Insurance Advocate April 11, 2016 by C Acunto

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Serving New York, New Jersey, Connec cut, Eastern Pennsylvania and Washington, DC

Vol. 127 No. 7 | April 11, 2016

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[ FOREWORD ]

STEVE ACUNTO

No Ordinary Animal uLove the name: Gorilla Safety. Now comes an innovative new provider of software that fully automates all aspects of fleet and safety management, through its new mobile application and web-based dashboard. Gorilla Safety’s revolutionary mobile app is the first and only cloud-based solution that integrates capabilities necessary for managing short- and long-haul vehicle fleets of any size from one platform. Fleet managers, office staff, drivers, mechanics and owner operators can use Gorilla Safety to enhance Department of Transportation SAFER scores, reduce insurance premiums, optimize efficiencies, improve productivity, control costs, increase profits and perhaps most importantly make today’s highways a safer place for all drivers. According to the Federal Motor Carriers Safety Administration, more than one-in-five trucks are put out of service for safety defects. Gorilla Safety was developed to address this staggering fact, and to help ensure highway safety by maximizing utilization of the features of its industrychanging technology. Gorilla Safety’s technology platform is easily accessed from iOS and Android smart phones and tablets as well as from a computer via a web-based dashboard. From the palm of one’s hand and with just a few clicks, Gorilla Safety users can perform a range of functions pertinent to the successful and safe management of large fleets, using advanced features that allow for: • Recording hours of service electronically through eLogs, Electronic Logging Devices (ELD) or Local Radius Platform • Managing of accidents through realtime reporting, real-time investigation and recounting of accident/data collection at the scene, with ability to upload photos and record [voice] testimony of incident • Performing of closed-loop inspections through automated Electronic Daily Vehicle Inspection Report (eDVIR), which integrates mechanic app in real-time (Gorilla Safety is the 4 April 11, 2016 / INSURANCE ADVOCATE

first company to bring this patented tool to market) • Tracking of fuel use and vehicle maintenance

From the palm of one’s hand and with just a few clicks, Gorilla Safety users can perform a range of functions pertinent to the successful and safe management of large fleets… • Use of GPS to track fleet assets • Incorporation of an ELD self-certified compliant device that meets guidelines set forth by the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) ELD Mandate Scheduling • Development and storage of critical (paperless) documentation such as receipts, bills of lading, customized policies and procedures manuals, HR-required documents, training tools, etc., enabling app to be used as a proficient HR management tool for training/managing employees; and citing and storing violations (first company to feature this capability) • Sharing of information among permissible, granted users so everyone is on same platform, has access to same data at the same time and receives customized alerts and notifications to remain compliant and productive Gorilla Safety is leading forward what is traditionally a cumbersome paper-laden process that has long been the standard in the trucking industry. Gorilla Safety’s solution directly addresses a void in the marketplace by placing all the functions for successfully managing fleets into one, CONTINUED ON PAGE 14

VOLUME 127, NUMBER 7 APRIL 11, 2016

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Kelly Donahue-Piro Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com COPYEDITOR & PROOFREADER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Media, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN MEDIA, INC.

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $110.00. TO ORDER Call 914-966-3180, fax 914-966-3264, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2016. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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Contents

April 11, 2016 | Volume 127 Number 7

[COVER STORY] 24

In the News: Cuomo Announces Health Insurance For Victims

In the News: Citrix Joins Applied Systems Partner Program for eSignature MSO Announces Promotions

Marsh & McLennan Names Easton CCO for Insurance Services Segment

The Formula: $15 per hour & Family Leave - How it adds up.

[FEATURES]

In the Associations: PIA National Names Augusto Russell 2016 Agent of the Year

On My Radar: Shooting Arises Out of Use of a Vehicle Barry Zalma

Foreword: No Ordinary Animal Steve Acunto, Publisher 31

On the Level: Story Telling Connects — Are you Telling Your Story? Jamie Deapo

Health News: Insurer Report on NY Emergency Visits: “Flawed”

The Social Notebook: Insurance Marketing Featuring Facebook’s New Feature Chris Paradiso

Courtside: Top Court Rejects Expert Opinion That Smell of Gasoline Proves Toxic Exposure Level For Fetus Lawrence N. Rogak, Esq.

Looking Back: March, 1991

Classiﬁeds

12 22

Guest Opinion: NAIC Attempts to be PBR Statistical Agent: A Bad Idea for Companies, Consumers, and Regulators John R. Hurley

[AD FEATURES] 13

PIA: 2016 Annual Conference

MSO: The Future of Auto

In the News: Certiﬁcates of Insurance Act Takes Effect

NYIA: 2016 Conference

Arent Fox Secures Dismissal of Major Claim

info@insurance-advocate.com www.insurance-advocate.com

In the News: PRI Names Northwell Health Patient Safety “Best Practices” Award

INSURANCE ADVOCATE / April 11, 2016 5

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[ ON THE LEVEL ]

JAMIE DEAPO

Story Telling Connects – Are You Telling Your Story? uWhen I sat down to write this article, I gave quite a bit of thought to previous articles I have written. I also thought about the enormous amount of unsolicited advice being put out by many well-intended industry folks preaching to agents about all the changes they need to make if they want to stay in business. If I was still an agent and on the receiving end of all this information, I would be overwhelmed and want to “stop the madness.” Most, if not all, of you reading this are currently operating fairly successfully. You may have issues or weaknesses in certain areas of your agency operations, but you are most likely not going out of business in the next six months to a year. If you were, it’s highly unlikely anything I could write here would be able to turn your situation around. By now you all know the world we operate in is changing rapidly. Our business model has been slow to react to changes in technology and changing consumer demographics. Several established insurance companies (Geico, Progressive, etc.) have been successful in writing business direct. There also seems to be a groundswell of startup companies looking to heavily leverage technology and the preference of younger consumers and entrepreneurs to carve out a place in the insurance market. As an independent agent relying heavily on personal insurance and small-tomedium commercial insurance, this is the kind of thing that will keep you up at night. Add to that the significant transition of experienced “Baby Boomer” staff leaving independent agencies and it’s no surprise why so many agents are considering selling or becoming part of a large multi-state agent conglomerate. If you’re not interested in selling or giving up, all is not lost. It is important that you make the necessary changes to stay competitive in the marketplace but it all doesn’t have to happen overnight. The first step is to diagnose what your biggest problems are and then prioritize them. Whether you need to find staff, better train your existing staff to be effective, 6 April 11, 2016 / INSURANCE ADVOCATE

modify your work flow and automate it, improve your marketing by using social media and the Internet or increase your sales effectiveness, there are many

Insurance is not a one-size-fits-all business. resources at your disposal that can help you. Don’t try to do it alone. Take advantage of the knowledge and resources available to you as an IIABNY member. We may not have everything you need but probably we can direct you to where you can find it. Our purpose and goal is to assist you in more effectively operating your agency and helping it to grow. There is one issue that each and every one of you shares as an independent insurance agent. That is successfully communicating the tangible benefit of purchasing insurance protection from an independent agency. All of you need to mount a serious campaign that educates consumers on the value of contract knowledge and claims handling experience in properly designing protection to meet a specific customer’s needs. Insurance is not a one-size-fits-all business. People are different and their protection needs are different as well. Every agent needs to develop a campaign to educate consumers on the benefits of buying their insurance protection from you, an independent agent. We have a national brand called Trusted Choice® that was developed for just that purpose. We’ve expanded the brand to include the TrustedChoice.com website where consumers can research insurance and get referred to an independent agent to fulfill their protection needs. As a group we must work together to combat the irresponsible marketing of insurance protection as a commodity. We need to bring consumer attention to the pitfalls of that way of thinking. Insurance protects the financial security of the individual, their family and their business. It is intended

Jamie Deapo is AVP of Membership & Member Programs for IIABNY and is an approved CE instructor in New York. Prior to being with IIABNY, he was an independent agent in the Syracuse area for 15 years. Jamie started his career in 1972 working for insurance carriers, and he has held various underwriting and marketing positions with several national as well as regional companies. He is a past president of the Independent Insurance Agents of Central New York and served on the board of directors of IIABNY.

to put them back where they were before the loss occurred. Without the safety net it provides, life would be very different. No one wants to experience a loss and find out they aren’t properly protected, especially if the financial consequences are severe or devastating. The only way to prevent this from happening is to work one-on-one with a true insurance professional who can design a package of protection that meets the client’s needs and budget. They say ignorance is bliss but when it comes to insurance protection ignorance could spell disaster and financial ruin. Whenever I finish writing one of these columns I always wonder if you, the reader, will get something out of it. Do you agree with the substance of the message and will you take action on the things outlined? I wouldn’t be offended if a reader took exception to something and responded to it. It would confirm that the message was being read and considered. My hope is that what I have written will get you thinking and hopefully stir you to action. I’m especially hopeful that many of you will take up the challenge of educating consumers away from the unhealthy belief that buying insurance protection is like buying your laundry soap. You can live with a stain or dingy clothes but losing your house, your health or your business is life-changing. We need to educate and convince consumers before it’s too late![IA]

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[ THE SOCIAL NOTEBOOK ]

C H R I S PA R A D I S O

Insurance Marketing Featuring Facebook’s New Feature uOne thing that I teach insurance agencies on a regular basis is that moving forward, digital marketing is going to be considered a traditional form of marketing, and not just in our industry, but in any industry. Part of your digital marketing strategy should include marketing via Facebook, seeing as it is the world’s largest social media platform, making streamlined communication with your customers, clients, and prospects both easy and effective. If your company is not on Facebook already, then creating a Facebook page should be your first step. However, I didn’t write this article to give you tips or tricks about Facebook marketing, but instead to talk about its new feature: the reaction button.

