Automobile Insurance SubrogationAutomobile Total Loss ThresholdsDeductible ReimbursementDiminution of ValueFirst Come, First Served: Subrogating Multiple Claims in Excess of Policy LimitsFuneral Procession Traffic LawsImputing Contributory Negligence of Driver to Vehicle OwnerLaws Regarding using Cell Phones/Headphones/Texting While DrivingLoss Of UseMed Pay/PIP SubrogationOwner Liability For Stolen VehiclesPayment of Sales Tax After Vehicle Total LossPedestrian and Crosswalk LawsRental Car Company Physical Damage and Loss of Use ClaimsRental Car Company’s Liability Insurance Primary or ExcessSlower Traffic Keep RightSudden Medical Emergencies While DrivingSuspension of Drivers’ LicensesUse of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Federal , State, and Local Governmental EntitiesMunicipal/County/Local Governmental Immunity and Tort LiabilityState Sovereign Immunity And Tort Liability
General Tort Laws/StatutesAnti-Indemnity StatutesContribution ActionsContributory Negligence/Comparative FaultDog Bite LawsEconomic Loss DoctrineParental ResponsibilitySpoliationStatute of LimitationsStatute of Limitations Exceptions
Health Insurance SubrogationHealth and Disability Insurance
InvestigationAdmissibility of Expert TestimonyPre-Suit Disclosure of Liability Policy Limits in Third-Party ClaimsRecording Conversations
Product Liability SubrogationProduct Liability Law
Property Subrogation“Matching Regulations” And Laws Affecting Homeowners Property ClaimsCondominium/Co-OpWaiver of Subrogation LawsDamage to Property Without Market ValueGeneral Contractor Overhead And Profit Payments In First-Party ACV Property Damage ClaimsLandlord/Tenant Subrogation
Subrogation GenerallyAnti-Subrogation RuleCriminal RestitutionMade Whole DoctrineMedical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Workers’ CompensationEmployee Leasing LawsHospital Lien LawsOCIP/CCIP Subrogation In Workers’ Compensation Construction CasesRecovery Of Increased Workers’ Compensation Premiums By EmployerWhich Workers’ Compensation “Benefits” Can Be Subrogated?Workers’ Compensation Subrogation Waiver EndorsementsWorkers’ CompensationWorkers’ Compensation Claims by Undocumented Employees
Automobile Insurance Subrogation
Automobile Total Loss Thresholds
Percentage of Value: 75%
Cost for repair of vehicle made in 1973 or older is 75% or more of retail value prior to being damaged by a nationally recognized compilation of retail values. 15 NYCRR § 20.20(c)(ii).
Automobile: Pro-Rata. In Physical Damage Claims. Specific notice requirements exist even if not pursuing subrogation and are found in New York’s Unfair Trade Practices Regulations. N.Y. Ins. Reg. 64, § 216.7(g) provides:
Subrogation Agreements. (1) Where insured has received payment under physical damage coverage that is subject to a deductible, insured shall share, pro-rata, with the insurer any net recovery received by insurer from third parties. Within 30 calendar days of such recovery, insurer must mail or hand deliver to the insured its payment for the insured’s pro-rata share of the recovery; (2) Net recovery shall be the total recovery less the insurer’s allocated loss adjustment expenses attributable to such recovery. The formula for computing net recovery and the insured’s share of recovery of the deductible may be stated as follows:
Total Recovery – Allocated Loss Adjusting Expenses = Net Recovery
(Deductible ÷ Total Loss) X Net Recovery = Insured’s Share of Recovery
Application of Formula: Assume a loss of $500 subject to a $100 deductible with $50 in allocated loss adjustment expenses: (a) if there is full recovery of $500: computation of net recovery: $500 – $50 = $450; computation of insured’s share of recovery: $100/$500 x $450 = $90 (b) If there is a partial recovery of $300: computation of net recovery: $300 – $50 = $250; computation of insured’s share of recovery: $100/$500 x $250 = $50;
(3) Unless the insurer returns its insured’s full deductible, it shall attempt to effect full recovery in clear liability cases and shall not enter into any intercompany agreements that provide for the acceptance of lesser amounts on a formula basis; (4) If an insurer has paid a physical damage claim that is subject to a deductible and it has elected to pursue its subrogation claim, the insurer shall promptly attempt to effect recovery. If a dispute arises between two or more insurers regarding the subrogation recovery, and the insurers are unable to resolve it, the insurer seeking recovery shall submit the dispute to binding arbitration or a court action shall be commenced no later than 180 calendar days following the payment of the claim to its insured. (5) If an insurer has paid a physical damage claim that is subject to a deductible and it is pursuing its subrogation claim, the insurer shall notify its insured in writing of the status of its claim 120 calendar days after the date of the claim payment to its insured. An updated status letter shall be sent every 120 calendar days thereafter until the claim is either honored or rejected. (6) If an insurer has paid a physical damage claim that is subject to a deductible and it elects not to pursue its subrogation claim where the possibility of recovery exists, the insurer shall so notify its insured in writing within 60 calendar days after it has paid the claim, except that the notification shall be given at least 30 days prior to the running of any applicable statute of limitations or period required for notice of claim. If an insurer does not notify its insured within the time periods prescribed above and the statute of limitations or period required for notice of claim has expired, the insurer shall forthwith remit to its insured the full amount of the insured’s deductible.
In physical damage claims the insurer must promptly attempt to effect recovery. There are no specific requirements to include the deductible in the demand but the insured must be reimbursed a pro-rata share of any net recovery within 30 days of a recovery. If pursuing subrogation, the insurer must notify the insured in writing of status of its claim within 120 days after the claim is paid and every 120 days thereafter until the claim is honored or rejected. If not pursing subrogation, and if a possibility of recovery exists, the insurer must notify the insured within 60 days after the claim is paid (30 days if statute of limitations is running), or it will owe the insured 100% of the deductible.
Diminution of Value
First Party: In Edwards v. Maryland Motor Car Ins. Co., 197 N.Y.S. 460 (N.Y. App. Div. 1922), the court held that diminution in value is damage embraced within the clause of the policy insuring the plaintiff against direct loss or damage by the peril of theft. The policy contained language that the insurance company had the option to “repair, rebuild, or replace the property lost or damaged with other of like kind and quality.” The court found that “diminution in value is damage embraced within the clause of the policy insuring plaintiff ‘against direct loss or damage’ by the perils of ‘theft, robbery or pilferage.’” The court went on to state that the liability is not severed by making the insurance company liable for actual cost of repairs or replacement. The court notes that this case allowed recovery for diminished value by finding coverage in another section of the insurance policy and not due to any obligation to repair the auto with like kind and quality.
Third Party: In Miller v. Sanchez, 6 Misc.3d 479, 789 N.Y.S.2d 850 (N.Y. City Civ. Ct. 2004), the court accepted the difference in value as the proper measure of tort damages. If the auto is of the type that appreciates in value, such as with rare automobiles, or is otherwise unique or brand new, third-party diminution of value damages for a motor vehicle are recoverable in addition to the cost of repairs even if the repairs restore the vehicle to its pre-accident condition. Cost of repairs and residual diminution in value are the proper measure of damages. It is not the diminution in value based on the value of the car before the accident and immediately after the accident. Diminution in value is recoverable where a vehicle has increased in value since being purchased and the cost of repairs after injury does not fully restore the vehicle to its pre-accident value. Finally, where the vehicle has increased in value, the damages recoverable is the difference between the vehicle’s market value immediately before and immediately after the injury. Franklin Corp. v. Prahler, 932 N.Y.S.2d 610 (N.Y. App. 2011); Rosenfield v. Choberka, 529 N.Y.S.2d 455 (N.Y. 1988) (vehicle “a few weeks” old); Parkoff v. Stavsky, 2013 WL 4528799 (N.Y. App. 2013) (Mercedes-Benz with only 398 miles); Johnson v. Scholz, 93 N.Y.S. (N.Y. Sup. 2011) (collector automobile). See also Jacobson v. Purdue, 2018 N.Y. Slip Op. 52001 (N.Y. Sup. 2018).
