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PLAINTIFFS WERE PREJUDICED BY THE JURY SELECTION PROCESS WHICH DID NOT ALTERNATE THE PEREMPTORY CHALLENGES; THE FIRST QUESTION POSED TO THE JURY EFFECTIVELY PRECLUDED THE JURORS FROM CONSIDERING THE APPROPRIATE LEGAL ISSUE, I.E., WHETHER THE PLAINTIFF SUFFERED A “SERIOUS INJURY” WITHIN THE MEANING OF THE INSURANCE LAW (THIRD DEPT).

The Third Department, reversing the jury verdict and ordering a new trial in this Insurance Law 5102(d) “serious injury” case, determined the plaintiffs were prejudiced by the jury selection method used the trial judge, and the first question on the verdict sheet was improper because it effectively precluded the jury from considering the relevant question, whether plaintiff suffered a “serious injury:”

The court’s failure to alternate the peremptory challenge process … placed plaintiffs in the untenable position of having to utilize a peremptory challenge for a prospective juror that may not have been necessary had defendants been required to go first. This error compromised the fairness of the jury selection process.

Plaintiffs further contend that Supreme Court erred by including the first question on the verdict sheet — i.e., “[h]ave the plaintiffs . . . established that the incident . . . was a substantial factor in causing [Mormile’s] injuries?” We agree.  The specific issue for the jury to resolve was whether, as a result of the subject accident, Mormile sustained a “serious injury” as set forth in question 2 on the verdict sheet (did Mormile “sustain a significant limitation of use of a body function or system”); question 3 (did Mormile “sustain a permanent consequential limitation of use of a body organ or member”); question 4 (did Mormile “sustain a injury that resulted in a significant disfigurement”); and question 5 (did Mormile “suffer a medically determined injury or impairment of a non-permanent nature . . . that prevented him from performing all of the material acts that constituted his usual and customary daily activities for not less than 90 days during the 180 days immediately following the accident?”).

The first question effectively only asks whether there was probable cause to establish that Mormile’s injuries resulted from the accident (see PJI 2:70). Having answered “No” to that global question, the jury did not answer questions 2 through 5. In effect, the jury did not resolve the appropriate legal issue, i.e., whether Mormile sustained a “serious injury” in the accident, as defined under each of the four distinct categories at issue … . Mormile v Marshall, 2024 NY Slip Op 06390, Third Dept 12-19-24

Practice Point: Failure to alternate the peremptory challenges compromised the fairness of the jury selection process.

Practice Point: The first question on the verdict sheet effectively precluded the jury from considering the appropriate legal issue, i.e., whether plaintiff suffered a “serious injury” within the meaning of the Insurance Law.

 

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THE REPRESENTATION THAT THE INSURED PROPERTY WAS A TWO-FAMILY DWELLING WHEN, IN FACT, IT WAS A THREE-FAMILY DWELLING, WAS A MATERIAL MISREPRESENTATION; COVERAGE FOR FIRE DAMAGE PROPERLY DISCLAIMED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the representation that the insured property was a two-family dwelling when, in fact, it was a three-family dwelling, was a material misrepresentation and was a proper basis for denying coverage for fire damage:

“‘[T]o establish its right to rescind an insurance policy, an insurer must demonstrate that the insured made a material misrepresentation. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented'” … . “‘To establish materiality as a matter of law, the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application'” … . “‘[E]ven innocent misrepresentations, if material, are sufficient to allow an insurer to defeat recovery under the insurance contract'” … .

Here, MIC [the insurer] demonstrated, prima facie, that the application for insurance contained a misrepresentation regarding whether the premises was a two-family dwelling and that this misrepresentation was material … . … MIC established that the material misrepresentation was attributable to her, since, even if the application for insurance had been submitted without her actual or apparent authority, she ratified the representations contained in the application by accepting the policy for a two-family dwelling … . Estiverne v MIC Gen. Ins. Corp., 2024 NY Slip Op 06327, Second Dept 12-18-24

Practice Point: Even an innocent misrepresentation supports the denial of insurance coverage if it was material.​

Practice Point: Here plaintiff alleged she was unaware of the misrepresentation. The court held she ratified the misrepresentation when she accepted the insurance policy.