Facebook’s New Reaction Button Before they unveiled their new “reaction” button, there was a “like” button in its place, one that we have grown all too familiar with. By giving a post a “like” in the past, you gave it your positive vibe, approval, or showed that you were genuinely interested in the post. We, as marketers, were looking to get as many likes on our company posts as we could to increase user engagement, and in turn reach a wider audience. We would simply strive for likes, comments, and shares to increase our overall audience size, and at the end of the day for each of our posts that was about it. What we decide to include in each post, whether it’s a video, a link to the agency website, or a form of visual content marketing, can change; the thing that could not change was how our audience reacted to the post. Now that Facebook has put out their new reaction button, people can go much further than just a like, comment, or share. Now people have the ability to react to your post, and the options they have to choose from are “love,” “haha,” “wow,” “sad,” or “angry” that have a corresponding emoji (smiley face) to go with it. Your

audience can tell you how your post made them feel, think, or what vibe your post gave them overall. But, what does this new feature mean for marketing, for the insurance space, or for you and your agency?

Your Social Attitude Matters In the world of social media, your social attitude matters for many reasons. Your social attitude is how you are interpreted in the social world, which is how your audience feels about your agency’s traits, ideas, message, and your way of communicating, and this all speaks directly to your agency’s brand. Think about it this way; everything you create in terms of marketing should tie back into your brand, whether it’s using your brand in your visual content, your message, your branded tone of voice, etc. Your brand is the core of your social attitude, but now your audience has a chance to show you their social attitude in return based on how well they respond, or react, to your posts. Your audience’s reactions are quantifiable data that are not only easy to be tracked, but free for you to leverage. This is your chance to see if a branded message made your audience react in a certain way, and then track what’s going wrong and what’s going right, and adjust accordingly to strengthen your presence in the social world. For example, if I posted a campaign about feeding the homeless, and my audience reacted with “sad” and “wow” reactions, then this could be their way of saying that they empathize with me but are also marveled that there are people willing to help. If my post received a lot of reactions in this manner, I know I did something right. Similarly, I could have also posted some pictures of my staff with the homeless folks smiling together, and people could have reacted with a “love” or a “haha” to let me know they really enjoy how happy everyone looks after working together to achieve the same goal. Now, what if you post something and it makes a lot of people angry? Not only

Christopher Paradiso, CPIA , is President of Paradiso Financial & Insurance Service. He has been acknowledged by several insurance publications as a leader in the industry for his use of digital marketing and social media to help brand his agency and promote other small businesses within his community. Chris has also been recognized for his charity work with The Connecticut Children’s Medical Center. In 2011, Chris introduced “Paradiso Presents LLC,” a social media program aimed at teaching small agencies to not only survive, but compete in today’s complex online marketing world. Chris resides in Stafford Springs, CT with his wife and two children, Mia and Gianni.

will you see that in the comments, but they actually have a chance to give you an “angry” reaction as well. In some cases (such as making a post about a veteran who was disrespected), it could be good that they are angry because they are getting behind a cause and agreeing with you. But, in others, you could be posting content that made your audience uptight but that was not supposed to. For instance, there may be times when you make a post and get some “angry” reactions to it, but you need to take advantage here. Any time that you upset your audience, you have one chance to own up to your mistake and fix it, but then moving forward you can attempt to avoid upsetting them again in the same fashion. Use reactions as a source of strengthening your content, and look for more engagement in the nature of your posts, how you brand them, and even try to get your staff on board with “reacting” to your agency’s posts online! If you can think of other ways that reactions can be used to your agency’s advantage in the social world, I’d love for you to reach out to me at cparadiso@paradisoinsurance.com, and other than that, happy marketing agents![IA]

8 April 11, 2016 / INSURANCE ADVOCATE

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[ GUEST OPINION ]

JOHN R. HURLEY

NAIC Attempt to be PBR Statistical Agent: A Bad Idea for Companies, Consumers, and Regulators uNAIC staff located in Kansas City performs many valuable functions for state insurance commissioners and indirectly for insurers and consumers. Recently, staff reported that it was planning to assume the role of Statistical Agent (SA) for the collection and analysis of experience data and reports related to the implementation and operation of the new system of life insurance reserving known as PrinciplesBased Reserving, or PBR. This work has not been directed by nor authorized by NAIC committees or its officers, based on public information. The submission of enormous amounts of life insurance experience data and analysis takes a tremendous amount of computer power, actuarial expertise, judgment and cost. The current pilot program authorized by the states of New York and Kansas covers the data relative to over 80% of the companies subject to PBR. It is being conducted by the Medical Information Bureau (MIB), a private non-profit insurer mem-

bership organization dedicated to preventing fraud and performing statistical studies of life insurance values and behavior. MIB is a membership organization of 420 life insurance companies doing business in the United States and Canada. It has a sterling record of protecting the privacy of personal data submitted to it during the underwriting process, and a reputation among industry and regulators of providing accurate and reasoned analyses of the state of the life insurance business; allowing companies and other entities, including the regulatory community, to protect and enhance the ability of both industry and commissioners to protect consumers and improve the marketplace. NAIC commissioners and NAIC staff receive reports from MIB upon request, with identity and security protections, that help the commissioners make decisions on behalf of the citizens and consumers of their states and territories. MIB has the computer capability, the privacy protocols, the judgment

4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 http://zalma.com/blog Zalma Insurance Consultants provides expert advice to counsel for insurers and counsel for policyholders. Advice from Zalma Insurance Consultants is indispensable to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative and legal work. 10 April 11, 2016 / INSURANCE ADVOCATE

The current pilot program authorized by the states of New York and Kansas covers the data relative to over 80% of the companies subject to PBR. and expertise, and the support of its member life insurers who voluntarily cooperate in its programs, to perform the SA tasks. A few comments related to this issue: • Privacy: The life insurance experience data currently collected by MIB is subject to stringent confidentiality controls. It is not certain that NAIC staff could meet that standard, or if it might use this data for unrelated regulatory action. • Cost: The industry is already paying a significant cost, both internal and external, to comply with PBR. Adding to this cost will have an impact on premiums and reserves of life insurers without benefit to consumers. • NAIC Management: This staff proposal appears to be self-driven, not authorized or sanctioned by the Life (A) Committee or the Executive (EX) Committee. A clear statement from NAIC leadership is necessary to bring this issue into focus. • Industry Support: During the description of staff activity regarding the SA role, staff stated that industry was “on board” with their efforts. We have not confirmed that support after due diligence. NAIC leadership should carefully consider the current situation, the potential drawbacks of a change in direction, the benefits of the SA as currently provided under its current contract, and the benefits of an independent, objective and secure organization that is supported by regulators and life insurers.[IA]

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[ IN THE NEWS ]

PRI Names Northwell Health Patient Safety “Best Practices” Award Honorable Mention to: Atlantic Dialysis Management Services, LLC, College Point, NY; Brighton Surgery Center, LLC, Rochester, NY; The New Jewish Home, Sarah Neuman, Mamaroneck, NY uROSLYN, N.Y.—Physicians’ Reciprocal Insurers (PRI) presented Northwell Health, Lake Success, New York, its coveted Patient Safety “Best Practices” Award for 2016. Atlantic Dialysis Management Service, Brighton Surgery Center, and The New Jewish Home, Sarah Neuman, each won Honorable Mention. PRI, New York’s second-largest medical professional liability insurer, established the awards in 2011 to promote awareness of client-based patient safety efforts that deserve recognition throughout the healthcare industry. The awards were made during a breakfast ceremony held at the company’s Roslyn, New York headquarters that was attended by

PRI, through its hospital risk management program… continues to receive accolades for innovation, a reflection of the insurer’s emphasis on patient safety, best practices and conducting quantitative analyses to help identify incidents that may result in a negative outcome.

ACCEPTING THE FIRST PLACE AWARD, ALONG WITH MARK JARRETT, MD, SENIOR VICE PRESIDENT, CHIEF QUALITY OFFICER AND ASSOCIATE CHIEF MEDICAL OFFICER FOR NORTHWELL HEALTH ARE (L TO R): LORI STIER, ASSISTANT VICE PRESIDENT, CLINICAL EXCELLENCE AND QUALITY; DONNA ARMELLINO, VICE PRESIDENT FOR INFECTION PREVENTION; JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS AND SPECIAL PROGRAMS, PHYSICIANS’ RECIPROCAL INSURERS; KAREN NELSON, VICE PRESIDENT, CLINICAL EXCELLENCE AND QUALITY; CATHY GALLA, VICE PRESIDENT OF NURSING INITIATIVES; AND DAWN LEWIS, DIRECTOR, HOSPITAL RISK PROGRAMS, HOSPITALS AND SPECIAL PROGRAMS, PRI. 12 April 11, 2016 / INSURANCE ADVOCATE

Physicians’ Reciprocal Insurers (PRI), headquartered in Long Island, New York, is a leading provider of professional liability insurance to physicians and medical facilities. As the second largest medical malpractice insurer in New York State and one of the Top Ten in the country, PRI is recognized as one of the most respected names in medical malpractice insurance. Founded in 1982 by doctors to serve the healthcare industry and its professionals, PRI continues to be a leader providing coverage and innovative products that anticipate the needs and further the financial goals of policyholders, and offers key services to help improve the liability environment for doctors, chiropractors, dentists and healthcare facilities.