First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits
A liability insurer faced with multiple claimants and not enough insurance limits may settle with some of the parties injured in an automobile collision and is thereafter liable only for remainder of policy limits even though it may have been aware that total claims would probably exceed policy limits. Gerdes v. Travelers Ins. Co., 440 N.Y.S.2d 976 (N.Y. Sup. Ct. 1981). It is a first come, first serve state. There is no authority for the court to ratably distribute the policy limits among the various claimants. Id. An insurer has no duty to interplead the remaining potential claimants, although it is probably good practice to do so. Hartford Ins. Co. v. Methodist Hosp., 785 F. Supp. 38 (E.D. N.Y. 1992). Although an insurer is liable for an amount in excess of its liability coverage owed to third parties by the insured if the insured lost an actual opportunity to settle within coverage limits by reason of insurer’s purported bad faith, in order to show bad faith, the insured must show that the carrier acted in “gross disregard” of the insured’s interests. Id.
Funeral Procession Traffic Laws
There are no state laws governing funeral processions, however, the state’s Vehicle and Traffic Laws do not provide any exceptions to following traffic control signals, except in the case of emergency vehicles. If a funeral procession is to be granted ability to disobey traffic signals, there most be a traffic officer present to regulate traffic. Vinci v. Charney, 80 N.Y.S.2d 521 (N.Y. 1948).
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: A driver’s contributory negligence is not to be imputed to owner/passenger “no matter what his relationship to the driver may be”, unless it is shown that the owner’s negligence contributed to the injury. (Joint Enterprise expense sharing business trip). Kalechman v. Drew Auto Rental, Inc., 308 N.E.2d 886 (N.Y. 1973).
N.Y. Veh. & Traffic Law § 388 does not operate to impute contributory negligence of the driver to the owner. It is only a liability statute. Schuyler v. Perry, 886 N.Y.S.2d 228 (N.Y. App. 2009).
Vicarious Liability/Family Purpose Doctrine: Every owner of a vehicle used or operated in New York is jointly and severally liable for injuries or damage to person or property resulting from the negligent use or operation of the vehicle by any person with permission – express or implied. N.Y. Veh. & Traffic Law § 388.
New York does not recognize the Family Purpose Doctrine because it has a vicarious liability statute. Cherwien v. Geiter, 272 N.Y. 165, 168, 5 N.E.2d 185, 187 (1936).
Sponsor Liability for Minor’s Driving: No Sponsorship Liability Statute.
Laws Regarding using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: Only hands-free use of hand-held devices is allowed. No driver may send, receive, or read text messages or make calls, unless it is hands-free. N.Y. Veh. & Traf. Law § 1225-c.
Other Prohibitions: It is unlawful to operate a vehicle while wearing more than one ear phone that is connected to a radio, tape player, or other audio device. N.Y. Veh. & Traf. Law § 375-24a.
Loss Of Use
Loss of Use: Yes. Where the property has a usable value, the loss of use damage is determined according to the fair market rental value of the property. Franjo Transp., Inc. v. B & K Fleet Serv., Inc., 226 A.D.2d 674 (N.Y. 1996). N.Y. Pattern Jury Instr. Civil 2:310. Cannot recover loss of use when the vehicle is a total loss. Cecere v. Harquail, 481 N.Y.S.2d 533 (N.Y. 1984).
Lost Profits: Yes. If not speculative. Loss of revenue from business interruption is not recoverable in damages where the claim is based upon lost profits, revenues or labor productivity which are “speculative” in nature. Koch v. Consol. Edison Co. of New York, 468 N.E.2d 1 (N.Y. 1984). Proof of lost profits might specific enough to warrant recovery in damages. Milliken & Co. v. Consol. Edison Co. of New York, 644 N.E.2d 268 (N.Y. 1994). The burden of establishing a loss of revenue claim with certainty is a heavy one and depends in part upon whether the missed revenue is merely delayed, or permanently lost. Sanwep Rest. Corp. v. Consol. Edison Co. of N.Y., 611 N.Y.S.2d 177 (N.Y. 1994).
Comments: Loss of use damages can be recovered even where there is no actual rental of a substitute vehicle. Horton v. State, 272 N.Y.S.2d 312 (N.Y. Ct. of Claims 1966). There is a split of authority among Appellate Divisions whether loss of use is recoverable if a commercial plaintiff has other vehicles in reserve and does not hire a substitute vehicle. 2nd Department allows for such a recovery. Mountain View Coach Lines, Inc. v. Storms, 102 A.D.2d 663 (2d Dep’t 1984). 3rd department does not. Mountain View Coach Lines, Inc. v. Gehr, 80 A.D.2d 949 (3d Dep’t 1981). Federal Court has tried to predict how the NY Ct. of Appeals would resolve the conflict and held that it would likely follow 2nd Department approach, as permitting recovery is more consistent with settled principles of tort doctrine. Kuwait Airways Corp. v. Ogden Allied Aviation Services, 726 F.Supp. 1389 (E.D.N.Y. 1989).
Med Pay/PIP Subrogation
Med Pay: Med Pay benefits are usually in the form of PIP, APIP, or OBEL benefits. Where Med Pay is paid, however, subrogation is prohibited in settlements under § 5-335 and in verdicts under § 4545. Under § 4545, damages for which the bodily injury claimant was insured may not be included in a verdict, but might still be possible, but the insurer would have to file suit separately to preserve this claim (which could be extinguished if the injured party settles).
- Carrier can subrogate against a non-covered person and has a lien. N.Y. Ins. § 5104(b). Carrier also has common law subrogation rights for APIP benefits (additional PIP benefits in excess of basic PIP benefits) but does not have lien where APIP benefits not included in insured’s third-party lawsuit. This recovery claim does not qualify for inter-company arbitration. Federal Ins. Co. v. Hansen, 162 A.D.2d 224 (N.Y.A.D. 1990). Under N.Y. Veh. & Traf. Law § 341, a third-party lawsuit can be brought if a “serious injury” is sustained and monetary damages and/or non-economic damages exceed the no-fault PIP benefits. OBEL payments are treated as no-fault benefits.
PIP: No subrogation for first-party basic PIP benefits. N.Y. Ins. § 5104(a). Exceptions: (a) at least one vehicle weighs more than 6,500 lbs. or (b) one vehicle is used for transportation of person or property for hire (livery). This is done through inter-company Loss Transfer arbitration. There is also mandatory arbitration of “priority of payment” or “joint coverage” situations and voluntary UM arbitration. N.Y. Ins. § 5105(b) (2003). There is no lien or subrogation when both vehicles are insured.
- No-Fault State. Verbal threshold. Enacted in 1974. No-fault law provides for payment of “basic economic losses” up to $50,000. N.Y. Ins. § 5104 allows for third-party suit for such basic economic losses or non-economic losses only if there is a “serious injury.” N.Y. Ins. § 5102 (2002) (Death, Dismemberment, or Serious Disfigurement).
Made Whole: Doctrine applies. Winkelmann v. Excelsior Ins. Co., 640 N.Y.S.2d 994 (N.Y. 1995).
Statute of Limitations: The statute of limitations for Loss Transfer Arbitration is three (3) years from each PIP payment. C.P.L.R. § 214(2). The statute of limitations for Additional PIP (APIP) is three (3) years from the accident. Allstate Ins. Co. v. Stein, 807 N.E.2d 268 (N.Y. App. 2004). The statute of limitations for subrogation against non-covered person is three (3) years from the accident. Safeco Ins. Co. v. Jamaica Water Supply Co., 444 N.Y.S.2d 925 (N.Y. 1981).
Owner Liability For Stolen Vehicles
Key In The Ignition Statutes: N.Y. Veh. & Traf. Law § 1210.
Common Law Rule: At common law, the owner of a stolen vehicle was not liable for injuries caused by the thief. Epstein v Mediterranean Motors, Inc., 109 A.D.2d 340, 491 N.Y.S.2d 391 (2nd Dept. 1985), aff’d, 66 N.Y.2d 1018, 499 N.Y.S.2d 397, 489 N.E.2d 1299 (1985).
Payment of Sales Tax After Vehicle Total Loss
First-Party Claims: Insurer is required to reimburse the insured with the ACV. This means either repairing the damaged item or replacing it with an item substantially identical including sales tax (sales tax added to the value of the auto prior to the accident before salvage value is taken). N.Y. Comp. Codes R. & Regs. tit. 11, § 216.6. An insurer is not required to include transfer or title fees. http://www.dfs.ny.gov/insurance/ogco2008/rg081013.html.
Third-Party Claims: Third-party insurers must follow the same rules as first-party insurers. N.Y. Comp. Codes R. & Regs. tit. 11, § 216.0 (Standards for Prompt, Fair and Equitable Settlement of Motor Vehicle Physical Damage Claims) states that these claim practice rules apply to both first and third-party claims. On 5/1/02, the N.Y. Office of General Counsel issued a formal opinion which says that in adjusting a third-party claim for a total loss of a vehicle, the third-party insurer must comply with the requirements in N.Y. Comp. Codes R. & Regs. tit. 11, § 216.7(c)(1), (3), (4) (1999), which specifies how the insurer’s minimum offer, subject to applicable deductions, should be computed.
