Contact Chiropractic, P.C., as Assignee of Girtha Butler, Respondent,v.New York City Transit Authority, Appellant.BriefN.Y.March 21, 2018APL 2016-00111 Queens County Clerk’s Index No. 03291/07 Appellate Division–Second Department Docket No. 2014-05446 Court of Appeals of the State of New York CONTACT CHIROPRACTIC, P.C. as assignee of Girtha Butler, Plaintiff-Respondent, – against – NEW YORK CITY TRANSIT AUTHORITY, Defendant-Appellant. BRIEF FOR AMICUS CURIAE AMERICAN TRANSIT INSURANCE COMPANY GREENBERG TRAURIG, LLP 200 Park Avenue New York, New York 10166 Tel.: (212) 801-6807 Fax: (212) 805-5510 SHORT & BILLY, P.C. 217 Broadway, Suite 300 New York, New York 10007 Tel.: (212) 732-3320 Fax: (212) 732-3326 Attorneys for Amicus Curiae American Transit Insurance Company Dated: September 26, 2017 STATEMENT PURSUANT TO COURT OF APPEALS RULE 500.1(f) 1. American Transit Insurance Company has the following parent: American T., Inc. Dated: September 26, 2017 New York, New York Table Of Contents Page Table of Authorities iii Preliminary Statement 1 3Argument A No-Fault Claim Against a Self-Insurer Is Statutorily Created and the Limitations Period Should Be Three Years. I. 3 This Court Should Follow Its Precedent And Continue to Apply A Three-Year Limitations Period To No-Fault Claims. A. 3 B. Respondent’s No-Fault Cause Of Action Is A Statutory Creation— Not The Product Of An Implied Contract. 5 II. Applying a Three-Year Statute of Limitations Is Consistent with Public Policy Promoting Speedy Resolution of No-Fault Claims. 8 The Court’s Decision Could Broadly Impact The No-Fault Insurance Industry. III. 9 The Court’s Decision Here Could Impact The Statute of Limitations For No-Fault Claims Against Insurers. A. 10 The Court’s Decision Could Impact The Limitations Periods For No-Fault Law Penalties B. i Of 2% Monthly Interest And Legal Fees. 11 Conclusion 15 Exhibit 1 - Excerpt of NY Senate Debate Transcript, 1973 Ch 13 Exhibit 2-Excerpt of NY Senate Debate Transcript, 1973 Ch 13 Exhibit 3-Report of the Joint Legislative Committee on Insurance Rates, Regulation and Recodification of the Insurance law Exhibit 4-Memorandum of the Insurance Department, No-Fault Automobile Insurance-Additional First Party Benefits-Attorney’s Fees for Securing Payment of Overdue Claim, Arbitration Exhibit 5-Memorandum of the Liquidation Bureau regarding Statutory penalties Exhibit 6- The Matter of Empire Mut. Ins. Co. and Allcity Ins. Co., (N.Y. Sup N.Y. Cnty. June 29, 1978), New York Law Journal, June 29, 1978 ii Table Of Authorities Cases Page Aetna Life & Cas. Co. v. Nelson, 67 N.Y.2d 169 (1986). 3,4,5,8,9,10 Aetna Health Plans v. Hanover Ins. Co., 27 N.Y.3d 577, 582 (2016) 8,10 Application of Country-Wide Ins. Co., 96 A.D.2d 471, 472 (1st Dep’t 1983), aff d sub nom. Country-Wide Ins. Co. v. Manning, 62 N.Y.2d 748 (1984) 10 Barnes v. Maryland Cas. Co., 124 Misc.2d 942, 478 N.Y.S.2d 565 (Civ.Ct. Kings County, 1984) 13 Cardinell v. Allstate Ins. Co., 32 A.D.2d 772, 754 N.Y.S.2d 111 (3rd Dept., 2003) 12 City of New York v. Kingsview Homes, Inc., 70 A.D.2d 866, 418 N.Y.S.2d 62 (1st Dept., 1979) 13 Collins v. Blunt, 15 A.D.3d 992, 993 (4th Dep’t 2005) .7 Dermatossian v. N.Y. City Transit Auth., 61 N.Y.2d 219, 501 N.Y.S.2d 784, 492 N.E.2d 1200 (1986) 12 Gurnee v. Aetna Life & Cas. Co., 55 N.Y.2d 184 (1982). •4,5 Matter of Medical Society of New York v. Serio, 100 N.Y.2d 854, 768 N.Y.S.2d 423 (2003) 14 MVAIC v. Aetna Cas. & Surety Co., 89 N.Y.2d 214 (1996). .4,5,8,9,10 Oeschger v. Fullforth, 51 A.D.2d 864, 864 (4th Dep’t 1976), 7 Perez-Hernandez v. M. Marte Auto Corp., 104 A.D.3d 489 (1st Dep’t 2013)....6 Pommells v. Perez, 4 N.Y.3d 566, 570-71 (2005) .8 iii Simmons v. Government Emp. Ins. Co., 59 A.D.2d 468, 400 N.Y.S.2d 99 (2nd Dept., 1977) 12 The Matter of Empire Mutual Ins. Co. and Allcity Ins. Co., New York Law Journal, June 29, 1978 12,13 Thomas v. Travelers Ins. Co., 54 A.D.2d 608, 608-09 (4th Dep’t 1976). .7 Walton v. Lumbermens Mut. Cas. Co., 88 N.Y.2d 211,214 (1996). 8 Statutes CPLR213 .4 CPLR 214 [2] .3,4,5,8,9,11,13,14 Insurance Law §675 13 Insurance Law §5102. .6 Insurance Law §5103 .6,11 Insurance Law §5106. 11,12,13 Vehicle and Traffic Law §321 .6 Regulations 11 NYCRR 65-1.1 11 11 NYCRR §65-3.9(c). 13 11 NYCRR §65-4.6(i) 14 iv 11 NYCRR 65.6(g)(1) 12 11 NYCRR 65.6(f)(5) 1 V PRELIMINARY STATEMENT American Transit is the largest writer of commercial automobile liability insurance in the State of New York. American Transit principally writes commercial automobile liability and physical damage insurance on risks such as taxis, black cars, company fleets, and other commercial livery vehicles. It also has significant experience with no-fault claims issues. All told, American Transit has over 40 years of industry experience. Because of American Transit’s deep understanding of the commercial and no-fault insurance industry in New York State, its perspective could assist the Court in its deliberations in this case. This case presents a very significant issue for the no-fault insurance industry: whether the Statute of Limitations for claims against a no-fault self- insurer is three or six years. In presenting their arguments on this issue, the parties have discussed much of this Court’s jurisprudence surrounding no-fault insurance. American Transit will not duplicate their discussion. Rather, it will address three additional issues. First, this Court’s jurisprudence has consistently treated rights and obligations pursuant to the No-Fault Law as strictly statutory creations. Changing courses now, and treating Respondent’s claims as contractual rather than statutory would be inconsistent with this Court’s prior jurisprudence, and inject uncertainty into an industry that requires predictability. 1 Second, holding that a six-year limitations period applies to claims filed for the statutorily-created No-Fault Law benefits runs contrary to the public policy behind the statute of encouraging speedy resolution of no-fault claims. Permitting no-fault beneficiaries to sit on their rights for years prior to filing suit could undermine this public policy. American Transit thus submits this Amicus Brief to bring these issues to the Court’s attention. Third, any ruling in this case could broadly impact the no-fault industry, affecting additional issues of first impression, including the applicable Statute of Limitations for: (1) a claim against a no-fault insurer (not a self-insurer); and (2) a claim to recover the statutory penalties for failing to timely pay claims of 2% monthly interest and legal fees against a no-fault insurer or self-insurer. American Transit previously filed for amicus status when requesting that the Court remove this case from Rule 500.11 Review— Alternative Procedure for Selected Appeals (SSM review) — and hear this appeal in the normal course upon full briefing and oral argument, given its importance for the automobile insurance industry. This Court granted American Transit’s application to submit an amicus brief and ultimately removed this case from Rule 500.11 review, ordering full briefing and oral argument. We acknowledge and appreciate that decision, and respectfully request that we may appear as amicus here as well. 2 ARGUMENT I. A NO-FAULT CLAIM AGAINST A SELF-INSURER IS STATUTORILY CREATED AND THE LIMITATIONS PERIOD SHOULD BE THREE YEARS. A. This Court Should Follow Its Precedent And Continue to Apply A Three-Year Limitations Period To No-Fault Claims. Section 214(2) of the Civil Practice Law and Rules provides that a three- year Statute of Limitations applies to an action to recover upon a liability, penalty or forfeiture created or imposed by statute. This Court has previously held that no-fault benefits are statutorily-created, and did not exist at common law. Consistent with these decisions, a three-year limitations period should apply here. In Aetna Life & Cas. Co. v. Nelson, 67 N.Y.2d 169 (1986), this Court considered the Statute of Limitations in a claim to recover on a lien against a no¬ fault insured. In determining the applicable limitations period, the operative inquiry was whether the lien was “created or imposed by statute,” and subject to a three-year Statute of Limitations pursuant to CPLR 214(2). In addressing this question, this Court first explained that CPLR 214(2) “only governs liabilities which would not exist but for a statute.” Id. at 174. While “bearing] some relationship to common-law actions,” id., the Court nonetheless held that the lien procedure, and the No-Fault Law more generally, “does not codify common-law principles; it creates new and independent statutory rights and obligations in order to provide a more efficient means for adjusting financial responsibilities arising out 3 of automobile accidents.” Id. at 175. The three-year limitations period thus applied. In Matter of Motor Vehicle Ace. Indem. Corp. v. Aetna Cas. & Surety Co., 89 N.Y.2d 214 (1996), the Court similarly ruled that CPLR 214(2)’s three-year Statute of Limitations applied to No-Fault recovery claims brought by Motor Vehicle Accident Indemnity Corporation (“MVAIC”), In so holding, the Court reaffirmed its reasoning in Aetna that “the No-Fault Law does not codify common- law principles,” but “creates new and independent statutory rights.” Id. at 221 (quoting Aetna, 67 N.Y. 2d at 175). Thus, as was the case in Aetna, “MVAIC’s obligation to pay no-fault benefits to an injured party where the accident vehicle’s insurer denies such coverage is purely statutory, established under the no-fault scheme.” Id. Both Aetna and MVAIC stand for the proposition that rights and obligations under the No-Fault Law are “created or imposed by statute,” making CPLR 214(2) applicable. Nothing in Gurnee v. Aetna Life & Cas. Co., 55 N.Y.2d 184 (1982), relied upon by Respondent (Brief for Plaintiff-Respondent|18 (July 13, 2017), affects this holding. In Gurnee, this Court mentioned in dicta that “it should be noted that the applicable six-year Statute of Limitations has already extinguished a portion of the insurers’ potential liability (See CPLR 213).” Gurnee, 55 N.Y.2d at 193. But Gurnee, decided prior to Aetna and MVAIC, did not analyze whether rights and 4 obligations under the No-Fault Law are statutory or contractual. It only addressed the retroactivity of the Court’s construction of the phrase “first party benefits” as it relates to no-fault insurance protection, and is wholly inapposite. Id. at 190. Aetna and MVAIC, on the other hand, appear to be more on point, and we maintain should be applied here. Like Aetna and MVAIC, Appellant’s claims arise solely from the No-Fault Law. This Court’s repeated holding that the No-Fault Law itself created “new and independent statutory rights and obligations,” compels the application of a three- year Statute of Limitations pursuant to CPLR 214(2). That Respondent’s claims may “bear some relationship to common-law actions” — in implied contract or otherwise— does not affect their statutory nature. See Aetna, 67 N.Y.2d at 174. Indeed, because Respondent’s no-fault “claims which, although akin to common- law causes, would not exist but for the statute,” MVAIC, 89 N.Y.2d at 220-21, a three-year limitations period applies. Respondent’s No-Fault Cause Of Action Is A Statutory Creation— Not The Product Of An Implied Contract. The no-fault claim here, as in Aetna and MVAIC, arises solely from the No- B. Fault Statute, and very little distinguishes this case from this Court’s prior no-fault rulings. Specifically, Respondent Contact Chiropractic’s assignor, the injured party, and Appellant New York City Transit Authority, had no written or direct contract. Respondent concedes this point, as it must. Nor is there a contract for 5 insurance benefits implicated here. Instead, in arguing that the six-year Statute of Limitations applicable to contract claims governs, Respondent claims that an implied contract exists between Appellant and the injured party based on the fare the injured passenger paid to the Appellant common carrier. This argument— a stretch at best— should be rejected by this Court. Although framed in terms of the common carrier and paying passenger, Respondent is asking this Court to generally apply the contractual limitations period applicable to insured vehicles to those that are statutorily self-insured based on its implied contract theory. As a factual matter however, this theory is inapplicable: many self-insured vehicles, including those owned by municipalities and school districts, among others, do not provide transportation for a fee. They are not susceptible to Respondent’s implied contract theory. Many school children, for example, receive free transportation to school. Criminal suspects are also transported upon arrest, and convicted prisoners are often transported to multiple locations throughout the state. These passengers do not pay a fee nor otherwise contract with police officers or municipalities for their transport. The No-Fault Statute nevertheless protects them as well. See N.Y. Ins. Law § 5103; VTL § 321. The No-Fault Law also covers a broad range of individuals in additional circumstances that cannot implicate Respondent’s implied-contract theory. 