Category Archives: New York

Insurers Win Battle against Stalled Litigation in Health Insurance Fraud Action (NY)

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In State Farm Mutual Automobile Insurance Company v Mittal, No. 16-CV-4948 (FB) (SMG) (E.D.N.Y. June 25, 2018), State Farm alleged that defendants (various health care providers) engaged in a conspiracy to defraud insurance companies by issuing fraudulent bills and medical records.

After suit was filed, a dispute arose as to the order of depositions and it was ultimately decided that the insurer’s deposition would go first and defendants would follow thereafter. The insurer’s deposition went forward as scheduled but the defendants refused to move forward with their scheduled depositions.

Defendants’ attorneys notified State Farm’s counsel that their clients were under investigation by the New York State Attorney General’s office and sought a stay in the matter until the investigation ran its course, and filed a motion to enforce the stay. The Court initially granted the defendants permission to stay the depositions and then issued a decision on their motion.

U.S Magistrate Judge Steven M. Gold, denied defendant’s motion, finding that the circumstances weighed strongly against the issuance of a stay. The U.S. Court of Appeals for the Second Circuit laid out six factors it uses for district courts to exercise their discretion when deciding whether a related criminal action warrants issuance of a stay: 1) The extent to which the issues in the criminal case overlap with those in the civil case; 2) The status of the case, including whether the defendants have been indicted; 3) The private interests of the plaintiff’s in proceeding expeditiously weighed against the prejudice to the plaintiff’s caused by the delay; 4) The private interests of and burden on the defendants; 5) The interests of the courts; and 6) the public interest.

The court decided that the first factor slightly weighed in favor of the defendants due to the overlapping of issues in the potential criminal case and the civil case. The second factor weighed “heavily against issuing a stay.” In the instant case the investigation cited by the defendants was a search warrant not an indictment and no charges had been brought against the defendants. The court also found that the third factor supported denying the stay as there was no gauging how long the criminal investigation would last and “the potential delay could be years, even before an indictment is returned.” The judge also noted that assets that might be available to satisfy a judgment would be moved or depleted while the case was stayed.

The fourth factor slightly favored the stay as the Court acknowledged that the defendants’ concerns about self-incrimination during the deposition was valid however in this situation there was no activity regarding the criminal investigation for around a year and there was no reason to think that criminal prosecution was inevitable.

The fifth factor supported denying the stay as the court has an interest in advancing the docket and avoiding delay.  Lastly, the sixth factor of public interest strongly favored denying the stay. The court stated that this case could affect “hundreds of thousands of dollars of potentially fraudulent claims.” Moreover, the Court stated that defendants had imposed substantial costs on the insurer that undoubtedly had been passed on to consumers in the form of higher premiums.

Overall, the Court found that the defendant health care providers had not met their collective burden is showing that a stay was necessary and appropriate.  Thus, State Farm is now permitted to depose the defendants.  One expected there may be some invocation of 5th Amendment privilege, is the criminal investigation is ongoing. Stay tuned.  Thanks to Jon Avolia for his contribution to this post.  Please contact Brian Gibbons (on Twitter @bgibbons35) with any questions.

Plaintiff Allowed To Take Swing against City For Fall at Citi Field (NY)

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In Henn v. City of New York, Sterling Mets, et. al, plaintiff allegedly sustained injuries as a result of tripping and falling upon the sidewalk abutting Citi Field on July 6, 2014. Plaintiff alleges that defendants were responsible for the maintenance of the sidewalk and created the defective condition of the sidewalk. Defendants moved to dismiss under 3211(a)(7) – failure to state a cause of action. The lower Court denied defendants’ motion to dismiss and the defendants appealed.

The Appellate Division Second Department concurred with the lower court and ruled that defendants did not reach their burden to dismiss. The sole criterion on a 3211(a)(7) motion is whether the factual allegations articulated in the four corners of the complaint itself manifest any cognizable cause of action. “When determining a motion to dismiss, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.”