Pedestrian and Crosswalk Laws
N.Y. Veh. & Traf. Law § 1151: Vehicle must yield to pedestrian in crosswalk. Pedestrian must not leave curb so close to vehicle that it has no time to stop.
N.Y. Veh. & Traf. Law § 1146: Vehicles must exercise due care for pedestrians.
N.Y. Veh. & Traf. Law § 1152: Pedestrians must yield to vehicles when crossing outside crosswalk, Pedestrians must not cross diagonally.
Summary: When exercising right-of-way, pedestrian has a duty to heed any danger confronting them. Schmidt v. S. M. Flickinger Co., Inc., 88 A.D.2d 1068, 452 N.Y.S.2d 767 (3rd Dept. 1982). Under common law, the fact that driver never saw pedestrian in crosswalk does not excuse conduct where driver should have seen pedestrian. Domanova v. State, 41 A.D.3d 633, 838 N.Y.S.2d 644 (2nd Dept. 2007).
Rental Car Company Physical Damage and Loss of Use Claims
Recovery From Renter: A car rental company may hold an authorized driver liable for FMV or repair costs. However, if based on a physical survey after-hours or by automation it must be made within ten (10) days, must be only for actual and reasonable costs, and must be assessed and billed separately from the rental agreement. Loss of use damages and related administrative fees may not be recovered from authorized drivers. N.Y. Gen. Bus. Law § 396-z.
Recovery From Third-Party: Case law allows for owner of commercial vehicle (airplane and bus). Nothing specifically for rental cars. Deprivation of the use of commercial chattel causes harm to the chattel owner because the owner lost the right to use its chattel. Loss of use damages exist to compensate for the deprivation of the owner’s right to use its chattel as the owner sees fit. This right has a value, and its deprivation necessarily entails what economists call “opportunity cost.” Any particular allocation of a resource necessarily costs the owner the opportunity to put that resource to other, competing uses. When a tortfeasor by its negligence forces a thing’s owner to allocate that chattel to the singularly unsatisfying use of sitting in a repair shop for a while, that tortfeasor forecloses the owner’s opportunity to put the chattel to some productive use. Kuwait Airways Corp. v. Ogden Allied Aviation Services, 726 F.Supp. 1389, 1396 (E.D.N.Y.,1989) (damage to aircraft).
Loss of use damages allowed by owner of bus. Mountain View Coach Lines v. Storms, No. 836 E, 102 A.D.2d 663, 476 N.Y.S.2d 918 (N.Y.A.D. 2 Dept., June 18, 1984). New York does not require an actual replacement rental vehicle. Pittari v. Madison Ave. Coach Co., 68 N.Y.S.2d 741 (N.Y. 1947). An owner of a commercial vehicle may recover loss of use damages. The appropriate measure of such damages is based on rental value and the owner need not prove that a substitute was required to cover the loss -of the damaged chattel. Koninklijke Luchtvaart Maatschaapij, N. V. v. United Technologies Corp., 610 F.2d 1052 (2nd Cir. 1979). In CTI Int’l, Inc. v. Lloyds Underwriters, 735 F.2d 679 (2nd Cir. 1984), the court tried to reconcile the two Mountain View Coach Lines decisions above. The 2nd Circuit retreated from Koninklijke and held that there was no loss of use damage for a container company because there were empty containers available and, therefore, there could have been no loss of income. The consensus in New York appears to be that loss of use damages for commercial vehicles is allowed, and the plaintiff does not have to prove that he did not have a replacement vehicle on hand or couldn’t lease a replacement.
Rental Car Company’s Liability Insurance Primary or Excess
Summary: A car rental company’s liability insurance is primary up to the minimum limits. N.Y. Comp. Codes, Rules and Reg. Tit. 11 § 60-1.1. The Vehicle and Traffic Law also requires car rental companies to provide primary insurance. N.Y. Veh. & Traf. § 370; ELRAC v. Ward, 96 N.Y.2d 58, 748 N.E.2d 1, 724 N.Y.S.2d 692 (N.Y. 2001). A car rental company can also require indemnification from a renter for that portion of damages which exceeds the minimum liability limits. Morris v. Snappy Car Rental, 637 N.E.2d 253 (N.Y. 1994).
Slower Traffic Keep Right
Statute: N.Y. Veh. & Traf. Law § 1120 and N.Y. Veh. & Traf. Law § 1122.
Summary: Drivers must drive in the right lane and use the left lane for passing only. Drivers must drive in the right lane, except when passing another vehicle; when overtaking or passing bicyclists, pedestrians, animals, or obstructions on the right half of the roadway; obstruction exists making it necessary to drive to the left of the center of the highway; when travel on the shoulder is permitted; upon a roadway with three marked traffic lanes; or upon a roadway restricted to one-way traffic. Slower traffic must keep right. Vehicles proceeding slower than the normal speed of traffic must drive in the right. Except when overtaking and passing on the right is permitted, the driver of an overtaken vehicle shall give way to the right in favor of the overtaking vehicle on audible signal.
Sudden Medical Emergencies While Driving
Sudden Medical Emergency. An operator of an automobile who experiences a sudden medical emergency will not be chargeable with negligence provided that the medical emergency was unforeseen. State v. Susco, 666 N.Y.S.2d 321 (N.Y. 1997).
There is a question of fact if it was foreseeable that a diabetic who had suffered a hypoglycemic attack while driving when they had low blood sugar that morning and was driving erratically for a good distance. Thomas v. Hulslander, 649 N.Y.S.2d 252 (N.Y. 1996).
Suspension of Drivers’ Licenses
Administrative Suspension: Upon receipt of evidence that proof of financial security is no longer in effect, the Commissioner will suspend the registration of the vehicle and the driver’s license of the registrant. N.Y. Veh. & Traf. Law § 318. Instead of filing a deposit of security, the uninsured driver may avoid suspension by filing a release or a written, executed installment agreement. N.Y. Veh. & Traf. Law § 335.
Judgment: The clerk/judge, upon written request of the judgment creditor after 15 days following entry of a judgment, will forward the Commissioner a certified copy of any unsatisfied judgment, requiring the Commissioner to suspend the license of the judgment debtor. N.Y. Veh. & Traf. Law § 336; N.Y. Veh. & Traf. Law § 332. Suspension will remain in effect until the judgment is stayed, satisfied, or discharged in bankruptcy, and the judgment debtor has provided proof of financial responsibility. N.Y. Veh. & Traf. Law § 337.
Contact Information: State of New York, Department of Motor Vehicles, 6 Empire State Plaza, Albany, NY 12228, (212) 645-5550, http://www.dmv.com/ny/new-york/drivers-license.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: 11 NY ADC § 216.7; NY Circular Letter 1993-7; 15 NY ADC § 82.5.
Summary: The estimate must specify who manufactured any non-OEM parts used in the repair. An insurer must get permission from an insured if the insurer wishes to specify the use of non-OEM parts from more than three suppliers. Additionally, the insurer can only specify for the use of certified non-OEM parts. If the non-OEM part that is used has not been certified yet, the insurer must confirm that the part has a written warranty warranting that the part is of like quality and function to its OEM equivalent, and that the warranty will last as long as the insured drives the car. If the part’s manufacturer does not honor the warranty, the insurer is responsible for returning the vehicle to working condition.
Federal , State, and Local Governmental Entities
Municipal/County/Local Governmental Immunity and Tort Liability
New York Court of Claims Act: N.Y. Ct. Cl. Act §§ 8 – 12 (1929). State waives immunity and consents to being sued in the same manner as a private person would, so long as requirements of the Court of Claims Act are complied with. Parallel statute deals with Port Authority almost identically. N.Y. Unconsol. Law §§ 7101 to 7112.
Notice Deadlines: Written Notice of Claim must be filed and served on the municipal government agency, by personal delivery, or registered or certified mail within 90 days (6 months for breach of contract claims) after the claim arises. It must be served on a person designated by law to receive summonses in Supreme Court actions or an attorney representing the public corporation. N.Y. Ct. Cl. Act § 10. Specific requirements for filing claim. N.Y. Ct. Cl. Act § 11. Court of Claims has exclusive jurisdiction over claims against State but not city, county or town. Suit must be filed within one year and 90 days after incident. N.Y. Gen. Mun. Law § 50-i.
