Thursday, July 30, 2009

Back to Workers Compensation

One of the most intriguing things about this area of law is that in a matter of 6 months, the same court can make pronouncements that are apparently inconsistent with each other. Some of these inconsistencies are subtle. Some of them are more pronounced.
An example of a sublte change is the pronouncement that an uncertified police report may under certain circumstances be considered admissible evidence in accord with CPLR 4518(a). People v. Hunter, 62 A.D.3d 1207 (3d Dept. 2009); Westchester Medical Center v. State Farm Mut. Auto. Ins. Co., 44 A.D.3d 750 (2d Dept. 2007) Compare, CPLR § 4518(c).
Another subtle change involves the proof necessary to demonstrate intoxication in a civil case. A proper certified hospital record or police record will now suffice. Six months prior, it did not suffice. Compare, Westchester Medical Center v. Progressive Cas. Ins. Co., 51 A.D.3d 1014 (2d Dept. 2008)(“A blood alcohol test result, as set forth in a certified hospital record, constitutes prima facie evidence of the test result pursuant to CPLR 4518(c) Thus, the blood alcohol test results contained in a certified hospital record from Sound Shore would be sufficient to make a prima facie showing that Forthmuller was intoxicated at the time of the accident”), with Westchester Medical Center v. State Farm Mut. Auto. Ins. Co., 44 A.D.3d 750 (2d Dept. 2007)(“the defendant was unable to establish, prima facie, that Gjelaj was intoxicated at the time of the accident. The result of a blood alcohol test may be admitted on the issue of intoxication in litigation involving an exclusion in a no-fault policy provided that a proper foundation is laid. At bar, the defendant failed to lay a proper foundation for admission of the BAC report by proffering any evidence regarding the care in the collection of Gjelaj's blood sample and its analysis.”)
Then there is the question: what is a prima facie case? I will not even go there, but a NYLJ article that will be published next week will gloss on that issue.
Now we have the workers compensation defense issue. Specifically, is the workers compensation defense one of standing or is it an exclusion. Notice that I left out the word “coverage”. Coverage, as we learned in Fair Price, is only implicated in rare instances. Workers Compensation issues do not implicate coverage.
Last month, the Appellate Division, Second Department, told us that the workers compensation defense is an exclusion that needs to be preserved in a timely denial. The Appellate Term, Second Department, followed suit under principles of stare decisis. I discussed this in prior posts.
The case that triggered this post is LMK Psychological Serv., P.C. v American Tr. Ins. Co. 2009 NY Slip Op 06004 (2d Dept. 2009). The pertinent portion of the opinion is as follows:
“There has been no determination by the Workers' Compensation Board as to whether the assignors are entitled to Workers' Compensation benefits for their injuries. The Workers' Compensation Board has primary jurisdiction to determine factual issues concerning coverage under the Workers' Compensation Law. Where "a plaintiff fails to litigate that issue before the Board, the court should not express an opinion as to the availability of compensation but remit the matter to the Board'"
It is not clear whether the Appellate Division has now decided that the compensation defense is now a standing issue (id), or is precludable as was set forth in Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009). Without resort to the record on appeal, it is hard to tell what exactly happened here.

Thursday, July 23, 2009

Intentional loss - preponderence and not fraud

AA Acupuncture Serv., P.C. v Safeco Ins. Co. of Am.,

2009 NY Slip Op 29311 (App. Term 1st Dept. 2009)

This was a really interesting decision. It is so rare that the Appellate Term, First Department writes a lengthy decision about any topic, let alone one involving a no-fault case. The law announced in this case represents established law. An insurance carrier may disclaim all no-fault benefits or other first-party benefits as to a party who makes material misrepresentations in the procurement of an insurance policy.

There was an interesting line in there, which I am not sure represents settled law:

This evidence was [*2]sufficient to establish prima facie that the insured intentionally misrepresented her address in order to obtain insurance at reduced premiums, and that the misrepresentation was material, since defendant would not have issued the policy under the same terms had it known that the insured resided in Brooklyn

Yet, the Appellate Division last year stated the following in Precision Auto Accessories, Inc. v. Utica First Ins. Co., 52 AD3d 1198 (4th Dept. 2008):

Defendant's president further stated in his affidavit that, “if [defendant] had been aware of plaintiff's true *1201 loss history ... [defendant] would not have issued a policy of insurance to plaintiff.” Contrary to plaintiff's contention, defendant is correct that it need not establish that the misrepresentations were willful in order to rescind the contract. Insurance Law § 3105(b) does not specify that a misrepresentation must be willful, and “[w]hether or not plaintiff intended to provide inaccurate statements or misrepresentations at the time [it] filled out the application is irrelevant”

Besides the above, Justice McKeon’s concurring opinion was interesting. He made an interesting observation, one I always joke about. Specifically, have you ever wondered whether the registrants of out of state vehicles, registered in non no-fault states, really reside in those states?

