Group Health Plans Raising Premiums for Unhealthy Members

A recent article in the Insurance Journal discussed how companies are beginning to focus on cutting health care costs with regards to group health plans. The article explains that a growing number of companies have begun to encourage workers to voluntarily improve their health and well being to control rising insurance costs. The need for such increase in premiums is highlighted by the statistic that tobacco users consume about 25% percent more healthcare services than non-tobacco users.

With such clear evidence that bad health habits cost companies money, Wal-Mart for example states that in 2012 they will charge tobacco users higher premiums for their health coverage.

The programs designed to charge unhealthy members higher premiums so far have met little resistance in Court. However, companies are still bound by the 1996 Health Insurance Portability and Accountability Act (HIPAA) which prevents workers from being discriminated on the basis of health. While employers do have the right to alter premiums based on the health of members, they do need to provide alternatives to workers who cannot make health changes.

While some argue that wellness programs and company intervention in the health of their members is unlikely to work, considering the cost of health insurance, some changes are certainly needed to maintain revenues through these tough economic times.

http://www.insurancejournal.com/news/national/2011/10/31/222111.htm

Thanks to Andrew Marra for his contribution to this post

NY Court of Appeals Rules That Labor Law May Apply to “Same Level” Case

In Wilinski v. 334 E. 92nd Housing Development Fund, the Court of Appeals up-ended an evolving body of case law that precluded a plaintiff from recovering under Labor Law § 240(1) when the plaintiff and the base of the object that fell on him stood on the same level.

There, the plaintiff was demolishing brick walls at a vacant warehouse owned by defendant. Previous demolition of the ceiling and walls left metal, vertical pipes measuring four inches in diameter and standing ten feet tall, exposed and unsecured. Before plaintiff began work, he voiced concern to his supervisor about the pipes. Nonetheless, they were not secured. Later that day, debris from a nearby wall knocked the pipes down, injuring plaintiff.

The Supreme Court granted plaintiff summary judgment, but the Appellate Division reversed and awarded defendant summary judgment. In doing so, it held that plaintiff’s accident was not the type of accident § 240(1) was meant to guard against since both the pipes and plaintiff were at the same level. Thus, the incident was not sufficiently attributable to elevation differentials to warrant imposition of liability.

In rejecting the “same level” rule applied by the Appellate Division, the Court of Appeals, quoting Runner v. New York Stock Exch., 13 NY3d 599 (2009), stated that, “the single decisive question is whether plaintiff’s injuries were the direct consequence of a failure to provide adequate protection against a risk arising from a physically significant elevation differential.” Applying this rule, the Court found an issue of fact as to whether the defendant violated § 240.

The Court focused on the fact that plaintiff stood 5’6″ tall, that the pipes fell at least 4 feet before striking plaintiff, and that since they were 4″ in diameter, the height differential could not be described as de minimis given the amount of force the pipes were able to generate over their descent. Given these factors, the Court found that plaintiff suffered harm that flowed directly from the application of the force of gravity to the pipes.

However, although injuries arose the risk arose from a physically significant elevation differential, there was an issue of fact as to whether plaintiff’s injury was the direct consequence of a failure to provide adequate protection against that risk. In that regard, neither the plaintiff nor the defendant submitted sufficient evidence to establish that a protective device prescribed by the statute would have been applicable or inapplicable.

Thanks to Gabriel Darwick for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_07477.htm

Application of Revised “First Bite” Doctrine Results in Dismissal of Suit

In 2007, John Smith brought suit against Marijane Reilly because her dog broke free from its leash, ran into the street and collided with plaintiff Smith’s bicycle. As a result of the collision, Smith was thrown over the handlebars of his bicycle and fell to the ground, causing injury.

Defendant moved for summary judgment, citing that she had “no knowledge of her dog’s alleged propensity to interfere with traffic.” At trial, the Court denied defendant’s motion, because the court ruled that the prior instances of the dog of escaping defendant’s control and running towards the road constituted triable issues of material fact.

The Court of Appeals disagreed and reversed, because the dog’s prior actions were insufficient to raise a material issue of fact, since the dog had never specifically chased cars or bicycles before. The decision strongly suggests that in order for an owner to be liable for the actions of his/her dog, there must be evidence that the dog had a propensity to behave in a manner very similar to what is alleged in the case at bar. Here, the dog chased a bicycle, but because the dog had never specifically chased a bicycle in the street before, there was no triable issue of material fact regarding the dog’s propensity.

Thanks to Brian Gibbons for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_07478.htm

Evidence of Sidewalk Improvements Not Sufficient to Defeat Complaint

In Schulman v. 34th Street Partnership, Inc., the First Department unanimously affirmed the trial court’s denial of defendant’s summary judgment motion where plaintiff claimed personal injuries as a result of sidewalk defects in defendant’s property. Defendant, citing that it had made improvements to the sidewalk as part of a business improvement district project was unable to establish entitlement to judgment as a matter of law.