health and medical professionals from many segments of the health care field. First place honors went to Northwell Health's “Reducing Catheter-Associated Urinary Tract Infections Across a Large Multi-Hospital Healthcare System,” an initiative that facilitated communication and promoted accountability among its 14 acute care hospitals and approximately 35 intensive care units to reduce the risk of Catheter-Associated Urinary Tract Infections (CAUTIs). The award was accepted by Mark Jarrett, M.D., Senior Vice President, Chief Quality Officer and Associate Chief Medical Officer for Northwell Health, and presented by Jeanne Braun, Executive Vice President, Hospitals and Special Programs, PRI. Honorable Mention was accorded to Bonnie Carnes, Vice President of Support Ser vices for Atlantic Dialysis Management Services, LLC, College Point, New York, for “Improving SBAR Usage in Hospital Dialysis Patients.” Solution, Background, Assessment, Recommendation (SBAR) is a simple yet effective way to standardize communication between caregivers. CONTINUED ON PAGE 14

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IN THE NEWS CONTINUED FROM PAGE 12

The final Honorable Mention presentation was given by Liz Weingast, Vice President of Clinical Excellence, The New Jewish Home, for its “Small House: Person-Directed Care and Safety – The New Model.” Ms. Weingast discussed safety measures improving quality of life and enhancing clinical outcomes of residents in this progressive long-term care facility. PRI, through its hospital risk management program, led by Ms. Dawn Lewis, continues to receive accolades for innovation, a reflection of the insurer’s emphasis on patient safety, best practices and conducting quantitative analyses to help identify incidents that may result in a negative outcome. PRI, now over 30 years since its founding, is recognized as one of the most respected names in medical professional liability, a leading provider of specialty insurance coverage and innovative products for doctors, hospitals, healthcare facilities, chiropractors and dentists. For more information, please contact Dawn Lewis at (516) 277-4070.[IA]

ACCEPTING THE HONORABLE MENTION AWARD ON BEHALF OF ATLANTIC DIALYSIS MANAGEMENT SERVICES, LLC ARE (STANDING L TO R): RICHARD TAGLIAGAMBE, PURCHASING MANAGER; JUGAL AGARWAL, VICE PRESIDENT, FINANCE; BONNIE CARNES, RN, VICE PRESIDENT, SUPPORT SERVICES; JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS AND SPECIAL PROGRAMS, PHYSICIANS’ RECIPROCAL INSURERS (PRI); J. GANESH BHAT, MD, PRINCIPAL. SITTING (L TO R) VICTOR PARAS, DIRECTOR OF INFORMATION TECHNOLOGY; SEMONE MARTIN, HUMAN RESOURCES; AND DAWN LEWIS, DIRECTOR, HOSPITAL RISK PROGRAMS, PRI. KIM STRASSNER, NURSE AND CLINICAL MANAGER FOR BRIGHTON SURGERY CENTER, LLC, OF ROCHESTER, NEW YORK, ACCEPTED ITS HONORABLE MENTION AWARD FOR ITS EFFORTS IN “REDUCING INCIDENTS OF TASS (TOXIC ANTERIOR SEGMENT SYNDROME)” IN OPHTHALMIC PATIENTS.

FOREWORD CONTINUED FROM PAGE 4

easy-to-use and easy-to-access mobile app that improves productivity, increases profitability and lowers insurance claims and premiums. The singular goal of this company is to ensure all roads become safer for every motorist. Gorilla Safety will combat the rising costs of insurance claims. It is the first technology available to the trucking industry with the potential to reduce claims and, in turn, lower insurance premiums by as much as 60%. Every day it takes for fleet managers to file claims causes total claim costs to rise by 3.9%. For example, if $100,000 in claims are submitted annually, that equates to $39,000 in claim reduction simply by having an automated first notice of loss. Most Gorilla Safety clients see an improvement of 3-5 days, on average, in this area by using the new app. This, coupled with an expected 15% improvement in total claims costs based on fraud avoidance, results in significant savings for any fleet operator. Compliments for the innovation.[IA] 14 April 11, 2016 / INSURANCE ADVOCATE

ACCEPTING THE HONORABLE MENTION AWARD ON BEHALF OF THE NEW JEWISH HOME, SARAH NEUMAN, ARE (L TO R): CATHERINE PELLE, RN, HOUSE MANAGER; LIZ WEINGAST, VICE PRESIDENT OF CLINICAL EXCELLENCE; YVETTE ALLEN, ASSISTANT ADMINISTRATOR; DAWN LEWIS, DIRECTOR, HOSPITAL RISK PROGRAMS, PHYSICIANS’ RECIPROCAL INSURERS (PRI); AND JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITAL AND SPECIAL PROGRAMS, PRI.

4-11-16_INA 4-11-16 4/19/16 10:58 AM Page 15

American Transit Insurance Company The leading for-hire commercial auto liability carrier in New York State with over 40 years of experience insuring Taxis, Livery, Black Cars, Fleets, and Transportation Network Companies.

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16 April 11, 2016 / INSURANCE ADVOCATE

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New York State Will Provide Paid Family Leave and $15 Minimum Wage By William J. Milani, Jeffrey M. Landes, Dean L . Silverberg, Susan Gross Sholinsky, Steven M. Swirsky, Nancy L . Gunzenhauser, Ann Knuckles Mahoney, and Alexandra Bruno Carlo Reprinted with the permission of Epstein Becker Green

The statewide $15 minimum wage will lift the earnings of more than 2.3 million New Yorkers and the 12 week paid family leave policy – the longest and most comprehensive in the nation – will help workers maintain financial stability while caring for a new child or sick relative.

uOn March 31, 2016, New York State’s governor and legislative leaders announced an agreement on the state’s budget for 2016-2017 (“Budget”). Governor Andrew Cuomo signed the bill enacting the Budget at a press conference at the Javits Center. The Budget will impact two areas important to New York employers. First, the Budget enacts a law providing the country’s most comprehensive paid family leave benefit through the state’s existing Disability Benefits Law (“Paid Family Leave Benefits Law”). Second, the Budget enacts a law increasing the minimum wage to $15.00 per hour in some, but not all, counties by 2021 (“Minimum Wage Law”).[1]

Paid Family Leave Benefits The Budget amends New York’s current Disability Benefits Law to establish paid family leave benefits. Beginning January 1, 2018, employees who have worked for a covered employer for 26 or more consecutive weeks will be eligible for paid family leave benefits. At the outset, employees will be entitled to eight weeks of paid leave, increasing to 12 weeks of paid leave by January 1, 2021. Eligible employees will receive pay at a schedule established by New York State, as described below.

Eligibility for Leave Paid family leave benefits may be taken for “family leave,” defined as any leave: • to participate in providing care, including physical or psychological care, for a family member of the employee made necessary by a serious health condition[2] of the family member; or CONTINUED ON PAGE 18

DATE

January 1, 2018

January 1, 2019

January 1, 2020

January 1, 2021

LENGTH OF BENEFITS WITHIN A 52-WEEK CALENDAR PERIOD

AMOUNT OF BENEFITS

8 weeks

50% of average weekly wage, not to exceed 50% of the state average weekly wage

10 weeks

55% of average weekly wage, not to exceed 55% of the state average weekly wage

10 weeks

60% of average weekly wage, not to exceed 60% of the state average weekly wage

12 weeks

67% of average weekly wage, not to exceed 67% of the state average weekly wage INSURANCE ADVOCATE / April 11, 2016 17

4-11-16_INA 4-11-16 4/19/16 10:58 AM Page 18

CONTINUED FROM PAGE 17

• to bond with the employee’s child[3] during the first 12 months after the child’s birth, or the first 12 months after the placement of the child for adoption or foster care with the employee; or • because of any qualifying exigency as interpreted under the federal Family and Medical Leave Act arising out of the fact that the spouse, domestic partner, child, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the U.S. Armed Forces. Unlike New York’s disability benefits, there will be no waiting period before employees become eligible to receive paid family leave benefits; benefits will be payable during the first full day when family leave is required. Employers may establish rules limiting employees from receiving paid family leave benefits at the same time as another employee for the care of the same family member.

Family Leave Benefits—Payments and Annual Increases The length of available leave benefits, and amount of weekly benefits, will increase yearly, on the following schedule: The State Superintendent of Financial Services may delay the increases in paid family leave benefits if such increases have a negative impact on the state’s economy.

Interaction with Other Laws and Benefits Employees who are also eligible for disability benefits may only receive a combined amount of 26 weeks of disability benefits and paid family leave benefits in a 52-consecutive calendar week period. Employees may not collect benefits for disability and paid family leave concurrently. During any time that employees are receiving paid family leave benefits, employers may permit an employee to choose whether the employee will use accrued, unused vacation or personal time to receive a full salary while on leave. Employers may not require that employees use such accrued, unused vacation or personal time while receiving benefits. However, if an employee chooses to use such vacation or personal time, an employer may request 18 April 11, 2016 / INSURANCE ADVOCATE

reimbursement from the employee for any paid family leave benefits received by the employee during that period.

The Paid Family Leave Benefits Law establishes non-retaliation provisions that protect employees from retaliation by employers because the employee filed for or received such benefits.

While an employee is receiving paid family leave benefits, employers will be required to maintain any existing health benefits on behalf of the employee. The Paid Family Leave Benefits Law establishes non-retaliation provisions that protect employees from retaliation by employers because the employee filed for or received such benefits. Further, employers will be required to reinstate employees to the position held when leave commenced, or to be restored to a comparable position with comparable benefits, pay, and other terms and conditions of employment. The Paid Family Leave Benefits Law, however, does not diminish the rights, privileges, or remedies of any employee under a collective bargaining agreement or employment contract.