6 Pedestrians are covered under the No-Fault Statute, although they obviously have not paid or otherwise implicitly contracted with the vehicles causing their injuries. See N.Y. Ins. Law § 5102; see also Perez-Hernandez v. M. Marte Auto Corp., 104 A.D.3d 489, 490 (1st Dep’t 2013) (granting summary judgment in favor of pedestrian seeking recovery under no-fault law); Thomas v. Travelers Ins. Co., 54 A.D.2d 608, 608-09 (4th Dep’t 1976) (holding that the plaintiff, who was crossing the street on foot at the time of the accident, “was a pedestrian and was a covered person” under the No-Fault Law). The No-Fault Law similarly covers bicyclists, as well as individuals injured when a vehicle strikes a building, all of whom had no contact with the drivers or their insurance carriers prior to the accident triggering no-fault coverage. See Collins v. Blunt, 15 A.D.3d 992, 993 (4th Dep’t 2005) (plaintiffs who sustained injuries “when a vehicle . . . struck the window of the room in which they were seated” were “covered persons” entitled to recovery under the No-Fault Law); Oeschger v. Fullforth, 51 A.D.2d 864, 864 (4th Dep’t 1976) (infant plaintiff who was hit by an automobile while riding his bicycle was “clearly ... a ‘covered person’” under the No-Fault Law). The No-Fault Statute provides insurance coverage for a wide range of individuals, many of whom have not paid— or even interacted— with the vehicle prior to their injury. The fee exchanged between a paying passenger and a self- insured common carrier does nothing to alter the statutory nature of that coverage. 7 This Court should reject the claim that an implied contract exists, and find that a three-year Statute of Limitations applies based on the statutory nature of the liabilities imposed by the No-Fault Law. APPLYING A THREE-YEAR STATUTE OF LIMITATIONS IS CONSISTENT WITH PUBLIC POLICY PROMOTING SPEEDY RESOLUTION OF NO-FAULT CLAIMS. II. This Court has recognized that “[t]he purpose of the No-Fault Law [i]s to promote prompt resolution of injury claims, limiting cost to consumers and alleviating unnecessary burdens on the courts.” Aetna Health Plans v. Hanover Ins. Co., 27 N.Y.3d 577, 582 (2016) (internal quotation marks and citations omitted); accord Pommells v. Perez, 4 N.Y.3d 566, 570-71 (2005) (“In 1973 the Legislature enacted the ‘Comprehensive Automobile Insurance Reparations Act’ . . . — commonly known as the No-Fault Law— with the objective of promoting prompt resolution of injury claims, limiting cost to consumers and alleviating unnecessary burdens on the courts (citing Governor’s Mem approving L. 1973, ch. 13, 1973 McKinney’s Session Laws of N.Y., at 2335)); Walton v. Lumbermens Mut. Cas. Co., 88 N.Y.2d 211, 214 (1996) (“New York’s no-fault insurance law, formally known as the ‘Comprehensive Automobile Insurance Reparations Act,’ was enacted in 1973 ... Its purpose[] w[as] to . . . establish a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of such accidents” (citations omitted)). 8 Extending this Court’s precedent in Aetna and MVAIC to apply CPLR 214(2)’s three-year limitations period to the no-fault claim at issue here is consistent with the No-Fault Law’s public policy of promoting efficient resolution of claims. Indeed, in applying CPLR 214(2)’s three-year Statute of Limitations to the No-Fault Law’s lien procedure in Aetna, this Court similarly explained that the purpose of the statutory scheme codified in the No-Fault Law is “to provide a more efficient means for adjusting financial responsibilities arising out of automobile accidents.” 67 N.Y.2d at 175; accord MVAIC, 89 N.Y.2d at 221 (stating that No- Fault Law’s purpose was efficiency (quoting Aetna, 67 N.Y.2d at 175)). Applying a six-year limitations period to Respondent’s no-fault claims, however, would permit beneficiaries to sit on their rights for years prior to filing suit, injecting delay and uncertainty into the no-fault industry. This would be anathema to No-Fault Law’s public policy encouraging expeditious resolution of no-fault claims. A three-year statute of limitations should thus apply to the no¬ fault claims at issue here. III. THE COURT’S DECISION COULD BROADLY IMPACT THE NO-FAULT INSURANCE INDUSTRY. This Court’s decision regarding the Statute of Limitations applicable to no¬ fault claims against a self-insurer could broadly impact the no-fault industry, including the applicable Statute of Limitations for: (1) a claim against a no-fault insurer (not a self-insurer); and (2) a claim to recover the statutory penalties for 9 failing to timely pay claims of 2% monthly interest and legal fees against a no-fault insurer or self-insurer. In reaching a decision here, the Court should consider the implications on both issues. The Court’s Decision Here Could Impact The Statute of Limitations For No-Fault Claims Against Insurers. This Court has clearly held that no-fault benefits are statutorily-created, and A. did not exist at common law. Aetna, 67 N.Y.2d at 175; MVAIC, 89 N.Y.2d at 221; see also Aetna Health Plans v. Hanover Ins. Co., 27 N.Y.3d 577, 583 (2016) (Stein, J. concurring) (describing the no-fault law as a “tightly-regulated and comprehensive no-fault statutory scheme”). While not directly decided by this Court, other New York courts have recognized that this holds true whether the no¬ fault benefits are provided by an insurer or self-insurer. See, e.g., Application of Country-Wide Ins. Co., 96 A.D.2d 471, 472 (1st Dep’t 1983), aff’d sub nom. Country-Wide Ins. Co. v. Manning, 62 N.Y.2d 748 (1984) (holding that insured and self-insured should be treated equivalently regarding provision of uninsured motorist protection). Because no-fault claims should be treated equivalently whether brought against an insurer or self-insured, the Court’s decision here could affect the statute of limitations for all no-fault claims brought against all defendants, not just those brought by paying customers against self-insured common-carriers. Based on this Court’s prior rulings, application of a three-year Statute of Limitations to no-fault 10 claims should be applicable to no-fault claims generally— regardless of whether the defendant is self-insured. B. The Court’s Decision Could Impact The Limitations Periods For No-Fault Law Penalties Of 2% Monthly Interest And Legal Fees. The Court’s decision here could also profoundly affect the Statute of Limitations applied to claims for penalties and legal fees for untimely payment of no-fault claims. Specifically, Insurance Law § 5106 sets forth penalties of two percent monthly interest, and legal fees when claims are not timely paid. Because these penalties are created by the No-Fault Statute, they should be also governed by a three-year Statute of Limitations. Applying a six-year Statute of Limitations in this case, however, could inject uncertainty into the applicable limitations period for those claims. Like the underlying benefits at issue here, these penalties exist solely by statute: they did not exist at common law, are not contained in any insurance policy, and are not even included in the mandatory policy endorsement set forth in 11 NYCRR 65-1.1. Nor are they among the required elements of no-fault coverage in Insurance Law § 5103. They constitute an additional and separate statutory penalty created by Insurance Law § 5106. A three-year limitations period should thus be applicable to these penalties as well. See CPLR 214(2). Indeed, the provisions’ legislative history further established that the two percent monthly interest was created as a statutory penalty for untimely payments 11 by insurers. In explaining the provisions of the original No-Fault Law, one of the bill’s sponsors stated that when timely payment is not made, “there is a penalty of 2% a month.” See Exhibit 1 annexed hereto. Later in the consideration of the bill, Senator Gordon reiterated that “This is why we provided 2% penalties per month.” See Exhibit 2. The Report of the Joint Legislative Committee also referred to “a penalty in the form of interest at the rate of two percent per month.” See Exhibit 3 at 11. Similarly, when the No-Fault Law was amended in 1981 to apply the two percent monthly interest to additional personal injury protection (“PIP”) claims, the Memorandum of the Insurance Department published with the bill stated that it was enacted to apply the “interest penalty of 2% per month” to additional PIP claims. See Exhibit 4 at A314. The attorneys’ fees provided for in Insurance Law § 5106 are likewise a “penalty or forfeiture created or imposed by statute.” As the Second Department explained in Simmons v. Government Emp. Ins. Co.: [T]he interest penalty may not be included by the insurer in ratemaking calculations (11 NYCRR 65.6(f)(5)). The reasonable attorney’s fee is based upon “the reasonable value of the legal work performed in obtaining the recovery” (11 NYCRR 65.6(g)(1)) and such fees similarly may not be included in rate-making calculations (11 NYCRR 65.6(g) (3)). 59 A.D.2d 468, 472 (2d Dep’t 1977); accord Dermatossian v. N.Y. City Transit Auth., 67 N.Y.2d 219, 224 (1986) (under Insurance Law § 5106, “insurers are 12 obliged to honor [the claim] promptly or suffer the statutory penalties”); Cardinell v. Allstate Ins. Co., 32 A.D.2d 772 (3d Dep’t 2003). Like the underlying benefits claimed by Respondent, the interest and attorneys’ fees pursuant to Insurance Law § 5106 are pure statutory penalties for untimely payment. The three-year Statute of Limitations mandated by CPLR 214(2) should thus apply to them as well. See City of New York v. Kingsview Homes, Inc., 70 A.D.2d 866 (1st Dep’t 1979) (applying CPLR 214(2) to fees created by statute which went beyond what was contemplated in the contract). Further underscoring their purpose to encourage prompt resolution of no¬ fault claims, see supra § II, courts have held that while a no-fault insurance policy survives an insolvent insurer’s period of rehabilitation, the statutory interest penalty does not. Specifically, in addressing this issue, Supreme Court, New York County explained: [N]owhere in the policy itself is there any provision for the payment of interest and attorney’s fees . . . The penalties for “overdue” payments are provided for solely in the statute and the regulations implementing the statute . . . Thus, while the policy itself may be deemed to have survived notwithstanding the insolvency of the insurer, the statutory penalties imposed upon the insurer do not. Exhibit 5, The Matter of Empire Mut. Ins. Co. and Allcity Ins. Co., (N.Y. Sup N.Y. Cnty. June 29, 1978). Supreme Court further explained that the statutory “interest/attomeys’ fee provisions were designed to be punitive. Thus, the ‘interest’ awarded by section 675 (1) is not truly interest, but a penalty imposed for 13 non-compliance with procedure . . . The award of attorneys’ fees is likewise punitive in nature.” Id. (Ins. Law § 675 was the predecessor to § 5106 prior to recodification); N.Y.L.J.; accord Exhibit 6, Mem. of the Liquidation Bureau of the Ins. Dep’t (explaining that while the benefits provided by a policy survive rehabilitation, “the statutory penalties do not.”). Because the penalties are designed to encourage swift resolution, the Regulations provide that interest is stayed if an applicant delays filing its claim or delays the pursuit of its litigation. See 11 NYCRR 65-3.9(c). Requiring a no-fault applicant to file its action within three years in order to recover the statutory penalties of interest and attorneys’ fees is also consistent with the legislative purpose of resolving no-fault disputes promptly. In Barnes v. Maryland Cas. Co., 124 Misc. 2d 942 (Civ. Ct. Kings Cnty. 1984), the court commented that: The law is not intended to cast a burden upon the carrier to pay 2% monthly compounded interest, which is ultimately absorbed by the consumer, to the party who proceeds dilatorily, although successfully. The regulation was to act as a lightning rod to spark disposition of claims and to lighten the trial calendar. The petitioner is not to be the beneficiary of his own delay. Id. at 944-45; see also 11 NYCRR 65-4.6(i) (providing that if a health provider violates the fee schedule, it cannot receive an attorneys’ fee even if it prevails on its claim; Med. Soc. v. Serio, 100 N.Y.2d 854, 871 (2003) (upholding 11 NYCRR 65-4.6(i)). 