The First Department stated that the evidence of improvements presented was insufficient to show that defendant did not create or cause the dangerous defective condition.

Thanks to Alison Weintraub for her contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_06944.htm

Handing Ring to Medical Technician Created Bailment

As if we didn’t have enough reasons to fear the doctor…

In [i]New York Cent. Mut. Ins. Co. v. Med. Diagnostic Imaging[/i], the Poughkeepsie County City Court, was recently asked to determine if a medical provider was responsible for an engagement ring that was either lost or stolen after the technician requested that plaintiff remove it before undergoing a PET scan.

Plaintiff’s subrogror, Rousseau, went to MD Imaging to undergo a PET scan and a CAT scan. At no point before the test did anyone advise Rousseau that she would need to remove her jewelry. In addition, there were no lockers or safes for personal belongings and no signs about what to do with one’s personal belongings. When the technician met with Rousseau, he did not tell her to remove her jewelry. It was only when Rousseau was alone and situated on the PET scan machine when the technician instructed Rousseau to remove her engagement ring. Upon taking the jewelry, the technician stated, “Don’t worry, I’ll take care of it.” The technician placed the ring atop the hamper in the PET scan room and it was never found again.

After trial, the court found that plaintiff had established a bailment between the parties. This put the burden on the defendant failed to come forward with a reasonable explanation for the loss, which it did not. The court noted that had the defendant come forward with an adequate explanation, plaintiff would have had to prove negligence.

Thanks to Gabriel Darwick for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_21345.htm

Passenger May Have Assumed Risk By Riding With Intoxicated Driver

In 2007, plaintiff Edward Rogers and defendant Charles Duffy drank one or two beers and Duffy’s girlfriend’s apartment, then went to a bar and had another beer or two. Afterwards, Duffy and Rogers left the bar with Duffy driving and Rogers as a passenger in Duffy’s vehicle. At some point Duffy lost control of the vehicle, veered of the road and struck a telephone pole. Rogers allegedly sustained injuries, sued Duffy, and moved for summary judgment on the issue of liability. After his motion was denied by Westchester County Supreme Court, plaintiff appealed.

The Second Department affirmed the order because Rogers “failed to establish as a matter of law that Rodgers was free from culpable conduct with regard to the causation of his injuries.” The Second Department has held that a passenger in a vehicle, with knowledge that the operator may be intoxicated, takes a risk that injury might occur. That risk should be considered as part of the analysis of the comparative negligence of the passenger and the operator of the vehicle. Therefore, in order to prevail on this motion, plaintiff would presumably need to demonstrate that he was not aware that Duffy was intoxicated, which he likely would not have been able to do.

Thanks to Brian Gibbons for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_06832.htm

Hurricane Irene Raises Homeowner Policy Issues

A recent article in the Insurance Journal discussed the difficult questions relating to whether special deductibles should apply to homeowners’ insurance policies for damages caused by Hurricane Irene. The issues arise from whether or not Hurricane Irene was in fact a Hurricane, or whether it was a tropical storm when it struck various states in the Northeast. Benjamin Lawsky, Superintendent of Financial Services explains that the storm hit the New York City area with winds at approximately 60 mph, which would categorize it as a tropical storm. The distinction is that with winds below 74 mph, that storm would be determined to be a tropical storm, and accordingly special hurricane deductibles would not be applied saving homeowners thousands of dollars. Hurricane deductibles can range anywhere from one to five percent but can be higher in coastal areas.

In New Jersey, Commissioner of Insurance Thomas Considine stated that hurricane deductibles would not apply to policy holders in the State, and any attempt by insurers to levy such deductibles would be a violation of the New Jersey Administrative Code. In Connecticut, hurricane deductibles are permitted only on coastal properties, and depending on the insurer, hurricane deductibles could be levied simply by the issuance of a hurricane warning. In Vermont, especially hard hit during the storm, policies do not contain the hurricane deductible language, and thus consumers would not have to consider this aspect of their homeowners’ policy.

As the cleanup from Hurricane Irene continues, it is important for policy holders to take note of the deductibles that should apply based upon State directives and the language in their policies.

Thanks to Andrew Marra for his contribution to this post.

If you have any questions about this post, please contact Greg Vetter at gvetter@wcmlaw.com.

Res Judicata Not Applicable to Claim Against Professional Employee

In Farren v. Lisogorsky, the plaintiff sued Metro pharmacy after plaintiff had a prescription filled at Metro, however Metro filled the prescription with the wrong drug, causing plaintiff to sustain personal injuries. In plaintiff’s action against Metro, it conceded liability, however contested damages. Prior to trial, Metro and plaintiff settled for $300,000 and executed a stipulation of discontinuance with prejudice.