 

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NYC MUST PAY CITY EMPLOYEES, RETIREES AND DEPENDENTS THE FULL COST, UP TO THE STATUTORY CAP, OF ANY HEALTH INSURANCE PLAN THE CITY OFFERS (CT APP). ​

The Court of Appeals, in a full-fledged opinion by Judge Wilson, determined NYC was required to pay city employees, retirees and dependents the full cost, up to the statutory cap, of any health insurance plan the city offers:

At issue on this appeal are the portions of Administrative Code of the City of New York § 12-126 requiring New York City (“City”) to pay, for active employees, retirees and their dependents, “the entire cost of health insurance coverage,” defined as “[a] program of hospital-surgical-medical benefits,” in an amount “not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis.” The statute requires that the City’s program includes “hospital[,] surgical [and] medical benefits.” The statute also requires the City to pay the full cost of the program, so long as that cost does not exceed the comparator in the statute. The question in this case is what section 12-126 requires the City to do when it offers more than one health insurance plan to employees and retirees. Petitioners argue that section 12-126 requires the City to pay, up to the statutory cap, for any plan it offers. The City contends that its section 12-126 obligation is satisfied if it pays up to the cap for one health insurance plan providing hospital, surgical and medical benefits. It argues that it may offer additional plans but has no statutory obligation to pay any portion of their cost, and explains that when it has paid for additional plans in the past, it has done so because it agreed to in collective bargaining, not because it was statutorily required to do so. The parties also disagree as to which health insurance plan sets the statutory cap for Medicare-eligible retirees.

We hold that section 12-126 requires the City to pay up to the statutory cap for any plan it offers to employees and retirees. Matter of NYC Org. of Pub. Serv. Retirees, Inc. v Campion, 2024 NY Slip Op 06291, CtApp 12-17-24

 

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IN THIS FIRE-DAMAGE CASE, THE INSURANCE POLICY IMPOSED A TWO-YEAR LIMITATION PERIOD; THE ACTION WAS NOT BROUGHT UNTIL SIX YEARS AFTER THE FIRE; PLAINTIFF’S FAILURE TO PROVIDE ANY DETAILS DEMONSTRATING WHY THE RESTORATION COULD NOT BE COMPLETED WITHIN THE TWO-YEAR LIMITATION PERIOD REQUIRED DISMISSAL OF THE COMPLAINT; THREE-JUDGE DISSENT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Singas, over an extensive three-judge dissent, determined plaintiff’s complaint in this fire-damage case was properly dismissed because the contractual two-year limitation period was exceeded and plaintiff made only conclusory allegations that the repairs could not be made within that two-year period:

On this motion to dismiss, the Tower/AmTrust defendants met their burden of establishing, by reference to the contract’s two-year suit limitation provision, that the action was time-barred because plaintiff did not commence it within two years of the fire, utterly refuting plaintiff’s factual allegations … . Nothing in plaintiff’s response raised any issue as to whether the provision should bar her claims. Plaintiff’s allegation that “[g]iven the massive structural damage wrought by the fire, the restoration of [plaintiff’s] property would have been [a] multi-year process under even the best of circumstances” is a conclusory statement that the suit limitation provision was unreasonable and is not logically inconsistent with the replacement of the property within the two-year limitation period. Here, plaintiff failed to allege actions that she took to complete the repairs within two years; she did not provide any details regarding the extent of the damage, other than that the damage was “massive” and the fire set off four alarms, or why complete restoration within two years was an impossibility. This bare-bones allegation stands in stark contrast to the plaintiff’s factual assertions in [Executive Plaza, LLC v Peerless Ins. Co. (22 NY3d 511)]. There, the plaintiff pleaded the specific remedial actions taken to restore the property, including retaining an architect and construction company, submitting a variance application, and seeking and obtaining building permits, which were not issued until 20 months after the property damage … . Most importantly, that plaintiff provided that these remedial actions were taken within the limitation period. All of this information is notably absent from plaintiff’s pleadings and motion response here. Farage v Associated Ins. Mgt. Corp., 2024 NY Slip Op 05875, CtApp 11-26-24

Practice Point: Here the insurance contract imposed a two-year limitation on claims for the cost of fire-damage repair. Plaintiff did not bring the action until six years after the fire. The complaint was properly dismissed because it did not provide any details explaining why the repairs could not have been made during the two-year limitation period.