14 Thus, applying a three-year Statute of Limitations to the statutory penalties of interest and attorneys’ fees is consistent with the requirements of CPLR 214(2), and the public policy rationale for the penalties— encouraging speedy resolution of no-fault claims. A claimant who delays filing its claims for several years should not be awarded the statutory penalties. CONCLUSION The Amicus respectfully requests that this Court hold that a three-year Statute of Limitations applies to no-fault claims against self-insurers. Dated: September 26, 2017 New York, New York Respectfully submitted, Skip Short, Esq. SHORT & BILLY, P.C Attorneys for Amicus American Transit Ins. Co. 217 Broadway, Suite 300 New York, N.Y. 10007 (212) 732-3320 Respectfully submitted, 7 /sfykuX Carmen Beauchaifip Ciparick, Esq. Of Counsel GREENBERG TRAURIG, LLP 15 Attorneys for Amicus American Transit Ins. Co. 200 Park Avenue New York, N.Y. 10166 (212) 801-6807 16 NEW YORK STATE COURT OF APPEALS CERTIFICATE OF COMPLIANCE I hereby certify pursuant to 22 NYCRR 500.1(j) that the foregoing brief was prepared on a computer using Microsoft Word. Type. A Monospaced typeface was used, as follows: Name of typeface: Point size: Line spacing: Times New Roman 14 Double Word Count. The total number of words in this brief, inclusive of point headings and footnotes and exclusive of pages containing the table of contents, table of citations, proof of service, certificate of compliance, corporate disclosure statement, questions presented, statement of related cases, or any authorized addendum containing statutes, rules, regulations, etc., is 3,436 words. Dated: September 26, 2017 New York, New York SHORT & BILLY, P.C. Attorneys for the Movants 217 Broadway, Suite 300 New York, New York 10007 1/ (— - By: Skip Short, Esq. Exhibit 1 , * r ,.,-n !BIBg I ' m mk, /ÿ; a ■nm -=i l i ,i’S 1 I1 Hi iJPH s t i St SENATE DEBATE TRANSCRIPTS 1973 Chapter 13 166 PAGES NEW YORK LEGISLATIVE SERVICE, INC. 299 Broadway, New York, NY 10007 (212) 962-2826 www.nyfi.aq| * O AM appEcpfafa right* 9mw t ■ . __ * • _ _ __ __ _ i r TAPE J SENATE SESSION FE&Rl'ARY 12, 1973 PACE i of bindIns arbitration - a system to b« sot. up t>v the Superintendent of Insurance. wherein there are certain penalties If the psyae&t of a Just claim is net medv. And if there la any question about the clala at all, and they fall to pay It within the 30 day period, thero la a penalty of 2i a month. Aa a aattar of fact, we want even a little farther and made certain that if therr ware any reason that a dais was turned down unjustifiably, that even the attorney’s fees for the pcion conlr ’ico the binding arbitration proceedings would be paid. Now, in addition to everythin* else, we have nade a change in tba bill to sake certain that tk»re la na misunderstanding that after the basic eennoalc losses are paid to the person injured that there la no dilution of any degree to the responsibility of the insurance eaapany to pay any court clalne agalnat the person to whoa tha first party benefits have been paid. In other words, to use an extreme example, if $30,000 were paid of baste economic losses to an Individual, end he wee thereafter sued, we didn’t want the insurance company to any, well you only have a $10,000/520,000 policy. We paid you $50,000. Wo are home free. We wanted to make certain Chat the insurance company was still responsible under the Bodily Injury liability portion of the policy foi that amount aa written in the policy, and we have ao provided for that. Now, we have provided for rafunds. We have provided for a method for de¬ termining profitability, and I know that this comas to tha cora of some of the problems } that have been previously diacuaeed. Along this particular line, 1 think it la interesting, and 1 think that It la important to nota that the Superintendent df Insurance hae already started public hearInga bn tha question of profitability. I attended several of theaa hearInge so far, and I hopa to gat to some more, but gentliman, the questinn of profitability la a complex, Intricate subject mattes. In my diacuMiona with the Superintendent Z have aseured him of the desire of tha Legisla¬ ture, arid 1 feol that 1 speak for many of you, to sake certain that the profitability item haa been kept down to what could ha reasonable, whet could ba minimal Under tha "balsast-falre" system. I think that ha recognises this. Therm la no question in my V•mm ......~ *" .....— . ' ... ■ ■ ■■■ ~ tAi*r. > SENATE SESSION rcwi jUT U\ 1*71 FAiir » Sind «1 *U, And 1 l Kink that ha 1» aolna to Ml* »r«r» aftor!, «• >,? hi* ilr*«4f IP sake, IP ir* what ran ba .tan* about tha qtiaatton of prof ttabtllty. I think» that v* wilt probably hr tha fu*' Stata In this country to auccaaafully attack that It la difficult. It la Vary, vary coopla*, and really, /uilWlJ youparticular :i ; K. . | - —-Ml ' f TAft IS SCUTE SESSION FLSftCAKT 12, 1973 PAC-E I» or should have been exxnlostion of this particular problea, especially since In the State of Florida, today they are cosplalolni bitterly that the Insurance companies are hasallng on each and every nodical payment, eepe. tally since those of you who have nodical payments and have approached thair own insurance companies, have aubmitted bills snd have likewise baan Hasaled. Now, Senator, 1 an aura that you stored thla. 1 think that you gave it away whan you said thla bill can atand on its own two foot. Util, Senator, 1 challenge you to advise this Body what an laturad who haa Incurred first party expenses - factor and nedical expenses - is to do whan ha submits his bill, and the gentleman on etia other line tails hla that this la not reasonable and necessary. We think you should have only paid 20X, 301. What does ha do than! He sujC, then get an attorney. He then auat proceed with arbitration. Nov 1 don't know about your community, but 1 daresay that In ay community, they won't know vhat to do, The very fact of the nectar la there la nothing to do so you throw up your hands and you take what you can got and you Just keep on cunning. The Insurance canpeny keeps on making a great profit. Now, Senator, that question la befora ue now. What happens when t..i! insurance company tells a fellow that he should not have paid. It la not reasonable and it ia not naceaaary. Vhat doao he do?* PRESIDING OFFICER! The question arista on the amondmont offered by Senator Lewis, Senator Lewie. SENATOR LEWIS! I wilt ask the Sen*tot to yield with a more definitive Senator, you otatod I believe that thin bill can aland on its own, I give you, therefore, thla premies - what lg the Insured's remedy?' Should ha aubeit hla /expenses on a first party claim, and tho insurance .adjuster refuse to pay allot It? Vhat ia bin remedy? i question. * SENATOR CORDONi Under tbo bill, Senator, tboro to a binding arbitration proendur* to be promulgated by tho Euporintondant of Inaurmeo, Thio It vhoro tho i claim comas. This to why wo provided H penalties par nonth. Thin In whp wo provldod also that If thora la a disputed elate and tho Insurance company U found to bo wrong, f 9 99 m 9 m IATV IV sr.NAtK stjtsu’N rrswAUi i:. i»?i PW:C » {Jut the c-«panv Ii lUs rtiponiltU for any aitornry't faea aa a mult of tha (lilaant fjjj getting an attorney to COB* In. 1 perhapa ahouldn't have Interjected oyeelf , Senator, f|| and field that we are going to consider eon*thing that you have suggested baeauaa It Juat opened the donr to a tot of prohlana. And tha problems ara that if va ara going to conalder »omr thing In a raaaonabla light, wa ahould take th. praaant . 1 don't aubacrlb* to that, and you can understand why. . and ind I juatIt and atnrt anew. trying to give you, Senator, aa heat aa I ran froai A paraonal viewpoint, a fair appralant nf what I w>m|d Ilka to aae done, four atat meant that a Chapter aaendaant never take* place la erroneoua baeauaa you hava baenhara long enough to aaa aany Chapter .uvstwhacntn and t wa* Juat offering to you. Senator, any part that I could posslb- l* play In trvlng to attreipt to come to » or TAPF. i •> a Exhibit 3 Aig:PHSr**!?*3-’*- -- * rp )MWKSWT*8 m&---sSsk: -4*s wv* * >* fIf? •MVTIJ • j . 'NEW'YORK.|LES1SLAT!VE DOCUMENTS NO. IS l; I \ I3 ! ! i; I i i ; i ! i REPORT OP THE JOINT LEGISLATIVE COMMITTEE ON INSURANCE RATES. REGULATION AND ! RECODIFJCATION OF THE INSURANCE IAW : i I IS ; : % : !n ! t I: i< %ii "t;1 ! 5 i *i f >i 5. 1 t ? Ii STATE OF NEW YORK LEGISLATIVEDOCUMENTNO.IB1 1973!*ÿ i - i ::-I!ÿ i; i % I i >s \ I5 — m NEW YORK LEG lm**y • • t 1973M1 i gtr § ' !• i *•is : Pinanml at Ote CommittM THE COMMITTEE: SgatorDcmmlO.Groton.CMIrmin Senator /ante*H- Donovan SenatorJohn R, Donne Senator Mania J.Kaorr Semtor A.FWetfakMqroca /UwmbhmÿÿOMOnlqr.ViesCMna AMcnbÿnwa RatalF.KtOyAttasbÿnan Hynaa MSto AuaaMpnwJooeph M.MamaceBo AuemMynaa LoetoF.ROMO ANAMJAIIISaintonJ.Orieeo* Et i. i S i ;T' s ,• i EX-OFFICIO MEMBERS:i -! SenatorEul W. Btydgea**SenatorWanesAodsaoo*** SnatoriSattadÿ* SenatorIotaGaeomerer i AuanUynan PettyB.Dwjca Jr_Spota AaeaabljaaaaStank;jShtopt ABtaWjnnnJoto E.Kfepton AssemblymanVtBO»H.Stephens3' -sanstota- 4 : i 3.on THE STAFF:' . Professor Manricc Roscnbay.Comxihmf Cocrad JawsDenpsey EnwQesml Stephen1.Vcatic,AstroChoral Ja&aaLGfetn.Dtaterof Rematch •> : DooUeLEkto, MmbSum Ehte** Banks.swimiy TotheLegolatnreof theStateolHeirYack:cr* ! i 11 ;t>*m I ■| > ! wmm sn&M/iitsitft»: [jttJ! %pij?OW(S£ÿSUTIVE DOCUMENTS No. 18 i . t *m ft*— *«r f J * i |WII. I aHS V i I LETTER OF TRANSMITTAL ; Pursuant to con u the Joint UgW* live Committee on Insaauicc Rater. Regulation and RecodUeation of tbs Iaststmoec Lew respectfully tab. mils this 'Report, covering the work el Jtt study end Investigation for the dial year cotfieg March 31. 1973. u eatreded. t ResI mmmiSenator Bernard G. Cordon,ChairmanSenator James KDoaoveaSenator John R.DunneSenator Martin J.Knott Senator A. Frederick Mcyeaen Senator Joseph L. Caliber Assemblyman John G. McCarthy. V.Chairman Assemblyman Robert F.Kelly Assembtjman Hyman MlDer * Assemblyman Lock) F. Rosso Assemblyman Joseph M.Martuscello AssemblymanSaintote Qrieeo* •Wot .metotvre*AncMbh-aeiflineVT I.»9» ; ; f i i i1 i i:i . i ■HI■ 1 k: i * s .* i 3 :: i ■m4 i f ___ - .....- -ÿÿÿÿ• ' - l&y'M’l,HI NEW YORK■H 1973 ?+ÿ: ' . XJ..,., , ■_ ! !• HIi 1 Le, tio: Co Rc.tv I ole* : RESOLUTION ESTABLISHING *ND CONTINUING THE JOINT LEGISLATIVE • COMMITTEE ON INSURANCE RATES, REGULATION AND RECODIFICATION OF THE INSURANCE LAW .IN SENATE (SI00,000). or to imieb thereof as may be necessary, be appropriated from the contingent fund of the Legis¬ lature. to pay the expenses of tueh committee during the fiscal year commencing April first, nineteen hundred seventy-two. Such money shall be payable on tho audit and warrant of the Comptroller on vouchers certified and approved in the manner provided by law; and be it further RESOLVED fit the Assembly coocur). That so much of the funds heretofore appropriated for the use of such committee and remaining unexpended be reap- propriated (or sueb committee payable on tha audit and warrant of the Comptroller on voucher certified and approved In the manner provided by law. (Same Resolution by Assemblyman I. McCarthy— ABB)Finance Com. May 4 Rept. amend as indicated May 9 Adopted. Assembly Adopted. IN SENATE ALBANY, MARCH 20, 1973 -Resolution No. 99 to Inn IDS: ' me1 Sr' odf wb- gai.7 ALBANY, MAY 4, 1972 Resolution No. 49 suey to 1 lullBy Commutes on Rslest RESOLVED (ill the Assembly concur), That the Joint Legislative Committee on Insurance Rates, Regu¬ lation and Recodification of the Insurance law, crested by concurrent resolution adopted on May tenth, nine¬ teen hundred sixty-six, ami last continued by concur¬ rent resolution adopted ]on June sixth, nineteen hundred seventy-one, be tod hereby Is continued with . . all its powers and duties to March thirty-first, nineteen ; ; hundred leventy-ihfcee; and be It fnnher RESOLVED .fill the Assembly concur), That such :;-TT * , committee shall make a report of its legislative reenm- iir ■ ’ meodallons, If any,’ to the Temporary President of (he * , Senate and the Speaker of the Assembly on or before December fifteenth; nineteen hundred seventy-two, and shall make a report of Ifa activities hereunder to the , Legislature on or;before March thirty-first, nineteen hundred seventy-three; and be it farther * RESOLVED (if the Assembly concur), Tbit the sura of tone hundred twenty-five thousand dollan ' (2125,000)) One Hundred Thousand Dalian the ncc net llvt of- cni it: • COI !m ■He 19 !lOBy Committee on Rules: RESOLVED (if the Assembly concur), That the existence of and the time for reports by all joint legis¬ lative committees created or continued by concurrent resolution adopted at lbs 1972 session, are hereby extended until tire fifteenth day following the adjourn¬ ment sine die of the nineteen hundred seventy-three regular legislative session. Finance Com. March 20 Rept Mar. 21 Adopted. March 26 Assembly adopted. £01 to ha cm ICC ih; »1£ lot PH (he1 ■ cn net Cc Lcr. < Lc 1 ( LeLe-V Lef.' . I fM Lcj ■* Le I-Ct Lc r 4, w '1-1: j. -- ' „ t '1f*rÿr] -. :\ ■ . » , rNEW.Y0RK.1EGISLATIVE DOCUMENfS , No. 18i • i :i • «• HISTORICAL. * * >Initially created in 1947 and designated the Joint Legislative Committee on Insurance Rates and Regula¬ tion and redesignated in ,1967 os the Joint legislative Committee on Insurance Rates; Regulations and RajodiScation o( the Insurance Law and Related Stat¬ utes, this Committee is charged with the responsibility to poke a comprehensive study and investigation of instunnee rates and the business of Insurance and to make a study of all provisions o( law relating to auto¬ mobile liability insurance and the practises and meth¬ odÿ of Insurance companies in (heir dealings with those who purchase such Insurance; and further, lo investi¬ gate and study the problems of cancellation of any such policies in any manner so as to cause on lojustiee to the Insureds; and finally, pursuant to the Joint Reso¬ lution adopted In 1967, to examine the provisions ot thej Insurance Law IUKI related ’itetutes toward the need or desirability for rccodlficatian. It b deserving ot