The Second Department held that the documentary evidence submitted by the ballpark defendants in support of their motion failed to conclusively establish a defense as a matter of law. Further, the ballpark defendants failed to establish conclusively that the plaintiff had no cause of action. That the complaint alleged the ballpark defendants owned, operated, managed, maintained, or controlled the subject sidewalk upon which the plaintiff was injured was sufficient to go forward on a cause of action and the documentary evidence submitted by the ballpark defendants—a “Stadium Lease Agreement” and a “First Amendment to Stadium Lease Agreement” – was insufficient to show they did not own, operate, manage or control the subject sidewalk and therefore, was insufficient to provide a basis for dismissal under that subsection.

The case was allowed to move forward to discovery and depositions of all parties.

Thanks to Paul W. Vitale for his contribution to this post.

Church is a 1-2 Family Dwelling Under the Labor Law’s Homeowner Exception (NY)

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In Bautista v Archdiocese of NY, Plaintiff was injured when he fell from a scaffold while repairing a detached garage associated with a church rectory used for both residential and church purposes. Against the Church, plaintiff asserted common-law negligence and claims under the scaffold law and statute requiring owners and contractors to provide reasonable and adequate protection and safety for construction workers, and the workplace safety statute applicable to owners and contractors.

Plaintiff initially moved for partial summary judgment on the Labor Law § 240(1), and the Archdiocese cross-moved for summary judgment dismissing the complaint. Both motions were denied. The Archdiocese appealed.

On appeal, the Appellate Division First Department  reversed, granting the Archdiocese’ motion for summary judgment on Labor Law §§ 240(1) and 241(6) under the 1-2 Family Dwelling exception for “owners of one and two-family dwellings who contract for, but do not direct or control the work”. The Court held that the certificate of occupancy indicated that the record constituted a dwelling and a private garage, and that Plaintiff’s assertions that the garage was exclusively restricted to use by teachers at an elementary school owned by the church were unsupported by the record, thereby failing to raise issues of fact as to the applicability of the homeowner’s exemption.

Moreover, the Archdiocese established that it did not have the authority to supervise or control the job and thus was not liable as an agent of the owner under Labor Law § 240(1) and Labor Law § 241(6). As such, the Court held that the Labor Law § 200 and common-law negligence claims should be dismissed because plaintiff’s fall from scaffolding involved the means and methods of his work, which were supervised and controlled solely by his employer.

Thanks to Margaret Adamczak for her contribution to this post.

Failing to Preserve Arguments for an Appeal and Facts that “May or May Not” Exist (NY)

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In Gordon v City of New York, the plaintiff sued the LIRR, the City of New York, and the Metropolitan Transportation Authority (“MTA”) for injuries that occurred while performing excavation of rock under Grand Central Terminal.  Plaintiff fell from a ladder that slipped out from plaintiff and he fell to the tunnel floor while fixing lights 15-20 feet above him.  The defendants moved for summary judgment dismissing the complaint, which included Labor Law §§ 240(1) and 241(6) claims while the plaintiff moved for summary judgment on the issue of liability on the Labor Law §240(1) claim.  The lower court entered an order granting the City of New York and the LIRR’s motions for summary judgment and denying plaintiff’s motions against all defendants.

On appeal, the First Department affirmed the order granting the City of New York and the LIRR’s motions because affidavits were submitted based on the affiant’s work and job duties for the City of New York and the LIRR and their knowledge of and familiarity of their business operations.  The affidavits established that they did not contract for plaintiff’s work, nor did these defendants perform, supervise, or control any construction work at the subject premises.  As plaintiff’s sole theory of the City’s ownership was that it owned land on which the project was located was not raised before the motion court, it was not properly before the Court.  The plaintiff did not raise any other evidence to dispute the claims and the order granting summary judgment for the City of New York and the LIRR were affirmed.

However, on appeal, plaintiff’s entitlement under Labor Law §240(1) against the MTA, however was successfully argued because the record established a failure to provide plaintiff with proper protection for him to perform the elevation-related task of re-positioning the stadium light.  The MTA’s opposition with an engineer’s testimony that there “may or may not have been” platforms available to tie the ladder to, was not enough to raise a triable issue of fact.  The lower court reversed as to the MTA.

This opinion contains a lesson about the long term effects of failing to raise an argument in the motion court that not only affects the decision in the motion court, but also affects the appeal.  Thus, it is important to have counsel with the foresight to preserve arguments in anticipation of appeal.