Thursday, July 16, 2009

The standard to rebut a peer review was raised a few notches

Pan Chiropractic, P.C. v Mercury Ins. Co.
2009 NY Slip Op 51495(U)(App. Term 2d Dept. 2009)

Sensing the belief that no-fault actions were starting to follow the trend in Ins Law 5102(d) actions (the no-fault threshold statute), the Defendant appealed the order finding that Plaintiff’s affidavit of merit was sufficient to raise a triable issue of fact, in opposition to Defendant’s summary judgment motion.

Factually, this case involved $660 worth of diagnostic testing. Defendant’s peer review set forth numerous reasons and cited to various authorities for the proposition that the diagnostic testing was either never necessary or not necessary in relation to the patient’s presented symptomology.

Plaintiff relied on the reports annexed to Defendant’s papers and concluded that the services were indeed medically necessary. There was no meaningful disagreement with Defendant’s doctor’s medical rationale for finding that the services lacked medical necessity.

The Court in applying the meaningful disagreement standard found in 5102(d) causation cases rightly found that Plaintiff failed to rebut the inference that the services lacked medical necessity.

I would opine that a provider, in successfully opposing this type of motion, is going to have to send these cases to their own peer doctor to perform a utilization review in their own right in order to raise a triable issue of fact in opposition to a defendant’s motion for summary judgment. This should be interesting.

Standing. All rise.

Davydov v Progressive Ins. Co.
2009 NY Slip Op 29299 (App. Term 2d Dept. 2009)

The concept of standing has numerous meanings. In Civil Procedure, it refers to the existence of a case or controversy, which is a precondition to allowing a Court to hear a case. In Criminal Procedure, it addresses the ability to contest a Fourth Amendment search and seizure violation. As a matter of common law and statutory law, it involves the ability of a party to prosecute an action, even though there is a case or controversy. I would be remiss if I did not include the statement that in English parlance, standing means to be on one’s feet in an upright, vertical position. If you were playing Password and someone said, in that funny opposite like voice “sitting”, the answer would be “standing”.

In regards to the common law notion of standing, there appears to have developed two different types of standing issues. The first is a statute or a regulation vesting or stripping a party of so-called standing. For instance, 65-3.16, the regulation that Malella is predicated upon, states that improperly formed corporations, and most likely their assignors in a direct first-party suit, do not have standing to prosecute overdue no-fault healthcare-expense bills. This “standing” rule also involves corporations prosecuting actions on behalf of independent contractors; and I would argue that 65-3.19 strips a health care provider’s ability to prosecute bills where a worker’s compensation carrier is deemed “primary”. But see, Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009).

As to an example of a statute that vests standing, where it would not otherwise exist, one should look to GBL 349. Prior to the amendments promulgated years ago, the attorney General was the only official who could prosecute a GBL 349 (consumer fraud) claim.

The second notion of standing represents so-called technical standing. The Courts have over the last decade deemed technical standing issues, mainly as to valid assignments, to fall within this category. As to technical standing issues, the deficiencies in the assignment forms in the no-fault scenario are deemed waived if not properly addressed during the claim stage, and in non no-fault actions, the defect is waived if not properly pleaded in an answer or a pre-answer motion. See, e.g., Wells Fargo ]Bank Minn., N.A. v Mastropaolo, 42 AD3d 239, 241-243 (2d Dept. 2008)

Judge Golia’s dissent is only too logical. On a blank slate, it is correct. The type of technical defect in this matter, i.e., an assignment that assigns a claim to another entity should be a bar to a prima facie case in any type of action. This is a true standing issue, although deemed technical in nature. This statement would not hold true for issues such as missing signatures and other hyper-technical issues, where the intent to assign a claim to the proper entity may be inferred from the document. The issue of true standing should never be waivable since it addresses the fundamental right to access the courts. But the Appellate Courts have seemed to reject untimely challenges to technical defects, involving the nature of true standing.

I lastly wonder why Davydov, M.D., was not impleaded in a third-party contribution action in this case. This would most likely address the issue of proper standing and would protect the carrier from a subsequent action that Davidof M.D., could possibly bring against the carrier.

Wednesday, July 8, 2009

Collateral Estoppel may not apply in no-fault arbitrations – so says the Fourth Department


In a very interesting case, the Appellate Division, Fourth Department held that principles of collateral estoppel do not apply in arbitration.

Matter of Falzone v New York Cent. Mut. Fire Ins. Co. 2009 NY Slip Op 05423 (4th Dept. 2009)

In this case, a Claimant initially arbitrated a no-fault claim between himself and his insurance carrier. The issue that was arbitrated involved whether Claimant’s injuries were causally related to the motor vehicle accident. A no-fault arbitrator found the injuries to be causally related to the motor vehicle accident and awarded benefits.