note, perhaps In support ot tho need, or perhaps by way of justification of the Legisla¬ tive leaders who have seen the products of the efforts of Ihl* committee, that this Joint Legislative Committee enjoys the distinction of being the third oldest joint committee In the Legislature. Only the Committee on Industrial and Labor Relations' created ,hi 1938 and the Committee on Intentate Cooperation created in 1905 can claim more longevity. There are some Indies- lidns that this Joint Legislative Committee may bo dis¬ continued at the end of this fiscal period, March 31, 19(73. not because alt problems In the insurance field have suddenly evaporated-or have alt been met and ctyiquened during the 26 year lifetime of this Commit¬ tee, but more as a result of current legislative thinking that the Standing Committees In Insurance should be made year round committees with an adequate stall to look into and watch over the continuing needs and practises of the insurance Industry, the consumer, and tire Insurance Department.' * !An awareness of (be relative place ot insurance cov¬erages generally in the list of the necessities of lire fs self evident if one examines the 'annual reports t( this Cbmmitlcc: Legislative document 1948,No. *6 Legislative document 1949,No.7b liegillalive document 1950,No. 44 Legislative document 1951,No. S5 • liegistative document 1952,No. 57 (Majority report.Minority-report No. 58) Legislative document 1953,No. 47 Legislative document 1954,No. 57 Legislative document 1955, No. 56 Legislative document 1956, No. 40 Legislative document 1957,No. 31 Legislative document 1058,No. 29 Legislative doedment 1959,No.18 Legislative document 1960,No. 13 Legislative document 1961,No. 81 Legislative document 1962,No.76 Legislative document 1963,No. 13 Legislative document 1964,No.28 Legislative document 1965,No: 10 Legislative document 1966, No. 23 Legislative document 1967,No. 9 Legislative document 1968,No. 10 Legislative document 1969,No.9 Legislative document 1970,No.12 Legislative document 1971,No. 6 Legislative document 1972,No. 21 Speaking historically and nho by way of expressing a feeling of self accomplishment, wc mention an annual highlight in the "career'' of ibb Committee from 1967, the first Tull legislative year following Senator Gordon's appointment as the Chairman. 1967 b looked upon as the hints year of the Keaton-O'Connell plan and Cram It there have emerged numerous and varied proposals (or No-Fault legislation. Because of il, or inspired by it this Committee over the ensuing five yean held some thirty days of public hearings, the ikst of which were on March 1, 2 and 3, 1972; and Governor Rockefeller was moved in 1970 to direct his then Superintendent ot Ineutanca, Richard E. Stewart, to make a thorough ’ appraisal of New York's vehicle accident reparations system which wax to result In the much widely read and dlscunted report entitled “Automobile Insurance... For Whose Benefit", and two subsequent administra¬ tion’ legislative proposals for a form of No-Fault, namely, SB922 (1970) and S4850 (1971). The intensity nf through, discussion and debate which has been provoked by (his concept that nn automobile accident b-nat necessarily anyone's fsol.L or at least the need to always determine that fault, b overridden by the greater need to provide prompt and substantial reparation to the victims, culminated in a strongly con¬ tested non partisan debale in the Legislature on May 9, 1972 which laidNo-Fault to rest for that sesalon. In 1968 a principal product and achievement of this Committee's concern and efforts, motivated by its ever watchful eye for current troubles in the day to day complexities of the business of insurance, was the ''Pool Bill." Through its machinery, protections and a market were made available ngainst fire hazards which were fast declining and being denied for "underwriting reasons". Chapter 131 of the Laws of 1968 wax the enactment of that bill. In 1969 there were a number of Influences which heightened the risk of Insolvency of insurers, not the \ Legis- during as teen blc on uehecs y law; iai go he use reap- audit -.rtifidd (Same vfj J May ,1923 st the .legfa- lirrejit hereby Ijourh- Mhree *lopted. ! 5 > ; ■ Pfc-V-f i j •’ 1973 NEW YORK P-i-Ik? • j II . I < s text ot which was the rising inflation. This Committee was awiue o( and sensitive to these pressures. Chapter 189 o( the Laws of 1969 outdo effective additional safeguards against such an eventuality. The rather cumbersome, costly and time consuming practises of the prior approval system of rate malting in the area of casualty insurance prompted a thorough look at alternative methods for establishing fairness and competition in the determination of the “retail" price of insurance. A scanning of the experience of other Jurisdictions and a weighing ot the words ol many who were knowledgeable in this area led to the introduction of a measure and Urn enactment of Chap¬ ter 189 ot the Laws of 1969 (o effectuate open rating on a four year trial basis. Its eoathtusnee or Its demise Is due to be considered during the current legislative sesiIon. Vandalism and high costs, more delicately termed socio-economic (acton, dictated the need to find a mechanism to insure the Insurabiliey of our schools. Chapter 9 of the.Laws of 1971 followed months of searching and study and has made the cancellation and the refusals to underwrite three coverages a thing of the past. During the 1971-72 year in the life ef this Commit¬ tee Ih preparation for and anticipation ot the 1972 legislative session, die one overriding Issue challenging every thoughtful mind concerned with the business of insurance was the matter of No-Fault as a replace¬ ment. or not, (or (he existing system for making auto¬ mobile accident reparations, and if to, how pure must or can Its Ingredients be. There were indications that the executive branch had. if not forsaken, certainly relaxed its previous push to enact the so-called Stewart plan; there were strong currents of opposition to tha Cordon bill (58000, A, B) led by the Trial Lawyers Association and numerous Bar groups; there were a number ot counter, substitute or compromise propos¬ als, each demanding thoughtful consideration aad seek¬ ing direction from the experience and knowledge of this Committee. S-8000, multi-sponsored by Senator Gordon, et al. was Introduced February 2, 1972 and was subsequently amended twice to become S8000B, the version which was debated on the Senate Boor on May 9, 1972 and defeated. 59686, xpontored by Sena¬ tor Laverne, Hughes et al, «u introduced on March 7, 1972, referred to tho CommlUea on ludleUry, and as amended three times represented the degree of sceept- ancc hy most segments of' the Bar as a substitute for the existing tort system for determining entitlement to benefits from insurance coverages against automobile damages. This bill was passed by tha Senate, referred to Assembly Rules Committee and did not receive a favor¬ able report by that committee to the Assembly floor. The loreping chronology serves u a bint at the multitude of the problems to which this Committee has given of its time, energies and talents over tire put several yean. The rest of this Report will look to the running events of this past year highlighted, of course, by the struggle, not so much it seemed as one for or against (be concept of No-Fault, but rather to agree on the form it should take. This is substantiated tome what from an examioation of S8000S and 59686C, representing two determined and thoughtful factions, copies of which are included in this Report as Exhibits B & C respectively. It is the consequences from the enactment of either bill into law which appear to have drawn the sharp lines between the proponents and opponents of the two measures, rather than the specif¬ ies In phraseology or whether or not some form of No-Fiult should bo enacted. A fair summary of a basic difference between the concept ol S0686C, or the so- called New York State Bar Association measure, and S8000B, this being tho end product from the many days of hearings by this Committee as the testimony was lifted, phrased and rephrased into bill language, can be taken from o statement made during the Senate debate of May 9, 1972 by 5enator Bernstein— "The Laverne Bill (59686C) combines the better features ol a Fault System and R No-Fault System because under the Laverne Bill, as under your bill Senator, an injured person could receive his instant cash for hit economic loax. But unlike your blit it retains the benefit on a serious Injury its properly defined to go into court and recover for bis pain and suffering". With the defeat by the Senate of S8000B and the passage of S9686C, albeit the Assembly Rules Com¬ mittee did not report it to the floor for a vote, was cer¬ tainly cause for and did prompt this Committee to study la fine detail Ihc variances between the two measures anil to attempt to peer into the future to determine on a course of action. Were these variances irreconcilable? Were the supporting arguments or the opposing arguments on the two sides real and valid? On what points o( departure, if any, could or should compromise features be considered while maintaining the virtues and character of the No-Fault concept? Was there any practical consideration evident as to what the consumer wanted and how could a reading be obtained w|tb reasonable accuracy? Following adjournment of the 1972 session of the Legislature, Senator Gordon is Chtirman of this Com- miuee, driven fay both his conviction as to the merits ot No-Fault and by an earnest need to formulate the knowledge and dam accumulated over the several years into acceptable nml workable legislation, in concert with his staff, the Department, other members of the Committee, representatives of the industry, the agents iI if ::au % •J III c a i 3F iiFr j:>I \l v> c g c I- A .r Pr cr. ry. £ - rII : F i i F ■i t I*¥ i ?: rc lmma l Cl< tr rI i\i s i i r ti t \ ! it Ift I \ 1 : ii h 6am & ■ 853k. \ i *.; \l NEW;.-YORK,’LEGISLATIVE DOCUMENTS-'}ÿ • *rr iNo. 18:■ l ! > fatal at the ,, Committee has .‘ aver lira pest < viU look,la the :t _ tied, '-ot course, u one for or < her to agree on Jtantfated some i and S9686C, fht/ut factions, 1 ortas Exhibits -j sneer from the appear lo have ropownis and \ ban ibe sped!- | soma form of ' nary"of a baric , 6C, or the so- | i measure, and . romithe many j the, testimony i bill, language, j ring ‘the Senate j ernsmill— "The tier features of because under ttor, an injured ■r his economic c benefit on a Into eouit and j # BOOOB and the j ly Rules Com- j ivote,-was cct- 1 Committee to tween the two! > the future to - these variances j gumenu or the j- real,and val!d7 1- xuld or should! tile maintaining: It concept? Was; it as to what the* lingbe obtained lsession of the.'- ■an of this Com-j. as to tbo medts to firmulato tho. the several years i Jlon, in concert; members o( the ' ustry, the agents . and the consumers, devoted many hours in drilling a new proposal lor (he 1973 session. To a large degree, an analysis o( Information;available from those Jurisdic¬ tions which had Instituted No-Fault, with particular attention being drawn to Mossacbusctts, was showing great promise, even It not 100% success and accept¬ ance. indications were tbkt the insureds In Massachu¬ setts were saving premium dollars and there had been little hesitation in extending the concept to Include property damage as wall os personal injury claims. Connecticut adopted legislation to become effective in lanuaty, 1973. New Jersey was following suit. There- was at least some evidence here in New York that the opposition and their arguments were foreboding less contention the nest time around. Fortified with such real or apparent optimism the basics of the bill which was to become S2000B- A2974A and to be Introduced January 30, 1973, passed on February 12, 1973, and signed into taw as Chapter 13 of the Laws of 1973 by Governor Rocke¬ feller, were conceived, drafted into legislative bill fonn, revised, redrafted and In conference after coulcrenca with Assembly leaders, industry spokesmen, consumer representatives, members of the Bar and with agents. Fallowing the introduction of this Joint bill, in a news release dated 1/3(1/73, Assemblyman John G. McCarthy, Chairman of i the Assembly Standing Com¬ mittee on Insurance and a member of this Joint Legis¬ lative Committee, characterized this measure «*“... the strongest program in first party benefits.'* in the nation.'in touching upon the highlight! of the bill as co-ipoiuorcd by Assemblyman McCarthy. Speaker Perry B. Durye» and Assemblyman H. Dark Belt, be emphasized the near certainty of reduced premiums; the first party benefits of up to $50,000 covering u... all reasonable and most necessary rehabilitation and medical expenses asecijalnafila within oae year of accident; loa wages up to $1000 per month Tor a period n( three years less 20 percent (representing taxes (hat would normally bo payable) and accessary services, such as housekeeping services, up to S2S per day lor one year.'1 Of seemingly significant importance and os a departure from so many other proposals, Assemblyman McCarthy made a point to mention that there would be “No deduction.for offsets ■gainst the benefits paysble) except for Social Security Disability Benefits end Workmen's Compensation payments would be made. Payment would be Imposed within 30 days of a corroborated injury; two percent Interest per month In addition to reasonable attorney’s fees would be levied on delinquent payments." These points were made by Assemblymen McCarthy In aatlcipitlon ot the passage of S-2000B A-2974A but were not at great varinnee with those made by Gov. Rockefeller In his memorandum filed with the bill on the occasion of bis signing it into law on February 13. 