Opinion
2018-4228
06-07-2019
Kim E. SCHOCH, CNM, Ob/Gyn NP, Plaintiff, v. LAKE CHAMPLAIN OB-GYN, P.C., Defendant.
Nolan, Heller Kaufman, LLP, Attorneys for Plaintiff, 80 State Street, 11th Floor, Albany, New York 12207 Dreyer Boyajian LaMarche Safarnko, Attorneys for Defendant, 75 Columbia Street, Albany, New York 12210
Nolan, Heller Kaufman, LLP, Attorneys for Plaintiff, 80 State Street, 11th Floor, Albany, New York 12207
Dreyer Boyajian LaMarche Safarnko, Attorneys for Defendant, 75 Columbia Street, Albany, New York 12210
Ann C. Crowell, J.
The plaintiff, Kim E. Schoch, CNM, OB/GYN NP ("Schoch") requests an Order pursuant to CPLR § 3212 granting summary judgment declaring that Schoch is entitled to $74,747.03 in cash proceeds being held in escrow. The defendant, Lake Champlain OB-GYN, P.C. ("Lake Champlain") requests an Order pursuant to CPLR § 3212 granting summary judgment declaring that Lake Champlain is entitled to $74,747.03 in cash proceeds being held in escrow.
From June 18, 2007 to February 27, 2015, Schoch was employed by Lake Champlain as a Certified Nurse Midwife (CNM) pursuant to a written employment agreement. Lake Champlain purchased professional liability insurance for all of its physicians, certified nurse midwives and nurse practitioners, including Schoch, from Medical Liability Mutual Insurance Company ("MLMIC"). New York law does not permit Schoch to practice as a CNM unless she is in a collaborative relationship with enumerated medical practitioners or entities. See, Insurance Law § 6950 (1). Lake Champlain was able to purchase coverage for Schoch because of her collaborative relationship with Lake Champlain. Lake Champlain selected, bargained for, purchased, controlled and maintained the MLMIC policies for Schoch. Lake Champlain paid all of the premiums for the policies and received any policy dividends or premium reductions. Lake Champlain requested Schoch be listed as the "insured" on the applicable insurance policies that provided her individual coverage while practicing at Lake Champlain in the amount of 1 million/ 3 million dollars. The endorsements to the policy were issued to "Lake Champlain OB-GYN, P.C." Lake Champlain was named as the "Policy Administrator" on the policy. Upon Schoch's departure from the practice in February of 2015, Lake Champlain received the policy cancellation premium refund of $8,664.00. Schoch does not make any claim to the policy refund.
In 2018, MLMIC announced that it was converting from a mutual insurance company into a stock insurance company. As part of the conversion, MLMIC was required to distribute a "cash consideration" to policy holders/members to extinguish their membership interests in an amount calculated upon the premiums paid on the policies. The amount of cash consideration for the policies with Schoch listed as the named insured is $74,747.03.
Schoch's motion for summary judgment relies upon Justice Sedita's March 22, 2019 decision in Maple-Gate Anesthesiologists, P.C. v. Nasrin , 63 Misc 3d 703 [Sup. Ct., Erie Cty. 2019]. Justice Sedita determined that Insurance Law § 7307(e) and the New York State Department of Financial Service's decision on the demutualization of MLMIC required that the cash consideration be paid to the "policyholder," named insured. Justice Sedita found that the practices' allegations of unjust enrichment to be nothing more than bare legal conclusions.
Lake Champlain's cross-motion for summary judgment relies upon the Appellate Division, First Department's decision, issued two and half weeks later on April 4, 2019, in Schaffer, Schonholz & Drossman, LLP v. Title, 171 AD3d 465 [1st Dept. 2019]. Upon facts submitted to the Appellate Division, First Department pursuant to CPLR § 3222(b)(3), the Court determined:
"Although respondent was named as the insured on the relevant MLMIC professional liability insurance policy, petitioner purchased the policy and paid all the premiums on it. Respondent does not deny that she did not pay any of the annual premiums or any of the other costs related to the policy. Nor did she bargain for the benefit of the demutualization proceeds. Awarding respondent the cash proceeds of MLMIC's demutualization would result in her unjust enrichment." (citations omitted)
The doctrine of stare decisis provides that once a court has resolved a legal issue, it should not be re-examined each and every time it is presented. Battle v. State , 257 AD2d 745 [3d Dept. 1999] (internal citations omitted). Schoch discounts the Appellate Division, First Department's decision in Schaffer, Schonholz & Drossman, LLP v. Title, supra based upon its terseness and lack of detail. However terse, the First Department found as a matter of law that an award of the MLMIC proceeds to the named insured doctor would result in her unjust enrichment. The significant facts relied upon by the First Department are not distinguishable from the significant facts in this case. This Court is bound to follow the Appellate Division, First Department until such time as the Appellate Division, Third Department or the Court of Appeal issues a contrary decision. Based upon the doctrine of stare decisis Schoch's motion for summary judgment is denied. Lake Champlain's cross-motion for summary judgment is granted.
It is declared that judgment be entered awarding defendant Lake Champlain OB-GYN, P.C. the MLMIC proceeds in the amount of is $74,747.03, plus the interest accrued while the proceeds were in escrow, plus costs and disbursements. Any relief not specifically granted is denied. No costs are awarded to any party. This decision shall constitute the Judgment of the Court. The original Decision and Judgment shall be forwarded to the attorney for defendant Lake Champlain for filing and entry. The underlying papers will be filed by the Court.