Opinion
0106881/2006.
November 20, 2007.
I. Factual and Procedural Background
This subrogation action arises from a motor vehicle accident wherein a vehicle driven by Jamwantie Chatoredussy collided with another. Chatoredussy, who claims to have suffered spinal and other injuries in the accident, received no-fault benefits from her automobile liability carrier, defendants Allstate Insurance Company, for medical expenses incurred from the date of the accident, May 23, 2003, until July 15, 2003. Allstate discontinued the benefits based upon a physical examination of Chatoredussy by Dr. Ernesto Seldman, conducted at their request. Thereafter, Chatoredussy's health insurance carrier, Health Insurance Plan of great New York (HIP) paid for her medical expenses, which included lumbar fusion and decompression surgery in March 2005
In May 2006, HIP, as purported subrogee of Chatoredussy, commended the this action against Allstate to recover $42,148.64, the sum it paid for Chatoredussy's medical expenses. HIP asserts two causes of action, one sounding in breach of contract and one sounding in unjust enrichment or equitable subroagtion. HIP now moves, pursuant to CPLR 3212, for summary judgment on the issue of liability on both causes of action. Allstate opposes the motion and cross-moves, pursuant to CPLR 3211(a)(7) to dismiss the complaint for failure to state a cause of action.
II. Discussion
In support of its motion for summary judgment, HIP argues that the defendant's discontinuance of Chatoredussy's no-fault benefits was improper because the findings of Dr. Seldman were contrary to other medical evidence, including records of Chatoredussy's treating doctor, indicating further treatment was necessary. HIP argues that the improper discontinuance was a breach of Allstate's contract with Chatoredussy which required it to pay no-fault benefits and HIP's consequent payment resulted in Allstate being unjustly enriched in the sum of $42,148.64.
Allstate's position is that HIP has failed to state a cause of action for either breach of contract or equitable subrogation. Allstate avers that HIP has not shown it was "legally answerable for or compelled to pay said no-fault claim" and thus has no contractual right of subrogation. As to the unjust enrichment cause of action, Allstate argues that HIP has failed to show that it was legally compelled to pay Chatoredussy's no-fault claims and that, therefore, its payment of the claims was involuntary. Allstate further argues that, in any event, HIP fails to show that payment was demanded or made on the claims, and thus fails to show that it is aggrieved.
The complaint must be dismissed.
First, HIP does not and can not assert that it may proceed under 11 NYCRR 65-3.11 which provides, in relevant part, that "an insurer shall pay benefits for any element of loss, other than death benefits, directly to the applicant or, . . . upon assignment by the applicant . . . shall pay benefits directly to providers of health care services . . ." HIP, as a health insurer, is clearly not a "provider of health care services." Indeed, the courts have consistently afforded the regulation a narrow construction. See e.g. Allstate Ins. Co. v Belt Parkway Imaging, Inc., 33 AD3d 407 (1st Dept. 2006); V.S. Medical Services, P.C. v New York Central Mutual Fire Ins. Co., 14 Misc 3d 134 (A) (App Term 2nd and 11th Jud Dist. 2006); Craig Antell, D.O., P.C. v. New York Cent. Mut. Fire Ins. Co., 11 Misc 3d 137 (A) (App Term 1st Dept. 2006); A.B. Medical Services PLLC v. Liberty Mut. Ins. Co., 9 Misc 3d 36, (App Term 2nd and 11th Jud Dist. 2005). Thus, 11 NYCRR 65-3.11(a) is unavailing to HIP in this action.
Contrary to HIP's contention, it may not assert a breach of contract claim against Allstate on behalf of Chatoredussy. HIP, of course, is not in privity of contract with Allstate, and has not shown it was an intended third-party beneficiary of the contract. Indeed, both HIP and Allstate were both contractually obligated, under separate and distinct policies, to pay first-party benefits to Chatoredussy. Thus, even assuming that HIP established that it demanded payment and Allstate refused to pay, HIP may not maintain this cause of action against this defendant. Allstate's assertions that HIP was "not legally answerable for" or "legally compelled to pay" Chatoredussy's no-fault claims, to the extent they are intended to argue the same, are correct.