Claims/Actions Allowed: If the act is a discretionary (decision based on policy) there is immunity. Valdez v. City of N.Y., 960 N.E.2d 356 (N.Y. 2011). If act is proprietary (act could be undertaken by a private enterprise, such as property ownership, operation of a motor vehicle, or providing hospital services. there is liability). Every county, municipality (except NYC) is liable for the negligent operation of a municipally owned vehicle or other transportation. N.Y. Gen. Mun. Law §§ 50-a, 50-b. However, emergency vehicle involved in “emergency operation” (pursuing violator of the law) with lights and sirens on, is immune. N.Y. Veh. & Traf. § 1104. Authorized emergency vehicles, § 1104; Fuchs v City of New York, 2017 WL 4202315 (Sup. Ct. 2017). Municipality liable for construction defects or inadequate maintenance. Briga v. Town of Binghamton, 778 N.Y.S.2d 545 (3rd Dept. 2004).
Comments/Exceptions: If governmental act involved, municipality is liable only if there was a special duty owed to plaintiff as opposed to mere public duty (Public Duty Defense). Special duty formed in three ways: (1) Statute for class of persons; (2) Assumption of duty toward person (most common); and (3) Assume direction and control in face of known safety violation. If ministerial act, plaintiff must still show a special duty existed. McLean v. City of New York, 905 N.E.2d 1167 (N.Y. App. 2009) (duty trumps all else). If governmental act and special duty exists, no immunity if act was ministerial. If discretionary, government must actually have exercised its discretion to be immune.
Damage Caps: None. No punitive damages allowed. Wang v. N.Y. State Dep’t of Health, 933 N.Y.S.2d 503 (N.Y. Sup. Ct. 2011).
State Sovereign Immunity And Tort Liability
Tort Claims Act: New York Court of Claims Act. N.Y. Ct. Cl. Act §§ 8 – 12 (1930).
State waiver of immunity and consent to being sued in the same manner as a private person would, so long as requirements of the Court of Claims Act are complied with. Parallel statute deals with Port Authority almost identically. N.Y. Unconsol. Law §§ 7101 to 7112.
Notice Deadlines: Claim (or written notice of intention to file claim) must be filed and served on Attorney General within 90 days (6 months for breach of contract claims). N.Y. Ct. Cl. Act § 10. Specific requirements for filing claim. N.Y. Ct. Cl. Act § 11.
Claims/Actions Allowed: States waives its immunity from liability and consents to have the same determined in accordance with the same rules of law as applied to actions in the Supreme Court against individuals or corporations, provided the claimant complies with conditions set out in the statute. N.Y. Ct. Cl. Act § 8.
Comments/Exceptions: Court of Claims has exclusive jurisdiction over claims against State or State-related entities but has not jurisdiction over any city, county or town governmental entity.
Damage Caps: None.
No punitive damages allowed. Wang v. N.Y. State Dep’t of Health, 933 N.Y.S.2d 503 (N.Y. Sup. Ct. 2011).
General Tort Laws/Statutes
Prohibits Intermediate Indemnity. Applies to Construction Contracts or Agreements. N.Y. Gen. Oblig. Laws § 5-322.1.
Not applicable to insurance contract or workers’ compensation agreement.
Modified Joint and Several Liability. Joint and several liability, except when it is a personal injury defendant less than 50% liable – then several liability and only for non-economic damages. N.Y. C.P.L.R. § 1601; Cooney v. Osgood Machinery, 612 N.E.2d 277 (N.Y. 1993).
Joint tortfeasors have a right to contribution, provided they have discharged the common liability of joint tortfeasors by payment or have paid more than their pro-rata share. Settlement or order must satisfy “all claims” arising out of the incident. A settling defendant who has obtained a general release from the plaintiff is free from any claim of contribution by the non-settling defendants under § 15-108. That defendant will be dropped from the action. Furthermore, the settling defendant forfeits any claim that he/she may have for contribution against the other non-settling defendants; he/she does not, however, forfeit the right to indemnification.
Contribution may be sought in the underlying action or in a separate action. A joint tortfeasor who settles with a tortfeasor relieves that tortfeasor of any potential contribution liability to any other person. N.Y. C.P.L.R. § 1401; Sommer v. Fed. Signal Corp., 593 N.E.2d 1365 (N.Y. 1992). Settlement is “voluntary” if before judgment, but not after judgment. Makeun v. New York, 471 N.Y.S.2d 293, 298 (N.Y. App. Div. 1984). Settling tortfeasor cannot seek contribution from non-settling defendant even if he pays more than his share, because he is a “volunteer.” Orsini v. Kugel, 9 F.3d 1042 (2nd Cir. 1993). There is a two years statute of limitations from date of payment. Berlin & Jones, Inc. v. State, 381 N.Y.S.2d 778 (N.Y. Ct. Cl. 1976).
Contributory Negligence/Comparative Fault
Pure Comparative Fault: Damaged parties can recover even if 99% at fault. Plaintiff’s damages will be reduced by their own liability, but not barred completely. N.Y. C.P.L.R. § 1411.
Dog Bite Laws
Dog owner will be held strictly liable for medical damages, but for all other damages the victim must prove that the owner knew (or should have known) of the dog’s dangerous propensities. N.Y. Agriculture & Markets Law, § 123(10).
Economic Loss Doctrine
Majority Rule. Where a product fails to perform as promised due to negligence in either the manufacturing or installation process, a plaintiff is precluded from recovering tort damages for its economic loss. Suffolk Laundry Servs., Inc. v. Redux Corp., 238 A.D.2d 577, 578 (N.Y. App. 1997). Tort recovery in strict products liability and negligence against a manufacturer should not be available to a downstream purchaser where the claimed losses flow from damage to the property that is the subject of the contract. Bocre Leasing Corp. v. General Motors Corp., 645 N.E.2d 1195 (N.Y. 1995). An end-purchaser of a product is limited to contract remedies and may not seek damages in tort for economic loss against a manufacturer for damages to the product alone. Schiavone Constr. Co. v. Elgood Mayo Corp., 436 N.E.2d 1322 (N.Y. 1982). An exception for service contracts exists. MCI Telecommunications Corp. v. John Mezzalingua Associates, Inc., 921 F.Supp. 936 (N.D. N.Y. 1996). In sum, the “Economic Loss Rule reflects the principle that damages arising from the failure of the bargained-for consideration to meet the expectations of the parties are recoverable in contract, not tort.” Bristol-Myers Squibb, Indus. Div. v. Delta Star, Inc., 206 A.D.2d 177, 181 (N.Y. App. 1994). Failure of a component part is still considered to be part of the product, and a plaintiff cannot argue that the component part which caused damage to the greater product (such as defective switch in a vehicle causing the vehicle to burn) caused damage to “other property”. Trump Int’l Hotel & Tower v. Carrier Corp., 524 F.Supp.2d 302 (S.D. N.Y. 2007). All the parts are considered an “integrated unit”. Trump Int’l. Hotel & Tower, supra. An exception to the ELD exists when a defective product causes damage not only to the product itself, but also to other property. Arkwright Mut. Ins. Co. v. Bojoirve, Inc., 1996 WL 361535 (S.D. N.Y. 1996). When you have an abrupt, cataclysmic occurrence caused by defendant’s negligence, the ELD will not apply. State Farm Fire & Cas. Co. v. Southtowns Tele-Communications, Inc., 667 N.Y.S.2d 157 (N.Y. 1997). New York has flirted with another possible exception to the ELD. When the product is “unduly dangerous” such that the defect causes physical damage, presumably due to an accident, to either persons or property, some case law provides that a tort action may be maintained. Schiavone Constr. Co. v. Elgood Mayo Corp., 436 N.E.2d 1322 (N.Y. 1982). However, this “unduly dangerous” exception appears to have been rejected in subsequent decisions. Bocre Leasing Corp. v. Gen. Motors Corp. (Allison Gas Turbine Div.), 645 N.E.2d 1195 (N.Y. 1995).
Willful Misconduct. Liability imposed on parents when child willfully, maliciously, or unlawfully destroys property; liability imposed on parent when child, with intent to deprive an owner and/or custodian of property, or to appropriate the same to himself or herself or to a third person, knowingly enters or remains in a building and wrongfully takes, obtains or withholds property from the building in which the personal property is owned or maintained; liability imposed on parent when child falsely reports an incident or places a false bomb. McKinney’s General Obligations Law § 3-112(1).
The limit of liability is $5,000.00. Child must be between 10 and 18.
