Torts, Insurance and Compensation Law Weblog

On October 21, 2008 the Court of Appeals decided the case of Sorbara Construction Corporation v. AIU Insurance Company. In this case the court ruled that notice to Sobrara’s workers' compensation carrier is not sufficient to serve as notice of a potential claim to its liability carrier, even when the workers' compensation carrier and the liability carrier is the same insurance company. The Court was of the opinion that each policy requires a separate notice to the appropriate part of the insurance company. The result of this is that Court of Appeal upheld the liability carrier’s disclaimer of responsibility when the employer was impleaded in the liability action under §11 of the Workers' Compensation Law.

Submitted by Ronald Balter.

The New York Court of Appeals recently addressed at oral argument the following certified question in Briggs Avenue LLC v. Insurance Corp. of Hanover.  Here is the issue:

When an injured party begins its suit against an insured by serving process on the Secretary of State, who, under New York corporate and limited liability company law, is the insured's agent for such service, does this service suffice to trigger the provisions in the relevant insurance policy that require the insured to inform its insurer in a timely manner that a suit has been brought, where: (a) the insurance policy does not expressly refer to notice that a suit has been brought being (a) the insurance policy does not expressly refer to notice that a suit has been brought being given to an insured's "representative" rather than the insured itself, and (b) the insured plausibly argues that - due to its failure to update its address with the Secretary of State - it had not received actual notice that the suit had been brought?

Briggs Avenue LLC, the owner of an apartment building at 2570 Briggs Avenue in the Bronx, was informed when part of the ceiling in one of the apartments fell down in May 2003, but apparently it was not informed that Nelson Bonilla, the son of the tenant, had been injured.  Briggs did not notify its liability insurer, Insurance Corporation of Hannover (ICH), of the incident.  When Bonilla filed a $2 million negligence suit against Briggs in July 2003, he served the complaint on New York's Secretary of State, who serves as Briggs's agent for service of process under New York law.  The Secretary of State forwarded copies of the complaint to the address it had on file for Briggs, but the company did not receive them.  Briggs had moved its office and failed to advise the Secretary of State of its new address. 

Briggs became aware of the lawsuit in late March or early April of 2004, when Bonilla moved for a default judgment and directly served the papers on Briggs at its new address.  Briggs then notified ICH of the lawsuit.  ICH disclaimed coverage, contending that Briggs violated the notification conditions of the policy by failing to notify ICH for eleven months after the ceiling fell and eight months after the suit was filed.  The policy required Briggs to notify ICH "as soon as practicable of an 'occurrence' or an offense which may result in a claim," notify it "as soon as practicable" when a suit is filed, and "immediately" send ICH any papers received in connection with a lawsuit.

 

TO: All Law School Career Center Staff

FROM: Dan Gerber, Chair of the Torts, Insurance & Compensation Law Section - New York State Bar Association

Please be advised that the Torts, Insurance & Compensation Law Section of the New York State Bar Association (NYSBA) is sponsoring a Law Student article writing contest for the Torts, Insurance & Compensation Law Journal. The winner of this contest will have his/her article printed in the Torts, Insurance & Compensation Law Journal and win $250, plus a free admission to the NYSBA annual meeting in January.

The subject of the article must be about recent changes to New York Insurance Law § 3420 and how the other states across the country apply the issue of prejudice to insurance companies who seek to disclaim coverage for late notice of claims. On July 21, 2008, New York Governor David Paterson signed into law Chapter 388 of the Laws of New York 2008. This legislation contains amendments to §3420 of New York's Insurance Law and §3001 of the New York Civil Practice Law and Rules that, among other things, changes New York law on late notice of insurance claims from a “no prejudice” standard to a standard which requires insurance companies to show prejudice. The article should contemplate what will constitute prejudice in New York.

The deadline for entries is November 30, 2008. All submissions are to be sent in Microsoft Word via e-mail to either Paul Edelman at pedelman@kreindler.com or David Glazer at DGlazer@shaferglazer.com.