Plaintiff then commenced an action against Lisogorsky, part owner of Metro and the pharmacist/employee that allegedly improperly filled the plaintiff’s prescription. Prior to answering, Lisogorsky moved to dismiss under CPLR 3211(a)(5) and (7). With respect to (a)(5), the trial court granted Lisogorsky’s motion to dismiss on the basis of res judicata. Plaintiff appealed.

The Appellate Division, Second Department reversed, finding that the doctrine of res judicata was inapplicable to plaintiff’s action against Lisogorsky. The Second Department reasoned that plaintiff was entitled to pursue Lisogorsky in his professional capacity as a pharmacist, which was entirely distinct than the suit against Metro. As such, the doctrine of res judicata was inapplicable and the trial court improperly granted Lisogorsky’s motion to dismiss on that basis.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_06366.htm

Thanks to Alison Weintraub for her contribution to this post.

Larceny by Trick Covered as Robbery Under Crime Policy (NY)

VAM Check Cashing Corp. operated three check cashing stores in Brooklyn. On the date of the loss, a VAM cashier, while on the phone with the wife of the owner of the company, received a frantic call from a cashier at another VAM store indicating a state tax collector was on site looking for payment and needed cash. The owner’s wife instructed the cashier to give $120,000 to “Mr. Windfrey,” and that he would deliver the cash to the second location. Soon thereafter, Mr. Windfrey arrived with the secret code, and the cashier handed him the $120,000. But after speaking with the owner later in the day, the cashier realized she had been duped, and that both of the callers and Mr. Windfrey were all criminal imposters.

VAM submitted a claim to Federal under its Crime Insurance Policy, which covered, among other things, Robbery. But VAM denied the claim, asserting that this loss did not meet the policy definition of Robbery, which was defined as “the unlawful taking of insured property from an Insured … by violence, threat of violence or other overt felonious act committed in the presence and cognizance of such person.”

VAM filed suit against Federal in the Eastern District of New York, and filed a motion for summary judgment. Federal took the position that “overt felonious act” meant that the employee needed to be aware that a crime was being committed, and that, for example, a larceny by trick was not covered under the definition. Federal also took the view that in “the presence and cognizance” of the cashier meant that she not only needed to be physically present when a felonious act took place, but she must have also known that something criminal was occurring.

The Court, in awarding summary judgment to VAM, found the language of the policy was ambiguous. Looking to the criminal law, it found that “overt” meant any substantial act that furthers the goals of the conspirators. The Court looked to various dictionary definitions of “cognizance” and determined that in this context, it meant the employee needed to have power or control over the item taken.

Frankly, while these definitions cast by the Court seem a bit tenuous, the more persuasive point made in the decision was that Federal’s position would have rendered the robbery by non-violence coverage in the policy definition superfluous.

If you would like more information about this decision, please write to Mike Bono at mbono@wcmlaw.com

Alternate Reality: NJ Court finds Coverage for Spoliation Litigation Strategy that Could Have Been

Typically, whether an insurer has a duty to defend is determined by the four corners of the complaint. But in Carlin v. Cornell, Hegerty, & Koch a New Jersey appellate court not only looked to facts that arose “during the resolution of the underlying dispute,” but also considered whether an alternate litigation strategy would have triggered coverage.

In the original lawsuit, plaintiffs, employees of a construction company, alleged that they were exposed to high levels of lead while working on a construction project on the Ben Franklin Bridge; one of the allegations was that the construction company intentionally concealed information about the employee’s lead exposure. CIGNA provided a defense to the construction company, and a no-cause verdict was rendered in favor of the defendants after a jury trial.

Plaintiffs then filed another lawsuit, alleging that the defendants fraudulently concealed or destroyed evidence (commonly known as “spoliation”) during the first trial. But CIGNA denied coverage, finding that such claims were not covered as an “occurrence” under its CGL policy. Ultimately, the trial court agreed with CIGNA.

But the Appellate Division reversed, even though it agreed that the spoliation claims themselves were not covered under the policy. The Court held that there would have clearly been coverage if plaintiffs successfully moved for relief from the trial judgment based on newly discovered evidence,” or “fraud… misrepresentation, or other misconduct of an adverse party.” The Court found that plaintiffs’ spoliation complaint was, “in effect, an attempt to reopen the first litigation on the covered claim on the ground that it did not have all of the pertinent evidence.” Therefore, the defendant seeking coverage “understandably expected the insurer who provided the defense in the first action to do the same here regardless of the merits.”

Because plaintiffs could have recovered damages for the covered personal injuries by way of motion to vacate the judgment in the personal injury action — and because plaintiffs would not have been required to prove any intentional misconduct — the defendants were, in essence, faced with covered and noncovered claims. Under such circumstances, a carrier is required to defend until all covered claims have been resolved.

If you would like more information about this case, please e-mail mbono@wcmlaw.com