New York Insurance Coverage Law Update

Health Insurer That Paid Insured’s Medical Bills May Not Demand Reimbursement From Insured’s No-Fault Carrier, N.Y. Court Of Appeals Rules

After Luz Herrera was injured in a car accident, her health insurer, Aetna Health Plan, paid bills submitted by her medical providers. Aetna subsequently sought reimbursement from Herrera’s no-fault automobile insurer, Hanover Insurance Company, alleging that the bills should have been paid by Hanover. New York’s highest court, the Court of Appeals, ruled that Aetna was not entitled to reimbursement. It reasoned that New York’s no-fault law and regulations contemplated reimbursement to a health care provider, not to a health insurer. The Court concluded that Aetna could not recover because it was not a “provider of health care services.” [Aetna Health Plans v. Hanover Ins. Co., 2016 N.Y. Slip Op. 04658 (N.Y. June 14, 2016).]

No Coverage Where Actions Against Insured Were Based On Its Sales Of Counterfeit Products, Not Its Advertising Activities, Second Circuit Says

After a company sold luxury goods bearing counterfeit Fendi trademarks, the seller was sued and found liable for trademark infringement. The seller’s insurer sought a declaration that it did not have to indemnify the company. The U.S. District Court for the Southern District of New York held that the policies did not cover the claims because they were not the result of an “advertising injury.” The U.S. Court of Appeals for the Second Circuit affirmed, explaining that the insured did not engage in “any advertising of the counterfeit goods” and that Fendi had not alleged that it had suffered injury because of any “advertising activities” on the insured’s part. Rather, the Second Circuit pointed out, Fendi complained that it suffered injury because of the sale of counterfeit goods, and it had been awarded damages based not on the insured’s advertising activities, but on its sale of counterfeit products. The Second Circuit concluded that the insured’s use of the Fendi mark did not constitute advertising within the insurance policies’ definition of “advertising.” [U.S. Fidelity and Guaranty Co. v. Fendi Adele S.R.L., Nos. 14-3435-cv, 14-3474-cv (2d Cir. May 17, 2016).]

No Coverage For Contractor Where No Policy Had Been Issued, Notwithstanding Certificate Of Insurance

An employee of Teji Construction, Inc., a subcontractor, sued Vikram Construction, Inc., alleging that he was injured while working. Vikram sought coverage from Atlantic Casualty Insurance Company. Vikram relied on a “certificate of liability insurance” given to Vikram by Teji which said that Teji had liability insurance with Atlantic and that Vikram was an additional insured. After Atlantic denied that a policy was in effect, Vikram sued. The Appellate Division, Second Department, ruled that Atlantic was not obligated to defend or
to indemnify Vikram because it had demonstrated that no policy had ever been issued to Teji. The court added that even if the certificate of insurance had raised a triable issue of fact as to whether Atlantic issued a policy to Teji, the effective date on the face of the certificate post-dated the incident upon which the underlying action was based, and Vikram was not entitled to coverage where it was not named as an additional insured as of the date of the accident. [Vikram Construction, Inc. v. Everest Nat’l Ins. Co., 2016 N.Y. Slip Op. 03501 (2d Dep’t May 4, 2016).]

Insured’s New York Suit Was Time-Barred, Despite Prior Texas Action

On June 25, 2012, Chandler Management Corporation sued its insurer, First Specialty Insurance Corporation, in a Texas state court, asserting that the insurer had failed to cover storm damage to its property in Texas. The court dismissed the action, finding that Chandler had not complied with the New York forum selection clause in the First Specialty policy. On August 5, 2015, Chandler sued First Specialty in a New York court. The insurer moved to dismiss, asserting that the New York action was time-barred under the 12-month suit limitation provision in the policy. The court granted the motion, finding that Chandler had failed to bring its New York suit within 12 months after the alleged occurrence. It also ruled that even if the Texas action had been timely, Chandler’s choice of Texas as a forum violated the New York forum selection clause in the First Specialty policy. [Chandler Manage-ment Corp. v. First Specialty Ins., 2016 N.Y. Slip Op. 30823(U) (Sup. Ct. Kings Co. May 4, 2016).]