1973 as Cbaptcr 13 when he stated “With the enactment ol this meas¬ ure, the present automobile insurance system— asystem which costs too much, takes too long to pay off and delivers too little protection— will be cast aside. InIts stead will be a new Insurance reparations system which— assures that every auto accident victim will be com¬pensated for substantially all of bis economic loss, promptly and without regard to fault; —will eliminate the vast majority of auto accident neg¬ ligence suits, thereby freeing our courts for more Important tasks; and— provides substantial premium savings to all New York Motorists. The passage of No-Fault onto Insurance is a triumph of good sense and a victory for (ha people. On the solid foundation of this bill, 1hope that wo can con¬ tinue to achieve further premium savings and get even more negligence eases out of the courts in the future. Iam, therefore, pleased to give my approval of this longoverdue incisure. Thebill is approved. Looking back to 1969 when Governor Rockefeller had charged bis then Superintendent of Insurance, Ri¬ chard E. Stewart, with the making of a comprehensive study of the fault automobile accident reparation) sys¬ tem and the making recommendations for alternatives which culminated in tha publication of “Automobile Insurance— For Whose Benefit*' on February 12, 1970 and the Introduction of A6I33 by tbe Committee on Rules on March 10, 1970, one might say that the Gov¬ ernor has been a champion for the enactment of No- Fault legislation in New York. He has urged its adop¬ tion in his last two annual messages to the Legislature and his elation over Inpassage by the Legislature this year Is cosily discernible from bis remarks hr a News Release of February 13, 1973 when he staled the "Passage of No-Fault will put behind us a legal dino¬ saur that has coat the consumer tea much money and has delivered the accident victim too little protection." ami "We owe an enormous debt of gratitude; —In the Senate, to Bemle Gordon, tireless chans- plan of No-Fault for years, and to John Dunne, Chair¬ man of thaSenate insurance Committee;— and in the Assembly, to Jaho McCarthy and H.Clark Bell. "Wllh the passage of No-Fault auto Insurance, wc have adopted a new, and far more relevant system to ease the financial consequences of automobile acci¬ dents. . "on the solid basis ot our new law,Ihope that wc ean continue to achieve further premium savings and get ;l 1 J r f 7r t X < gg? 1973 NEW YORK LE6ISLATfa. . ‘ When, on February 12, 1973, S 20000 reached the third Reading Calendar and was called up for debate, Senator Schermerhotn wax ready with amendments which would effectuate those feature* of no-fault as he had outlined them In the News Release discussed above, (n Ms remarks opening the debate on S2QOOO, Senator Gordon reviewed the history of this joint Legislative Committees' concern with no-fanlt os it was bom nt the time of the release of the Keaton- O'Connell plan In 1968. White the theory of no-fault in¬ surance was not an entirely new one, for the Satatehc- wan Dan dates back to die 1930's, the Keaton- O'Connel! plan up-dated its concept varied Its mechan¬ isms. dollar limitations, inclusions and exclusions and gave it widespread and general publicity. It was recognised in many areas as a legislative challenge and soon accepted by this Committee ax a proposal with which it nuixt deal. After very careful xiudv ard evaluation. Senator Gordon outlined this "new" method for compensating automobile accident vic¬ tims and. after touching upon Its virtues and antici¬ pated sources of opposition, received concurrence to proceed with the scheduling of public hearings throughout the Slate. A review of the activities of this Committee from 1969 through 1971 shows that them were some thirty days devoted in actual hearings from Buffalo to Albany to New York. Conceive If you will the reams of pages of testimony; the conceptual no¬ tions, theories, assumptions and apprehensions ex¬ pressed by insurance professionals, legal experts, ac¬ tuarial "prosumers", consumer protectors, professors.’ motorcyclists, farmers, truck drivers, urbanists, roral- !«». and yes. religious leaders, requiring most careful study and analysis, and you will approximate the mountainous risk that has been seated by thb Commit- re culminating in the adoption of Chapter'13 of the taws of 1973. These arduous days, weeks, months and yuan were recognised In many corners and were well sumtnarfrrd hi an editorial In the Reporter Dispatch, White Plains, N.Y, on February 14. 1973 when follow¬ ing the lead line "Gorton's endurance teal" St said "it there were such a thing as combat pay In the Legisla¬ ture. Senator Bernard O. Gordon, R-PcekskM, would qualify for it. As Insurance chairman and chief spear- carrier for no-fault insurance. He has been the target of slings and arrows from all sides. The assaults were not without effect. In the end ha hod to accept dilutions in order to win passage. The acceptance of a S300 threshold— meaning avictim can sua If medical and related expenses reach that amount— was quite a comedown from the 33.000 threshold he originally proposed. Obviously the tower threshold won't relieve court congestion as much, but it will avoid litigation in most cases— thus reducing not even more negligence eases out of courts in the future. ‘‘No-Fault Insurance Is also an outstanding example of what this Country needs badly today: —and that Is the need to match the services pro¬ vided by our fnstitulions to the conditions of the mod¬ em world." Of course not every legislator jumped to Ihc support of the Garden-McCanhy 1973 bHI, and there were other proposals which received considerable attention, evaluation and comparison. One such proposal was that of Senator Scbcrnterhom and Assemblyman Hen¬ derson, Rather Ilian go into the detail of a point by point discussion ol the variances between this proposal and that which is now the law of this state, it certainly will he interesting to set out the salient points af this “other'' measure as summarised In a News Release by SenatorSchcrmcrhom as Follows: I , Unlimited compulsory no-fault medical payments ineluding physical and occupational rehabilita¬ tion. No-fault lump sum death buneAt equal us one year’s wage-, up to S12,n00. A no-fault reimbursement of expenses for house¬ hold services at S23.H0 per day not to exceed S3,730 in the aggregate. 2. Benefits which remain unpaid for thirty (30) days will hear interest at the rate of 6% per year. 3 Claims up to 54,000 are to be litigated under a system of compulsory arbitration to be promul¬ gated by the Appellate Division nf each judicial Department. 4, Tire comparative negligence rule is substituted for the present harsh contributory negligence rule. S. Interest shall be recoverable on awards for dam¬ ages resulting from negligence. 6. Henceforth, insurance rates have the prior ap¬ proval »1 the Superintendent of Insurance who is required to conduct hearings before rates are es¬ tablished similar to the hearings conducted by ‘ the Public Service Commission when it deter¬ mines utility rates. The- Superintendent of Insurance must consider insurance company earnings from all source: when rates arc established. Without any intendnn of editorializing, it probably can be safely said, that except fat those areas which deal with rate making policies and the procedures for settling claims above the established threshholds, we see in this proposal mostly an Individual difference of feeling at to the mounts which are to be paid for inju¬ ries nndcr the no-fault feature for injuries under the no-taull feature with the preservation Of certain adver¬ sary rights under defined procedures. only court cor expenses a> »e And. by no illc price of ihv premiums. Even if this would commcs hursemem of a Under the j overpaid while hassling and hi The (in-fault| over that Th> hilt dr: properly ilini; claim* Util sp experience in Lr proven to b Ju*l ax nu-l and culpable • have in cxeluri roaring down i rriy parted at been sorted o> age could txcc For now. i bany, reprexer insurance refc for his genera as he Ufcc- or man of the jud Having sha and persistent lest, these (cw his the C drive toward between the dent imli-mnil and tempered the thorough Striving tow.ii Sen.it >ir Cord .Senate debate have In Jid a pcct* of wh.it Ihink that a* pro of cen rv hern aired ex ingx. ind wh a tn-f iuit bil system ol aut under mdictn agree that it segments of t 14 ' :: | III ; i 8 ... ' —EW YORK LEGISLATIVE DOCUMENTS No. 18 n~ (he only conn congestion but Insurance companies’ legal expenses as well. And. by no means least, the new system will reduce (lie price of the buddy injury portion of auto Insurance premiums. Even if this plan did not save anyone a dime, it would commend itself for the feature of swift reim¬ bursement of accident victims up to S5Q.000, Under the present system, minor claims tend hi be overpaid while major claims, after years of legalistic hassling and litigation, are underpaid or not paid at all. The no-fnult process has to bo a huge improvement over that. The bill drew some criticism because it didn’t cover property damage, which accounts lor moat insurance claims. Uut sponsors felt it would be better to observe experience in Massachusetts, where this feature has so far proved to be rather complicated. Just as no-fault injury insurance excludes criminals ami culpable drunks, a no-fault property policy would have to exclude such characters as the one who comes roaring down the street and smaeks into your car prop¬ erly parked at the eutb. But when the problems have heen sorted oot. ro*-f mlt coverage far vehicular dam¬ age could become feasible. Fur noiv. (he no-fault legislation approved in Al¬ bany, represents a substantial stride in the direction of insurance reform, ft is time to thank Senator Cordon Cor his generally thankless labors and to wish him well as he takes on a new syndrome of headaches ax chair¬ man of the judiciary committee.’’ Having characterized Senator Gordon1* perseverance and persistence over some live yean as an endurance test, tlwsc few accolades serve well ax a recognition of bis and the Committee's untiring effort and relendcis drive toward the rather elusive goat uf a compromise between the existing procedures for automohile acci¬ dent indemnification and a No-Fault system modified and tempered su as to overcome formidable opposition. The thoroughness and the depth of the live year study striving inward this gnal was certainly suggested hy Senator Cordon in his remarks mi tbo occasion of the Senate debate cn S 200QB on February 12, 2973. ‘'We have heard a lut of :hc philosophical and practical as¬ pects uf what no-fault wilt or will not do, andIdon't think (hat as n( the moment there ate new arguments pro or eon relating to no-fault Insurance: they have all been sired extensively. But throughout all of the bear¬ ings— and what prompted me so move strenuously fora no-fault bill in 1971- -was the fact that the present system of automobile reparations is the hyatem that is under indictment by one and all. The trial attorneys agree that It is a bad system, It needs improvement; xcgincnlc of the Insurance industry felt (be same way: many o[ the legislators felt that the system was poor and needed refinement— indeed needed great improve¬ment— so that we came to a situation last year, and again now. that we are attcmpUog to revise and reform the present automobile reparations system. Now, why have we come to this point? AndIemphasize that not eveÿon* is that much cnamoored with the no-fault proposal—? know there are great differences— boiagain t emphasize that the present system Is just not working and it is not serving the needs of the people of our State. Now, why do we have this rihenrhnntment. why do we bave this unhappiness, if you will, with the present system? Over this period of time as we were debating the issue and airing it and as we held the public hearings and listened to voluminous testimony, in conjunction with our hearings there were studies made hy the Department of Transpcnation on a fed¬ eral level, and 1 am going to read some of the results of the Department of Transportation stadia, results also obtained by the Joint Legislative Committee, and Indicate to you first of all what is the dUficuiiy with tbo present system.” Recognizing that all of the members of the Senate had heard and read, and many had had actual experi¬ ence in their practise as attorneys, of these philosophi¬ cal differences between the two concepts, and that merely poiadng up these differences again and again wax not going to be sufficiently persuasive to capture the needed majority ot votes far the postage of the bill, Senator Gordon then, using considerable care not to become burdensome, felt It necessary to put In the ree- nrd tome of the pertinent and vital siallsilex supporting the indictment of the existing tort fault system. .. but in addition to every thing else, in serious injury cases, in 22 percent of those cases another member of the family had to seek employment— |4 percent whohad serious injuries had to move with their families to cheaper housing— 28 percent had la borrow money to meet their expenses, and 45 percent, believe It or not. had to change their standard of living. These are not just among the seriously Injured. Wc bave also found, and it is (incontroverted, that those people who have a less serious injury— andIdu not want to minimize anyinjury,Iam certain that they are all serious to the per¬ son who suffers them— those people with the lets seri¬ous injury usually received 4Vi or 5 times the amount of their special damages, and this Is because certainly there is a desire to settle these cases, (he insurance companies want to dUpow at them, and wc thus find overall that the las seriously injured penon is receiv¬ ing far in exeexx of his out-of-pocket expenses. Much argument has been made that this is a dis¬ criminatory bill— that it discriminates against the poor. We dug even further in outer to verify our conclusions ite. nu he sed DB, lint was on- •n» hc- on* an* wd ns ORC ||«al jdy h*ic- ici* i in this ere om will no- ex* ac- or*. nd- J etui the ■nit- the and ■tvell tch, *ow*-ir isla- auld ear- t of , HOI w in ,%i ip a each .000 ower ml it ; not 9 ... ' ' - '§ A* 5 -If:'-II NEW YORK LEG!1973! m f- nUo wh medical ever you Sonus motor v coveted. have de into pla; of cne.