Justia Insurance Law Opinion Summaries

In this insurance dispute involving an insurer withholding payments to a medical service corporation improperly controlled by nonphysicans the Court of Appeals ruled that the trial court did not err in declining to give a charge requiring the jury to find fraudulent intent or conduct "tantamount to fraud" in order to reach a verdict in favor of the insurers.Plaintiff Andrew Carothers, M.D., P.C., a professional service corporation, filed multiple collection actions against insurance carriers seeking to recover unpaid claims of assigned first-party no-fault insurance benefits. The jury found that Defendants had proved that Plaintiff was "fraudulently incorporated" and that Carothers did not engage in the practice of medicine. Plaintiff appealed, arguing that the court erred in failing to give a jury instruction on "the traditional elements of common-law fraud and fraudulent intent. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the court's instructions to the jury were proper. View "Carothers v. Progressive Insurance Co." on Justia Law

The Court of Appeals affirmed the decision of the Appellate Division affirming the judgment of Supreme Court granting Defendant summary judgment in this insurance dispute, holding that a general business practice of failing promptly to disclose coverage within the meaning of N.Y. Ins. Law 2601(a)(6) does not include violations of the timely liability disclaimer requirement of N.Y. Ins. Law 3420(d)(2).This dispute arose between Plaintiff, the general contractor in an underlying personal injury action by an employee of Plaintiff's subcontractor, and Defendant, the subcontractor's general liability insurer. Defendant's policy named Plaintiff as an additional insured, extending coverage to Plaintiff for liability related to the "ongoing operations" of the subcontractor and other members of the risk retention group. After Defendant disclaimed coverage Plaintiff sought a declaratory judgment that the policy obligated Defendant to defend and indemnify Plaintiff in the employee's personal injury action. Supreme Court granted summary judgment for Defendant, and the Appellate Division affirmed. The Court of Appeals affirmed, holding that section 2601(a)(6) does not encompass the liability disclaimer requirement of section 3420(d)(2). View "Nadkos, Inc. v. Preferred Contractors Insurance Co. Risk Retention Group LLC" on Justia Law

The Court of Appeals affirmed the judgment of the Appellate Division concluding that the claims asserted by plaintiff Ambac Assurance Corporation in its appeal from Supreme Court’s judgment in a suit against defendant Countrywide Home Loans, Inc. lacked merit.Ambac, a monoline financial guaranty insurer, agreed to insure payments of principal and interest owed to the holders of residential mortgage-backed securities sponsored by Countrywide. Many of the loans backing those securities went into default following a market downturn, causing substantial losses. Ambac filed suit against Countrywide, alleging that Countrywide breached several contractual representations and warranties and fraudulently induced Ambac to enter into the insurance agreements. The Court of Appeals held that the Appellate Division correctly determined that (1) justifiable reliance and loss causation are required elements of a fraudulent inducement claim; (2) Ambac may only recover damages on its fraudulent inducement claim that flow from nonconforming loans; (3) the remedy for Ambac’s contract claims was limited to the repurchase protocol provided for in the contract’s sole remedy provision; and (4) Ambac was not entitled to attorneys’ fees. View "Ambac Assurance Corp. v. Countrywide Home Loans, Inc." on Justia Law

The three-year statute of limitations set forth in N.Y. C.P.L.R. 214(2) applies to no-fault claims against a self-insurer.Girtha Butler sustained personal injuries in a motor vehicle accident involving a New York City Transit Authority (Defendant) bus in which she was a passenger. Plaintiff provided health services to Butler for her injuries, and Butler assigned to Plaintiff her right to recover first-party benefits from Defendant, who was self-insured. Plaintiff then brought this action seeking reimbursement for allegedly outstanding invoices it had submitted to Defendant. Defendant moved to dismiss the complaint based on Plaintiff’s failure to bring the action within the three-year statute of limitations under N.Y. C.P.L.R. 214(2). Civil Court denied the motion, ruling that the six-year statute of limitations set forth in N.Y. C.P.L.R. 213(2) controlled this case. The Court of Appeals reversed, holding that the three-year period of limitations in N.Y. C.P.L.R. 214(2) should control this case. View "Contact Chiropractic, P.C. v. New York City Transit Authority" on Justia Law

At issue in this case involving long-tail insurance claims was whether, under the “pro rata time-on-the-risk” method of allocation, Century Indemnity Company was liable to its insured, KeySpan Gas East Corporation, for years outside of its policy periods when there was no applicable insurance coverage available on the market.KeySpan sought a declaration of coverage and determination of liability owed under the policies issued by Century. Supreme Court denied Century’s motion for partial summary judgment with respect to those years in which the relevant insurance coverage was otherwise unavailable in the marketplace. The Appellate Division reversed, determining that, under the applicable insurance policies, Century did not need to indemnify KeySpan for losses that were attributable to time periods when liability insurance was otherwise unavailable in the marketplace. The Court of Appeals affirmed, thereby rejecting application of the unavailability rule for time-on-the-risk pro rata allocation. View "Keyspan Gas East Corp. v Munich Reinsurance America, Inc." on Justia Law