Employee Contributions The State Superintendent of Financial Services will set the maximum employee contribution for family leave benefits, which is estimated to be a nominal weekly

amount. Employers will not be required to fund paid family leave benefits. Minimum Wage Increases A report issued by the New York State Department of Labor in February 2016 found that raising the minimum wage would directly benefit 2.3 million workers. New York is one of many states, including Oregon and California, establishing statewide minimum wage increases. The Minimum Wage Law provides a tiered increase to the minimum wage for work performed in New York City from the current statewide rate of $9.00 per hour. The Minimum Wage Law provides for a longer implementation period for small employers in New York City and for counties outside New York City. The law divides the state into three areas—(1) the five boroughs of New York City, (2) certain suburban counties (Westchester, Nassau, and Suffolk), and (3) the rest of the state. New York City, with the highest cost of living, will see the most radical change. Employers will be required to pay workers $15.00 per hour by the end of 2018 or 2019, depending on the employee-size of the business. The increases for work performed in New York City follows the schedule below. Nassau, Suffolk, and Westchester Counties will see more gradual increases over a longer time period. For these counties, the minimum wage is set to increase to $10.00 per hour by December 31, 2016, and then $1 every year[4] until reaching $15.00 per hour on December 31, 2021. For work performed in the rest of the state, the minimum wage increase will be even more gradual. The minimum wage will increase to $9.70 per hour on CONTINUED ON PAGE 20

Effective Date

Small NYC Employers (10 or less employees)

Large NYC employers (11 or more employees)

Dec. 31, 2016

$10.50

$11.00

Dec. 31, 2017

$12.00

$13.00

Dec. 31, 2018

$13.50

$15.00

Dec. 31, 2019

$15.00

4-11-16_INA 4-11-16 4/19/16 10:58 AM Page 19

ADVERTORIAL

The Future of Auto AMERICA’S LOVE AFFAIR with the automobile will undergo a significant change in the next few years, with repercussions that will impact society as a whole. Autonomous or driverless vehicles will radically transform everyday life. Helping clients understand and prepare for this change is another valueadded service of the professional insurance agent. Many auto manufacturers estimate that they will have driverless vehicles by the year 2020. It is predicted that driverless cars will be all over the world by 2025 (www.driverless-future.com). UBER is rumored to have plans for a self-driving fleet. A recent study determined that the number of cars owned could drop by 43%. Google estimates that vehicle ownership could drop by 90%. Frequency and severity of accidents are projected to decrease dramatically with autonomous vehicles. Even without a fully autonomous vehicle, assisted driving technology is now standard on many vehicles, including such improved safety features as blind spot assist, crash avoidance (emergency braking), lane assist and speed control. The U.S. Department of Transportation’s National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety announced on March 17, 2016 a commitment by 20 auto makers, representing more than 99 percent of the U.S. auto market, to make automatic emergency braking a standard feature on virtually all new cars no later than NHTSA’s 2022 reporting year, which begins Sept. 1, 2022. One concern is that these safety features may make drivers less alert to the hazards around them. The Wall Street Journal (3/11/16, Car Makers Test Technology to Make You Pay Attention to the Road by Elizabeth Dwoskin and Mike Ramsey) reports that major car makers are experimenting with artificial intelligence systems to evaluate drivers and their fitness while operating vehicles. This raises privacy concerns and other issues such as reduction in driving skills, as there is more reliance on automated assistance. Google’s self-driving cars have already

logged over a million miles, with only one reported accident that was caused by the vehicle. In February 2016, a Google car shifted lanes to avoid traffic cones and hit a passing bus. The Google car “thought” the bus would stop. Modifications were subsequently made to the software to allow the driverless car to anticipate such situations. While addressing all possible scenarios is probably not realistic, additional modifications will be required to address those that come to light. Additional “real world” testing is required. Insurance ramifications will come in reduced claims frequency and severity, which will result in lower premiums. Fewer automobiles owned will also mean lower premiums. Rating criteria, such as age of driver, may become meaningless. Insurance agents and companies will need to look to other income sources as the personal auto insurance market shifts. Traditional auto carriers will out of necessity branch to other lines of business to survive. One area of impact that may not be readily apparent is the benefit of autonomous vehicles to the visually and physically handicapped and the elderly. A visually impaired person would not need someone else to drive them around. Elderly people who no longer feel comfortable driving can maintain their independence. It is possible that driverless cars could reduce the number of drunk driving accidents. Another benefit would be the tracking capability – parents will know if their teen changed the route rather than go straight home. Cyber security is an issue. Fully selfdriving cars do not have steering wheels

or pedals. A car’s system could be hacked and the passenger might have no way to control the vehicle. There are other questions to be addressed. If drivers are not required, how will that impact licensing laws? The states now regulate licensing. How will state laws interface with federal regulations? Can children ride in such vehicles without adult supervision? Auto repair shops will see a decrease in business. A driverless car means that fewer cars will be needed. A “return home” feature could allow a car to drop someone off and then return home for use by another family member. Another concern is how these vehicles will be regulated. Transportation Secretary Anthony Foxx stated during an event held on March 29, 2016 that his department will unveil regulatory guidance for driverless cars in the coming months. He acknowledged the importance of developing a cohesive federal framework in order to encourage the development and sale of self-driving cars. The future of auto is here and it has global implications. There are many open questions on the final outcome of this exciting technology. Helping clients anticipate and adapt to changes is another sign of the true insurance professional.

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CONTINUED FROM PAGE 18

December 31, 2016, followed by a 70-cent increase every year until December 31, 2020, when the minimum wage will reach $12.50 per hour.[5] After December 31, 2020, the minimum wage in these counties will continue to increase on an indexed schedule to be set by the Director of the Division of Budget (“DOB”) in consultation with the Commissioner of Labor.

Tipped Minimum Wage The Minimum Wage Law further provides that the tipped minimum wage in the hospitality industry will be calculated, based on the minimum wage in the locality, to be the greater of (i) two-thirds of the current minimum wage, rounded to the nearest five cents, or (ii) $7.50. The employee may receive the tipped minimum wage provided that the tips, when added to the employee’s wages, are equal to or exceed the minimum wage in effect for that location.

Annual Reassessment of Minimum Wage—“Safety Valve” Provision As with the Paid Family Leave Benefits Law, the Budget includes a so-called “safety valve” provision in case the increases have a negative impact on the state’s economy. Under this provision, on or after January 1, 2019, the DOB will conduct an annual analysis of the state of the economy in each region and the effect of the minimum wage increases to determine whether there should be a temporary suspension or delay in any scheduled increases. The DOB will issue a report and recommendation to the Commissioner of Labor, who will then decide whether or not to suspend or delay increases in the minimum wage.

What New York Employers Should Do Now • Review family and medical leave policies to make sure that they make appropriate references to, and comply with, the Paid Family Leave Benefits Law. • Review minimum wages for your employees based on the counties in which you do business and where employees perform work to identify workers whose wages will need to be increased. • Consider conducting a comprehensive 20 April 11, 2016 / INSURANCE ADVOCATE

Ensure that your payroll personnel or payroll service provider takes the appropriate actions to effectuate the minimum wage increases and procedures for administering paid family leave benefits, including appropriate deductions.

wage review to determine whether changes should be made to your company’s compensation structure. • Ensure that your payroll personnel or payroll service provider takes the appropriate actions to effectuate the minimum wage increases and procedures for administering paid family leave benefits, including appropriate deductions. • Review collective bargaining agreements covering persons employed in New York State to assess what impact, if any, the changes to the minimum wage and the adoption of paid family leave benefits may have on contractual obligations.[IA] ENDNOTES [1] On December 31, 2015, the subminimum wage for tipped employees in the hospitality industry was increased from a $5.00 hourly rate to $7.50 per hour. For more information, please see the

Epstein Becker Green Act Now Advisory titled “New York Tip Law Update: Subminimum Wage for Tipped Employees Will Increase to $7.50 per Hour on December 31, 2015.” [2] The definition of a “serious health condition” is the same as under the federal Family and Medical Leave Act. [3] A “child” means biological, adopted, or foster son or daughter, a stepson or stepdaughter, a legal ward, a son or daughter of a domestic partner, or the person to whom the employee stands in loco parentis. [4] The increases will be as follows: $10.00 per hour on December 31, 2016; $11.00 per hour on December 31, 2017; $12.00 per hour on December 31, 2018; $13.00 per hour on December 31, 2019; $14.00 per hour on December 31, 2020; and $15.00 per hour on December 31, 2021. [5] The increases will be as follows: $9.70 per hour on December 31, 2016; $10.40 per hour on December 31, 2017; $11.10 per hour on December 31, 2018; $11.80 per hour on December 31, 2019; and $12.50 per hour on December 31, 2020.

