May 29, 2017 Insurance Advocate by C Acunto

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Serving: New York, New Jersey, Connecticut, Eastern Pennsylvania and Washington D.C.

EDITORIAL

“Measurement Began Our Might…” When poet William Butler Yeats wrote these words, he was not thinking of insurance underwriting standards for sure. But his line does apply to the essence of the stability and viability of insuring especially in the face of increasingly intrusive concepts from governments turned activist and activists who’d love to be our government.… continued page 4

GGA Expands, Rebrands Vol. 128 No. 10 | May 29, 2017

Chris Carnicelli, CEO, Generali Global Assistance see page 14

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Stay in the know on Paid Family Leave! After Paid Family Leave (PFL) was announced in 2016, we made a commitment to you: to ensure a successful implementation of PFL for everyone involved — from brokers to policyholders and claimants. With that in mind, we are now launching your go-to-resource for all PFL related information. Check back often! You’ll ﬁnd updated information throughout the year as regulations are issued and more details unfold.

Visit www.newyorkpﬂ.com to keep yourself updated.

This material is for producer (agent and broker) use only. It is not intended for the general public. ShelterPoint is a registered Service Mark. All images licensed through iStockphoto.

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Contents

May 29, 2017 | Volume 128 Number 10

Courtside: Facebook Cannot Appeal Grant of Warrant to Search User’s Account, Holds Court of Appeals Lawrence Rograk

In the News: Berkshire Hathaway GUARD Adds Commercial Auto Insurance in N.Y Merchants Awarded “Brand Champion” by IIABNY

4 “Measurement Began Our Might.…” [FEATURES] 4

Foreword: Editorial…continued. Steve Acunto, Publisher

On the Level: How Do You Get Rich? N. Stephen Ruchman, CPIA

Exposures and Coverages: Insurable Interest—It’s Not Just Theory Authorized Rep Steals $5.2 Mil—Firm “Fully Insured” But Collects Zero After 40 Years in the Desert, Norman Rockwell Painting Returns Vacancy and Ambiguity—Bad Mix Jerome Trupin, CPCU

14 18

Feature: GGA Emerges as Generali Expands Market Presence in North America In Focus: Over Half of Agents Have Never Had Sales Training Kelly Donahue-Piro Guest Opinion: Universal Coverage Means Less Care Dr. Jane M. Orient

On My Radar: Arson-for-Proﬁt Fails— Life in Prison Without Parole Barry Zalma

Looking Back: May, 1992

Classiﬁeds

[A D F E ATUR E S ] 16

IIABNY: Education Calendar

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

FOR ADVERTISING OR SUBSCRIPTION INFORMATION Call 914-966-3180 | email g@cinn.com

INSURANCE ADVOCATE / May 29, 2017 3

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[ FOREWORD ]

STEVE ACUNTO

Editorial…continued

A proposal floated recently in New York that would prohibit insurers from using an individual’s occupational status or educational level as factors in setting rates is an example of activism gone wrong. In other words, insurers’ underwriting standards—which may include credit scores, driving records, type of car, miles driven each year, gender, age and other factors—would not be able to include these two elements that may be among the insurer’s chosen benchmarks for issuance and pricing of policies.” Problem is, by nature all pricing based upon experience and qualification IS discretionary, based upon actuarial science, not societal engineering…and should be. There is plenty of competition, for example, for auto and the pricing varies in many ways. But the discretion exercised is not based upon race or any unlawful discrimination. Think life insurance. There are indicators in insurability that derive from education level, smoking, weight, occupation, and the like. Is it not rational to write a race car driver differently from a dry cleaner? Why do regulators and elected officials NOT trust anyone to use standards that suit the science? Insurance companies are permitted to use factors that are predictive of loss and do so to limit exposure. One’s education and occupation have been correlated with risk. It is good actuarial science. These factors heretofore were approved for use by state regulators. The NYIA points out, “Never before in history has the price of auto insurance been more transparent. You can get a multitude of quotes literally within minutes—either through an agent or by contacting a company directly. There are more than 60 insurance companies writing auto insurance in New York vying for your business. These companies compete on price and underwriting. The state’s insurance market is vibrant and delivers a great deal of choice to consumers. New York residents benefit from choice. Companies offer a wide range of options that address the varying needs of consumers. Limiting underwriting factors can penalize drivers and drive up the cost of insurance for everyone. Other states, specifically New Jersey and Maryland, have already conducted extensive analysis of the use of education and occupation in determining risk and concluded that eliminating specific underwriting factors would only result in increased rates for drivers.” We thoroughly agree and call upon regulators and elected officials to help create a stronger, more competitive insuring environment. Intuition on the underwriter’s behalf is an outmoded tool; sound, transparent actuarial science has replaced it. Measurement is our might. 4 May 29, 2017 / INSURANCE ADVOCATE