* .•tamely. milling motor v those ct Non. the «:n' ular iter sector■; an ii(Tv> tlutnVIe should trying t. going li (teecssai that tic iupi of pnim « nature. •A i tb an ’hat ir »PsVi lit/ have hi: .•s-ary l< w- l inilsi st pope •». ill- U-3" for yon’ a 21) pc J PsTstll I cm. pn hing stood th insured Ir Ut that ct ihi- pn jtisiutcn nations ttv havt general In u hace tr going t hills ev and make certain that tbc fads that I am presenting to you are Justified, accurate nod substantiated. If any group of people are discriminated under the fault sys¬ tem. it is the poor. No question about il— Ir Is tbcgreatest discriminator uf any kind of a system that you can possibly have " “While all the seriously injured victims generally re¬ cover less than their economic loss, is I indicated to you, the percentage of the economic loss which they recover depends upon two thlnp: education ami in¬ come. 1 was interested in these figures, which I pass on to yog. People who arc seriously injured, with a post¬ graduate education, receive on the average of 73 per¬ cent o( their economic toss, while ihose with an eighth grade education recover on the average 27 percent. Those with a family income of over $10,000 recover on the average bl per cent of their economic loss. while ihose with a family income under SS.000 recover 3S percent, and the reason is basically clear. Those who are best able to cope with the present reparations system do better. Those who nre least able to cope with It, da not do half as well. And so that we feel in this proposal on no-(ault we are treating everyone, the pnnr. the moderate income, the rich, with the same de¬ gree nf first party benefits, as defined In the bill, up to the sum of S50.000; end the poor person wbo now feels after an accident dint he has to go In a clinic be¬ cause be It concerned about his future medical expen¬ ses, certainly he would know, under this proposal be¬ fore us. that he can obtain the best of medical attention, that he can avail himtelf of the finest facili¬ ties and receive the highest degree of attention for his injuries and know that be has someone backing him tvhn is going (n pay for those expensive first party easts and basic economic lasses.” These last remarks are Indicative of the main direc¬ tions from which criticism of and challenge to no-fauli came. A great many nf these source* of abjection were easily foreseeable but then there were others equally as rie-erving of recognition yet were somewhat less nppar- ent to this Committee and the drafters of the bill now up for debate until brought specifically to their atten¬ tion by the watchful representatives of those interest-, which would be vitally affected were there not lan¬ guage In the bill lo prefect them. The concern of two of these interests were touched in the debate nn S 2000B when Senator Qnrdoii with a religious method of healing rccognired by Ibis State shall also be emided to those first party benefits. The next problem we ran Into were the questions of cliiropraetois, and certainty they were emided to be considered. They are licensed by the State of New York, so on line 22 pige 2. we added "and any other professional health services" We desired to cover any¬ one who might rely on seme type of treatment, medical or otherwise, lo make sure that they had the type of benefits that should, and would, accrue to them.” In but these few words, hours that added up to weeks and months of discussion, debate, argument, lis¬ tening, reading and study were summarized, A mere reading of the end produei, namely $ 2000(1, could not begin to suggest that it was the result of so much labor, frustration, anxiety, and. at limes, tedium. It certainly was important that each person who was about to be asked to have bis support or apposition in this new approach to compensating accident victims, and the .simultaneous overthrow of an existing system that dated back through centuries of common law rule, completely understand the terms of Ihis measure, its ‘ practical significances as far as foreseeable, ami the why of the decision of the spoiuort to include ur ex¬ clude certain features or in sumc manner prescribe lim¬ itations on these features. In careful detail Senator Gordon, as the spokesman for the proponents, spelled out the specifics in saying “we have provided for loss of earnings from work for up ro three years in the sum of SI.000 a month, and I will Immediately clarify the question that was raised lo me. If you are out one day, you do not get SI,000 worth of less of earaings- That would be prorated, certainly, but from the SI,000 we deducted 20 percent, and I know Senator Griffin has been very concerned about the 20 percent and whether it might not be IS percent or even 10 percent, and i want to point out that the 20 percent deduction from the SI .000 was predicated ou tbc fact that the gross payment to the victim would not be subject to income tax. It would not be subject in 5oeial Security pay¬ ments and. Incidentally, Senator, Social Sccnriiy pay¬ ments amount to almost € percent. 1 think it is S.ii per¬ cent, so you subtract that from the 20 and you are get¬ ting closer to the figure that you would be intcrcscd In. Many people today are at least in the IS perecat category, so that spin when you are adding I S anil al¬ most 6, you are over (he 20 percent immediately. Wc felt also that the provision for coming bnek to work or inducing people to eome back to work should be attractive enough in the sense that If they are going to take the deduction— wc did not want them malin¬gering— and that they should return to their jobs.Non-ccenomlc loss has been defined end, of course. we spelled out w|int Is a serious injury and we defined i I 1 1 i I fps I : : ■ ■ I I 1 upon in his opening remarks said "Now, when we wrote this bill, wc ran Intn some knouy problems; for instance, what we were to do about the Christian Scientist who believed in his awn faith anti be did nal utilize perhaps the medical approach as we unow il; so we tried to cover them also hy including that any nort-mesDeal remedial care and treatment rendered In accordance 1 9 10II ■f •ÿ.'jy* > w 1i mm "W NEW YORK LEGISLATIVE DOCUMENTS No. 18 aKo what Is a reasonable and customary charge (or meilital expenses; and site threshold nr ceiling, what¬ ever yuc want to call it, haj been set at S500. Someone Had naked a question ahuut (be types ol motor vchlclm that are covered. All motor vehicles ate covered, with the exception of the motorcyclist. We have defined, alio, n family unit because that comer. into play n little further into the bill, and in addition. o( course, we liasa had exclusion* from the bill. namely, those who are intoxicated, me drug*, are com¬ mitting. a feluay, racing or speeding, and occupying a mtnnr vehicle by him known tn he stolen so see have those exceptions. Kens', there has been a great deal of diseusilcm about the S-OQ family deductible. Unfortunately, that partic¬ ular hem has been somewhat misunderstand in various sectors. Any deductible that Is offered Is only that, ft Is an offering, t'hn insured does nnt have to take a tlc- sluuiblc If he dues not want a deductible— and nu oneshould try to sell dm hill as something that we ate trying in pawn air onus the consumer-— then be Is not going to t.iku » 5200 deductible. That Is entirely un¬ necessary, but it is there, and originally it svas there sr that sve eoii'il compute into (he figures of possible sav¬ ing} of ihe plant sve could peg from that particular point what the savings would throw off on n bill of Ulis nature. Picnic undemaml. loo, that we are dealing with an extremely complex, intricate subject matter that involves actuarial r,imputations— llu.t involve.specialised knowledge that I myself personally do not have but that 1 must rely upon. We have found It nee- canary to engage the services of an actuarial firm. We have atsn relied upon figures given to in (rent other sources, und sva have emue up, an the bottom of page 9. with n mandated savings of IS percent on your Insurance policy mcr and above the amount nosv paid for ymir minimum coverage and medical payments and a 21' percent reduction of your automobile insurance if a person elects in lake the 52CO deductible. I cmphaslnr. mi tile $700 deductible, no one is pushing that feature, and it has lo be clearly under- stoust that this is merely an option on the part of the insured and certainly not an option of the insurer. in line ssith those deductions ami lo make certain that everybody received (he benefit ol a decrease in this proposal, sve have stated that commensurate ad¬ justment* shill lie required in the eases of either combi¬ nations of insurance, m dial on thm particular aspect. sve have tried to tvnrk nut a meaningful savings to the general public. tn astdiiion to the savings we have on Page 7, s»c have tried to make certain that thine people svhn are going to go into the tort system, where their medical bill* cured S300 or Heir injury Is that serious -we have tried to make certain that there is no preclusion of prunf of special damages in that situation. There hnrl been some question in that regard, and we amended tha bill just to spell it out. and we think It is much dearer, and certainly that Is the intent, tha: under the tort system, and under this bill, there is no preclusion of proof of specie! damages. We have also made certain that it a resident of this Slate, and automobBa owner, drives to another State and it musr be written into the policy— that be has the minimum coverage required III tha't ether State sn that a person, a consumer, an automobile owner in New York State, would certainly have that type of coverage minimally required by the State which he svas vbUing;" During the eariv days of drafting a bill it seemed that the dollar thresholds wera perhaps the knottiest among the gamut of problems. Through the evolution from svhieh the present measure emerged there were a considerable number of areas which demanded the at¬ tention of exports, students and those with praeiical knowledge. Among these “fringe’ features svas the need to provide a mechanism whereby claimants, who may not be satisfied with a settlement (or one reason nr another, may find final resolution. Thera Is a provi¬ sion directing the Superintendent of Insurance to scr up prreedurex and an appropriate vehicle fur binding arbi¬ tration fur die settlement of grievances. A penalty In the form of interest at the rate oi two percent per month of any claim that is determined to have been unjustifiably withheld, plus a provision, under pre¬ scribed circumstances, for the payment of attorney's fees wore also spelled out In this section o( the blit. The question of rates under the No-Fault .system and to what extent the Legislature could dictate re¬ duced premiums wo* certainly not one to be answered easily or with less than expert opinion. Its determina¬ tion leil inevitably to the whole area of reasonable profitability to be allotvcd Insurance companies and Senator Gordon In his desire to underscore this prob¬ lem are stated during the debate on S 2Q00B, “It h very complex and really almosr unless you are an ac¬ tuary, It Is extremely difilcult tn fulluw the profitabiliiv motives here and the profitability results ” The question of the effective date for the new No- Fault policies, especially as they are to be a replace¬ ment Tor existing contract!, die related question of re¬ newal and fur what term were not In U> taken lightly nr answered simply. Presumably to afford seme reason¬ able lime tor trial, and experience and tn eliminate “bugs" there wax written into (his hill a provision for .1 guaranteed three year renewal policy, and this even for those existing policies that will expire between August. 