Third-Party Negligent Spoliation: The New York Court of Appeals declined to recognize such a cause of action under the facts of Met-Life Auto & Home v. Joe Basil Chevrolet, Inc., 1 N.Y.3d 478, 807 N.E.2d 865, 775 N.Y.S.2d 754 (N.Y. 2004). The Court in this case focused its decision on the non-existence of a duty giving rise to preservation of evidence and the lack of notice to preserve the evidence militated against establishing such a cause of action.
Employer Spoliation: Spoliation by an employer may support a common law cause of action when such spoliation impairs an employee’s right to sue a third-party tortfeasor. DiDomenico v. C & S Aeromatik Supplies, 252 A.D.2d 41, 682 N.Y.S.2d 452 (N.Y. 2d Dept. 1998). In other instances, New York courts have specifically rejected a cause of action for spoliation of evidence when the employer was not on notice that evidence would be needed. Monteiro v. R.D. Werner Co., 301 A.D.2d 636, 754 N.Y.S.2d 328 (N.Y. 2d Dept. 2003) (employer had no duty to preserve scaffold which allegedly caused plaintiff’s injuries and employer was not on notice that an action was contemplated against a third-party).
Sanctions: C.P.L.R. § 3126 permits sanctions, including dismissal for a party’s failure to disclose relevant evidence. Met-Life, 1 N.Y.3d at 482-83. New York courts will impose “carefully chosen and specifically tailored sanctions within the context of the underlying action” to remedy spoliation of evidence. For instance, a defendant may be granted summary judgment when the plaintiff negligently fails to preserve crucial evidence. Amaris v. Sharp Elecs., 758 N.Y.S.2d 637 (N.Y. App. Div. 2003). However, awarding summary judgment to the plaintiff for the defendant’s intentional destruction of evidence may be too drastic a remedy. Mylonas v. Town of Brookhaven, 759 N.Y.S.2d 752, 753-754 (N.Y. App. Div. 2003). But see Herrera v. Matlin, 758 N.Y.S.2d 7, 7 (N.Y. App. Div. 2003), aff’d 771 N.Y.S.2d 347 (N.Y. A.D. 2004) (physician’s loss of records amounting to professional misconduct warranted striking of answer).
Statute of Limitations
Personal Property3 YearsN.Y. C.P.L.R. § 214, et seq.
Personal Injury/Death3 YearsN.Y. C.P.L.R. § 214, et seq.
Personal Injury/Wrongful Death2 YearsN.Y. Est. Powers & Trusts Law § 5-4.1
Personal Injury/Medical Malpractice2 Yrs./6 Mo.N.Y. C.P.L.R. § 214-a
Breach of Contract/Written6 YearsN.Y. C.P.L.R. § 213(2)
Breach of Contract/Oral6 YearsN.Y. C.P.L.R. § 213(2)
Breach of Conract/Sale of Goods4 YearsN.Y. U.C.C. § 2-725
Statute of Repose/ProductsN/AN/A
Statute of Repose/Real Property – Engineers/Architects OnlyN/AN.Y. C.P.L.R. § 214-d*
Breach of Warranty/U.C.C.4 YearsN.Y. U.C.C. § 2-725(1)
APIP Subrogation3 YearsN.Y.C.L.S. Work Comp. § 29
Strict Product Liability3 YearsN.Y. C.P.L.R. § 214, et seq.
Statute of Limitations Exceptions
*No Statute of Repose, but after 10 years, notice of suit must be given to party responsible for professional performance (engineers and architects). N.Y. C.P.L.R. § 214-d. Six (6) year SOL for construction defects runs from the date of completion of the project. City School District of Newburgh v. Hugh Stubbins & Associates, 85 N.Y.2d 535 (N.Y. App. 1995). No statute of repose for construction claims, only breach of contract SOL by the owner (six (6) years from project completion) and for parties other than the owner (three (3) years from the date injury).
Health Insurance Subrogation
Health and Disability Insurance
Statute of Limitations: 3 Years. N.Y. C.P.L.R. § 214, et seq. Wrongful Death – 2 Years. N.Y. Est. Powers & Trusts Law § 5-4.1. Medical Malpractice – 2 Years and 6 Months. N.Y. C.P.L.R. § 214-a.
Subrogation of Medical and Disability Benefits are not allowed. GOL § 5-335 precludes subrogation or reimbursement claims against NY settlements. Exceptions apply for APIP, Medicare, Medicaid, and workers’ comp. *Statute does not apply to cases that go to verdict and insurer may intervene on the eve of trial. Rizzo v. Moseley, 30 Misc.3d 773, 774, 913 N.Y.S.2d 905, 907 (Sup. Ct. 2010).
Made Whole Doctrine applies. Winkelmann v. Excelsior Ins. Co., 85 N.Y.2d 577, 584, 650 N.E.2d 841, 845 (1995) The Court noted, however, that the insurer’s action based on partial subrogation through its insured will not necessarily interfere with the insured’s right to be made whole by the tortfeasor and the insurer need not delay its subrogation claim against the tortfeasor to avoid impairing the insured’s right.
Common Fund Doctrine does not apply. Only available in “exceptional cases.” Kantrowitz, Goldhamer & Graifman, P.C. v. New York State Elec. & Gas Corp., 27 A.D.3d 872, 875, 810 N.Y.S.2d 550, 553 (3rd Dept. 2006); Allstate Ins. Co. v. Denbleyker, 280 A.D.2d 204, 206, 722 N.Y.S.2d 641, 642 (4th Dept. 2001) (“although the services of defendant’s attorneys led to the availability of the fund against which Allstate placed its lien, the contingency fee agreement was between the defendant and her attorneys and cannot be enforced against one not a party to the agreement, in this case the lienor”).
Admissibility of Expert Testimony
Admissibility Standards: Frye
Case/Statutory Law: People v. Wesley, 633 N.E.2d 451 (N.Y. 1994).
Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims
Duty To Disclose: Yes. N.Y. Ins. § 2601(a)(6). Unfair claim settlement practices. (Liability Policy). .Y. Ins. § 2601(a)(6) Unfair claim settlement practices. (UM/UIM carrier).
Comments: New York law requires a carrier doing business in New York to disclose bodily injury liability limits to an individual (or his lawyer) who has filed a claim for damages and made a written request for such information. The time of the insured to make any supplementary UM/UIM claim, is tolled during the period the insurer of any other owner or operator of another motor vehicle that may be liable for damages to the insured, fails to to disclose its coverage. Section 3420(f)(2)(A) provides for a similar obligation for a supplemental UM/UIM carrier within 45 days.
One-Party Consent: It is not unlawful for an individual who is a party to or has consent from a party of an in-person or electronic communication to record and or disclose the content of said communication. N.Y. Penal Law § 250.00(1); N.Y. Penal Law § 250.05.
Product Liability Subrogation
Product Liability Law
Statute of Limitations/Repose: 3 years for personal injury. N.Y. C.P.L.R. § 214, et seq. Wrongful death is 2 years. N.Y. Est. Powers & Trusts Law § 5-4.1. Discovery Rule applies (Toxic Substance).
Liability Standards: Negligence, Strict Liability, Warranty.
Fault Allocations: Pure Comparative. N.Y. C.P.L.R. § 1411.
Non-Economic Caps/Limits On Actual Damages: No.
Punitive Y/N and Limits: Yes.
Heeding Presumption?: Unresolved.
Innocent Seller Statute: No.
Joint and Several Liability: Yes (With Exceptions). N.Y. C.P.L.R. § 1601.
Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; Inherently Unsafe Products; State of the Art; Government Contractor Defense; Presumption; Compliance With Government Standards; Seatbelts; Alcohol/Drugs; Sophisticated User.
Restatement 2nd or 3rd?: Restatement 3rd
“Matching Regulations” And Laws Affecting Homeowners Property Claims
Condominium/Co-OpWaiver of Subrogation Laws
Associations shall, if by-laws or majority require, insure the building against loss or damage. There is no waiver of subrogation requirement in the statutes, but it has been somewhat addressed through case law. N.Y. C.L.S. Real P. § 339-bb.
Requirement in condo by-laws that, if individual owners acquired insurance “for their own benefit,” such insurance had to contain waivers of subrogation against condo board of managers, was enforceable, and even if individual owners breached by-laws by acquiring insurance lacking waiver provisions, insurers were precluded from subrogating. Agostinelli v. Stein, 794 N.Y.S.2d 759 (N.Y. App. 2005).
