The Plaintiff/Defendant reversal for declaratory judgments blows my mind.
I was discussing this decision recently — informally and off the record, of course — with two judges who were in no way involved in this case. Both of them made the same comment: “It can’t mean what it says.” Given the fact that we’re talking about an Appellate Division decision with potentially large consequences, that assessment is fraught with portent, isn’t it.
“I was discussing this decision recently — informally and off the record, of course — with two judges who were in no way involved in this case. Both of them made the same comment: “It can’t mean what it says.” Given the fact that we’re talking about an Appellate Division decision with potentially large consequences, that assessment is fraught with portent, isn’t it.”
There is a time for peace, and a time for war.
Reading the decision of the Supreme Court, it appears that the Appellate Division went way beyond what was necessary to dispose of this case. What this means for the future of no-fault, I cannot tell.
It means that the Appellate Division rendered a decision that was ill conceived, is against existing precedent, and is made without an understanding of basic insurance law governing disclaimers of coverage and coverage in general. A win for the insurance industry, a loss for every policy holder in New York State. Insurers profits grow, policy holder rights vanish.
The decision is bad law, plain and simple, on so many grounds.
Perhaps as someone said above, this decison was the result of the Supreme Court’s and AD 1st Dept’s unfamiliarilty with PIP. Nevertheless, the Supreme Court at least was guided by the policy language that states, “No action shall lie against the Company unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage.” Now many of us understand how this language has been eviscerated starting with Presbyterian in 1997. Some of us may also recall how in the immediate aftermath of Presbyterian, many practitioners, Courts (including one panel of the App Term), and PIP arbitrators believed preclusion applied only to the extent of preventing carriers from offering affirmative proof in opposition to a plaintiffs prima facie case, and that in many cases the PIP plaintiff was still required to demonstrate its prima facie entitlement, which back in those days in some tribunals included proof of medical necessity. Well, those days are long gone due to the extension of the preclusion doctrine into areas that reasonably relate more to burdens of proof, rightly or wrongly.
I point this out because if this case goes to the COA, it may very well get reversed for the reasons aptly stated in the practioners’ posts above. However, do not forget that the COA is not bound by precedent, even its own, and will weigh public policy considerations. It is worthwhile to read Presbyterian again, recall it was a 4-3 decision, and that the only thing the majority and dissent could agree on is that the PIP regs are contractadory, deifed legal interpreation, and further stated “If more harmony and clarity are to be achieved, we earnestly invite the Legislature to study and remedy the Rube-Goldberg-like maze”. Of the 7 Presbyterian Judges, 1 (Ciparak) still sits on the COA. Chief Judge Lippman who also serves as the de facto adminstrative head of the Courts, is surely aware of the mess that PIP litigation has made of the Courts, and is under increasing pressure to slash the already overworked Courts’ budgets and personell. How he feels about PIP, I have no idea, but he must be aware of how 10’s of thousands of PIP cases burden the system. Judge Smith and Pigott who dissented in Fair Price may vote to affirm. There are still 4 Judges remaining who were in the majority in Fair Price, but never forget “the switch in time that saved nine”. I am no COA watcher, but I have seen that Court recently disregard, or at least distinguish/harmonize, 65 years of their own precedent to get where they want.
Without offering an opinion whether Unitran was correctly decided under precedent as it now stands, I would not be shocked to see the COA blow up PIP if given the chance.
Of course, the language of the PIP endorsement is regulatory, regulations do not invalidate statutes, or statutory intent as determined by the Court of Appeals. The insurance department neither overturns the Legislature nor the Court of Appeals, thank God.
It’s the other way around.
What is most amazing is that this Court actually cited Chubb for support, tellingly, without analysis, and without citing any language. I really don’t know how to take that, other than as some sort of poke in the eye at fools who think the rule of precedent should still exist.
Under Chubb, Presby, Hospital for Joint Diseases, Fair Price, assuming coverage is triggered by the occurrence of an auto accident and resulting injuries, the rule of preclusion applies.
Indeed, as the Court of Appeals provided in Chubb:
“The denial of liability based upon lack of coverage within the insurance agreement, as framed in part by the litigation strategy and nature of the instant dispute, is distinguishable from disclaimer attempts based on a breach of a policy condition for which timely notification by the insurer is required.”