1973 and July 31, I97A Finolly there was needed time for companies to “tool up“, time to draft ihcir Min¬ ted by Ibis rty benefits. questions of litter! to be itc of New d any other I cover any- :nt, medical the type of isied up tn gument, Iis- ;t£. A mere 1, could not if so much tedium. It s who was pnosilinn to ent victims, ttiilft system on law rule, nensure, its ' Ic. and the lode nr ex- escribe lint- tail Senator :nts, spelled Jed for loss i in the sum / clarify the tut one day. filings. That 1 S1,000 we Griffin has md whether rtem, and ! uciiaii from at the gross :t to income ccurily pay- ccurity pay- it is 5 if per- you arc gel- icrcscd in. IS percent g I $ ami al- ately. sing back to work should ey arc going them matin- jobs. d, of course, d we defined I I if* * - ' £ ■'""-TXT'i ___ J..... ..„ .. TT Si,; m3 1 ■m 1- 1973 Ntft fUAts. M-u » »**.** * nncc tllJ they from and nnr It ItIT*. the F i|i»ir»ic,' nr Wiili Hu- min. lliv L'W.CW.V i asked the t irkcJ them one sample. i shT under .1 -hf.l pen. i.r;nin. Corf* j«vr is what tint ll.iv. Oil up Ke IMI;. <*.•.• i- •i. accept, till' re (atilt." am1 v. the (julyle. S. I ic .’fsc i tki.l.i. Hi:: I iimeiidircnt'. icctvd lii the • mans popple pre.n lt>* iil'ui. have *-*vr i>t read an incur ever,thine ■’ i he* line. v« let llnd.’r K’ . goirnt to ire l prinui If inn n etl f>i'>ivn« >>f ihu print: good idea TH li.'liff. md ih eepi. Citntna* the lijjh ihir.s ular lull which they consider a hilt for the insurance company, at well it It, uml a bill which is going to be legislated against the poor of thin state . . ." Senator iatins a somewhat different tacit, adding to the barrage of obicctiuns, mad. It clear that he was supporting amendments but only as the lesser at two evils and ex¬ pressed the target id his remarks with these words, . 'hat open rating Is one of the biggest fallacies, one o( the biggest fraud*, ever committed upon the insurance pniicy holder in New York State." "It there is no other reason :n defeat this lull or hath hills, the upen rating wc’ild he an adequate reason." In grasping the opportunity in speak, ostensibly in the amendments ottered it seemed a number oC Sena¬ tors considered this as it chance to aim "shots” at the inutrancc companies and the insurance Dcparinieut. More than once the opponents of these amendments resc nn a potm tit order and this being that the spenk- e« remurks nos not germane to the subject mailer uf iHu amendments ’his prompted the chair to state C on :»• tin for tot ihc ib- he i a tdy :nt, hv. itur The on* sno vie* I sed HI ■ ten¬ ure Ton 000 jan< pre- :s is 1 up urcs and nent. the ir IS m of •revet i ■13 ‘ ■�’-*, ' -Jf •' T--* • f ■" " V \ • ■ : . ■' ' • , „ . , ' , . ** * * ' ' ‘ * I • Mi[•*) V feet that “this Mir is a wittered down version of No- Fault and tummarhed his stand with these word** "Tlie AFL CIO opposes this Mil. No civic mim!etH>r. Sanitation approves the bill, without reeormncndjlion. for amendments. We offered amendments, and absent their approval I just clnn't see how anybody who realty thinks lie wants to do somethin;: Tor his constituents can vote fur the bill bemuse as the Slatr AFL-CIO *ÿijn. “The principle of no-fault insurance has not been met by this bill, it is a fake and n hoax." So those of you whu believe in the labm movement. as I do, the protection of the working man. ihi» bill doesn't do it. 1 wanted to draw that to your nnrniim W: are making a start; it may he alt right, hut t have been here a long time anti 1 have seen tKmc starts go no further. After they started, the} stopped We either fish or ait bail. This is rml the bill to fool the pcept.- with. I hope it Is defeated," Senator Anderson v»a» no less persuasive In his remarks to father as many .if- flmtntlve votes as possible fur a cause In which hr strongly believed when hr said. “It is not a pure tv- fault Mil, that is admittedly so. hut it Is a true no-fault hill. The principles of no-fault, as has been aaid m this nÿ: Dt f; r 8 r h Vi 4 !ÿ m r.Vi % 5 .>ÿ! It t\’ ! l> C % •IWJ* C »"!»> \l\* if..:m To: IZ at /‘i i* 5c STV h.-ri1 >• hr tie a- ! Csn *V'4Mr1I 141m ■_ ' ' - ' i. . V < j1J- ::| §g| I ; *1 : J'1?'■ i TOTAL P.0a 12/01/00 FRI 18:57 [TX/RI NO 5820) Exhibit 4 y ■ THE I GTSLATURE payments (tot.- j •en.iums mine. J vidends. if any) over \ pariod of ..eats with ine cash valu. at the end of IL- period." This technical amendment would dtlae the existing provisions of Si lion 127(2) and Section 211(2) as obsolete and confusinc in the light of present-day requirements. ' S. Budget implications None. v *-T&’ I f\ 1 Vit* ;*m i-*’*NO-FAULT AUTOMOBILE INSURANCE— ADDITIONAL FIRST PARTY BENEFITS— ATTORNEY’S FEES FOR SECURING PAYMENT OF OVERDUE CLAIM— ARBITRATIONp •M- * iText of Law, see Ch. 340, .< ■ . _ 1 - Memorandum of State Department of Insurance .... ®S:' L PurposeTo broaden the applicability of arbitration tu include disputes involving '.he payment of additional first party benefits and to make the interest penalty of 2% per month applicable to the late payment of additional first party be: tsfft claims. The bill would also permit payment of attorney's fees incorrect h? the claimant in obtaining payment of an overdue claim regaraless of when the attor¬ ney was retained. !it * If. 2 ■'■X i 'r 2. Summary’ of provisions The will would amend subdivision 1 of Section G75 of the Insurant.1 2 tv*. which provides for the payment of interest and rcascnabl; attorney's it c? in¬ curred in connection with the payment of an overdue claim. The bill woe 1 ex¬ pand the applicability cf the subdivision to disputes involving the payment of additional first party benefits and would provide for the payment of a rea.innsble attorney’s fee incurred ir. connection with an overdue claim regardless of the dale tha attorney was retained by the claimant. ":.i bill would also ameiid sulid: .Irion 2 of Section 675, which provides the claimant with the option of arbitration against thfc insurer for disputes in I-ni’c the- payment,of first party benefits. The bill would expand the jurisdi ,V such.arbitration to disputes involving the payment of additional first pat-tv L.ne- ’ ' ' The bill would take effect’ on January 1. 19S2 and shall be applicable to acci¬ dents occurring on end after such date. 3.. Existinglaw ■ ; - -Under existing law. disputes involving the payment of additional fir;' , arty benefits may only be resolved by administrative or court action, i-utc pay- ..at claims under additional first party benefit contracts (additional PIP con..:-- is not subject to the 2% interest penalty applicable to statute.-..' :‘irKi pari- i.~ „* «mm-: ->- .ttio" ox ■,*-k ; m ! # ' ' fe In order for a claimant to be reimbursed by the insurer frr nit - r litney’s fee necessitated- by the denial or dilatory tactics of a no • ,.ih : attorney must be retained subsequent to the claim being overdue- or le i „ , r 1 prior to the payment of the claim. In many cases an attorney is i.uir.i J .iv.di- ately following an accident’for both no-fault and to-.i claims. Vi • r cxi.- e li.iV a claimant is not entitled to reimbursement of the attorney’s fee for bai:tt:.n;, an • r % A-314 H • ;j&f U-s-L. i-T'* -rift w “t— T ' “*— . » H • ’ . ■ . r.‘ m:-r?- ME;..JHANDA<•* PS: ■s'*. i ' overdue no-fault clair' ‘.ideas the att**.*n*y executes u;i additional retainer asrrefc- • nient applies to the o.crdue claim. = ■�1 4. Statement in supportThere is no logical reason for me different treatment accorded to di/’-cte.i £ involving the payment of first party nenefits and disputes involving benefitr use under additional first- party benefit contracts. In the case of additional first i V party benefits, insurers are not penalued for the late payment of additional first party benefits and are not required to submit to arbitration of the dispute. In most cases, the source of the basic level of no-fault benefits is the same, i source that is responsible for the payment of any additional no-iault benefitr. H i Thus, in most disputes the same parties and issues are involved. Under existing * law an insurer would be subject to binding arbitration for only the basic level o: benefits. Thus, in a case involving t dispute as to the extent or duration of krt l earnings coverage, e. g., a claimant entitled to both basic and additional no-fault 44•Vi ct ■p#mi- ! i • ‘ benefits alleging $2,500 per month lost earnings is only entitled to arbitration for the first Si,250 of such loss. The arbitrator’s authority does not extend to ‘ t amounts over SI.250 unless the ir. rer agrees to such extension. Thus, the claim- !vr.;r j- V. .for,*.f? ,k- * t art must pursue additional court action to resolve the next layer of lost earnings, j even though the arbitrator could have resolved the entile matter with one hearing. ■ The Appellate Division, Second Department, in a decision dated November 3, 1 1330, Transamerica Insurance Company v. Weinberg, 432 N.Y.S.2d 715. 7B A.D. 7 2d 853, requested legislative action on this subject, as follows: **In the interest of establishing a more efficient procedure to cficctuaia the purposes of the no-fault law and to avoid a needless burden upon the court; and unnecessary expense to claimants, it is suggested that legislation be en¬ acted to permit e single arbitration to determine claims mnde far mandhtcry first-party personal injury benefits end for any excess additional f:rst-«.iri> personal injury benefits." (432 N.Y.S.2d at TIC) Since the claim practice rules applicable to the proccs?inr cf additional no- fault benefits are identical to those applicable to the basic level of no-fault i'ur.-.- fils there is no reason why the 2% monthly interest puuJ'y should rot apply to the late payment of additional first party benefit ino-fci.li > claims. The amendment regarding the cate of retaining an attorney will eliminate • Intqi. . jle situations that have occurred under existing law. An ausrnry re¬ tained. ut the outset of s claim shoulu not be required to bo retained again v.-hea-. ever.eiemcnts of the claim become overdue. The pi eneut provision in the law serves f . no useful purpose, especially in light of ti e fee schedule applicable to what amount•• constitutes a. reasonable attorney'* fee. . a. Budget implications None. } U&,: , V• , ■ , i 5 I ! r > m•4"NO-FAULT AUTOMOBILE INSURANCE— ADDITIONAL FIRST PARTYBENEFITS— ATTORNEY’S FEES FOR SECURING PAYMENTOF OVERDUE CLAIM-ARBITRATION•r»25a£Sl » fife* ! ■ if i m\ m$ •< ;-,ni ' - Memorandum relating to this chapter, m L-gislntivc Mrmnnnda. post CHAPTER 340 Approved June 29. (SB!, effective as provided in section 2 AH ACT to amend tha insurance la*. In relation to arbltTatloi. of fanlt motor vehicle Insurance claims, and attorney’s fees regarding jvardne Claims *I fe#m I: *imno-\ I m|feiiM •*> ' Th«» SPOBU of the St»te of Hew Vo-rh . represented *1 n Senate end Arim. Mv. de» *r»et as follow*; Section 1. Subdivisions one and two of section sly hundred seventy- five of the Insurance lav, as amended by chapter eight hundred ninety-' tiro of the lawA of nlnetorn hundred seventy.seven, are amended to read as followss '1. * Payments of first party benefits end eddltlonel first party bene. fit* shall be made as the loss is Incurred. Such benefits are' overdue. If not paid vithln thirty days after the claimant supplies proof of the 1 feet and amount of loss sustained. If proof is not supplied as to. the i 1 entire «lala, .the amount which Is suppc. ted by proof Is overdue .ir not pa.ld -vithln thirty days after such proof is supplied. All overdue payments shall hear Interest at the rate of two percent per month. If a f valid claim or portion thereof was overdue Eand such claim vas not paid before an attorney vas retained with respect to the overdue claim], the claimant shall also be entitled to recover his attorney's reasonable fee, services necessarily performed In connection with securing navwent of the overdue claim, which shall be subject to limitations promulgated by the superintendent In regulations. 2. Every insurer shall provide a claimant with- the option of submit¬ ting any dispute involving the Insurer's liability to pay first party benefits, or additional first party benefits, the amount thereof or any other matter vhlch may arise under subdivision one of .this section, to arbitration pursuant to simplified procedures to be promulgated or ap. proved by the superintendent. « An award by an arbitrator may be vacated or modified by a muter arbi¬ trator In accordance with simplified procedures t be promulgated or .Vi# ' *"**:-ÿ -» * | :-Tv' ■ - Vu * 1m* i mw !Ml I " 5ÿ ■■'r&m } I iis.u • safemii * i B?m im. M, V,v>! > m; feij 597 mdilctiom by [brocketi] Ch. 340 LAWS OF FEW YORK approved by the superintendent. 