Furthermore, the case also demonstrates the importance of early defense counsel oversite in investigating the facts and witnesses with knowledge in anticipation of motion practice.  Experienced counsel will be able to deal with gaps of knowledge from the witnesses provided by an insured.  Rather than rely on such ambiguous testimony regarding things that “may or may not” exist, experienced counsel should take steps to investigate further to find records or other witnesses  that may have actual knowledge of the circumstances of the accident that fill in those gaps to prevent a plaintiff being granted an early summary judgment.

Thanks to Jonathan Pincus for his contribution to this post.

Failure to Discontinue Constitutes Bad Faith, Frivolous Continuation Warranting Sanctions (NY)

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A Justice of the New York County Supreme Court recently imposed sanctions on a plaintiff who refused to discontinue against a defendant that made a showing of non-involvement in the happening of the subject accident.  In Burgund v. Verizon, plaintiff commenced a Labor Law action after he tripped and fell stepping off of a ladder during his work for Verizon. During the deposition of building’s managing agent, plaintiff learned of the potential involvement of a third party entity known as “A&S.” Thereafter, plaintiff named A&S Group and A&S Construction Corp., among others, as defendants in a separate case that was ultimately consolidated.

Upon service of the complaint, A&S Group’s principal immediately contacted plaintiff, explaining that A&S Group had never performed work in the building, never worked for Verizon or any of the other named defendants as a subcontractor or in any other capacity, had no involvement with A&S Corp or its principals, and was not even in existence at the time of the alleged accident. However, plaintiff’s counsel refused to discuss the matter until A&S Group was represented by counsel.

Thereafter, A&S Group composed a series of letters over the course of a one-year period, each requesting a voluntary discontinuance against. Each time, these letters went unanswered. Ultimately A&S Group moved for summary judgment in its favor, denying any liability and asserting that plaintiff wrongfully included it in the action without any factual basis. The Court granted the motion, finding that A&S Group had presented affirmative evidence that it never performed any work at the subject building, had no professional relationships with any of the named parties, and was not even a registered corporation at the time of the accident.

Further, the Court determined that “regardless of whether [p]laintiff originally brought the action in good faith, plaintiff’s repeated failure to voluntarily discontinue the action, despite three specific requests… constituted a bad-faith frivolous continuation that warranted sanctions.”

Thanks to Tyler Rossworn for his contribution to this post.

Plaintiff Gets Second Bite at Defendant’s Dog (NY)

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In Lipinsky v Yarusso (2018 NY Slip Op 05925), two co-workers and friends ended up as adversaries when the defendant’s dog bit the plaintiff’s left thumb.

After the dog bit the plaintiff, he filed a lawsuit in Suffolk County Supreme Court.  The defendant then filed a motion for summary judgment, asking the Court to dismiss the lawsuit because his dog did not demonstrate vicious propensities, and even if the dog did, the plaintiff was not aware of such propensities.  The plaintiff’s opposition to the motion included an affidavit from the plaintiff’s neighbor stating that on two occasions prior to the incident, the defendant warned the neighbor to be careful near the dog because he bites.  Nonetheless, the Court granted the motion dismissing the lawsuit.

The plaintiff appealed the dismissal and the Appellate Division reversed the trial court’s findings.  The decision addressed the law and the facts, and reinstated the action because there were questions of fact regarding the defendant’s dog’s vicious propensities.

The appellate decision discussed the legal standard pertaining to liability for dog bites, holding that “to recover upon a theory of strict liability in tort for a dog bite or attack, a plaintiff must prove that the dog had vicious propensities and that the owner of the dog . . . knew or should have known of such propensities” and vicious propensities include the propensity to do any act that might endanger the safety of the persons and property of others in a given situation.   The Court also held that “evidence tending to prove that a dog has vicious propensities includes a prior attack, the dog’s tendency to growl, snap, or bare its teeth, the manner in which the dog was restrained, and a proclivity to act in a way that puts others at risk of harm.”

Applying this law to the facts as stated in the affidavit from the plaintiff’s neighbor, the Appellate Division held that the Supreme Court erred in dismissing the lawsuit.  Specifically, the decision held that the affidavit from the plaintiff’s neighbor was sufficient to raise a triable issue of fact as to whether the defendant had actual and/or constructive notice that the dog had vicious propensities.

Thanks to George Parpas for his contribution to this article.