VOLUME 128 NUMBER 10 MAY 29, 2017

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 Director of Operations and Creative Services Gina Marie Balog 914-966-3180, x113 g@cinn.com EDITORIAL ASSISTANT 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) 613-1595 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., 22 Bedford Road, Greenwich, CT 06831. Periodical postage paid at Greenwich, CT 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 $135.00. 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 2017. 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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[ O N T H E L E VE L ]

N. STEPHEN RUCHMAN, CPIA

How Do You Get Rich? uReaders of this column know I am a proud family man. My twin grandsons are entering college in the fall and we could not be more delighted. They are an endless source of pride and an equally great source of stories. Recently, one of my grandsons asked me, “Grandpa, how do you get rich?” I presume he’s been thinking about his path in life and, as he is entering university, he’s been giving some thought to his career and direction. I didn’t hesitate in my answer: “Well,” I said, “It depends on your definition of ‘rich.’ You can be rich with your relationship with your wife; you can be rich with your family. You can be rich with your friends and community…These are some of the things I value most.” I knew that was not what he was asking about, but it is an important point, and there are things a person needs beyond monetary wealth to be happy and successful in life. In fact, these very things help to build financial wealth. I took the opportunity to share this with my grandson. “Rich isn’t just money,” I said, “And besides, who is rich in whose eyes? There will always be someone with more money than you and if you chase money with greed, you may not end up happy or rich.” When we first got started, my wife made $5,000 a year as a teacher, and I was hustling for less than $25,000/year. I was fortunate because I had a great mentor in my father and he taught me to use my centers of influence to help build my business. In fact, my father was one of my biggest centers of influence. He was a manufacturer in New York’s garment district. I stopped in at his office for lunch every day (because I couldn’t afford lunch myself) and he would introduce me to people he worked with. Eventually, I became a specialist in that industry: I could talk about textiles and trimmings and I learned the risks in that business and I picked up a lot of accounts that way. I joined organizations, built relationships, and I was always prospecting. If I went to the dry cleaner, I was working with the dry cleaner. But, my father taught me to be careful, to not always be selling— rather, to always be building my network. 6 May 29, 2017 / INSURANCE ADVOCATE

“…There will always be someone with more money than you and if you chase money with greed, you may not end up happy or rich.”

When I entered the Army, I was in a unit that had many accountants and attorneys. One of the accountants became a close friend and he began his practice when I was starting mine. We would recommend various accounts to each other. Another center of influence I had was the friends I made in college; and friends with whom I went to summer camp. I didn’t chase people, but I let them know what I was doing and they knew I wanted to help them. One of my fraternity brothers got a job out of school at a major advertising firm. We would get together once a week, because his agency was located in my building. He would introduce me to various people with whom he worked. Before you knew it, I had a book of advertising executives’ homeowners and auto policies. One of them became the biggest agency owner in the country and before I knew it, I was the agent—all from a simple auto policy. Speaking of accountants and attorneys, a friend of mine (who happened to become president of Michigan State) had a little black book of wisdom, and shared his tips about business through the book. One of his best pieces of advice was: “Be kind to the accountants and attorneys, for they will inherit the earth.” Truer words were never said; I’ve gotten many referrals from accountant and attorney friends. Once my business was running, I learned that attorneys and accountants, like insurance agents, have to take continuing education. But, they have the option to identify their own experts and specialists to teach the courses. I got approved to teach these courses and I went to my friends’ firms to discuss Workers’ Compensation audits; I would customize

N. Stephen Ruchman, CPIA, is a retired independent agent and founder of Ruchman Associates, Inc., the agency he started in 1961. A past president of the Professional Insurance Agents of New York State, Inc., he is an active supporter of PIANY, and he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. He can be reached via email at: nsruchman@gmail.com.