 

NEW YORK STATE’S SELF-FUNDED GOVERNMENT HEALTH PLAN FOR NEW YORK STATE’S PUBLIC EMPLOYEES, THE “EMPIRE PLAN,” IS SUBJECT TO THE INDEPENDENT DISPUTE RESOLUTION (IDR) PROCEDURES IN THE FEDERAL “NO SURPRISES ACT” (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Lynch, determined the state’s self-funded government health plan for New York State’s public employees (the Empire Plan) is subject to the independent dispute resolution (IDR) procedures in the federal “No Surprises Act:”

In 2014, the Legislature passed the “Surprise Bill Law” … which protects insureds from being billed directly for healthcare services they did not know were being performed by an out-of-network provider … . Under the law, the “health care plan” of an insured who receives a surprise bill is liable for the costs of the out-of-network services and may attempt to negotiate a reimbursement amount that is less than the amount billed … . “If the health care plan’s attempts to negotiate . . . do[ ] not result in a resolution of the payment dispute . . . , the health care plan shall pay the non-participating provider an amount the health care plan determines is reasonable for the health care services rendered, except for the insured’s co-payment, coinsurance or deductible” … . The law also contains an independent dispute resolution (… IDR) process to address payment disputes, which may be invoked by “[e]ither the health care plan or the non-participating provider” if certain conditions are met … . When invoked, the IDR process assigns the dispute to an independent arbitrator to determine the reasonable fees for services rendered by an out-of-network provider utilizing the factors outlined in Financial Services Law § 604 and the FAIR Health benchmarking database * * *

… [A]fter the US Congress passed the federal No Surprises Act in 2020 … — a statute substantively similar to the state’s Surprise Bill Law — the Empire Plan began using the IDR process set forth in the federal law, which uses different benchmarks to determine the reasonable fees to be paid to an out-of-network provider by an insured’s health care plan … . Joseph v Corso, 2024 NY Slip Op 05170, Third Dept 10-17-24

 

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THE SHORTER LIMITATIONS PERIOD IN THE FIRE INSURANCE POLICY WAS NOT FAIR AND REASONABLE; THE MOTION TO DISMISS IN THIS BREACH OF CONTRACT ACTION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court in the fire-insurance breach of contract case, determined the contractual limitations period in the insurance policy was not fair and reasonable:

“Article 2 of the CPLR (‘Limitations of Time’), provides that ‘[a]n action . . . must be commenced within the time specified in this article unless . . . a shorter time is prescribed by written agreement'” … . “‘[A]n agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action is enforceable'” … . “‘[T]he period of time within which an action must be brought . . . should be fair and reasonable, in view of the circumstances of each particular case. . . . The circumstances, not the time, must be the determining factor'” … . “‘Absent proof that the contract is one of adhesion or the product of overreaching, or that [the] altered period is unreasonably short, the abbreviated period of limitation will be enforced'” … .

The Supreme Court should have denied that branch of the defendants’ motion which was pursuant to CPLR 3211(a) to dismiss the complaint. Contrary to the defendants’ contentions, the modified limitations period in the subject insurance policy was not fair and reasonable. The insurance policy provided that “[n]o action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss” and that “[w]e will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Once actual repair or replacement is complete, we will settle the loss.” Here, the one-year limitation was unreasonable since the condition precedent, completion of actual repair or replacement, was not within the plaintiffs’ control and could not be met within that period … . “‘A “limitation period” that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim'” … . Filasky v Andover Cos., 2024 NY Slip Op 04545, Second Dept 9-25-25

Practice Point: Parties can agree on shorter limitations periods. Here the limitations period in the subject fire insurance policy expired before suit could be brought rendering it unfair, unreasonable and unenforceable.