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4-11-16_INA 4-11-16 4/19/16 10:58 AM Page 21

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Keynote Address from Acting Financial Services Superintendent Maria Vullo

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Golf Tournament, Group Walk & More

4-11-16_INA 4-11-16 4/19/16 10:58 AM Page 22

[ IN THE NEWS ]

Certificates of Insurance Act Takes Effect For construction project managers and others who need proof of insurance from contractors and vendors, important new protection is here. uFLORHAM PARK, NJ—This should weed out a few more cheats and liars. For everyone in New Jersey who manages construction projects and coordinates

“If someone’s looking to game the system by lying about their insurance coverage, this new law should give them serious reason to reconsider.”

the services of multiple contractors, it can be challenging to confirm which building professionals have appropriate insurance coverage with adequate limits. Inaccurate, even outright fake certificates of insurance are the common tools of unscrupulous builders. But now, the Certificates of Insurance Act – signed into law earlier this year – will take effect on April 10 and make any effort to falsify insurance certificates a serious criminal offense. “If someone’s looking to game the system by lying about their insurance coverage, this new law should give them serious reason to reconsider,” explains Dan Borgna, vice president of the Dale Group. “In the past, while such activity was obviously frowned upon, enforcement really didn’t have ‘teeth.’ Basically, many individuals felt the reward was worth the risk.” Under the new law, it’s illegal to issue, request, or require issuance of any insurance certificate that includes false or even misleading information. In addition, the New Jersey Department of Banking and Insurance is granted full enforcement authority. Any violator can be held liable under the state’s Insurance Fraud Prevention Act. 22 April 11, 2016 / INSURANCE ADVOCATE

“This is an important consumer protection law,” Borgna adds. “By curbing improper use of certificates of insurance, it provides increased confidence to project managers and also enhances opportunities for legitimate contractors who play by the rules.” The new law applies to all certificates that are issued in connection with property, operations, and risk. About the Dale Group Focused on providing businesses with commercial insurance and surety bonds, along with personal insurance, employee benefits, and financial services, New Jerseybased Dale Group helps client companies secure the future and maximize profits through comprehensive insurance and bonding programs. These are cost-effective, secure, competitively priced, and backed by top-rated insurance companies. Dale Group’s staff of highly-trained insurance professionals excels at identifying areas of exposure and creating customized coverage. Additional information on Dale Group is available by visiting www.dalegroup.com or by calling (973) 377-7000. [IA]

when a fiduciary communicates a rejection of its trust. Judge Victor Marrero for the US District Court for the Southern District of New York dismissed a complaint against Fortress brought by NEM Re Receivables LLC, formerly known as Federated Reinsurance Co. that sought payment for funds stemming from a settlement agreement that never came to fruition. Judge Marrero agreed with Arent Fox attorneys

“Our argument is clear that NEM Re did not meet the requirements for a claim of accounting and the statute of limitations expired several years ago.” that requirements for a claim of accounting were not met and that New York’s statute of limitations for breach of contract passed more than five years ago. “We are thrilled that Judge Marrero dismissed the complaint and that he found, as other courts have, that a conventional business relationship does not become a fiduciary relationship by mere allegation,” said Mr. Rousseau. “Our argument is clear that NEM Re did not meet the requirements for a claim of accounting and the statute of limitations expired several years ago.” Fortress served as an agent and manager for insurance companies and was in posses-

Arent Fox Secures Dismissal of Major Claim uNEW YORK, NY—Arent Fox LLP secured a victory for Fortress Re Inc.—the aviation reinsurance agency that infamously insured the four planes that crashed on 9/11—after a New York district court dismissed a breach of contract claim in late March. Insurance & Reinsurance partner Julius A. Rousseau and associate Lee A. Pepper have represented Fortress through all stages of litigation and successfully argued that the statute of limitations on claims in New York starts when there is a legal right to demand payment and not

sion of letters of credit and other funds belonging to Federated several decades ago. In 1990, Federated became insolvent and was placed into liquidation; fourteen years later in 2004 the Commissioner of Insurance of the State of New York assigned all of Federated’s then-uncollected reinsurance receivables to NEM Re — starting the sixyear window for NEM Re to file a complaint. But it was not until 2015 that NEM Re asked Fortress Re to pay any amounts that may have been owed, along with interest, attorney fees, and costs.[IA]

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Cuomo Announces Health Insurance For Victims uGovernor Andrew M. Cuomo announced that insurers and HMOs offering comprehensive health insurance coverage through the New York State of Health individual marketplace are now

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January 31 annual open enrollment period. Acting Department of Financial Services Superintendent Maria T. Vullo said, “DFS is taking this action to ensure that domestic violence victims, as well as victims of spousal abandonment, have the opportunity year-round – not just during the standard open enrollment period – to sign-up for necessary health insurance.” The following guidance is being provided to insurers and HMOs by the Department of Financial Services: The special enrollment period will be made available for individual coverage outside the New York State of Health starting April 15, 2016 to any member of a household who is a victim of domestic violence, including unmarried and dependent victims within the household, as well as victims of spousal abandonment, including their dependents. For applications received by the 15th of the month, coverage will be effective on the first day of the following month. For applications received after the 15th of the month, coverage should be effective on the first day of the second following month. Insurers and HMOs may include either an item on the application or request a separate statement from the applicant attesting to their eligibility for the special enrollment period. Insurers and HMOs should not require that the applicant have been a victim of domestic violence or spousal abandonment within a specified period of time. Insurers and HMOs may not require any proof of eligibility or apply overly burdensome requirements on applicants seeking to use the special enrollment period.[IA]

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[ IN THE NEWS ]

Citrix Joins Applied Systems Partner Program for eSignature uUNIVERSITY PARK, Ill.—Applied Systems has announced that Citrix has joined the Applied Partner Program to offer its eSignature solution, RightSignature, to North American insurance agencies and brokerages via integration with Applied Epic. Through this collaboration, agencies and brokerages can enhance their digital customer experience and improve productivity by automating paperless delivery of documents via eSignature capabilities directly from Applied Epic. The Applied Partner Program is a technology and industry partnership program focused on increasing the availability of best-in-class software and enhancing automation and connectivity across the independent insurance distribution channel. The Applied Partner Program is open to leading technology providers and organizations across the industry and advances Applied’s strategic focus on partnerships to deliver value-added capabilities that further automate workflows, increase data consistency and accuracy, and drive a connected insurance experience. Applied Solutions Partners embed third-party functionality into Applied’s solutions to provide users with new, best-in-class capabilities to further automate workflows and drive business operational efficiencies. With this integration solution, RightSignature is one of the simplest, most efficient ways to obtain document signatures directly from your Applied Epic account. RightSignature allows businesses to close more deals in less time, reduce paper and ink expenses, avoid fax hassles, cut cycle time from weeks to hours, and provide better customer service. With its intuitive and simple interface, RightSignature provides powerful, business-critical features: fill out a form and sign, handwritten mouse signatures, typed signatures, mobile signatures, self-service documents, reusable templates, and much more. “We are honored to be collaborating with Applied Systems as one of their first eSignature Solutions Partners to date,” said Bill O’Boyle, senior manager for Business 26 April 11, 2016 / INSURANCE ADVOCATE

Development for Citrix. “As a strategic Solutions Partner, we look forward to working with Applied to offer insurance agencies and brokerages a seamless way to sign documents quickly and securely, and ultimately save time and money by reducing paperwork and faxes.” The integrated eSignature capability for Applied Epic is available now with Applied Epic 2016, the latest version of the fastestgrowing cloud-based agency and brokerage management system in the world. Applied Epic delivers the most technologically advanced software application to independent insurance agencies and brokerages to enable faster growth and profitability in a changing insurance marketplace. Purpose-built for insurance agencies and brokerages, Applied Epic is a single, integrated and open application that provides essential capabilities for each stakeholder within an agency or brokerage to better manage customer relationships, sales opportunities, carrier appetite search, financial accounting, and policy and benefits administration across all lines of business, reducing time and expenses spent managing separate, disparate systems. The application offers a comprehensive view of client information and internal operations through an intuitive user interface, enabling users to make more informed decisions about their business and capitalize quickly on new opportunities. Applied Epic’s unique software architecture provides scalability for agencies and brokerages with multiple, global locations to manage expansion and business growth with ease. “Applied’s deep integration expertise and numerous prebuilt and custom integrations strengthen the value agencies and brokers can drive in their business with Applied Epic,” said Michael Howe, S.V.P. of Product Management, Applied Systems. “Integrated and fully automated eSignature capabilities offer the promise of streamlined operations and a better customer experience. We are committed to providing our customers a choice for eSignature and our partnership with Citrix demonstrates the value of an integrated solution.”[IA]

MSO Announces Promotions uGLEN ROCK, NJ—MSO, Inc. (The Mutual Service Office, Inc.) is pleased to announce the promotion of three employees to the position of Director: Melissa “Missy” Krepps, CPCU, API was named Director, National Filings for Insurance Programs and Senior Product Development Analyst. Ms. Krepps has been instrumental in the national rollout of the MSO Commercial Auto Program and Businessowners program, including our new Craft Brewery BOP. Jane McGraw, MBA, ARM is the new Director, Statistical Services and Enterprise Risk Management. Ms. McGraw manages statistical reporting and was a key architect of MSO’s new Statistical Plan and Enterprise Risk Management model. Trish Riggio is now Director, Compliance Services and Senior Product Development Analyst. Ms. Riggio handled the full state licensing for MSO and established and maintains the MSO compliance structure for processing MSO’s licenses in all states, as well as ensuring compliance with the regulations in all jurisdictions. According to MSO CEO Jan Scites, “Jane, Missy and Trish have been instrumental in building MSO’s national presence in the P&C industry. They are very valuable members of the team.” MSO is a national property and casualty rating service bureau, providing product development and rating services to the insurance industry since 1944. MSO has long been an industry leader, offering programs that are comprehensive and easy to use. MSO will work with companies to customize programs to meet a company’s marketing and underwriting requirements.[IA]

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[ IN THE ASSOCIATIONS ]

PIA National Names Augusto Russell 2016 Agent of the Year uWASHINGTON, D.C.—Augusto Russell, CIC, of Farmington, Connecticut, has been named the 2016 Professional Agent of the Year by the National Association of Professional Insurance Agents (PIA). Russell is a partner with May, Bonne & Walsh Inc. in Glastonbury, Connecticut. “This award is PIA’s highest honor,” said PIA National President Robert W. Hansen, Jr. “It recognizes the achievements of one professional insurance agent who is an outstanding member of PIA.” The PIA National Professional Agent of the Year award is the association’s highest national award of distinction. It is presented annually to one outstanding professional insurance agent who is a member of PIA. Nominations for this award are made by PIA state and regional affiliate associations. “Augusto Russell’s life and his career path have both been characterized by caring,” Hansen said. “After entering the insurance industry in Boston in 1986, he left the industry in 1999 to work as director of development for HOPE Worldwide—a charity that works to deliver community-based services to the poor and needy. He resumed his insurance career in 2003, when he and his family moved to Connecticut.” Russell has been an active member of PIA of Connecticut since 2005, serving as its President in 2013-14. He has served with distinction on many PIA committees and was honored as the PIA of Connecticut Professional Agent of the Year in 2015. In addition, Russell participates in efforts to give back to his community, which he believes is a necessary ingredient to being a good agent. He is president of the Board of The Arc of the Farmington Valley (Favarh), and chair of its $2,000,000 capital campaign which is nearing completion. Favarh serves a large client population with intellectual disabilities. Russell is also Chair of the Economic Development 28 April 11, 2016 / INSURANCE ADVOCATE