Court Finds Spoofing Attack is Hacking Covered Under Cyber Coverage (NY)

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The Second Circuit recently declined to reconsider its July summary order that required an insurer to pay more than $4.8 million to its insured, a cloud-based services firm, lost as a result of “spoof” emails.  The case, Medidata Solutions Inc. v. Federal Insurance Company, provides insight into the burgeoning world of cyber insurance coverage, and how courts may handle the various policy provisions invoked by insureds seeking coverage

In June 2014, an employee at  Medidata Solutions received an email purporting to be from the company’s president instructing her to wire money to an outside bank account, which the firm eventually did.  Medidata sought coverage under its commercial crime policy.  The policy covered losses stemming from “entry of Data into” or “change to Data elements or program logic of” a computer system.  When the insurer denied coverage, Medidata sued. The insurer argued that the spoofing attack was not covered because the policy applied to hacking-type intrusions.  Medidata argued that the fraudsters entered data when they changed the “From” entry in “spoof” emails to make it seem like they were actual Medidata executives.

In unanimously affirming the district court, the Second Circuit held that “[w]hile Medidata concedes that no hacking occurred, the fraudsters nonetheless crafted a computer-based attack that manipulated Medidata’s email system.”  Moreover, because the spoofing code enabled the fraudsters to send messages which seemingly came from high-ranking members of the firm, the court held that “the attack represented a fraudulent entry of data into the computer system.”  Therefore, the court held the insurer was on the hook for the $4.8 million.

In declining to rehear this case, the Second Circuit let stand a major decision for policyholders.  In an era when claims for cyber attacks is at an all-time high, policyholders will welcome holdings in which courts find coverage for cyber attacks in non-cyber specific policies.  The holding could also put the Second Circuit at odds with a similar case currently pending before the Sixth Circuit. American Tooling Center Inc. v. Travelers Casualty & Surety Co. of America, No. 16-12108, 2017 WL 3263356 (E.D. Mich. Aug. 1, 2017).  There, the district court found no coverage under a crime policy where the Michigan firm wired $800,000 in funds to a fraudster’s account by finding the loss was not a “direct loss” caused by the “use of a computer.”  Insureds and insurers alike are keeping tabs on these and other decisions invoking cyber coverage in light of the magnitude of cyber cases in recent years.

Thanks to Douglas Giombarrese for his contribution to this post.

 

WCM Prevails on Discovery Motion Seeking Supplemental IME (NY)

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Earlier this year, Wade Clark Mulcahy helped set a new legal precedent in New York for a plaintiff’s disclosure of Facebook and other social media materials, in Forman v. Henkin. Partner Michael Bono argued that issue before the Court of Appeals, and you can read our post on the decision here.

But other discovery battles have continued on the Forman case, including a dispute about post Note of Issue medical discovery.  Today’s edition of the New York Law Journal published another WCM victory, on a motion prepared by partner Brian Gibbons and associate Nick Schaefer.  Plaintiff claims traumatic brain injuries, and other orthopedic injuries, stemming from a fall from a horse back in 2011.   Our neuro-psychiatrist, Dr. Jeffrey Brown, examined plaintiff in 2014 at our request.  But since that time, the Facebook litigation plaintiff initiated has caused significant delay of the trial;  and because plaintiff’s mental condition is constantly evolving, we consulted with Dr. Brown and determined that a second IME was necessary to properly evaluate plaintiff’s current condition, as opposed to her 2014 condition.

Generally, supplemental IME’s are ordered, and more frequently, consented to, when a plaintiff supplements his/her bill of particulars to allege new injuries.  Here, there was no supplemental bill of particulars, which prompted plaintiff to oppose our request.   But at her most recent deposition in 2017, plaintiff testified that her TBI-related symptoms are ongoing, and in some cases, worse.   This testimony placed her current mental health condition in issue, thereby entitling WCM and Dr. Brown to another IME of the plaintiff.

The Court’s decision is well-reasoned, and references the broad legislative intent behind CPLR 3101(a), where requested disclosure is “material and necessary” to defend the action.  Here, our fact-specific request for the IME was based upon consultation with our expert, before making the motion.  As a result, we will be more equipped to evaluate plaintiff’s current symptoms, as they apply to the 2011 injury, if and when this matter proceeds to trial.  This decision by the Court by no means wins the “war” that every litigated case often feels like;  but the decision is certainly a battle victory that will help us down the road.