Where provision in by-laws provides that: “[a]ll policies of physical damage insurance” that the board is required to obtain and maintain under this section of the by-laws “shall, if possible, contain waivers of subrogation,” did not require waivers and did not prevent subrogation by the condo association against the unit owners. Admiral Indemnity Co. v Johnson, 137 N.Y.S.3d 331 (N.Y. Sup Ct. 2020).
Damage to Property Without Market Value
Service Value: “[B]asis for a recovery consists of the actual cost of emergency expenses together with the present day cost of replacing the damaged or destroyed equipment, less accrued depreciation, and any allowance for salvage.” New York State Elec. & Gas Corp. v. Fischer, 24 A.D.2d 683 (N.Y. App. Div. 1965).
Intrinsic Value: “…property of this nature, which is shown to have no true market value, may be appraised at its actual or intrinsic value, that is, its value to the owner, and upon any such appraisal the element of cost is a relevant and important factor, but cost is not the measure of damage.” Mullen v. Sinclair Refining Co., 32 A.D.2d 1000 (N.Y. App. Div. 1969).
Sentimental Value: “…plaintiff should be allowed to recover the value to him, based on his actual money loss; all the circumstances and conditions considered, resulting from his being deprived of the property, not including any sentimental or fanciful value, however.” Lake v. Dye, 133 N.E. 448 (N.Y. 1921).
General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims
Payment Of Depreciation Of GCOP/Sales Tax: Insurer was obligated to include profit and overhead in replacement cost, and thereby in ACV, whenever it was reasonably likely that contractor would be needed to repair or replace damaged property. Mazzocki v. State Farm Fire & Cas. Corp., 1 A.D.3d 9, 766 N.Y.S.2d 719 (2003).
New York has rejected the implied co-insured rationale and allowed the insurer to bring a subrogation claim against the tenant, absent an express agreement to the contrary. Galante v. Hathaway Bakeries, Inc., 6 A.D.2d 142, 176 N.Y.S.2d 87, 92 (N.Y. 1958). The principles underlying the Subrogation Doctrine and Anti-Subrogation Rule in New York does not support the fiction that the tenant is an implied co-insured of the landlord, and subrogation is therefore allowed. Phoenix Ins. Co. v. Stamell, 21 A.D.3d 118, 796 N.Y.S.2d 772 (N.Y.A.D. 4 Dept. 2005).
New York’s ASR is found in common law and is not statutorily based. The ASR is a common-law doctrine crafted by the New York Court of Appeals “both to prevent the insurer from passing the incidence of loss to its own insured and to guard against the potential for conflict of interest that may affect the insurer’s incentive to provide a vigorous defense for its insured.” ACE Am. Ins. Co. v. Am. Guarantee & Liab. Ins. Co., 257 F. Supp. 3d 596 (S.D.N.Y. 2017) (quoting N. Star Reins. Corp., 82 N.Y.2d at 294–95). The ASR primarily applies in circumstances where an insurer seeks to recover from its insured for “the same risk covered by its policy.” Arch Ins. Co. v. Harleysville Worcester Ins. Co., 56 F. Supp. 3d 576 (S.D.N.Y. 2014) (quoting ELRAC, Inc., 96 N.Y.2d at 75) (emphasis in original). “The essential element of the anti-subrogation rule is that the party to which the insurer seeks to subrogate is covered by the relevant insurance policy.” Millennium Holdings LLC v. Glidden Co., 27 N.Y.3d 406 (2016). “Furthermore, the ASR bars claims not only against the individual or entity who is directly insured, but also to ‘additional insureds’ when there is an express indemnity agreement.” Liberty Mut. Fire Ins. Co. v. E.E. Cruz & Co., 475 F. Supp. 2d 400 (S.D.N.Y. 2007) (quoting Allianz Ins. Co. v. Otero, 353 F. Supp. 2d 415 (S.D.N.Y. 2004)). The purpose of the New York ASR is to prevent an insurer who provides coverage to both sides of a third-party action from recouping from one insured, the third-party defendant, the payment it makes on behalf of another insured, the third-party plaintiff. Zurich Am. Ins. Co. v. Certain Underwriters at Lloyd’s of London, 2022 WL 4134569 (S.D.N.Y. 2022).
An insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered even where the insured has expressly agreed to indemnify the party from whom the insurer’s rights are derived. North Star Reinsurance Corp. v. Cont’l Ins. Co., 624 N.E.2d 647 (N.Y. 1993). Insurers are barred under the ASR from seeking subrogation against a named insured or additional insureds. Conversely, subrogation is typically permissible where the third party is not a named or additional insured. Millennium Holdings, LLC v. Glidden Co., 53 N.E.3d 723 (N.Y. App. 2016). In other words, an insurer may subrogate against a third-party tortfeasor if it also qualifies as an insured under the same policy for damages arising from the same risk covered by the policy. The ASR does not apply when the loss for which indemnification is sought is subject to a specific exclusion in the pertinent policy. State v. Schenectady Hardware and Elec. Co., Inc., 223 A.D.2d 783 (N.Y. App. Div. 1996). In Millennium Holdings, the Court of Appeals clarified that, except for rare public policy-driven exceptions, in order for the ASR to apply, the party seeking the protection of the rule must be insured under the insurance policy. In so ruling, the Court of Appeals reversed the rulings of the lower courts which, according to the Court of Appeals, would have improperly expanded application of the rule to the non-insured parties. The ASR does not apply to claims by liability insurers for lead paint manufacturer’s successor to recover on indemnify obligation by related successor that was never an insured. The application of the rule becomes more complex when the facts presented involve more than one policy and more than one insured. Where there are two policies, one a general liability policy and the second a compensation policy, ASR does not apply. Hartford Accident & Indem. Co. v. Michigan Mutual Ins. Co., 463 N.E.2d 608 (1984). However, where there are two separate policies, each naming a different insured, purchased by the same entity, and issued at the same time by the same insurer, the ASR applies. North. Star Reinsurance Corp, supra. The ASR does not prevent subrogation against a co-insured where the insurer’s obligation to the co-insured arises under a different policy, even where both insured parties are also covered under a separate, original policy that gave rise to the insurer’s obligation to defend the first-party action. HDI-Gerling Am. Ins. Co. v. Navigators Ins. Co., 2016 WL 4148216 (D. Mass. 2016) (applying NY law).
In ACE Am. Ins. Co. v. Am. Guarantee & Liab. Ins. Co., 2017 WL 2840286 (S.D. N.Y. 2017), Richard Wager, an employee of Wager Contracting Company, Inc., was injured while performing demolition work for Pelham Union Free School District. Several policies covered Wager and/or Pelham:
- NGM Insurance Company had issued a $1 million primary general liability policy insuring both Wager Contracting and Pelham. However, the NGM policy included workers’ compensation and employers’ liability exclusions that, in general, barred coverage to Wager Contracting for employees’ bodily injuries unless Wager Contracting had assumed that liability by contract. In this case, however, Wager Contracting had assumed such liability by contract with Pelham.
- American Guarantee had issued a $5 million Commercial Umbrella Liability Policy covering both Wager and Pelham. The American Guarantee policy was excess to the NGM Policy, to which the American Guarantee policy “followed form.” In other words, the American Guarantee policy adopted in general the NGM policy’s underlying substantive terms and thus provided the same basic coverage at the excess layer.
- New York Schools Insurance Reciprocal (“NYSIR”) provided insurance to Pelham with limits of $1 million primary and $15 million excess.
- ACE American issued a Specific Excess Workers’ Compensation and Employers’ Liability Insurance policy covering Wager This policy was issued to the Special Trades Contracting and Construction Trust, a group self-insurance program authorized by the New York Workers’ Compensation Law. Wager was a participant in Special Trades, and hence was covered under the ACE policy. The ACE policy was excess to Special Trades’ $1 million workers’ compensation/employers’ liability self-insured retention Theoretically, the ACE Policy provided unlimited workers’ compensation and employers’ liability coverage. However, the ACE policy purported to limit its coverage to “damages imposed upon Wager by law,” as opposed to liabilities assumed by contract.