(L-R) KELLY K. NORRIS, CAE, EXECUTIVE DIRECTOR, PIACT; AUGUSTO RUSSELL, CIC, PIA NATIONAL PROFESSIONAL AGENT OF THE YEAR; TIMOTHY G. RUSSELL, VICE PRESIDENT/TREASURER, PIA NATIONAL

Commission for his home town of Farmington, Connecticut and past president of the Farmington Rotary Club. “In my opinion, which is not just that of a Governor but as someone raised in a family of insurance brokers—I recognize the value of a committed professional who cares deeply for both his customers and his community. Mr. Russell exemplifies that in every regard,” wrote Connecticut Governor Dannel P. Malloy in support of Russell’s nomination for the PIA award. Former Insurance Commissioner of Connecticut Thomas Leonardi said that while there is much discussion about the need to attract bright young people into the industry, “Augusto has actually done something about it!” He was referring to how Russell initiated a program with Goodwin College to create a course curriculum to allow students a pathway into an insurance career. Board members of PIA of Connecticut collaborated in the effort. “I believe he is one of the finest human beings I have come across in my career,” Leonardi added. “He genuinely cares about people, his community, and his profession.”[IA]

[ IN THE NEWS ]

Marsh & McLennan Names Easton CCO for Insurance Services Segment uNEW YORK, N.Y.—Marsh & McLennan Companies, Inc. (NYSE: MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, announced that Robert H. Easton has joined the firm as Chief Compliance Officer of the Company’s Risk and Insurance Services segment. Mr. Easton reports to Jim McNasby, General Counsel for MMC’s Risk and Insurance Services segment, which includes Marsh and Guy Carpenter, and to Carey Roberts, MMC’s Deputy General Counsel & Chief Compliance Officer. Mr. Easton is based at Marsh & McLennan’s corporate headquarters in New York. “Rob’s experience as a highly-respected insurance regulator at the New York State Department of Financial Services and as global chief compliance officer for a Fortune 500 company make him ideally suited for this role,” said Peter Beshar, Executive Vice President and General Counsel. “I am delighted to welcome Rob to Marsh & McLennan.” Most recently, Mr. Easton was Senior Vice President and Chief Compliance Officer of McGraw Hill Financial. From 2011 to 2015, he served as Executive Deputy Superintendent at the New York State Department of Financial Services, where, as the state’s highest ranking official dedicated to insurance regulation, he provided oversight to more than 1,700 property and casualty, life, and health insurance companies operating in the State. Marsh & Mclennan Companies (NYSE: MMC) is a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. Marsh is a leader in insurance

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broking and risk management; Guy Carpenter is a leader in providing risk and reinsurance intermediary services; Mercer is a leader in talent, health, retirement and investment consulting; and Oliver Wyman is a leader in management consulting. With annual revenue of $13 billion and approximately 60,000 colleagues worldwide, Marsh & McLennan Companies provides analysis, advice and transactional capabilities to clients in more than 130 countries.[IA]

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[ ON MY RADAR ]

BA R RY Z A L M A

Shooting Arises Out of Use of a Vehicle UIM Cover Exceedingly Broad in Washington State uA truly stupid person fired a weapon from an automobile – claiming no intent to harm anyone but striking plaintiff Heidi Kroeber and injuring her. She claimed she was entitled to underinsured motorist (UIM) coverage because the shooting arose out of the use of the auto the shooter was in when he shot her. GEICO disagreed. In Certiﬁcation from the United States District Court for the Western District of Washington in Heidi Kroeber a/k/a Heidi Lazenby v. GEICO Insurance Company, 2016 WL 166528 (No. 91846–5) (Jan. 14, 2016), the Washington Supreme Court answered questions posed by a US District Court.

legally entitled to recover from the owner or operator of an underinsured motor vehicle. GEICO denied plaintiff ’s claim, asserting that her injuries did not arise out of the use of Atkinson’s truck. Plaintiff sued GEICO, claiming that she was entitled to UIM coverage under her automobile insurance policy. The district court found that the shooting constituted an “accident” for the purposes of plaintiff ’s policy, that plaintiff ’s policy unambiguously requires GEICO’s liability to “arise out of ” the shooter’s use of the truck, and that the vehicle was “in use” at the time of the shooting as contemplated by the insurance contract.

ANALYSIS FACTS The Supreme Court was faced with two certified questions from the United States District Court for the Western District of Washington. First, the Supreme Court was asked to determine for the purposes of underinsured motorist (UIM) coverage whether an injury to an insured pedestrian “arose out of ” the intentional firing of a gun from an uninsured pickup truck. Second, it was asked whether it is material if the shooter intended to harm anyone when firing the gun. On February 12, 2012, plaintiff Heidi Kroeber was shot outside the Bad Monkey Bar in Kent, Washington by Matthew Atkinson, who was driving an uninsured truck belonging to a friend at the time he opened fire. Plaintiff and her boyfriend had antagonized Atkinson earlier that evening. After pleading guilty to the crime of “Drive–By Shooting,” Atkinson claimed that he had not intended to injure anyone with his shot and later claimed that he did not know that he was shooting where people were standing. Plaintiff filed a claim with defendant, GEICO Insurance Company, to recover damages under the UIM coverage provision of her own automobile insurance policy. Under the relevant parts of this policy, GEICO is liable for damages an insured is 30 April 11, 2016 / INSURANCE ADVOCATE

Question 1 Insurance contracts are considered as a whole and given a fair, reasonable, and sensible construction—the same way an average person would when purchasing insurance. For the purposes of UIM insurance contracts, Washington cases have not provided a clear rule to determine where an injury “arises out of ” vehicle use. Washington case law has established, though, that some causal connection must exist between the use of an automobile and the resulting injury. The words “arising out of the use” are unambiguous and require a degree of causality between the injury and the use of the vehicle. The phrase “arising out of ” does not force the interpretation that before coverage can exist it must appear that the injury was the proximate result of the use of the automobile. Such a construction would do violence to the normal meaning of those words. Washington cases have neither explicitly embraced nor rejected the “but for” analysis plaintiff proposes. It follows that the accident would not have happened as it did but for the use of the vehicle; that Heidi’s injuries originated from, had their origin with, grew out of, or flowed from her use of the truck; that the truck causally contributed in some fashion toward producing the injury; and that the truck was

Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http:// shop.americanbar.org/eBus/Store/Pro ductDetails.aspx?productId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

more than a coincidental place at which the injury occurred. What Washington cases have established is that for an injury to “arise out of ” vehicle use, the vehicle itself or an attachment to it does not need

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[ ON MY RADAR ] to be the direct cause of the injury. Rather, the facts must establish that the accident involved some causal relationship between a condition of the vehicle, a permanent attachment thereto, or some aspect of its operation. Washington insurance statutes are to be liberally construed for the benefit of the public. The purpose of Washington UIM coverage is to protect innocent victims of motorists of underinsured motor vehicles. The Washington Supreme Court held that no causal connection exists where it is established that the vehicle serves as the “mere situs” of the accident. The fact that a vehicle is the mere situs of an accident, however, is not sufficient to establish the required causal connection. The vehicle must contribute in some fashion toward producing the injury; the vehicle must be more than the coincidental place in which the injury occurred. Determining whether a vehicle is the mere situs of an accident is a factual determination to be made by the trial court. To assist in such a determination, the Supreme Court added that an automobile is more than the mere situs of an accident if some causal connection does in fact exist between the use of the vehicle and the injury. In such circumstances, liability attaches to the insurer “under an insurance contract providing for coverage of an accident arising out of use of the vehicle. Thus, the rule is that some causal connection exists when the events leading up to an injury involve vehicle use, unless the vehicle is merely the coincidental location of the accident. Since Atkinson drove the pickup to the location from which he fired his weapon the Supreme Court concluded that there was a causal connection between the pickup and the injury and UIM coverage was required. Question 2 With regard to question two whether the driver/shooter’s intent to fire the gun is legally significant for triggering UIM coverage. The shooter’s intent informs the “accident” prong of UIM coverage. Here, Kroeber asserts—and GEICO concedes— that the injury was caused by an “accident” as contemplated by both the automobile insurance policy and the statutory definition. As such, the shooter’s intent does not affect whether the injury “arose out of ” the use of the automobile.

CONCLUSION An injury “arises out of ” vehicle use if some causal connection exists between a condition of, an attachment to, or some aspect of the vehicle’s use and the resulting injury. Conversely, an injury does not “arise out of” vehicle use when the vehicle is merely the situs of the accident. The Supreme Court answered the second question in the negative because both parties agreed that the injury was caused by “an accident.”