my information—so for attorney friends who served the garment industry, I could talk about those risks and related contracts. And I would receive referrals. I would get clients from the attorneys and by doing so, I built further expertise. My own attorney asked me to join him in volunteering for a charity. He said, “You will meet people who can become clients,” but he said, “Don’t chase them away.” I built my business further by doing good for others. At meetings, people knew what I did and they saw that I was interested in helping them and the community. When they needed to work with someone they trusted for insurance, they thought of me. My father and my friends taught me the importance of working with your centers of influence, not necessarily selling, but my dad also taught me to always look forward. He was a wonderful businessman and my idol. So, of course, I called him to tell him when I got a big new account. He said, “That’s good, but also bad.” I was surprised and asked, “How is that bad?” He said, “Now you have to replace that big prospect with five new prospects. You always have to have prospects in the pipeline—so your business doesn’t run dry.” He was right again. There’s a tenet in business: Eighty percent of your new busiCONTINUED ON PAGE 12

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[ EXPOSURES & COVERAGES ]

JEROM E TRUPIN, CPCU

Insurable Interest— It’s Not Just Theory Authorized Rep Steals $5.2 Mil—Firm “Fully Insured” But Collects Zero After 40 Years in the Desert, Norman Rockwell Painting Returns Vacancy and Ambiguity— Bad Mix Insurable Interest, It’s Not Just Theory Insurable Interest is not just a topic in Insurance 101. You cope with it every time you specify the named insured for a property policy. Insurable interest means the insured has to have some skin in the game. It doesn’t mean the insured has to be the absolute owner. New York insurance law says that a legal or equitable interest in the property insured is not necessary to support an insurable interest. Dependent property coverage (sometimes called contingent business income coverage) is an example of a coverage where no ownership interest at all is needed to establish an insurable interest. Dependent property coverage stipulates that the insured neither owns nor operates the location on which it’s dependent. It covers the loss of income to a business when, for example, a key supplier’s plant is destroyed by a hurricane. What is required is that the named insured will suffer financial loss if the specified property is damaged or destroyed. Nevertheless, there are many situations where a lack of insurable interest spells

trouble. One author’s list includes these examples: 1. The named insured is operating a business at the location, but is not the owner of the property, even though it is affiliated with the operating business. 2. The tenant, who is not the owner of the property, is the only one named as an insured. 3. Family trusts or limited liability entities are the owners of the property, but are not the named insureds. 4. A family member occupying, but not owning the premises, is the only named insured. 5. A divorce or separation occurs and the policy is not changed. 6. The property is sold, but the parties do not get permission to transfer the existing policy and no new policy is written to cover the buying entity.i Not all of these situations are fatal to a claim, but even if they’re not, it can take work, worry, and wampum to collect a loss. Get it right before the loss. The case of Raymond Azzato provides

Jerome “Jerry” Trupin, CPCU, is a partner in Trupin Insurance Services located in Sleepy Hollow, NY. He provides property/casualty insurance consulting advice to commercial, nonprofit and governmental entities. He is, in effect, an outsourced risk manager. Jerry has been an expert witness in numerous cases involving insurance policy coverage disputes and has taught many CPCU and IIA courses. Jerry has spoken across the country on insurance topics and is the co-author of over ten insurance texts used in CPCU and IIA programs including Commercial Property Risk Management and Insurance and Commercial Liability Management and Insurance. He regularly contributes articles to CPCU Society publication, the Insurance Advocate®, and others. He can be reached at jtrupin@aol.com. Thanks to Jerry Trupin for this article and to the CPCU Society for letting us reprint it.

a textbook example of how not to handle insurable interest problems. He and Richard Pleasants purchased a rental property in East Islip. Raymond took out a landlord’s policy covering the property in his name and in the name of Tricia Williamson, his wife. Richard Pleasants was not named as an insured. When the loss occurred, the most Raymond could collect was his 50% interest. (The policy limited recovery to not more than the insured’s insurable interest in the property and Raymond and Richard were equal partners.) But that wasn’t the end of his troubles. The insurance company denied coverage

CONTINUED ON PAGE 10

i Chip Merlin, “California Insurable Interest and the Merlin Law Blog Search Function” Property Insurance Law Blog http://www.propertyinsurancecoveragelaw.com/2016/06/articles/insurance/california-insurable-interest-and-the-merlin-law-blog-search-function/