Chubb, 90 N.Y.2d at 199 (emphasis added).
Ins. Law Article 51 is very clear from inception that the carrier can’t reduce No-Fault coverage by including additional policy conditions under the mandatory personal injury endorsement. Thus, only policy conditions that existed when the court of appeals determined chubb, as it is today, are termed “conditions precedent” in the MPIPE. Thus, Chubb expressly disposes of this Court’s analysis, whether this court purported to rely on it or not.
Under this Court’s view, carriers should have little incentive to process claims in a timely fashion and should properly require the provider to bring lawsuits over each and every no-fault claim, no matter how trivial.
Consumers required to pay for no-fault coverage will get nothing for their money. And many will suffer, injured without medical care, their policies being declared “void ab initio” under a bizarre and draconian system, unlike that of any other state or any other democratic country. Many of these prior insureds will have never even been aware that their carrier had noticed their IME’s in the first place.
Further, the tort bar has to understand it is now malpractice to not properly inform PI clients of each IME they are aware of as well as the consequences of missed examinations, least they get their clients first-party, liability and UIM coverage cancelled.
Lost faith in our judicial, regulatory, and political system is a trivial thing when people are making money hand over fist, until a tipping point is reached.
Over this case, from this day forward, I’m officially and permanently changing my fake name from “SunTzu” to “Sun.” From this day forward, I will dedicate my life to becoming the daylight that exposes injustice in our judicial system.
Ok, now I’m officially Zuppa. This decision has done it for me.
And, where is the Zuppa, btw????
Kurt, not only is the decison bad for policyholders in New York State but I am also afraid it may end up hurting defense attorneys. I saw the same thing happen with serious injury rulings by the Court of Appeals and bodily injury defense.
The worst thing that happens is that a “condition precedent” now escapes preclusion. Since most cases are predicated upon medical necessity and fee schedule, both of which are precludable, I think we are jumping the gun on calling this the next Pommels. Furthermore, “reasonableness” is still in play as to the application of a condition precedent. I am sure Plaintiffs will adjust to handle this new paradigm.
“Since most cases are predicated upon medical necessity and fee schedule, both of which are precludable, I think we are jumping the gun on calling this the next Pommels.”
I dispute that, policy condition defenses now represent a high percentage of defenses set forth in motions to dismiss, summary judgment, and appeals. Excluding the MVAIC coverage appeals, for example, probably most of the pending appeals in our office now concern policy condition defenses, including the one I’m working on at the moment, for example.
Of course, with this ruling, policy condition defenses will become even more common.
Well it is hard to appeal a medical necessity case when both sides present expert testimony, which is the common trend in the courts. The issues that would usually be appealed are those that you mention, so you raise a valid point. Could a Plaintiff who reads this and categorizes their cases give me a run down, percentage wise, of the types of active cases they have in their inventory. I have to imagine that the lion share are medical necessity cases.
I don’t see how this case hurts policyholders because it may reduce premiums. If the claimants want coverage, then they can comply with the conditions portion of the no-fault endorsement. If the IME demands are somehow unreasonable, then they should raise an issue instead of ignoring them. If you sleep on your rights, then you lose them.
This decision may hurt litigious providers, and specifically, the no-fault mills who give every fender-bender claimant the same battery of questionable treatment, and then continue to treat after benefits are cutoff. I suspect that they continue to treat so that they can create claims to sue on, as the vast majority of no-fault lawsuits are settled. It is a heavy burden for insurers to establish the timely mailing of denials at trial, given that firms like *** file separate lawsuits for each bill in an attempt to game the system and make claims difficult to defend.
If this decision is upheld, I suspect that more claims will be shifted to AAA instead of the Civil Courts. AAA is in a good position to evaluate reasonableness of claims handling. This decision can herald a return to substance over form for no-fault.
As attorneys, I don’t believe that we should be concerned with how the law benefits us. At least not publicly. The law should benefit the public at large. No-Fault, as it is, benefits unscrupulous medical providers and attorneys. The soft-tissue claimants treat for 6 months and get a $5,000 settlement. The people who lose are the drivers in Brooklyn paying $4,500 a year for car insurance.