ZALMA OPINION The test adopted by the Washington

Court is very broad. Under this test, “but for” causation is not necessary nor is “proximate causation” to find coverage under a UIM policy. All that is needed is that the trier of fact find “some causal connection.” By applying such a subjective and wide open test, just about any injury that can be connected to the use of an automobile would be covered under a UM/UIM policy in Washington state. UM/UIM insurers in that state should direct their investigations to determine whether some causal connection exists and if it does, the claim must be paid.[IA]

Insurer Report on NY Emergency Visits: “Flawed” uWASHINGTON, D.C.—The American College of Emergency Physicians (ACEP) and its New York Chapter today jointly take issue with a new report from Excellus BlueCross BlueShield about “potentially preventable” emergency visits, calling their statistics seriously flawed and misleading — saying, once again, an insurance company is using misleading data to draw inaccurate conclusions about whether emergency visits are appropriate. The two emergency physician organizations took issue with Excellus Blue Cross BlueShield in 2010. http://newsroom.acep.org/2010-05-27-ACEP-and-ItsNew-York-Chapter-Take-Issue-With-BlueCross-Blue-Shield-Report-That-Is-Based-o n-Misleading-Data “Health insurance companies, and especially this one, have historically used these types of tools as a way to justify denying legitimate medical claims and padding their profits,” said Jay Kaplan, MD, FACEP. “It is very alarming that a report like this is being issued because it undermines the language in the ACA and patients’ responsible use of the emergency department.” The report assesses whether emergency visits for certain conditions could have been avoided, based on the patients’ final diagnoses, not their presenting symptoms. The data does not take into consideration the national “prudent layperson” standard, which says emergency visits

must be covered by insurance companies based on the patients’ symptoms, not their final diagnoses. This standard was included in the Patient Protection and Affordable Care Act (ACA). It also directly contradicts data from the Centers for Disease Control and Prevention which says that the vast majority (96 percent) of emergency patients seek care appropriately. http://www.cdc.gov/nchs/data/ahcd/NHA MCS_2011_ed_factsheet.pdf Dr. Kaplan adds that patients never should be forced into the position of selfdiagnosing their medical conditions out of fear of insurance not covering the visit. For example, this report cites sprains and strains as a “potentially preventable” condition in the ER. But does a patient have a severe strain or a broken leg? Another condition cited is abdominal pain. This can be the symptom of something life-threatening, like a heart attack, an abdominal aortic aneurysm or an ectopic pregnancy, not just indigestion. It’s not always possible for a patient to know unless he or she gets a medical examination. In addition, some patients with certain conditions make the mistake of delaying seeking medical care when they are truly having an emergency. “A report like this may discourage some people from visiting the emergency department who really should be there,” said Dr. Kaplan. “The consequences of that could be (and has been) tragic.” [IA] INSURANCE ADVOCATE / April 11, 2016 31

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[ COURTSIDE ]

L AW R E N C E R O G A K

Top Court Rejects Expert Opinion That Smell of Gasoline Proves Toxic Exposure Level For Fetus Sean R. v BMW of N. Am., LLC Plaintiffs alleged that their baby was born with severe defects due to the mother’s exposure to gasoline fumes in their BMW caused by a defective fuel line hose. Plaintiff ’s expert doctors wanted to testify that the mother’s reported symptoms, such as headache and nausea, were sufficient evidence that she was exposed to 1000 parts per million of gasoline vapor — the level which is known to cause birth defects. The Court of Appeals rejected this testimony, finding the experts’ method was not generally accepted in the scientific community. More specifically, the Court held that while it is scientifically accepted that a known dose of 1000ppm causes symptoms, the reverse is not true — it is not accepted that the appearance of the symptoms establishes the dose of 1000ppm. Moreover, the mere ability to smell gasoline is not an indicator of a toxic exposure level, unlike certain other chemicals where the ability of the nose to detect it is sufficient to establish a toxic level. Therefore the expert testimony was precluded. — LNR

uPlaintiff Sean R. was born with severe mental and physical disabilities, which he attributes to in utero exposure to unleaded gasoline vapor caused by a defec-

…the mere ability to smell gasoline is not an indicator of a toxic exposure level, unlike certain other chemicals where the ability of the nose to detect it is sufficient to establish a toxic level. tive fuel hose in his mother’s BMW. The question on this appeal is whether the courts below properly precluded two of plaintiff ’s expert witnesses from testifying at trial as to causation. Because the experts did not rely on generally accepted princi-

1989 BMW 525i 32 April 11, 2016 / INSURANCE ADVOCATE

Lawrence N. ("Larry") Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best's Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.

ples and methodologies in concluding that plaintiff was exposed to a sufficient concentration of gasoline vapor to cause his injuries, we affirm.

I. In May 1989, plaintiff ’s father, Guy R., purchased a new BMW 525i for his wife, Debra. She was the only person to drive the car and used it primarily for running local errands. In the spring of 1991, Debra began to notice a smell of gasoline in the vehicle. She stated the odor “came and went” and that it would often dissipate as she drove. Debra said she could tolerate the smell in the summer when she was able to drive with the windows down, but that at other times it was so strong it caused her headaches, dizziness and throat irritation. Debra’s family members also noticed the odor when they rode in the vehicle, and Debra’s mother said it made her nauseous and dizzy. Eventually, the couple began to smell the odor in their home from the attached garage where they parked the car at night. That March, Debra took the car to Hassel Motors complaining of the gasoline odor. Hassel could not identify any problem with the vehicle, however, and made no repairs. Debra continued driving the vehicle, despite the persistent odor of gaso-

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[ COURTSIDE ] line, when she became pregnant with plaintiff in July or August of 1991. Her husband took the vehicle back to Hassel in November, at which time Hassel discovered a fuel leakage into the engine compartment caused by a split fuel hose. In total, Debra had driven 6,458 miles in the eight months that she smelled gasoline in the vehicle. Plaintiff was born without difficulty on May 13, 1992. Although his initial Apgar scores were 9 and 10 at one and five minutes after birth, respectively, subsequent testing revealed that plaintiff suffered from severe mental and physical disabilities. He was diagnosed with, among other things, spastic quadriparesis (a form of cerebral palsy), developmental delays, ventricular asymmetry, delayed myelination, microcephaly, aortic stenosis, malformed bicuspid valve, tracheomalacia and impaired visual function. Two years later, BMW of North America, LLC issued a recall of all 525i vehicles made between 1989 and 1991, due to defects in the feed fuel hoses. It described the defective hoses as being able to “harden and ‘set’ over time due to

engine compartment temperatures,” making it “possible that seepage between the hose and the fitting could result because the clamp cannot provide sufficient sealing

He alleged that the vehicle’s defective fuel hose, and Hassel’s failure to timely discover and fix the defective hose, caused his injuries by exposing him in utero to toxic gasoline vapor.

force to compensate for the hardening of the hose.” The recall report noted that customers had associated the defect with a “conspicuous fuel odor.” Plaintiff commenced this personal injury action in January 2008 against defendants BMW of North America, LLC, BMW

of North America, Inc., BMW (US) Holding Corp. (collectively, “BMW”), Martin Motor Sales and Hassel. He alleged that the vehicle’s defective fuel hose, and Hassel’s failure to timely discover and fix the defective hose, caused his injuries by exposing him in utero to toxic gasoline vapor. In furtherance of his claims, plaintiff served notice of his intent to rely on the testimony of ten expert witnesses at trial, including Linda Frazier, M.D., M.P.H. and Shira Kramer, M.H.S., Ph.D. As plaintiff ’s primary causation experts, Dr. Frazier and Dr. Kramer were prepared to testify that plaintiff ’s in utero exposure to gasoline vapor proximately caused his birth defects. For her part, Dr. Frazier concluded that plaintiff ’s mother inhaled 1,000 parts per million (ppm) of gasoline vapor based on the fact that “she and others experienced symptoms of acute toxicity during exposure, such as headache, nausea and irritation of the throat and mucous membranes. In controlled studies, for symptoms such as these to occur immediately, a gasoline CONTINUED ON PAGE 36

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[ COURTSIDE ] CONTINUED FROM PAGE 33

vapor concentration of at least 1000 ppm… is required.” Dr. Frazier then utilized the “Bradford Hill criteria” to conclude that unleaded gasoline vapor is capable of causing the types of birth defects plaintiff suffered based on the link between exposure to the constituent chemicals of gasoline and adverse birth outcomes. Finally, after ruling out other possible causes, Dr. Frazier concluded that Debra’s “high peak exposure” to gasoline vapor during the first trimester of her pregnancy was the most likely cause of plaintiff ’s injuries. Dr. Kramer reached similar conclusions with respect to causation. Using a “weight of the evidence” analysis, she explained that “gasoline vapor and/or the specific chemical constituents of gasoline vapor” — specifically toluene and benzene — are “causally related to an elevated risk of birth defects.” Based on the symptoms that plaintiff ’s mother said she experienced and Dr. Frazier’s estimate that plaintiff was exposed to 1,000 ppm of gasoline vapor, Dr. Kramer further concluded that plaintiff ’s exposure to unleaded gasoline vapor was a substantial causative factor in plaintiff ’s birth defects.

BMW and Hassel moved for summary judgment in November 2010, alleging, as relevant here, that the opinions of plain-

Not only is it necessary for a causation expert to establish that the plaintiff was exposed to sufficient levels of a toxin to have caused his injuries, but the expert also must do so through methods “found to be generally accepted as reliable in the scientific community” tiff ’s causation experts lacked a proper foundation. Supreme Court denied summary judgment, holding that plaintiff ’s experts provided a foundation for their opinions. The Appellate Division modified on grounds not pertinent to this appeal, and otherwise affirmed. Defendants then moved to preclude plaintiff ’s causation experts from testifying

at trial or, alternatively, to hold a hearing in accordance with Frye v United States (293 F 1013 [DC Cir 1923]). In support of their motions, defendants included the expert affidavits of Anthony Scialli, M.D. and Peter Lees, Ph.D., which challenged the opinions of Dr. Frazier and Dr. Kramer for reaching novel conclusions and not using generally accepted principles and methodologies. After reviewing lengthy submissions and a number of supplemental expert reports, Supreme Court granted defendants’ motion to the extent that it precluded the testimony of Drs. Frazier and Kramer. As relevant here, the court determined that those experts did not rely on generally accepted methodologies in concluding that in utero exposure to unleaded gasoline vapor caused plaintiff ’s injuries. After granting plaintiff ’s motion for reargument, Supreme Court adhered to its original decision. The Appellate Division unanimously affirmed and certified the following question to this Court: “Was the order of the Supreme Court, as affirmed by this Court, properly made?” (115 AD3d 432 [1st Dept 2014]).