8 May 29, 2017 / INSURANCE ADVOCATE

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[ EXPOSURES & COVERAGES ] CONTINUED FROM PAGE 8

for the entire claim, arguing that Raymond had submitted fraudulent claims for appliances that had not, in fact, been installed in the building. Trying to salvage at least part of the claim, Raymond contended that his wife was entitled to at least 25% of the claim as she was a joint insured on the landlord’s policy and was not involved in the exaggerated claim. To support that position, he stated that she had “contributed to the purchase of (his) share of the subject property, that she helped to maintain it after it was purchased, and that she furnished portions of the dwelling with her own personal property.”ii The court didn’t buy it. It ruled that even if Tracy had helped pay for or maintain the property, that did not create an insurable interest. It also pointed out that they didn’t claim that Williamson earned any income from the property, resided in the dwelling, or had any legal or equitable right to do so. The court found no “basis for concluding that she had an insurable interest.” The court concluded that “the interest must be of such a character that the destruction of the property will have a direct, and not a mere remote or consequential, effect upon it.”iii What does create an insurable interest? The requirements are generally spelled out in each state’s insurance law. New York insurance law § 3401 defines insurable interest as “any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage.” In other words, an insurable interest exists if the insured might suffer financial harm from the destruction of the property and/or derive financial benefit from its continued existence. (Most other states have laws similar to New York’s.) Another New York case went the other way. Leeza and Raffi Bardakjian had a homeowners’ insurance policy on the home they occupied. However, title was held by a corporation that paid all the operating expenses. Raffi had a 25% ownership of the corporation. Based on that and the fact that the Bardakjians were the

sole occupants of the house the entire time it was owned, the court found that they had an insurable interest in the house. But, once again that’s not a good way to collect on an insurance policy. First, there was the expense and stress of the lawsuit and second, the Bardakjians’ recovery may have been limited to the 25% interest that Raffi had in the corporation.iv PRACTICE POINT: Ask who holds title to the property to be insured and train your staff to do that, too. If someone other than the insured holds title, straighten out how the named insured should read before the loss. Furthermore, add a strong broadnamed insured endorsement to policies whenever possible. It can save the day.

Authorized Rep Steals $5.2 Mil, Firm Is “Fully Insured” But Collects Zero Juanita Berry started out as a consultant for Telamon Corporation. She progressed to become vice-president for major accounts, overseeing operation of the company’s facilities in New York and New Jersey. However she was still a consultant via a contract between Telamon and J. Starr Communications, Juanita’s one-person consulting firm. Juanita oversaw Telamon’s Asset Recovery Program that removed old telecommunications equipment from AT&T sites and sold it to salvagers. She was probably good at her job, but she had sideline that Telamon wasn’t aware of: she pocketed the proceeds. By the time Telamon realized something was amiss, she had skimmed $5.2 million. Telamon turned to its insurance to recoup its loss. It carried both commercial property insurance, which included theft, and employee theft policies with Travelers.v Telamon felt that at least one of the policies would respond, but Travelers declined coverage under both. Travelers said that Juanita had control of the property and the commercial property coverage excluded theft by anyone to whom the property was entrusted. As to the employee theft coverage, it applied only to employees and Juanita was a consultant, not an employee. Telamon sued.

Both the district court and the appellate court ruled that there was no coverage.vi It doesn’t sit right that Telamon carried both property coverage that included property theft and employee theft coverage but couldn’t collect a $5.2 million theft loss. What went wrong? Was there a coverage missing? The answer is yes. There is a standard endorsement to the employee theft coverage that would have closed the gap: the Designated Agents endorsement, ISO form CR 25 02. (Insurers that don’t use ISO forms offer comparable endorsements.) The endorsement covers any natural person, partnership or corporation appointed in writing to provide the services specified in the endorsement. Each such agent and its partners, officers, and employees are considered to be, collectively, one “employee.” In the current gig economy, “employees” who are actually contractors are very common. Ask your clients if they use independent contractors and amend their policies as needed if they do. An uninsured $5.2 million loss can really spoil your day.

