NY’s New Motor Vehicle Accident Amendment a Win for Insurers

New York’s comparative fault system and a broad serious injury threshold have made motor vehicle accident claims difficult and expensive to defend. Our current system, combined with staged accidents, manufactured injuries and unnecessary medical treatments have resulted in inflated verdicts and settlements, driving up costs for carriers and policyholders.

Albany, however, has recently passed bills which contain sweeping changes to how motor vehicle accident lawsuits are adjudicated in New York. The amendments affect liability determinations, serious injury threshold practice, damages, and case valuation, and will likely require significant adjustments to claims handling and defense strategy.

The new legislation represents a substantial shift in the legal landscape and allows the defense to attack marginal claims earlier and more aggressively.

1. A $100,000 Cap on Non-Economic Damages for Plaintiffs Engaged in Certain Illegal Conduct

In situations in which a plaintiff was: (a) operating an uninsured vehicle (unless the lapse in coverage was less than 30 days); (b) convicted for DWI/DUI; and/or (c) convicted for operating a vehicle in furtherance of, or fleeing the scene of, a felony, recovery for non-economic loss (e.g., pain and suffering, emotional harm) is capped at $100,000. This cap does not apply to wrongful death cases.

2. Elimination of the 90/180-Day Serious Injury Threshold

The 90 out of 180 days provision under Insurance Law Section 5102(d) has been repealed. Under that category, a plaintiff could previously satisfy the serious injury threshold by demonstrating their injuries substantially prevented his or her usual activities for at least 90 out of the first 180 days after the accident.

This often-invoked provision was a significant impediment to summary judgment. Its elimination should reduce the volume of marginal threshold claims and strengthen summary judgment motions in cases where medical records do not support the more demanding categories under this section to meet the serious injury threshold.

3. Modified Comparative Fault: Plaintiff Recovery Barred if More Than 50% at Fault

New York has long followed a “pure comparative fault” system, which allowed a plaintiff’s recovery to being reduced by their comparative fault up to 99%. Under the new law, a plaintiff whose culpable conduct exceeds 50% of the total fault will be barred from recovering damages. This is a monumental shift in the law. A plaintiff’s comparative negligence, which previously only affected the amount of damages, can now potentially bar a claim in its entirety.

4. New Sequencing May Limit Pre-Judgment Interest

The legislation also includes a procedural change affecting the order in which issues are decided at trial. The bill provides:

No liability for non-economic loss shall be fixed unless and until the trier of fact has determined the existence of a serious injury. In any action to recover non-economic loss pursuant to this article, the trier of fact shall not determine the question of whether an injury is a serious injury until the trier of fact has determined the party or parties at fault.

Prior to this legislation, 9% interest began to accrue upon judgment. The new law appears to limit that advantage by delaying the point at which liability for non-economic damages is determined. Thus, in cases where plaintiff obtains a liability judgment years before an actual trial, interest would not begin to run until it is determined that a serious injury has been sustained.

Conclusion

We expect these sweeping changes will greatly benefit defendants and their insurers. Of course, whether they ultimately reduce claim frequency, litigation costs, and insurance premiums remain undetermined. For insurers, self-insured entities, and defense counsel, these changes will require a reassessment of litigation strategy from the inception of a claim. At a minimum, we expect the impact of these reforms will significantly affect motion practice, settlement evaluations and trial strategy to the benefit of defendants and their insurers.