The gist of this case was that Pelham was covered by the NYSIR policy ($1 million primary/$15 million excess), by the NGM policy ($1 million primary), and by the American Guarantee policy ($5 million excess to the NGM policy). Wager Contracting was covered, as to workers’ compensation/employers’ liability claims, by the $1 million SIR and by the ACE Policy (unlimited excess to the SIR), and, for general liability, by the NGM policy ($1 million primary) and by the American Guarantee policy ($5 million excess to the NGM policy). To complicate matters further, these policies covered bodily injuries under different (and sometimes mutually exclusive) theories of liability. For example, the American Guarantee policy excluded from coverage liability for bodily injury based on a theory of common-law indemnity, whereas the ACE Policy by implication excluded from coverage liability for bodily injury based on a theory of contractual indemnity. In the third-party action, the dispositive issue in this case is whether New York’s ASR prevented American Guarantee from bringing an indemnity claim as the subrogee of one of American Guarantee’s insureds, Pelham, against Wager Contracting, another of American Guarantee’s insureds, Wager Contracting. If such a claim is permitted under New York state law, then American Guarantee may shift its liability for Richard Wager’s injury, which American Guarantee incurred through insuring Pelham, to Wager and, potentially, to ACE, the real party in interest. If such a claim is barred under New York state law, however, then American Guarantee is stuck with the $5 million liability.
New York has also applied the ASR to block indemnity claims brought by excess insurers such as American Guarantee. Jefferson Ins. Co. of N.Y. v. Travelers Indem. Co., 703 N.E.2d 1221 (N.Y. 1998); Ortiz v. Natl. Grid Services Inc., 2022 WL 17411473 (N.Y. Sup. Ct. 2022). American Guarantee argues that the ASR does not apply because it frames this case as a coverage priority dispute that only concerns how Wager Contracting’s insurers must allocate coverage among themselves. It argues that its policy is excess to ACE’s policy, and, because the ACE Policy is unlimited for the injury at issue, American Guarantee’s excess layer is simply never reached. The district court ruled that this case involved a carrier attempting to bring a subrogation claim on behalf of one insured against another insured. American Guarantee also argued that the ASR does not apply when the policy justifications underlying the rule are absent, as they supposedly are here. New York created the ASR both to prevent the insurer from passing the loss to its own insured and to guard against the potential for conflict of interest that may affect the insurer’s incentive to provide a vigorous defense for its insured. American Guarantee argues that it was not seeking to pass its loss to its own insured because ACE’s policy provided unlimited coverage for the injury, and there was no conflict of interest because American Guarantee did not control the defense of Wager or Pelham. The court held this argument not persuasive. American Guarantee was, in fact, trying to shift its liability to a policyholder that it insured for that very risk. In other words, American Guarantee, which insures Wager for bodily injuries to its employees as they arise out of contractual assumptions of liability, was trying to shift the liability for the injury to Wager Contracting. American Guarantee’s argument that this somehow does not implicate the ASR erroneously relies on the fact that Wager was separately covered for this risk by the ACE Policy. In an ASR analysis, the relevant question is whether the common insurer’s policies respond to the underlying liability, not whether some other insurer’s policy happens also to respond to that risk. Accordingly, because American Guarantee insures Wager Contracting for Richard Wager’s injury, American Guarantee’s attempt to avoid funding the settlement violated the ASR.
A truck lessor, which had obtained a policy providing primary insurance coverage for leased trucks, in which the policy included the lessee as an insured, could not assert a subrogation or indemnification claim against the lessee on behalf of a subrogated insurer after the insurer paid a claim on behalf of lessor for liability arising out of the lessee’s use of vehicle, because this represented an attempt by the insurer to recover from the lessee, its insured, for the very loss for which the lessee was supposed to be covered. Pennsylvania Gen. Ins. Co. v. Austin Powder Co., 502 N.E.2d 982 (N.Y. 1986). Where an insurance policy is restricted to liability for any bodily injury “caused, in whole or in part” by the “acts or omissions” of the named insured, the coverage applies to injury proximately caused by the named insured only. Burlington Ins. Co. v. NYC Tr. Auth., 2017 WL 2427300 (N.Y. 2017). Therefore, where an unnamed additional insured is solely responsible for an injury, subrogation would be permissible against the unnamed additional insured as the policy would not apply to that particular injury as it only applies to injuries caused in some way by the named insured. Id.
In Jefferson Ins. Co. of N.Y. v. Travelers Indemnity Co., 703 N.E.2d 1221 (N.Y. 1998), the New York Court of Appeals examined insurance policy language to determine whether the insurer could pursue a subrogation action against a permissive user who caused an automobile accident. With the insured’s vehicle. The policy contained a clause which provided, “[a]nyone else is an insured while using with your permission a covered auto you [the named insured] own, hire or borrow.” Because the policy “explicitly provid[ed]” coverage for all permissive users, the court found that the insurer lacked subrogation rights. Most tellingly, the court concluded that for purposes of the ASR, there is no contrast between named insureds and permissive users “except to the extent that the specific policy terms require [ ] a difference in treatment.”
The ASR will also bar indemnification and contribution cross claims against a party due to the ASR when the contribution defendant is a named additional insured under the contribution plaintiff’s commercial general liability insurance policy covering the work involved. Wesco Ins. Co. v. Travelers Prop. Cas. Co. of Am., 188 A.D.3d 476, 477–78, 135 N.Y.S.3d 384 [1st Dept. 2020); Pastorino v. City of New York, 2021 WL 377233 (N.Y. App. 2021).
New York is also one of the first states to chime in on the application of the ASR to Owner-Controlled Insurance Programs/Contractor-Controlled Insurance Programs (OCIP/CCIP), stating that the ARS barred a construction contractor and its client from asserting causes of action against subcontractors to recover damages for breach of contract and for declaratory relief, where subcontractors were members of Contractor Controlled Insurance Program (CCIP) implemented by contractor, and CCIP imposed $500,000 retention obligation on contractor as to each occurrence under policy. Wausau Underwriters Ins. Co. v. Gamma USA, Inc., 89 N.Y.S.3d 186 (N.Y. App. Div. 2018).
In Allied World Surplus Lines (a/s/o Tappan Zee Constructors, LLC) v. Hoffman International, Inc., et al., 2020 WL 4925618 (S.D.N.Y. 2020), Allied file a subrogation suit for damage to a crane and a bridge against three company which were not insured by them, but which created a limited liability company which was insured by Allied. Allied argued that the three companies were not covered by the Allied insurance policy and, therefore, the ASR should not apply to prevent their subrogation action. The court held that the ASR did not apply, because even if these three companies were insured in some capacity under the Allied policy, the ASR might not bar the third-party action if they were insured for different risks than the LLC.
In a workers’ compensation subrogation case, the court held that a permitting subcontractor to maintain a subrogation claim against contractor when both had same insurer would violate the anti-subrogation rule. Wilk v. Columbia Univ., 2019 WL 1715075 (N.Y. App. 2019).
New York statute allows for restitution to be paid by criminal defendant to “victim” of their criminal conduct. N.Y. Penal Law § 60.27(1). Applicable case law states that an insurer will qualify as a “victim” for purposes of recovery of restitution payments. People v. Kim, 694 N.E.2d 421 (N.Y. 1998).
Made Whole Doctrine
New York has applied and adheres to the existence of the Made Whole Doctrine. Winkelmann v. Excelsior Ins. Co., 626 N.Y.S.2d 994 (1995); U.S. Fid. & Guar. Co. v. Maggiore, 749 N.Y.S.2d 555 (2002). An insurer has no right of subrogation against its insured when the insured’s actual loss exceeds the amount it has recovered from both the insurer and the third party. Id. Where there are multiple plaintiffs, each insurer needs only to establish that its individual insured has been made whole before subrogation is allowed. Maggiore, supra. It seems, however, that the Made Whole Doctrine is applicable only to situations in which the insured makes a recovery and the subrogated insurer is seeking reimbursement from the insured and out of that recovery. An insurer’s action based on partial subrogation through its insured will not necessarily interfere with the insured’s right to be made whole by the tortfeasor and the insurer need not delay its subrogation claim against the third party to avoid impairing the insured’s rights. Id.
The court in Winkelmann introduced the Made Whole Doctrine to New York in the context of equitable subrogation, and the court in Maggiore extended the doctrine to contractual subrogation as well. It therefore appears that the equitable considerations, not the intent of the parties as evidenced by the terms of the policy, will govern in New York. Court applies “make whole” rule despite a subrogation clause to the contrary, noting that allowing subrogation where insured is not fully compensated would be “contrary to the principal purpose of an insurance contract: to protect an insured from loss, thereby placing the risk of loss on the insurer [though] the insurer has accepted payments from the insured to assume this risk of loss.” Maggiore, supra, (quoting 16 Couch, Insurance 3d, § 223:136, at 152-153).
Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Collateral Source Rule: Common law CSR modified by statute.