The Court of Appeals answered a question certified to it by the United States Court of Appeals in the negative, answering that under New York law generally, and particularly in light of the New York Court of Appeals’ decision in Excess Insurance Co. Ltd. v. Factor Mutual Insurance Co., 3 NY3d 577 (N.Y. 2004), there is neither a rule of construction nor a presumption that a per occurrence liability limitation in a reinsurance contract caps all obligations of the reinsurer, such as payments made to reimburse the reinsured’s defense costs. The court held definitively that Excess did not supersede the “standard rules of contract interpretation” otherwise applicable to facultative reinsurance contracts. Therefore, New York law does not impose either a rule or a presumption that a limitation on liability clause necessarily caps all obligations owed by a reinsurer, such as defense costs, without regard for the specific language employed therein. View "Global Reinsurance Corp. of America v. Century Indemnity Co." on Justia Law

Michael Carlson, individually and in his capacity as administrator of his deceased wife Claudia Carlson’s estate and as assignee of William Porter, brought this action pursuant to N.Y. Ins. Law 3420(a)(2) to collect on certain insurance policies. The policies were issued to DHL Worldwide Express, Inc. (DHL) by National Union Fire Insurance Co. (National Union) and American Alternative Insurance Co. (AAIC), and Plaintiff had previously obtained a judgment against MVP Delivery and Logistics, Inc. (MVP) and William Porter. At issue on appeal was whether Michael sufficiently pleaded that MVP was an “insured” under DHL’s policies and whether the policies fell within the purview of N.Y. Ins. Law 3420 as policies “issued or delivered” in New York. The Court of Appeals held (1) dismissal of Plaintiff’s first cause of action pursuant to N.Y. Ins. Law 3420(a)(2) and (b) to collect on certain insurance policies was improper as to National Union and AAIC; (2) whether MVP was an “insured” under DHL’s policies presents a question of fact to be resolved by the trier of fact; and (3) section 3420 encompasses situations where both insureds and risks are located in the state of New York. View "Carlson v. American International Group, Inc." on Justia Law

Assuming that the legislature’s 2013 amendment to N.Y. Workers’ Comp. Law 25-a has a retroactive impact by imposing unfunded costs upon Plaintiffs for policies finalized before the amendment’s effective date, that retroactive impact is constitutionally permissible.Plaintiffs - approximately twenty insurance companies that wrote workers’ compensation insurance policies in New York - commenced this declaratory judgment action in 2013, alleging that the legislature’s amendment to section 25-a operated retroactively to the extent that it imposed unfunded liability upon Plaintiffs and that this retroactive impact was unconstitutional. Supreme Court granted Defendant’s motion to dismiss, concluding that the amendment operated prospectively. The Appellate Division reversed and entered a judgment declaring section 25-a(1-a) unconstitutional as retroactively applied to policies issued before October 1, 2013. The Court of Appeals reversed, holding that, even assuming that the amendment has retroactive impact, this impact is constitutional. View "American Economy Insurance Co. v. State" on Justia Law

Excess Line Association of New York (ELANY), a legislatively created advisory association under the supervision of the Department of Financial Services (DFS), does not have capacity to sue its members to recover fees that it is statutorily authorized to receive and does not have capacity to sue to compel an accounting to determine amounts allegedly owed.ELANY commenced this action against Defendants - a third-generation, family-owned and operated insurance brokerage firm and consortium - seeking, inter alia, to recover stamping fees for excess line policies allegedly procured from 1989 through 2011 and to enforce its purported right to conduct an examination and accounting pursuant to the Insurance Law. Supreme Court dismissed the action, determining that ELANY lacked capacity to sue. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the courts below correctly concluded that ELANY does not have capacity to sue for the relief sought. View "Excess Line Ass’n of New York v. Waldorf & Associates" on Justia Law

An entity engaged in the bail bond business may not retain the premium paid on a criminal defendant’s behalf when bail is denied and the defendant is never released from custody.Arthur Bogoraz was indicted on state law fraud charges. Plaintiffs, Bogoraz’s wife and family friends, entered into an indemnity agreement with Ira Judelson, a licensed bail bond agent affiliated with the International Fidelity Insurance Agency, to secure Bogoraz’s release from custody in exchange for a premium of $120,560. The district court denied the bail bond after a hearing, however, and Bogoraz was never released from custody. Judelson refused to return the $120,560 to Plaintiffs. The district court found that the indemnity agreement permitted Judelson to retain the premium. On appeal, the United States Court of Appeals for the Second Circuit certified a question of law regarding the issue to the Court of Appeals. The Court of Appeals held that, under the Insurance Law, an entity engaged in the bail bond business does not earn a premium for a bail bond if a court refuses to accept the bond following a bail source hearing and the principal is not released on bail. View "Gevorkyan v. Judelson" on Justia Law