71.o grounds' for vacating or modifying an arbitrator's decU cl by a master arbitrator shall not be limited tc those grounds for revise set forth In article seventy-five of the civil ‘ practice lav and rules1. The decision or an arbitrator shall be binding except where vacated or modified by a master arbitrator. The decision of a master arbitrator shall be binding except for the grounds for review set forth in article seventy-five of the civil practice law and rules, and provided further that ‘where the amount of such raster . arbitrator's award Is five thousand dollars or greater, exclusive cr in¬ terest and attorney's fees, the Insurer cr the claimant may Institute an action In e. court of coxpetont jurisdiction to adjudicate the dispute da novo. * CPU* 7301 el sen. 5 2. This act shall take effect on the first day of January next suc¬ ceeding the date on Vhlch It shall have became a lav, and shall be ap. pllcshle to ascldonts occurring on and after such date. / t I t 4 I x Exhibit 5 !=*J?s*? UOUIOATION BUREAU INTER -OFFICE CORRESPONDENCE April 16 r 19B4 Francesca Genoveai-Blios*•. MM'llMdl William P. Jerome Opirwnf. •uttiacr. Nassau No-?ault Claims The subsequent analysis should be dispositive of most o£ the questions in your memo dated April 6, 1904 - Section 675(1) provides for payment of interest for overdue payments and rea¬ sonable attorneys' fees - etc. It has been held in the Case of the "Matter of Empire Mutual " N.T.L.J. 6/29/78 that interest and attorneys' fees as provided in Section 675(1) are intended as penalties to insure compliance. It further states that vhile the insur¬ ance policy survives a rehabilitation order the statutory penalties do. not and also do not apply to the Superintendent as ftohabilitator and the procedure outlined in Section 675(1) 1» not binding oh the Rehabilltator. Any claim heard before rehabilitation on which a payment is overdue should have Interest paid up to the date of rehabilitation. The guide line is the date on which it is deter¬ mined the payment was overdue - even if the decision comes down after the date or rehabilitation. However# the rehabili¬ tation date la a cut-off. The reasonable attorneys* fees can only be contemplated on claims heard before the rehabilitation date. All Ho-?ault claimants can file a proof of claim for ordinary interest due on overdue payments which are only to be considered in a liquidation proceeding if a surplus exists after the payment of all general creditor claims in full. Attorneys' fees will not be considered a claim in the rehabilitation or liquidation proceedings. This disting¬ uishes the present position from that set forth in the Empire decision in that the Court contemplated a successful rehabili¬ tation and would entertain the issues of attorneys' fees on the happening of such event. In fact referees did determine what the fees would be and said claim and payment was held In abeyance. -1- LIQUIDATION BUREAU INTER -OFFICE CORRESPONDENCE April 16, 1984tuit >a depart****r«t from OapartMvii: •object: Nassau No-Fault Claims -2- AB to matters before the Master Arbitrators for reconciliation - the same rules apply - No interest orattorneys' fees will be paid. Any questions arising out of an actual situation . will be addressed at the time it arises. Jerome WFJ:ftX ccs Andrew Alberti Kathy Reitman TOTAL P.93 TOTAL P.02 Exhibit 6 NEW YORK LAW JOURNAL JUNE 29, 1978 Matter of Empire Mutual Insurance Co, and Allcity Insurance Co. On Aug. 31, 1977, by two separate orders, the Superintendent of Insurance was appointed Rehabilitator of AHdty Insurance Company (hereinafter referred to as Allcity and Empire Mutual Insurance Company (hereinafter referred to as Empire). On Feb. 25, 1977, the court by further orders, in part disposed of a series of no-fault claims previously submitted to the rehabilitator. The Court directed that certain issues raised concerning those claims be the subject of a reference, but reserved two issues to itself: (1) whether claimants were entitled to interest on claims "overdue" within the meaning of Insurance Law section 675(1); and (2) whether requires the rehabilitator to pay attorney's fees incurred by such claimants. As early as 1881 Justice Holmes in his Common Law, predicted that the state might at some future time, replace the entire field of compensation for injury by a comprehensive system of public insurance. Yet, with respect to automobile accidents there has been widespread resistance in the United States even to private compulsory liability Insurance. And there is not a single instance of public insurance providing indemnification from the vicissitudes of vehicular accidents. Paradoxically, it may be the increasing unprofitability of providing automobile insurance which ultimately will result in state participation or other substitution for free enterprise. The role of the state up to this point has been to intervene reluctantly to salvage sinking private Insurance companies rather than to take over profitable insurance enterprises. Essentially, this proceeding is such a rescue operation. It is mandated by the need to bail out the interests of some 300,000 persons who secured automobile insurance from the companies herein. The question raised by claimants demands for interest and attorney's fees present an issue as to the purpose of the provisions of the no-fault scheme, as compared with the function to be served by order directing the rehabilitation of the two insurers In question. The "interests" and attorneys fees provided in section 675(1) are penalties intended to insure compliance with the procedure generally governing the no-fault law and do not apply In a rehabilitation proceeding. The “interest" and attorney's fees provided In section 675(1) are not benefits secured to claimants by the policies issued. Although claimants' attorney liberally quotes from respondent's brief to the Court of Appeals in State Wide Insurance Co. v. Curry, 43 N.Y.298, what is ignored is what was actually decided by the Court of Appeals in that case. That case dealt solely with the question of whether a motor vehicle insured by an insurance company which has become insolvent and its obligations assumed by the New York Property and Liability Insurance Security Fund is to be considered an uninsured motor vehicle within the meaning of the New York Automobile Accident Indemnification Endorsement mandated by Section 167, Subdivision 12- a of the Insurance Law. In holding that it was not to be so considered the liberally construed Section 167, Subdivision 2-a “so that its purpose of protecting accident victims will be accomplished" but stated “where the legislative intent is not frustrated there is no sound reasons for an overly broad construction of the provisions." The court did hold that although the insurer became insolvent “the insurance policy, itself survived, and the obligation owed its insureds were assumed by the security fund for the full amount of the policy limit of $1,000,000." However, nowhere in the policy itself is there any provision for the payment of interest and attorneys' fees (see Mandatory Persons Injury Endorsement, 11 NYCRR sec. 65.2). The penalties for “overdue" payments are provided for solely in the statute and the regulations implementing the statute (Insurance Law, sec. 675 [1]). Thus, while the policy itself may be deemed to have survived notwithstanding the insolvency of the insurer, the statutory penalties imposed upon the insurer do not survive. These penalties comprise part of the statutory procedure which the insurer must follow in discharging its obligations under the policies. Currently, the obligations of the insurers are being discharged in rehabilitation by the superintendent who is governed by the procedure set forth in Insurance Law section 512, et. Seq. the procedures set forth in section 675(1) do not apply to the superintendent. The assessment of interest and attorney's fees was intended to compel compliance with the thirty-day payment procedure imposed on the carrier by section 675(1). Payment of first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within 30 days after such proof is supplied. All overdue payments shall bear Interest at the rate of two percent per month. If a valid claim or portion thereof was overdue and such claim was not 2 paid before an attorney was retained with respect to the overdue claim, the claimant shall also be entitled to recover his attorneys' reasonable fees, which shall be subject to limitations promulgated by the superintendent In regulations. By statute and regulation, the carrier Is directed to pay all claims within thirty days from the time they are proven. If a delay in payment is attributable to wrongful inaction by the carrier, It is obligated to pay "interest" and attorneys' fees. Of course, if the claim Is validly rejected by the carrier, no interest or attorneys' fees may be assessed (cf. Annang v. Buffalo Ins. Co, 82 Misc.2d 1072). The assessment of "interest" and attorneys' fees on valid, overdue dalms was dearly intended to insure the carriers' compliance with the thirty-day payment procedure incorporated into the No-Fault Law. The thirty-day payment procedure itself was designed to cure perceived settlement abuses among carriers who, by indefinitely withholding payment on a valid daim, could force the injured party to accept substantially less than that to which they were entitled. The interest/attorneys' fee provisions were designed to be punitive. Thus, the "interest" awarded by section 675(1) is not truly interest, but a penalty imposed for non-compliance with procedure (see 11 NYCRR, sec 65.6 {f>, captioned "Penalties for Overdue Payments"). The award of attorneys' fees is likewise punitive In nature (cf Simmons v. Geico 59 A.D.2d 468). Interest is usually intended to compensate for the use or non-payment of money (Becker v. Huss, 43 N.Y.2d 527, 543). "Interest, however, is the compensation allowed by law, or fixed by the parties, for the use or forbearance of money, or as damages for its detention" (MacDonald v. MacDonald 71 Wise.516). Therefore, interest when authorized, is compensatory in nature, for which reason its amount reflects the general Investment rate (cf Gen. Obi. L, sect. 5-501; People v. Sexton, 284 N.Y. 57). In contrast, the provisions for interest under section 675(1) are not meant to be compensatory, but punitive. The fete alone belies any argument that the "Interest" awarded is compensatory in nature, for the more than 26 percent per annum authorized by the statute and regulation is far In excess of the current investment rate., the "interest imposed by section 675(1), as well as the provisions for attorneys' fees, was perceived as a means of forcing the carriers to comply with the thirty-day payment provision, without forcing the claimant to resort to judicial intervention (Montgomery v. Daniele, 38 N.Y.2d 41; Simmons v. Geico, supra). 3 These provisions were not only perceived as punitive, but were treated as such. For the regulations dearly provided that the expense or both the interest and attorneys' fees paid were to be borne by the Insurer's own assets, the carrier being precluded from passing them back to the consumer by way of higher premiums (see 11 NYCRR secs. 65.6[f][5], 65.6 {gX3>, providing that neither expenses could be considered in rate-making calculations). And the regulations themselves characterize interest as “penalties for overdue payments" (11 NYCRR 65.6{F». Therefore, the interest and attorneys' fees authorized by the Ins. L sec. 675(1) are (1) designed to insure compliance with the 30 day payment procedure therein set forth, and (2) punitive in nature. Since the purpose and effect of these provisions Is to compel the carrier to comply with the claims procedure generally applicable le to no-fault, they may not be Imposed upon the Rehabilttator. In his capadty as Rehabilitator of the two insurers now before the court. These sums were intended as penalties to be imposed solely upon the earners, and have no application where the procedures they were designed to enforce cannot be followed, the purpose for which they were imposed cannot be achieved. The procedure set forth in section 675(1) is not binding upon the Rehabilitator. The orders appointing the Superintendent were entered pursuant to Ins. L. section 512. By statute, the Superintendent, as Rehabilitator, is directed to take possession of the carrier's property and manage its affairs {sec 512(1» until such time as he determines control of the assess and management may safety be returned to the insurer {sec. 512 (3)> or further efforts at rehabilitation would be futile and liquidation of the carrier is necessary {sec. 512 (2)>. In carrying out his functions, the Superintendent is acting as a statutory receiver (Superintendent of Ins. Of N.Y. v. Bankers L. 8t Cas. Co., 401 F. Supp. 640 [S.D.N.Y. 1975) 526 F.2d 586 [2ndOr., 1975]). As such, he is an officer of the court and subject to its control and direction. The receiver becomes a statutory receiver; the property of the corporation is brought into the protective arm of the law, and the receiver is subject to directions of the court except in so far as discretionary power Is vested by the Legislature in him. (People v. Tide & Mortgage Guarantee Co., 264 N.Y. 69 (1934». 4 JUU +:j i J-*