By the way – putting my personal feelings aside – here is a case from today that necessitates the type of over treatment that you mention: “In opposition, plaintiffs submitted the affirmations of their treating physician who concluded that they suffer permanent partial disability as a result of the accident. His conclusions are based on medical records documenting their continued treatment since the accident including objective tests that he performed, and diminished ranges of motion that he related to plaintiffs’ physical limitations. Furthermore, the treating physician’s conclusions regarding causation are supported by medical records, wherein he acknowledges some pre-existing injuries but attributes specific other injuries to the accident. Additionally, plaintiffs’ contemporaneous MRI reports, in contrast to defendants’ expert’s reports, do not characterize their injuries as degenerative” Spencer v Golden Eagle, Inc., 2011 NY Slip Op 02113 (1st Dept. 2011)
We on the defense side cannot have it both ways. We picked our poison in Toure and Pommels and the one we are stuck with is called no-fault. I understand your frustration…
The courts have finally appointed themselves to the legislative branch of government.
What happened to the clear test that was stated by the Court in Fair Price to determine what is and is not a coverage issue?
Barry wrote, above, “There are still 4 Judges remaining who were in the majority in Fair Price, but never forget ‘the switch in time that saved nine’.”
At the risk of incurring everyone’s wrath, the maxim is “A stitch in time saves nine.” It means that taking remedial measures early (a stitch to repair a small rip) can prevent the need for much greater measures later (nine stitches to repair that rip after it grows).
In the context of Barry’s post it has no application because he was referring to the possibility of the “Fair Price” judges changing their position. There’s probably an old saw for that, but I can’t think of it at the moment. Probably the one about premature poultry accounting.
Pedantic, I know. Sorry.
Michael Reich said: “The courts have finally appointed themselves to the legislative branch of government.”
They’ve been saying that ever since Frankin Delano Roosevelt packed the U.S. Supreme Court with “New Deal-ers” who found Federal jurisdiction over every conceivable local issue.
Legislation by courts isn’t the primary problem in No-Fault. That part is old news. The bigger problem is the inconsistency of the court decisions and the courts’ careless use of insurance language.
Which brings to mind “State Farm v. Domotor,” in which the Second Department was just as wrong in favor of plaintiffs as “Unitrin v. Bayshore” is wrong in favor of insurers.
oh my goodness look at Hospital for Joint Diseases. The assignment of benefits confers standing. Every decision in every area of law says you need standing to sue. The Court of Appeals sais you need to assert problems with the AOB in a timely denial. That’s the strongest case.
Like a Creepy Neighbor if you are referring to me I never said that Fair Price overrule Malella. You guys said I said that time and time again in this brave new world of lawyering wherein you misrepresent the opponent’s arguments and then argue against the misreps. The Court’s actually show their biasis by enunciating the opponent’s misrepresentation as your argument when they write their decision.
Fair Price was but another case wherein the Court of Appeals — most importantly that Court of Appeals — made it clear as to what was a coverage defense and everything else is not and is subject to preclusion.
I have praised Judge Saxe as a great legal mind time and time again on the various Blawgs. Not anymore. Not after he participated in this.
And again do away with No Fault … I could care less … just don’t give me these stupid decisions that make No Fault not no fault. Give the citizens back their right to sue for pain and suffering and lost wages and medical bills for the “smaller” injuries. Say goodbye to threshold.
Larry Rogak wrote above in response to my earlier post:
“At the risk of incurring everyone’s wrath, the maxim is “A stitch in time saves nine.” It means that taking remedial measures early (a stitch to repair a small rip) can prevent the need for much greater measures later (nine stitches to repair that rip after it grows).”
Larry, I specifically meant “The switch”, not “stitch”. The post referenced the historical shift in the US Supreme Court in the 1930’s, when one Justice reversed his opposition to President Roosevelt’s New Deal legislation. At the time, the belief was that change in position was made to prevent Roosevelt’s Court packing plan from taking effect. Roosevelt had proposed replacing each of the older Justices with two new Justices (who presumably as his appointess would support his legislation, unlike the older Justices he sought to overrule) Thus, the “switch” in position “saved nine” Supreme Court Justices from becoming a 15 member Court. Not a perfect analogy, but historically informative, and a reminder that Judges do change thir positions from time to time for reasons not entirely tied to precedent.