Thank you for you assistance. If you have any questions, please feel free to contact Paul Edelman or David Glazer at the email addresses listed above.

You are invited to view the Torts Insurance & Compensation Law Section in action. On October 7th, the Section's Executive Committee will hold its quarterly meeting at the New York Bar Center. The first hour of this meeting will be broadcast over the internet and available for viewing at www.nysba.org/TICLWebcast. To view the webcast, simply access the link above on the day of the meeting and follow the directions on the screen.

Among the items on the agenda will be the Section's consideration and proposal of legislation to amend Insurance Law 3420(d). Also known as the disclaimer statute, the Executive Committee will examine whether it should require a policyholder or claimant show prejudice when an insurer's disclaimer is late, but otherwise valid. The Executive Committee will also address adoption of a strategic plan, and upcoming Section events.

This will be the first webcast by any NYSBA Section of one of its events. Our goal is to allow our members to view how the Section works, and afford to become more involved.

Practitioners often grumble about the New York Court of Appeals' holding in Brill v. City of New York -- i.e., the outside time limit for a summary judgment motion is 120 days after the filing of the note of issue, unless good cause is shown for the delay.  During the first Session of the Court's new Term, the Court will revisit what constitutes "good cause" under CPLR 3212.

The Essex County Bar Association extends an invite to all members of the Torts, Insurance and Compensation Law 4th District to the ECBA’s summer meeting on August 15, 2008, in Lake Placid. The summer meeting will start with a two hour Ethics CLE program for $50 (the proceeds to benefit the ECBA scholarship fund), lunch at the Crowne Plaza and Golf at the Lake Placid Resort Mountain Course, to be followed by a cocktail reception which we are going to sponsor. Here is a memo on the CLE, the details of the meeting, and the golf outing.

A preview of the issues at stake in the case of Ramroop v. Flexo-Craft Printing was previously posted.

The Court of Appeals in affirming the result of the decision of the Third Department in the case of Ramroop v. Flexo-Craft Printing on different grounds than the Appellate Division decision denies an entire segment of the work force in New York State the additional benefits available under §15(3)(v) of the Workers' Compensation Law. Under either theory the Mr. Ramroop, an undocumented alien, has been barred from receiving additional benefits. The Court of Appeals decision was 5-2 with the dissenting opinion finding that the majority took a narrow view of the Workers' Compensation Law and also was of the opinion that the record was in sufficiently developed to allow the Court to make a decision on the issue.

The majority was of the opinion that the claimant not entitled to the §15(3)(v) benefits because he is unable to participate in a “Board approved rehabilitation program”. The Court stated that no rehabilitation program could admit the claim because of his undocumented status and that he could not be legally employed in the United States.

The court went on to say that the legislature in enacting §15(3)(v) of the Workers' Compensation Law did not intend to restore to employment a person who is legally unemployable. Because of that the court felt constrained to deny the claimant benefits under §15(3)(v).

Section 17 was raised by the claimant starting at the Law Judge level to try to save the claimant’s right to the benefits. The court indicated that §17 of the Workers' Compensation Law as it has been amended exists so as to not deny a person who is entitled to an award just because they leave the United States or Canada. The court found §17 inapplicable to this situation because there was no denial of benefits to the claimant because he was leaving the United States for a country other than Canada. The court’s language in dealing with the §17 arguments raise questions as to what happens if an undocumented alien leaves the United States and returns to work in another country earning less than they did when injured. Once out of the country according to the court the claimant cannot have any of the benefits they are entitled to receive diminished because they are out of the country. This person would apparently be entitled to receive benefits under §15(3)(v) of the Workers' Compensation Law.

