NY: A&B Sub-Limit Applies To Primary But Not Excess Policy
It is a harsh reality that courts will give policyholders every benefit of the doubt in interpreting the terms, conditions and limits of policies of insurance. Insurers must be careful to place their insureds on notice of significant exclusions and limitations through the use of clear, concise and plain language in their policy forms. Even trickier, most states require that insurers timely advise their insureds and claimants if they conclude that the policy does not cover a particular claim or loss. What obligation does an insurer have if it does not deny coverage outright but seeks to enforce a significant sub-limit of liability? Is the insurer bound by the same rules that control when the insurer seeks to disclaim liability? Recently, in Santa v. Capitol Specialty Insurance, LTD., et al., plaintiffs filed suit against a Manhattan night club arising out of an alleged assault on plaintiffs. The third party administrator for the primary insurer became aware of the claim after it received the summons and complaint, which contained a specific count based on assault. Nine months later during discovery, the attorneys for the policyholder disclosed, for the first time, that the primary policy was subject to an assault and battery sub-limit of $50,000. The insurance disclosure also identified an excess policy with limits of $4,000,000 but made no reference to the sub-limit contained in the primary policy. The claimants protested that the primary insurer must provide its full policy limits because it failed to provide timely notice of the assault and battery sub-limit. Further, they argued that the excess insurer must make its full policy limits available because its policy did not contain any explicit exclusion or sub-limit for claims based on assault and battery. Of significance, the court held that the primary insurer was not subject to the normal rules requiring timely notice of disclaimer because it was not disclaiming or otherwise denying coverage. Rather, it was providing “the full measure of coverage available for the incident,” just with a reduced sub-limit of liability. On the other hand, the excess insurer did not fare as well. The court cited a number of problems with the excess insurer’s stance including its failure to exclude or specifically minimize its limits of liability for claims based on assault and battery. Further, the court was troubled by the excess insurer’s failure to put the claimant on notice of the sublimit when the insurance disclosure was furnished to the claimant’s attorney during discovery. The lesson of Santa is clear: while Santa may overlook minor errors in conduct and still arrive bearing gifts, insurers can expect no such generosity from the courts. Be clear, accurate and specific in the language contained in your policies and the disclosures made to your insureds and claimants. http://pdf.wcmlaw.com/pdf/santa.pdf If you have any questions or comments about this post, please contact Paul at pclark@wcmlaw.comRead MoreApp. Div: School’s are Not Insurers of Student’s Safety During Recess
In Benavides v Uniondale Union Free School Dist., the infant-plaintiff – a second-grade student – commenced an action against his school for inadequate supervision after he was pushed down a slide by a fellow student during recess. The school established its entitlement to summary judgment by showing the playground was adequately supervised and that the level of supervision was not a proximate cause of the subject accident. In affirming the decision, the Appellate Division stated schools cannot reasonably be expected to continuously supervise and control all movements and activities of its students and cannot be held liable for every thoughtless or careless act by which one pupil may injure another. Notably, the Second Department considered the plaintiff’s 50-h hearing testimony. Typically, trial courts have required a hearing to determine if an infant is swearable (understands the obligation to testify truthfully) before considering any testimony. Here, the plaintiff’s attorney claimed that the testimony was inadmissible because of his client’s age. However, the court refused to consider the plaintiff’s argument stating it was improperly raised for the first time on appeal. Thus, as the swearability of an infant plaintiff does not present a pure question of law appearing on the face of the record, the Courts have the discretion to consider an infant’s testimony at face value without such a hearing. Thanks to Bill Kirrane for this post. If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.comRead MoreNJ Supreme Court Rejects Employee’s Direct Action Against WC Carrier For Pain and Suffering
No one seems happy with the workers compensation system. Employers and their insurers complain that the system is biased in favor of employees, awarding compensation even in the face of fraud, malingering or worse. On the other hand, employees kvetch that workers compensation insurers are slow to process and pay claims, leading to delays in treatment, needless anxiety and unhappy medical providers.
With this background in mind, may an injured employee seek damages directly from his employer’s workers compensation insurer for pain and suffering allegedly due to the insurer’s delay in making required payments?
The New Jersey Supreme Court tackled this issued in Stancil v. ACE USA, ruling in favor of the workers compensation insurer. In Stancil, the employee alleged that the insurer routinely delayed medical payments and ignored a directive from the workers compensation court to rectify this situation by a date certain. In response, the employee filed suit against the insurer in the local Superior Court seeking damages for pain, suffering and physical injury allegedly caused by the insurer’s delay. The Superior Court and Appellate Division dismissed plaintiff’s complaint on the pleadings but, ever the persistent fellow, plaintiff was granted permission to appeal to the New Jersey Supreme Court. A good omen indeed.