The Claimant after obtaining an award for no fault benefits then sought to obtain SUM benefits arising from the same loss. Accordingly, Claimant commenced a second arbitration between himself and the same carrier upon which he was awarded no-fault benefits. The insurance carrier’s defense to payment in this SUM arbitration, similar to that in the no-fault arbitration, was that there was a lack of a causal nexus between the motor vehicle accident and the alleged injuries.

Since the parties and issues to be resolved in this SUM matter were the same as that in the no-fault matter, i.e., whether the injuries were causally related to the motor vehicle accident, you would think that principles of collateral estoppel would come into play and bind the SUM arbitrator to the same decision as that of the no-fault arbitrator. As we saw in a previous post involving the matter of Lobel v. Allstate, a no-fault arbitrator’s decision on causation will collaterally estopp a party from re-litigating a previously arbitrated issue in Court. Yet, the SUM arbitrator, aware that the prior arbitrator found a causal nexus existed between the motor vehicle accident and the injuries, nonetheless ruled that there was no causal connection between the injuries and the motor vehicle accident.

An Article 75 challenge was lodged in the Supreme Court. The Supreme Court granted the petition, reversed the SUM arbitrator’s decision and properly found that the results of the no-fault arbitration collaterally estopped the parties from contesting the causal relationship between the motor vehicle accident and the injuries at the SUM arbitration. Thus, the SUM arbitratror, as a matter of law, had to find that there was a causal relationship between the motor vehicle accident and the loss. The carrier appealed and the Fourth Department surprisingly reversed the order and judgment of the Supreme Court as set forth herein:

We agree with respondent that Supreme Court erred in granting claimant's motion. The fact that a prior arbitration award is inconsistent with a subsequent award is not an enumerated ground in either subdivision (b) or (c) of CPLR 7511 for vacating or modifying the subsequent award (see Matter of City School Dist. of City of Tonawanda v Tonawanda Educ. Assn., 63 NY2d 846, 848). As the court properly recognized, "[i]t was within the [SUM] arbitrator's authority to determine the preclusive effect of the prior arbitration on the instant arbitration" (Matter of Progressive N. Ins. Co. v Sentry Ins. A Mut. Co., 51 AD3d 800, 801). The court erred in noting, however, that it was unable to determine whether the SUM arbitrator even considered claimant's contention with respect to collateral estoppel. Arbitrators are not required to provide reasons for their decisions (see Matter of Solow Bldg. Co. v Morgan Guar. Trust Co. of N.Y., 6 AD3d 356, 356-357, lv denied 3 NY3d 605, cert denied 543 US 1148; Matter of Guetta [Raxon Fabrics Corp.], 123 AD2d 40, 41), and thus the SUM arbitrator was not required to state that he had considered that contention. “

Two points need to be considered. First, the Fourth Department cites a 2007 Second Department case entitled Matter of Progressive N. Ins. Co. v Sentry Ins. A Mut. Co. for its rule of law. Yet, the Progressive case actually held that collateral estoppel should be given effect to prior arbitration awards involving the same parties and the same issue. Second, there was a two Justice dissent, which as a matter of right brings this case to the Court of Appeals.

For the sake of commonsense, this case should be reversed. Otherwise, there will be too many instances where inconsistent decisions will arise in post-ime cases, other policy violation cases and coverage cases, among others. It would be a fair assessment to say that no-fault and other first-party practitioners will not benefit from the uncertainty and some could say absurdity that this case could rein upon the arbitral process.

Tuesday, July 7, 2009

What do CPLR § 2309 and CPLR § 2106 have in common?

The answer, unfortunately, is that too many practitioners fail to understand how to utilize and work with these statutes. It seems that in the field of no-fault and commercial debt collection, attorneys are forever mangling the application of these statutes.

Crossbridge Diagnostic Radiology v Encompass Ins., 2009 NY Slip Op 51415(U)(App. Term 2d Dept. 2009)

The above case, which was decided this week, demonstrates the special hazards that CPLR § 2309 presents. In fact, this case appears to be especially problematic for the insurance carrier since monies in excess of the no-fault policy limits are now due and owing because of an attorney’s misunderstanding of this statute. We learn this fact through Justice Golia’s thoughtful dissent.

The following quote from the Appellate Term says it all:

“However, the affidavit proffered by defendant, in which defendant's claims representative asserted that the available coverage had been exhausted, was not in admissible form. Defendant's affidavit was not in conformity with CPLR 2309 (c), which fact was duly objected to by plaintiff in the Civil Court”

Just remember that if you are executing an affirmation, executing an out of state affidavit or are in receipt of papers containing these documents, you should really be familiar with the procedural nuances of 2106 and 2309(c). The failure to appreciate the nuances of these statutes may lead to a deleterious and unfortunate result.