The court’s decision seems to be self contradictory. Although the claimant cannot be retrained and returned to the work force to make him eligible to receive the additional benefits under §15(3)(v) the court looked favorable upon two prior decisions on related issues. The first case favorable cited by the court was Balabuena v. IDR Realty, LLC, 6 N.Y. 3d 338 (2006). In Balabuena the court held that the New York State Labor Law protects undocumented aliens despite the federal Immigration Reform and Control Act of 1986. The court also let stand a 1960 decision of the Appellate Division which allowed the payment of basic workers' compensation benefits to undocumented aliens. Testa v. Sorento Restaurant, 10 A.D. 2d 133 lv to appeal denied 8 N.Y. 2d 705 (1960).

The dissent agreed with the majority’s interpretation of §17 of the Workers' Compensation Law in that it could not save the claimant to receive the awards under §15(3)(v). However, as to the merits the dissent by Judge Ciparick, which included Chief Judge Kaye, felt the court acted prematurely. The courts decision was based upon the fact that the New York State Education Department’s Office for Vocational and Educational Services for Individuals with Disabilities could not retrain the claimant because of his status. However, neither the claimant’s attorney nor the attorney for the employer and its workers' compensation carrier was aware if there was another agency or organization that would accept the claimant for retraining and rehabilitation. The dissent wanted the case to be referred back to the Workers' Compensation Board to determine if there is a program that would accept the claimant.

The dissent was believes that the legislative history of §15(3)(v) is such that only medical impairments to participating in a rehabilitation program could act to bar a claimant from receiving the supplemental benefits.

The dissent in its conclusion raised the difficult issue that is confronted in this case.

The purpose of section 15 (3) (v) is to re-employ the worker and maximize the worker's earning capacity (see Governor's Program Bill, Bill Jacket, L. 1970, ch 286, at 3). For this Court to now hold that a worker's earning capacity is diminished because of a lack of authorization to work in this country when the lack of authorization existed pre-injury defeats this legislative purpose.

The majority today forecloses the availability of additional compensation for severely injured workers solely because they may lack permanent residency status or authorization to work in this country, ignoring the history of our Workers’ Compensation Law and this State's commitment to protect all workers, irrespective of immigration status (see Balbuena v IDR Realty LLC, 6 NY3d 338, 358-359 [2006]).

Although this case results in a defeat for the injured workers’ of New York there may be a silver lining in the decision. The silver lining may be in footnote one in the majority decision with the application of the Reform Bill of 2007. The footnote describes four types of injuries, permanent total disability, temporary total disability, permanent partial disability and temporary partial disability. Under the reform bill limits were imposed as to how long a claimant can collect benefits in case where the claimant is found to have permanent partial disability. The Court of Appeals says that in addition to the four previously mentioned types of cases they are also cases that are

called schedule loss of use awards because the statue assigns – as by a ‘schedule’ – a fixed number of lost weeks compensation according to the bodily member injured. . . . Schedule loss of use awards “compensate for loss of earning power” and, like all other compensation awards “are intended to provide a limited and certain, not full but uncertain remedy regardless of the fault of the employer, and to continue the wage income as nearly uniform as the provisions of the law would permit after the employee’s injury. (Citations omitted)

This can lead to a beneficial interpretation as to how the now limited permanent partial disability benefits are to be paid to injured workers. The amendments to §15(3)(w) of the Workers' Compensation Law in the reform bill now puts a limit on the length of time that person can collect permanent partial disability benefits. This makes those awards similar to awards under §15 (3)(a) through §15(3)(l). As an example a person with a $900.00 average weekly wage who was injured on July 2, 2007 and found to have 1% permanent partial disability would be entitled to 225 weeks of additional benefits after a finding of permanency. The question is what rate those 225 weeks should be paid. A 1% disability on a $900.00 average weekly wage is a rate of $6.00. The Workers' Compensation Law mandates a minimum rate of $100.00 in such a case. The issue that will have to be decided first by the Workers' Compensation Board and eventually the courts is whether that award should be paid at $100.00 per week or at $500.00 per week. The $500 rate is the rate at which a scheduled loss of use under §15 (3)(a) through §15(3)(l) would be paid. If the Workers' Compensation Law is to continue to make sure that all injured workers “continue the wage income as nearly uniform as the provisions of the law would permit after the employee’s injury” as stated in the footnote the $500.00 rate would be the logical rate at which to pay the individual. This interpretation would as the dissent pointed out would be in the tradition of Judge Cardozo who stated that the Workers' Compensation Law was enacted to make sure that injured workers are saved from becoming one of the derelicts of society, a fragment of human wreckage. (Dissent at page 2.)