N.Y. C.P.L.R. § 4545(c): Evidence of collateral source admissible, unless subrogation right. Reduces verdict, less two years premiums and amount of maintaining benefits. Exception: life insurance and statutory right of reimbursement.
N.Y. Gen. Oblig. Law § 5-335: Eliminates the non-statutory right of benefit providers to reimbursement and subrogation in the case of third-party settlements. Applies to any insurer or plan that pays or reimburses medical expenses, disability payments, lost wages, or any other benefits under a policy of insurance. Presumption that settlement doesn’t include collateral source payments unless collateral source has statutory subrogation.
Recovery Of Medical Expenses Rule:
Private Insurance: Although a medical expense write-off is not technically a collateral source, plaintiff cannot recover it. Evidence of billed amounts admissible, but post-verdict reduction. Kastick v. U-Haul Co. of W. Michigan, 740 N.Y.S.2d 167 (N.Y. App. 2002).
Medicare/Medicaid: Because it’s has a statutory right of subrogation/reimbursement, Medicare and Medicaid benefits not deducted from plaintiff’s recovery. Singh v. Long Island Jewish Med. Ctr., 2006 WL 431635 (N.Y. Sup. Ct. 2006).
Medical Malpractice: Evidence of collateral source admissible and verdict reduced accordingly, less premiums for two years. N.Y. C.P.L.R. § 4545(a).
Actions Against Public Employer: Evidence of collateral source admissible, unless subrogation right. Reduces verdict, less premiums paid. N.Y. C.P.L.R. § 4545(b).
Personal Injury/Death/Property: Evidence of collateral source admissible, unless subrogation right. Reduces verdict, less two years premiums and amount of maintaining benefits. N.Y. C.P.L.R. § 4545(c) Charitable contributions are not collateral sources. N.Y. C.P.L.R. § 4545(d). New York’s CSR only applies to verdicts; it does not apply to settlements. Fasso v. Doerr, 903 N.E.2d 1167 (N.Y. 2009).
Employee Leasing Laws
Neither the New York Workers’ Compensation Act or case law directly addresses employee leasing. However, the issue is addressed by Rule 11G of the New York Workers’ Compensation and Employers Liability Manual. New York refers to the employee leasing company as the “labor contractor”, and refers to the client company as the “client”. Although it does not apply to temporary workers, Rule 11G provides that both parties must provide workers’ compensation coverage for the leased employee but does not specifically extend the Exclusive Remedy Rule to the client company.
Hospital Lien Laws
Statute: N.Y. Lien Law § 189. Other Liens on Personal Property.
(1) Send written notice containing name and address of injured person, date of accident, name and location of hospital and name of tortfeasor to patient, his attorney, and third party prior to settlement, by registered or certified mail with postage prepaid. § 189.
(2) Mail copy of notice to third-party carrier. Such mailing shall be deemed to be effective notwithstanding any inaccuracy or omission therein if the information contained therein shall be sufficient to enable the person or persons or corporation alleged to be liable, by the exercise of reasonable diligence, to identify the injured person, the occurrence upon which the claim for damages is based and the name and address of the hospital asserting the lien. § 189.
(3) File copy in the office of the county clerk of the county in which the hospital is located. After discharge patient, mail an additional notice of lien, duly verified, which shall show the total hospital charges and no lien hereunder shall exceed this amount. § 189.
Comments: Every charitable hospital and every state, county town or village operating a hospital has a lien on all causes of action the patient has against tortfeasor. § 189(1). Lien is for emergency services treating personal injuries received within one (1) week prior to receiving treatment or admission to hospital. § 189(1). Lien attaches to settlement with any other person, or persons or corporation claimed or alleged to be liable for said injuries. § 189(2)(a)(ii). Lien only attaches to wrongful death recovery if medical expenses are recovered by patient in settlement. § 189(2)(b). No release is valid against such perfected lien. Hospital can pursue action against tortfeasor for one year from date of such notice. § 189(3). County clerk must keep hospital lien docket. § 189(4). Tortfeasor or its carrier can examine hospital billing and records except for confidential records. § 189(5). Lien doesn’t attach to workers compensation. § 189(6). Patient can apply for order determining the validity of lien. If it appears that there is a bona fide dispute as to the charges, there must be an immediate hearing to determine the amount of the reasonable charges of such hospital § 189(6-a). Lien is subordinate to attorneys’ fees. § 189(7). Hospital lien valid for 10 years. § 189(11).
OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases
OCIP Law: A general contractor is not considered to be the statutory employer of a subcontractor’s employee, even when there is an OCIP in place. Duchenne v. 774 Dev., LLC, 2010 WL 4668462 (N.Y. Sup. 2013) (unreported decision).
Statutory Employer Law: A contractor who subcontracts all or part of a contract to be liable and pay workers’ compensation benefits to any employee and subcontractor who is injured on the job. N.Y. Work. Comp. § 56. There is no immunity for a statutory employer under § 56. Cutillo v Emory Housing Corp., 190 N.Y.S.2d 502 (N.Y. Sup. 1959).
Comments: A “subcontractor” under an OCIP who does not actually perform work on the project but merely provides materials to those who do perform the construction work is not protected as a “statutory employer.” Higgins Erectors & Haulers, Inc. v. Niagara Frontier Transportation Authority, 529 N.Y.S.2d 654 (N.Y. App. 1988).
Recovery Of Increased Workers’ Compensation Premiums By Employer
Recovery For Increased Premiums? Undecided.
Statute/Case Law: No.
Rule Summary: There is no authority or precedent regarding the attempted recovery of damages for increased workers’ compensation insurance premiums by an employer from a third-party tortfeasor.
Which Workers’ Compensation “Benefits” Can Be Subrogated?
There is no precedent or discussion in case law regarding whether nurse case management fees or other allocated costs which may benefit the employer and/or employee can be recovered in subrogation. Section 29 describes a workers’ compensation carrier’s subrogation lien as follows:
… the total amount of compensation awarded under or provided or estimated by this chapter for such case and the expenses for medical treatment paid or to be paid by it… N.Y. Work. Comp. § 29.
Workers’ Compensation Subrogation Waiver Endorsements
Subrogation Statute: N.Y. Work Comp. §29
Waiver Allowed? Yes. Comm’r of State of Ins. Fund v. Ins. Co. of N. Am., 607 N.E.75 795 (N.Y. App. 1992).
Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: A waiver of the right to subrogation does not mean that that the carrier also waives its separate and distinct right of reimbursement. Teichman by Teichman v. Community Hosp. of Western Suffolk, 87 N.Y.2d 514, 640 N.Y.S.2d 472, 663 N.E.2d 628 (1996).
Other Applicable Law: None.
Statute of Limitations: 3 Years for APIP subrogation. N.Y.C.L.S. Work Comp. § 29. 2 Years for workers’ compensation claim. N.Y.C.L.S. Work Comp. § 28.
Can Carrier Sue Third Party Directly: Yes, 30 days notice.
Right to Intervene: Depends.
Recovery from UM/UIM Benefits: No.
Subrogation Against Medical Malpractice: Yes.
Subrogation Against Legal Malpractice: Yes.
Recovery Allocation/Equitable Limitations: (1) Fees, Expenses; (2) Carrier Fully Reimbursed; and (3) Net to Plaintiff.
Employer Contribution/Negligence: “Grave Injury” Contribution.
Attorney’s Fees/Costs: Kelly Formula.
Future Credit: Yes.
Auto No-Fault: Yes.
Workers’ Compensation Claims by Undocumented Employees
Statute: The statute includes “aliens” but is silent on legal status. N.Y. Work Comp Law § 17.
Case Law: Testa v. Sorrento Restaurant, 10 A.D.2d 133 (N.Y. App. Div. 1960); Matter of Hernandez v. Excel Recycling Corp., 31 A.D.2d 1091 (N.Y. App. Div. 2003); Balbuena v. IDR Realty, 845 N.E.2d 1246 (N.Y. App. Div. 2006); Majlinger v. Cassino Constr. Corp., 25 A.D.3d 14 (N.Y. App. Div. 2006).
Comments/Explanation/Other: Testa held that if the legislature meant to exclude illegal aliens, they would have done so in the legislation. Hernandez upheld ruling by workers’ compensation law judge which held an undocumented alien was able to collect benefits even with false papers. Balbuena held that the IRCA does not bar maintenance of a claim for lost wages by an undocumented alien. They hinted that if there had been false documentation tendered by the plaintiffs the result may have been different. Majinger held that not allowing an undocumented alien to collect benefits would only incentivize employers to hire illegal aliens.