It has been held that a plaintiff insurer may not maintain an action, as purported subrogee, against its insured's broker for breach of contract with regard to the broker's failure to timely notify the insurer of a claim. In Dezer Properties II, LLC v Kaye Insurance Associates, Inc., 38 AD3d 213 (1st Dept. 2007), the First Department explained that the insured suffered no loss as a result of the defendant broker's actions, and that plaintiff insurer was not in privity with the broker and the broker owed it no duty. Similarly, in Federal Insurance Co., v Spectrum Ins. Brokerage Services, Inc., 304 AD2d 316 (1st Dept. 2003), the First Department held that the plaintiff insurer may not maintain an action against its insured's broker since the insured suffered no loss as result of broker's alleged negligence in failing to procure sufficient coverage for the insureds as additional insureds. The Court stated that "[i]t is clear that plaintiff as subrogee is seeking to recover for its own, and not its insureds' loss." Federal Insurance Co., v Spectrum Ins. Brokerage Services, Inc., supra at 317. The same applies to the instant case.
Nor may HIP maintain a claim against this defendant under the principle of subrogation. "Subrogation, an equitable doctrine, allows an insurer to stand in the shoes of its insured and seek indemnification from third parties whose wrongdoing has caused the loss for which the insurer is bound to reimburse." Kaf-Kaf, Inc. v Rodless Decorations, Inc., 90 NY2d 654, 659 (1997). "This right of subrogation is based upon principles of equity and natural justice" (Allstate Ins. Co. v. Stein, 1 N.Y.3d 416, 422; quoting, Ocean Acc. Guar. Corp. v. Hooker Electrochemical Co., 240 N.Y. 37, 47) and is intended to prevent unjust enrichment. See Teichman v Community Hosp. of Western Suffolk, 87 NY2d 514 (1996); Winkelmann v. Excelsior Ins. Co., 85 N.Y.2d 577 (1995). As such, where, as here, "an insured is driving a car and is hit and injured by another driver" and files a claim with her insurer, "the insurer then has the right, under the common law of subrogation, to 'stand in the shoes' of the insured and seek recompense from the third-party tortfeasor for the amount paid to the insured" so long as the insured has been made whole. ELRAC, Inc. v Ward, 96 N.Y.2d 58, 75-76 (2001) quoting North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 294 (1994); see Federal Ins. Co. v. Spectrum Ins. Brokerage Services, Inc., 304 A.D.2d 316, 317 (1st Dept. 2003).
Under these principles, the Court of Appeals has held that a health insurer may sue a tobacco company for injuries allegedly sustained by its insured from smoking tobacco products. In Blue Cross and Blue Shield of N.J., Inc. v. Philip Morris USA Inc., 3 NY3d 200 (2004), the Court found that while the insurer had no standing to sue under General Business Law § 349, a consumer protection statute, it was not precluded from recovering damages in an action in equitable subrogation. See also Principe v City of New York, 11 Misc 3d 879 (Sup Ct, Richmond County 2006).
Similarly, plaintiff HIP may have a subrogation cause of action against the individual whose vehicle struck Chatoredussy's vehicle, the "third-party tortfeasor" spoken of in the decisional authority. However, research reveals and HIP cites to no statutory or decisional authority which would authorize it to maintain a subrogation action against Allstate to recover the sums it was contractually obligated to pay to its insured, Chatoredussy. To allow it to do so would create an entirely new right of action unsupported by the long settled subrogation principles.
Accordingly, defendant Allstate's cross-motion to dismiss the complaint is granted.
In light of the disposition of the cross-motion, HIP's motion for summary judgment on the issue of liability is moot. Thus, the Court need not reach the merits of that motion.
III. Conclusion
For these reasons and upon the foregoing papers, it is,
ORDERED that the plaintiffs' motion for summary judgment on the issue of liability is denied as moot; and it is further,
ORDERED that the defendant's cross-motion to dismiss the complaint pursuant to CPLR 3211(a)(7) is granted; and it is further,
ORDERED that the Clerk of the Court is directed to enter judgment in favor of defendant, dismissing the complaint in its entirety, with costs and disbursements to defendant, as taxed by the Clerk.
This constitutes the Decision and Order of the Court.