Displaying unusual deference to the worker compensation system, the Supreme Court ruled that the employee’s complaint could not stand for three reasons. First, the legislature constructed the workers compensation system that eliminated the worker’s right to file suit in the Superior Court. The employee’s suit was inconsistent with that scheme. Second, the legislature had already enacted remedies to deter the occasional recalcitrant insurer. Neither the courts nor an injured employee should interfere with or expand those remedial measures. Finally, the Supreme Court found that the present system worked fairly well for several decades and the legislature had moved quickly and decisively when problems became apparent. In other word, no need to tinker with a system that, albeit not perfect, was working fairly well.
Stancil settles the question of whether an employee can seek damages for pain and suffering from a workers compensation insurer for alleged delays in making required payments. The Supreme Court firmly declined to recognize a remedy beyond that authorized by the Workers Compensation Act.
If you have any questions or comments, please email Paul at pclark@wcmlaw.com
Read MoreJanet’s Law Requires AEDs At School (NJ)
New Jersey Governor Chris Christie recently signed “Janet’s Law,” which requires New Jersey public and non-public schools to have an automated external defibrillator (AED), to train school officials and coaches on the use of AEDs, and to establish emergency action plans for responding to sudden cardiac events. The law also requires that the mandated AEDs be maintained in accordance with the previously passed law on AED acquisition and maintenance (section 3 of P.L. 1999, C.34 (C.2A:62A-25)). Janet’s Law will take effect on September 1, 2014 and effects schools that include grades kindergarten through 12. We believe this law sets a new standard for schools, and will lead to additional claims against schools and school districts that are not in compliance with the law. We note that previous versions of the law were more detailed and expansive, and called for AEDs at youth recreational facilities and camps as well as the education of students on various health topics. The new legislation makes clear that the standard for AEDs is now different for youth recreational facilities and camps as opposed to public and non-public schools. Janet’s Law imposes an additional burden on elementary, middle and high schools. However, AEDs are already required in many large places of public accommodation, such as airports and healh clubs, and have been proven to be effective tool in saving lives during sudden cardiac events. Prudent underwriters should inquire in the application process and pre-risk surveys about the presence of AEDs at schools located in New Jersey that they insure. Thanks to Alison Weintraub for her contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.comRead MoreHigh Tech Security System Shields Homeowner’s Association In Assault Case (NY)
In Diaz v Sea Gate Assn., Inc, the plaintiffs were attacked in their home located within a private, gated community that was managed, maintained and controlled by the defendant homeowner’s association. The plaintiffs alleged that inadequate security at the two entrance gates of the community allowed the assailant to enter property and commit his crime. In dismissing the plaintiff’s complaint, the Appellate Division found defendant established its entitlement to summary judgment by providing a detailed description of its key card system with surveillance cameras. With this system in place, the Court inferred that the assailant did not access the building from these entrances.
Thanks to Bill Kirrane for his contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com
Read More“Regular Use” Exclusion Upheld in Auto Policy (PA)
In the recent case of Adamitis v. Erie Insurance Exchange, the Pennsylvania Superior Court enforced an insurer’s “Regular Use” exclusion despite the plaintiff’s argument that the provision violates public policy. In early October 2005, plaintiff Adamitis was involved in a serious motor vehicle accident with an underinsured motorist while in the course and scope of his employment as a bus driver for the Berks Area Reading Transit Authority. As a result, Adamitis sought UIM coverage from Erie, but his claim was ultimately denied on the basis of a “Regular Use” exclusion which bars coverage for “bodily injury arising from the use of a non-owned motor vehicle or a non-owned miscellaneous vehicle regularly used by the insured” though not specifically identified in the policy. Unsurprisingly, Adamitis disagreed with his insurer’s coverage decision and brought suit against Erie in the Philadelphia Court of Common Pleas. The lower court, however, affirmed Erie’s decision in a bench trial citing the exclusion’s clear and unambiguous language. On appeal, Adamitis argued to the Superior Court that, among other things, the “Regular Use” exclusion violates public policy and conflicts with the Motor Vehicle Financial Responsibility Law of Pennsylvania. However, the Superior Court was likewise unconvinced by Adamitis’ contention and instead explained that the public policy behind UIM benefits is driven by the correlation between premiums paid and the coverage the claimant should reasonably expect to receive— nothing more. Accordingly, the appellate court reasoned that failure to enforce the “Regular Use” exclusion would run afoul of Pennsylvania’s public policy by requiring insurers to underwrite unknown risks for which theyhave not been paid. Thus, at least with respect to UIM insurance coverage, the Adamitis court reiterated that you get what you pay for in Pennsylvania.Thanks to Adam Gomez for his contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com
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