“As attorneys, I don’t believe that we should be concerned with how the law benefits us At least not publicly. The law should benefit the public at large.” “The people who lose are the drivers in Brooklyn paying $4,500 a year for car insurance”
Really, Mr. Neighbor? As attorneys our duty is to our clients and to the office of the Court, period. My clients are providing medical treatment and so it is my concern that they are not doing it pro bono on behalf of the insurance industry. Dragging your corporate bent ideology into the debate is fine, but lets be real. The idea that insurance companies are denying payment to the people that are paying for those $4,500 policies for the sake of the public good is just ridiculous. Do you really think it is in the public good to angle the law in favor of a sophisticated multi billion dollar party, who will and does maneuver its claim processing to increase profits by denying coverage, and gearing its process to absolving itself from its obligation to pay? An injured, insured public who is unable to utilize the benefits they paid for either because no one is going to be willing to treat them, or because the insurance industry’s gamesmanship is geared towards making sure that those who do treat them don’t get paid is not in the public interest, it is an abomination.
Can it be???? A court finally taking this crap seriously. No fault should be turned on its head. “The courts have finally appointed themselves legislatures”????? Finally? Where have you been? The courts have bastardized no fault for years. What gave them the AUDACITY to declare that no fault cases fall outside the scope of ANY OTHER civil case and the rules of evidence, procedure, decency dont apply to it????? And as for the court of appeals, “Fair Price”. Enough said. The highest court in the state SANCTIONING fraud, permitting our tax money to be used to enforce fraudulent claims, thereby making the judicial system a party to the fraud. Vomit. I can’t wait till no fault is put to sleep for good, and Cuomo’s gonna do it. Its disgusting what has gone on all these years. Repulsive. Dispicable.
I have no illusions that my opinions are considered more valuable than anybody else’s, so I offer this merely for whatever the reader thinks it’s worth:
1. The Legislature is not going to substantially tinker with the current state of no-fault because everybody involved is making money from it: Lawyers on both sides, the medical providers, the defense experts, and the insurance companies. The bills are ultimately being paid by the auto-driving public, and they don’t really care. Without some powerful political force pushing the Legislature, they have no reason to act. The dynamic tension between the Trial Lawyers Association on one side, and the insurance industry on the other side, ensures that PIP will stay substantially in place.
2. Nobody really cares about the fact that inconsistent court decisions drive lawyers crazy. Especially so, since one decision favors plaintiffs, the next favors insurers. Like bad umpires in baseball, the courts hurt both sides enough so that there is some rough approximation of equality. So try to look at the bright side: the courts give us fodder for lively conversations.
Just my humble opinion after 30 years of practice.
Well said Eva.
Tells it How it Is — you’re nonsense. The insurance companies do not want to do away with No Fault because as well all know it is so profitable.
I agree that the law doesn’t apply to No Fault — but that’s mostly to the detriment of providers. Look at the nonsense that is considered proof in admissible form in No Fault cases.
I agree that this is a despicable area of law that has dumbed down the rest of law.
As to Courts and the Cuomo. I tell you this — the insurance companies over the past 4 years have inundated this state with money. The politicians which includes the legislative, executive and yes the Judicial branches of government.
I’m going to give amounts — from who — and to who very soon.
So give me your threat. Do away with No Fault Andrew — “daddy make me someone” — Cuomo. I really want it. I hope to someday soon argue the point to an Appellate Court. They’ll laugh and when I lay it out and the other lawyers waiting to argue hear what I have to say and start shaking their heads in unison — then they’ll cut me off.
Been there.
Just for the record, the opinions I make on the blogs is only my personal viewpoint, and my bosses would probably rather I keep it to myself. I’m fairly new in No-Fault, low man on the totem pole, and have more experience in other areas of insurance law than No-Fault. No, I’m not a principal here, far far from it.
Sun,
You and Zuppa, my most prolific posters, are out of your collective minds. I really wanted to share that. Thank you.