Special Benefit of Special Employees (NY)

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In James v Crystal Springs Water, the Appellate Division, Second Department unanimously affirmed a lower court ruling granting defendant’s motion for summary judgment.  In James, plaintiff was allegedly injured in an accident that occurred while working at the premises owned by defendant, Crystal Springs Water.  He was employed by nonparty Manpower Group US, Inc. and received workers’ compensation benefits pursuant to a Manpower insurance policy.  Plaintiff sued Crystal Springs to recover damages for personal injuries.

The Court affirmed that an employee who is entitled to receive workers’ compensation benefits may not sue his or her employer based on injuries sustained by the employee, and, for the purposes of the Workers’ Compensation Law, a person may be deemed to have more than one employer.  Citing Pena v. Automatic Data Processing, Inc., the Court stated, “The receipt of Workers’ Compensation benefits from a general employer precludes an employee from commencing a negligence action against a special employer.”

While a person’s categorization as a special employee is usually a question of fact, a determination of special employee status may be made as a matter of law where undisputed critical facts compel that conclusion and present to triable issue of fact.  While no single factor is decisive, principal factors include who has the right to control the employee’s work, who is responsible for the payment of wages and furnishing of equipment, who has the right to discharge the employee, and whether the work being performed was in furtherance of the special employer’s or the general employer’s business.  Citing to Munion v. Trustees of Columbia University, the Court found that the most significant factor is who controls and directs the manner, details, and ultimate result of the employee’s work.

Crystal Springs established that it controlled and directed the manner, details and ultimate result of plaintiff’s work.  Plaintiff submitted an affidavit asserting that he received no supervision from Crystal Springs which the Court found to be insufficient to raise an issue of fact as it contradicted his own deposition testimony.  The workers’ compensation law is a complete bar to a plaintiff’s ability to sue his or her employer and the special employee doctrine allows special employers to be cloaked under the same veil of immunity.  Thanks to Mehreen Hayat for her contribution to this post.  With an y questions, please email Brian Gibbons.

No Written Notice = No Dice for Plaintiffs in NYC (NY)

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It has long been held pursuant to the New York City Administrative Code that the City of New York cannot be found liable for accidents occurring within it due to dangerous conditions unless the City had prior written notice of the existence of the condition. The exceptions to this being where the City created a defect or the defect was caused by special use of that benefited the City.

On August 22, 2018, the Appellate Division, Second Department upheld this stringent standard to obtain a recovery from the City for potholes within the five boroughs. In Allen v. City, plaintiff was injured when he fell off of his bike after riding over a pothole in a City owned and operate street. Defendant City moved for summary judgment based on the fact that there was no prior written notice of the condition and none of the exceptions applied. The lower Court denied the City’s motion and found that a reference to a raised or elevated area on a “Big Apple Map,” constitutes prior written notice.

The Second Department unanimously reversed the lower Court’s decision and found that the City showed that it did not have prior written notice and that a “Big Apple Map” is insufficient to impose notice onto the City.

In Budoff v. City, plaintiff was injured when he fell off of his bike due to a pothole present in a designated bike lane on a City owned and operated street in Brooklyn. The lower Court granted the City’s motion and plaintiff moved to reargue. The lower Court granted reargument and upheld its decision, plaintiff appealed. The Court, which normally will not hear appeals on reargument, decided it was within its discretion to do so here as the underlying Order was upheld upon reargument.

The Court unanimously upheld the lower Court’s determination that there was no prior written notice of the condition. IT also found plaintiff’s argument that the City benefited from the special use of the bike lane as it “attracted tourism” to be unveiling and insufficient to impose liability onto the City.

The two decisions discussed above, while somewhat different, show how stringent the Second Department is about finding liability against the City. It is decisions like this that push plaintiffs to try to impose liability onto anyone but the City if possible as the burden in showing the City’s negligence is high, and often impossible to meet. In our practice, we see many cases involving defective sidewalk conditions and more often than not, plaintiffs go through great lengths to try to impose liability onto anyone they can find as to make their chances of recovery greater.  Thanks to Dana Purcaro for her contribution to this post.  Please email Brian Gibbons with any questions.