New York Insurance Coverage Law Update

February 1, 2017 | Insurance Coverage

No-Fault Insurer Timely Requested EUO Of Provider After Conducting Assignor’s EUO, Court Rules

On December 19, 2013, after receiving a health care provider’s bills requesting payment of assigned no-fault benefits, the insurer conducted a timely examination under oath (“EUO”) of the assignor. On January 9, 2014, believing that the assignor’s testimony raised questions regarding the accuracy of the provider’s claims, the insurer requested that the provider appear for an EUO. The provider failed to appear, and the insurer sent a second letter requesting that it appear for an EUO on February 18, 2014. The provider again failed to appear, and the insurer denied its claims on February 20, 2014. The provider sued, arguing that the insurer had not timely mailed its request for an EUO of the provider within 15 days of its receipt of the provider’s claims. The court ruled that the insurer’s EUO request of the provider had been timely. It explained that the 15 days within which a no-fault insurer must request an EUO of the provider started anew after it completed the assignor’s EUO and discovered the need for an EUO of the provider. The court concluded that the decision to conduct the EUO of the provider was based on “new information” and, therefore, was a “new verification request.” [Sure Way NY, Inc. v. Travelers Ins. Co., 2016 N.Y. Slip Op. 26413 (N.Y. Civ. Ct. Kings Co. Dec. 8, 2016).]

Insurer Demonstrated Mailing Of Grace Period Notice, Second Circuit Concludes 

An insurer’s contention that a life insurance policy had lapsed due to nonpayment of premiums was challenged on the ground that the insurer had not mailed the “Grace Period Notice” required by New York law. The United States District Court for the Eastern District of New York ruled in favor of the insurer, and the United States Court of Appeals for the Second Circuit affirmed. The Second Circuit explained that the insurer had offered evidence regarding its office procedures as proof that the notice had been mailed, including declarations of its director of information technology and director of records management, as well as deposition testimony of the general manager of its mail processor. The Second Circuit found that this was sufficient to create a presumption of receipt of the notice and, in the absence of evidence to rebut this presumption, the insurer had satisfied its mailing obligations. [Stein v. American General Life Ins. Co., No. 15-3337-cv (2d Cir. Dec. 5, 2016).]

Unsigned Purchase Order Was Written Contract For Purposes Of Additional Insured Endorsement, First Department Decides 

A contractor’s employee sued the property owner, alleging that he had been injured while working at the property. The contractor’s insurer contended that the owner was not an additional insured under a policy providing additional insured coverage where required by “written contract” because the purchase order between the contractor and the owner under which the contractor operated was unsigned. The Appellate Division, First Department, ruled that the owner was an additional insured, reasoning that the unsigned purchase order met the “written contract” requirement. [Zurich Am. Ins. Co. v. Endurance Am. Specialty Ins. Co., 2016 N.Y. Slip Op. 08313 (1st Dep’t Dec. 8, 2016).]

Insureds’ 86-Day Delay In Notifying Insurers Of Alleged Burglary Doomed Their Claim, Second Circuit Says

The insureds sued their insurer, alleging that it had breached their policies by failing to pay for losses resulting from an alleged burglary of their property. The United States District Court for the Southern District of New York granted summary judgment in favor of the insurer, finding that the insureds had not provided timely notice of their alleged loss as required by their policies. The insureds appealed and the United States Court of Appeals for the Second Circuit affirmed. The court explained that the policies required that the insureds provide notice of loss to their insurers “as soon as reasonably possible,” “immediate[ly],” and “as soon as practicable.” The Second Circuit noted that the alleged burglary occurred on January 1, 2014 and that the insureds had learned of it that day, but that they did not notify their insurers until March 28, 2014. The Second Circuit held that the 86-day delay was “unreasonable as a matter of law,” and that the insureds’ alleged lack of sophistication did not excuse the delay. [Minasian v. IDS Property Cas. Ins. Co., No. 16-80-cv (2d Cir. Jan. 19, 2017).]

New York District Court Dismisses Homeowner’s Lawsuit Against Insurer Filed Outside Limitations Period

A homeowner submitted a claim to her insurance carrier for damage to a retaining wall on her property. The insurer disclaimed coverage, explaining that its policy did not cover damage from earth movement and that all the damage to the insured’s property had resulted from earth movement. Almost 10 years later, the homeowner sued the insurer, which moved to dismiss. The United States District Court for the Eastern District of New York granted the insurer’s motion. The court explained that the lawsuit was outside both the two year limitation period set forth in the policy and the six year limitation for contract claims under New York law. The court rejected the homeowner’s contention that the limitation periods should be tolled or that the insurer should be estopped from relying upon them. The homeowner’s claims, the court concluded, were “barred.” [Maniello v. State Farm Fire and Cas. Co., No. 16-cv-1598 (NG)(LB) (E.D.N.Y. Feb. 6, 2017).]

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