Post by Ronald Balter

For the first time ever, the New York State Bar Association’s House of Delegates meeting, which is being held in Cooperstown this Saturday, June 21, starting at 8:30 a.m., will be broadcast live on the Association’s Web site. Interested members of the Association will be able to access the Webcast and watch the meeting as new President Bernice K. Leber (Arent Fox LLP) is sworn in and the House debates a full schedule of items of interest including reports from the Committee on Civil Rights, the Committee on Senior Lawyers and the Committee on Professional Discipline, as well as the Commercial and Federal Litigation Section report on electronic discovery.

The web cast will remain on the association’s site and be available for members to view at their convenience.

On June 10, 2008 the Court of Appeals decided the case of Preserver Insurance Company v. Ryba. The case involved the limits of liability of an out of state workers' compensation insurance policy when the employer is impleaded under §11 of the Workers' Compensation Law.

A New Jersey employer started doing work in New York State. One of its employees was injured and filed for workers compensation as well as commencing a lawsuit. The employer was impleaded. The employer then commenced a declaratory judgment action to accomplish three things.

1- It sought a ruling that it had no duty to defend a contractual claim because of a breach by its assured.
2- It sought a ruling that it did not have to defend the employer because the action was not incidental to its New Jersey operations.
3- That if liable its liability was limited to the limits in the policy, even though the similar clauses on New York policies have no limits.

The carrier did not appeal the findings that it had a duty to defend the action. So the only real issue before the Court of Appeals was the limits of its liability under what New York calls the 1-B portion (Employers Liability Insurance coverage) of the policy, or in older terms, its Dole v. Dow 30 N.Y. 2d 143 (1972) liability.

The court found that the policy was actually a New Jersey policy and that the limits in the policy from New Jersey trumped what would have happened if it was a New York policy. The court stated that the true limits of liability are to be determined based upon the states that the policy was actually written for. The policy was only effective in New York for occasional work that may have been done in New York State. It was not a policy that would have been effective if the employer was a New York employer on a regular basis. Because the carrier only issued the policy for regular coverage in New Jersey it was determined to be New Jersey policy and therefore, the limits in the policy are valid when and if the carrier has an obligation to defend an action in which the employer has been impleaded. Had the policy been written to cover a ful time New York operation then the policy limits would not have been effective.

A careful reading of the decision shows that based upon the actions of the employer the carrier may not have had any liability in either the workers' compensation case or the personal injury action. The claimant was injured in New York on a job site that was more than an occasional New York work appearance. It appears that eh intent of the policy would be to cover an employee when they were traveling in New York, such to go to the airport on a business trip. It was not meant to cover regular on going New York operations. However, the carrier never sought to disclaim on this basis.

The Court went on at the end of the decision to indicate that under the 2007 amendments to the Workers Compensation Law [§50(2)] that any out of state employers must have a policy issued under New York law. It will be interesting to see how the court will interpret a similar situation for an accident that occurs on or after September 9, 2007 where the policy did not list New York as a place for which the policy was actually written.

http://www.nycourts.gov/ctapps/decisions/jun08/97opn08.pdf

The court felt that in order to understand the decision that the Information Page be made a part of the official reporting of the decision. The information page is here

Post by Ronald Balter

Nicole Black of Sui Generis, Greg Bell of D.S. Leach Consulting, Inc. and Iput together this webpage for a presentation we gave last month: "Practicing Law in the 21st Century". The webpage includes free office tools, productivity webpage, links to blogs, blawgs, podcasts, and much more.

If you have any questions about the content, please feel free to contact me.