 

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THE UNINSURED PLAINTIFF WAS AWARDED TENS OF MILLIONS OF DOLLARS, INCLUDING FUTURE MEDICAL COSTS, AFTER TRIAL FOR AN INJURY WHICH LEFT HIM PARALYZED; DEFENDANT REQUESTED A COLLATERAL SOURCE HEARING PURSUANT TO CPLR 4545 BECAUSE PLAINTIFF MAY BE ABLE TO RECOVER FUTURE MEDICAL COSTS UNDER THE PATIENT PROTECTION AND AFFORDABLE CARE ACT; IN A MATTER OF FIRST IMPRESSION THE SECOND DEPARTMENT HELD DEFENDANT WAS ENTITLED TO A COLLATERAL SOURCE HEARING (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Ventura, in a matter of first impression, determined defendant in this negligence action was entitled to a hearing pursuant to CPLR 4545 concerning damages awarded for future medical expenses. Plaintiff, a bicyclist, was struck by a railroad tie which was dropped from above, and was paralyzed. Plaintiff was awarded tens of millions of dollars after trial. Defendant argued the uninsured plaintiff may be entitled to future medical costs under the Patient Protection and Affordable Care Act and requested a CPLR 4545 collateral source hearing:

This appeal presents a question of first impression in New York involving the effect of the Patient Protection and Affordable Care Act on collateral source offsets in personal injury actions, to wit: whether a defendant may be entitled to a collateral source hearing pursuant to CPLR 4545 for the purpose of establishing that an uninsured plaintiff’s future medical expenses will, with reasonable certainty, be covered in part by a private health insurance policy, as long as the plaintiff takes the steps necessary to procure the policy. Among other reasons, since providing a defendant an offset under such circumstances would serve the “ultimate goal of CPLR 4545 to eliminate duplicate recovery by a plaintiff” … , we conclude that the defendant was entitled to a hearing pursuant to CPLR 4545 to demonstrate the extent, if any, to which the plaintiff’s future medical expenses would be reduced by available insurance coverage. We express no opinion, however, about the appropriate outcome following the hearing.

… [W]e modify the amended judgment by deleting the award of damages for the plaintiff’s future medical expenses and … remit this matter to the Supreme Court … , for a collateral source hearing on the issue of those expenses, with entry of an appropriate second amended judgment thereafter. Liciaga v New York City Tr. Auth., 2024 NY Slip Op 04257, Second Dept 8-21-24

Practice Point: If an uninsured plaintiff, who was awarded damages to cover future medical costs, may be entitled to future medical costs under the Patient Protection and Affordable Care Act, defendant may be entitled to a CPLR 4545 collateral source hearing.​

 

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WHERE THERE ARE MULTIPLE EXCESS COVERAGE POLICIES COVERING THE SAME RISK, THE EXCESS COVERAGE CLAUSES CANCEL EACH OTHER OUT (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, explained how multiple “excess coverage” insurance policies should be applied:

“[W]here there are multiple policies covering the same risk, and each generally purports to be excess to the other, the excess coverage clauses are held to cancel out each other and each insurer contributes in proportion to its [policy] limit,” unless to do so would distort the plain meaning of the policies … . By contrast, “if one party’s policy is primary with respect to the other policy, then the party issuing the primary policy must pay up to the limits of its policy before the excess coverage becomes effective”  … . Kolli v Kaleida Health, 2024 NY Slip Op 03998, Fourth Dept 7-26-24

Practice Point: The excess coverage clauses in multiple excess coverage policies covering the same risk cancel each other out.