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[ COURTSIDE ] II. In toxic tort cases, an expert opinion on causation must set forth (1) a plaintiff ’s exposure to a toxin, (2) that the toxin is capable of causing the particular injuries plaintiff suffered (general causation) and (3) that the plaintiff was exposed to sufficient levels of the toxin to cause such injuries (specific causation) (see Parker v Mobil Oil Corp., 7 NY3d 434, 448 [2006]). Although it is “not always necessary for a plaintiff to quantify exposure levels precisely”, we have never “dispensed with a plaintiff ’s burden to establish sufficient exposure to a substance to cause the claimed adverse health effect” (Cornell v 360 W. 51st Realty, LLC, 22 NY3d 762, 784 [2014]). “At a minimum, . . . there must be evidence from which the factfinder can conclude that the plaintiff was exposed to levels of the agent that are known to cause the kind of harm that the plaintiff claims to have suffered.” Not only is it necessary for a causation expert to establish that the plaintiff was exposed to sufficient levels of a toxin to have caused his injuries, but the expert also must do so through methods “found to be generally accepted as reliable in the scientific community” (Parker, 7 NY3d at 449). This “general acceptance” requirement, also known as the Frye test, governs the admissibility of expert testimony in New York. It asks “whether the expert’s techniques, when properly performed, generate results accepted as reliable within the scientific community generally.” Although unanimity is not required, the proponent must show “consensus in the scientific community as to the methodology’s reliability.” Plaintiff and his experts have failed to make that showing in this case. Dr. Frazier and Dr. Kramer concluded that plaintiff was exposed to a sufficient amount of gasoline vapor to have caused his injuries based on the reports by plaintiff’s mother and grandmother that the smell of gasoline occasionally caused them nausea, dizziness, headaches and throat irritation. Plaintiff and his experts have not identified any text, scholarly article or scientific study, however, that approves of or applies this type of methodology, let alone a “consensus” as to its reliability. Therefore, the courts below properly granted defendants’ motion to preclude their testimony at trial.[FN1] Dr. Frazier claims that it is accepted practice in occupational medicine to use standardized studies of symptoms as a

guide when assessing exposures retrospectively. For support, she cites to the documentation report for gasoline by the American Conference of Governmental and Industrial Hygienists (ACGIH), which synthesizes the results of controlled studies and states that the threshold for immedi-

Although unanimity is not required, the proponent must show “consensus in the scientific community as to the methodology’s reliability.” ate, mild toxic effect is approximately 1,000 ppm. She also cites a 1991 study in which subjects exposed to known quantities of toluene and ethanol experienced an increase in headaches as their exposure level increased, as well as a 2008 report on the safety of n-Butyl alcohol in cosmetic products. None of those sources, however, establish that Dr. Frazier’s methodology, “when properly performed, generates results accepted as reliable within the scientific community generally.” They merely support her conclusion that there is a doseresponse relationship between exposure to the chemical constituents of gasoline and symptoms of toxicity. In Dr. Frazier’s own words, the ACGIH report lists the known “exposure levels which cause people to report symptoms such as nausea and headache because, on the whole, controlled exposure studies are reliable.” We don’t disagree with the scientific validity of controlled studies or their ability to measure symptoms in response to a given exposure. But those controlled studies do not support the inverse approach Dr. Frazier employed in this case — working backwards from reported symptoms to devise an otherwise unknown concentration of gasoline vapor. Dr. Frazier has not identified on this record any study, report, article or opinion that admits or employs such a methodology. Dr. Frazier’s methodology is also fundamentally different from the true “odor threshold” analysis that has been admitted in other toxic tort cases. The odor threshold CONTINUED ON PAGE 38

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[ COURTSIDE ] CONTINUED FROM PAGE 37

t m

of a substance is the level at which the substance is capable of olfactory detection (Manuel v Shell Oil Co., 664 So 2d 470, 477 [5th Cir 1995]). Concentrations below the odor threshold are, by definition, not detectable by human smell (see Dickens v Oxy Vinyls, LP, 631 F Supp 2d 859, 863 [WD Ky 2009]). Causation experts have used odor thresholds to determine, for example, that a plaintiff was occupationally exposed to 60 ppm of hexane where hexane cannot be detected below that concentration and the plaintiff testified that he smelled hexane while working (see Beckner v Bayer Cropscience, LP, 2011 WL 805788 *6 n 8 [SD W Va, Mar. 2, 2011, No. 2:05-0530]). Similarly, the expert in Magistrini v One Hour Martinizing Dry Cleaning (180 F Supp 2d 584 [D NJ 2002], affd 68 Fed Appx 356 [3d Cir 2003]) calculated a plaintiff ’s occupational exposure to perchloroethylene (PCE) based on the chemical’s odor threshold, coupled with other employment information, the cubic footage of the workspace and industrial literature. Odor thresholds can be particularly helpful in occupational exposure cases, where the odor threshold of a substance exceeds permissible workplace safety standards (see Beckner, 2011 WL 805788 at * n 8 [noting that if “one detects the odor of hexane, there is necessarily an exposure exceeding the limit set by the National Institute for Occupational Safety and Health . . . of 50 ppm”]). In some cases, however, the odor threshold of a substance is far below toxicity. Indeed, as one of plaintiff ’s sources explains: “Smelling organic solvents is not indicative of a significant exposure, as the olfactory nerve can detect levels as low as several parts per million, which is not necessarily associated with toxicity. As an example, the odor threshold of toluene is 0.8 parts per million, whereas the threshold limit value is 100 parts per million.” (McMartin et al, Pregnancy Outcome Following Maternal Organic Solvent Exposure: A Meta-Analysis of Epidemiologic Studies, 34 American Journal of Industrial Medicine 288-292, 289 [1998]). Defendants state, and plaintiff does not dispute, that unleaded gasoline in the early 1990s had a very low odor threshold of between 0.50 and 0.76 ppm. Assuming that is correct, a person would have been able to detect the odor of unleaded gasoline 38 April 11, 2016 / INSURANCE ADVOCATE

vapor at less than 1 ppm. Had Dr. Frazier applied a true odor threshold methodology in this case, like the experts in Beckner and Magistrini, the only conclusion she could have reached was that plaintiff was

Although it is sometimes difficult, if not impossible, to quantify a plaintiff’s past exposure to a substance, we have not dispensed with the requirement that a causation expert in a toxic tort case show, through generally accepted methodologies, that a plaintiff was exposed to a sufficient amount of a toxin to have caused his injuries….

exposed to at least 1 ppm of unleaded gasoline — the minimum level at which gasoline is detectable by human smell. Instead, Dr. Frazier averred that there is a minimum threshold of gasoline vapor beneath which individuals do not experience headache, nausea or dizziness. And because Debra experienced headaches, nausea and dizziness, Dr. Frazier concluded she must have been exposed to at least that concentration. Plaintiff has not shown that such a “symptom-threshold” methodology, unlike the odor threshold methodology admitted in other cases, has been generally accepted in the scientific community.[FN2] Although it is sometimes difficult, if not impossible, to quantify a plaintiff ’s past exposure to a substance, we have not dispensed with the requirement that a causation expert in a toxic tort case show, through generally accepted methodologies, that a plaintiff was exposed to a sufficient amount of a toxin to have caused his injuries (see Joseph V. Rodricks, Reference Guide on Exposure Science, in Federal Judicial Center, Reference Manual on Scientiﬁc Evidence at 539 [3d ed 2011] [“The methodological tools necessary to ‘reconstruct’ the plaintiff ’s past exposure

are identical to those used to estimate current exposures, but the availability of the data necessary to apply those methods may be limited or, in some cases, nonexistent”]). It was plaintiff ’s burden to show that the methodology his experts employed was generally accepted in the scientific community. Having failed to meet that burden, the courts below properly precluded Dr. Frazier’s and Dr. Kramer’s testimony that plaintiff ’s exposure to gasoline vapor caused his injuries. Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative. ***************** Order affirmed, with costs, and certified question answered in the affirmative. Opinion by Judge Pigott. Judges Rivera, Abdus-Salaam, Stein and Fahey concur. Chief Judge DiFiore and Judge Garcia took no part.[IA] 2016 NY Slip Op 01000 Decided February 11, 2016 Court of Appeals Pigott, J. FN1: Due to the procedural posture of this case, our analysis and holding are limited to the Frye inquiry of whether the experts’ techniques are generally accepted in the scientific community. We express no opinion on the “separate and distinct” question of whether there was a proper foundation for their opinions (Parker, 7 NY3d at 447). FN2: Plaintiff’s reliance on Allen v Martin Surfacing (263 FRD 47 [D Mass 2008]) is similarly misplaced. The expert in that case “did not rely alone on [the plaintiff’s] symptom accounts in forming his opinion” about plaintiff’s exposure to toluene (id. at 56 [emphasis added]). The expert also considered the known amount of volatile organic compounds that were used in the resurfacing process, the manner in which those compounds would have dissipated in the gymnasium — including the weather at the time the solvents were used — and the pathways of exposure in concluding that plaintiff’s exposure approached the threshold limit value for toluene (id. at 55-56). Moreover, the defendant in Allen did not challenge the general acceptance of the expert’s methodology, as defendants do here.

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