 

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ALTHOUGH SUCCESSIVE SUMMARY JUDGMENT MOTIONS ARE DISFAVORED; HERE THE ISSUES IN EACH MOTION DID NOT OVERLAP AND APPELLANTS OFFERED A SUFFICIENT REASON. I.E. THE FIRST MOTION PRECEDED DEFENDANT’S DEPOSITION IN WHICH HE ADMITTED SWERVING INTO APPELLANTS’ VEHICLE (FIRST DEPT).

The First Department, reversing Supreme Court, determined appellants’ second summary judgment motion in this traffic accident case did not violate the prohibition of successive motions. The first motion dealt with whether plaintiff suffered a serious injury within the meaning of the Insurance Law. The second motion addressed defendant’s liability. Appellants demonstrated a sufficient reason for the failure to include both issues in a single motion, i.e., the first motion was made before defendant was deposed and admitted swerving into appellants’ vehicle:

… [A]ppellants’ first motion for summary judgment was on the issue of serious injury. Their second motion was on the issue of liability. The issue of whether plaintiff sustained a serious injury within the meaning of the Insurance Law, “is a threshold matter separate from the issue of fault” and which must, therefore, be determined separately … . “[S]erious injury is quintessentially an issue of damages, not liability” … . Under the facts presented, appellants’ failure to raise the issue of liability in their first motion for summary judgment does not run afoul of the general disfavor of successive motions since the issue of serious injury was not germane to the issue of liability … .

Appellants have also established the existence of sufficient cause … . Here, the record indicates that the first motion for summary judgment was filed prior to the deposition testimony of defendant-respondent Phanor. In his testimony Phanor admitted that he swerved into appellant’s vehicle in order to avoid another unidentified vehicle. Priester v Phanor, 2024 NY Slip Op 03554, First Dept 6-27-24

Practice Point: Here the fact that successive summary judgment motions are generally prohibited was overlooked. The issues in the two motions did not overlap (one dealt with plaintiff’s damages, the other with defendant’s liability). And the first motion was brought before the deposition in which defendant admitted swerving into appellants’ vehicle.

 

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IN THIS GROUNDWATER POLLUTION CASE, THE POLLUTION EXCLUSION IN THE INSURERS’ POLICIES APPLIED AND THE INSURERS ARE NOT OBLIGATED TO DEFEND AND INDEMNIFY THE INSURED OIL COMPANY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the pollution exclusion in the plaintiffs’ insurance policies applied and plaintiffs were not required to defend and indemnify the defendant, which allegedly caused a gasoline additive (MTBE) to pollute groundwater. The fact that the additive was a legal substance required by the EPA did not matter:

… [I]t is clear that even if MTBE was not a pollutant in the context of its use as a gasoline additive, it was a pollutant in the context of its release into groundwater … . * * *

Qualified pollution exclusions are characterized by an exception for pollution where the discharge or release of the pollutant is “sudden and accidental” … . The terms “sudden” and “accidental” each “have separate meanings, [both] of which must be established for the exception to nullify the pollution coverage exclusion” … .. “[T]he meaning of sudden in the pollution exclusion exception” has a “temporal quality” (id. [emphasis omitted]), which is only met where the discharge occurs “abruptly or within a short timespan, of a significant quantity of the pollutant sufficient to have some potentially damaging environmental effect” … .

Here, with respect to the plaintiffs’ … policies that contained qualified pollution exclusions, the defendant failed to meet its burden to “demonstrate a reasonable interpretation of the underlying complaint[s] potentially bringing the claims within the sudden and accidental discharge exception to exclusion of pollution coverage, or to show that extrinsic evidence exists that the discharge was in fact sudden and accidental” … . In other words, the type of pollution alleged, which occurred undetected over many years, was not sudden within the meaning of the applicable law … . St. Paul Fire & Mar. Ins. Co. v Getty Props. Corp., 2024 NY Slip Op 03510, Second Dept 6-26-24

Practice Point: A “pollution exclusion” in an insurance policy applies where, as here, the pollution occurs over years, as opposed to occurring suddenly and unexpectedly.

Practice Point: A substance can be legal and approved for use in gasoline by the EPA but constitute a “pollutant” when found in groundwater.

 

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