After 40 Years in the Desert, Norman Rockwell Painting Returns In 1976, a Norman Rockwell painting, Boy Asleep with Hoe, was stolen from the Grant family of Cherry Hill, NJ. The painting, which Rockwell painted in 1919 early in his career, shows a chubby young boy asleep in a field with his hoe lying across his chest. It came into Robert Grant’s possession in the 1950s when he was playing pool in a friend’s house. He drew his cue back too far and punctured the picture. In keeping with the rule “you break it, you bought it,” Grant gave his host $50 or $100 and took the painting—Grant died in 2004 and his heirs aren’t sure exactly what he paid. What they do know is that he proudly displayed the painting and that it is very valuable today. It’s not one of Rockwell’s best, but it is one of the earliest of the 323 paintings he did for covers of the Saturday Evening Post. CONTINUED ON PAGE 12

ii Azzato v. Allstate Ins. Co., 951 N.Y.S.2d 726 (NY Sup. Crt., App. Div. 2d Dept. 2012) iii Ibid iv Bardakjian v Preferred Mut. Ins. Co., 2013 NY Slip Op 51086(U) [40 Misc 3d 1209] v The policies were written by Travelers and Charter Oak, both members of the Travelers Group of Insurance Companies. At Telamon’s request, Travelers adjusted both claims as part of one procedure. vi Telamon Corp. v. Charter Oak Fire Ins. Co., Nos. 16-1205, 16-1815 (7th Cir. March 9, 2017).

10 May 29, 2017 / INSURANCE ADVOCATE

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[ EXPOSURES & COVERAGES ] CONTINUED FROM PAGE 10

Robert Grant carried homeowners’ insurance with Chubb. Chubb paid him for his loss, which included a TV set and other property. As part of loss settlements, title to stolen property is transferred to the insurer. Therefore, Chubb owned the recovered painting. However, crime policies give the insured the option to repossess covered property by reimbursing the insurance company the amount paid in settlement of the loss. And the repayment is the exact amount the insurance company paid for the loss, not its current value. Robert Grant’s heirs are glad to have the picture back—they remember it hanging in their childhood homes. But they’re not hanging it in their homes. Estimates of its current value range up to $1 million. It’s in storage. I hope it’s insured.

Vacancy and Ambiguity, a Bad Mix Village Heights is a gated community that includes fifteen stand-alone homes, thirty apartment units, one duplex, and one triplex. The Village Heights Condo Association was responsible for insuring the buildings. Insurance written by Cincinnati Insurance covered all the buildings on a blanket basis for $15,282,755. In December of 2013, Mr. and Mrs. Herbert Graves, the owners of one of the stand-alone units, moved to an apartment in Village Heights and signed a contract to sell their stand-alone unit. Unfortunately, in the summer of 2014, the sale fell through. The Graves were unable to find a buyer during the rest of 2014 and the beginning of 2015. On March 1, 2015, while the Graves were on vacation, a pipe froze and burst in the unit, causing significant water damage. Under the offering plan governing the association, Village Heights was responsible for the building up to the interior surface of the unit walls. That meant that much of the damage would be covered under the association’s policy, not by any insurance that the unit owner carried. Cincinnati Insurance said that the Graves’ unit was vacant and had been for more than 60 days prior to the loss, therefore the water damage loss was not covered. The policy contained a standard ISO

The US District Court decided that the policy was ambiguous…

vacancy definition that a building is vacant when less than 31% of the square footage of building is rented to others or used by the owner. It excluded water damage to vacant property.vii The Association and the Graves countered that the policy covered all 19 buildings blanket, and that the 31% calculation should be applied to the square footage of all 19 buildings. That approach would not trigger the exclusion. The US District Court decided that the policy was ambiguous; it was not clear whether “building” as used in the 31% requirement meant the one building or all 19 buildings. In accordance with the doctrine accepted in just about every state that ambiguities in contracts are resolved against the drafter of the contract, the court ruled in favor of the Association. It was a Pyrrhic victory for the Association and the Graves. Much of loss proceeds were undoubtedly eaten up by legal costs. This case is a warning. Condominiums and homeowners associations just like Village Heights are common. Some are almost entirely composed of single-family units, but even so single-family units can turn up in unexpected places. The homeowners association where we lived until last year consisted of 12 structures that each contained three or four units, however the resident manager’s house was a single-family structure. A few years ago, a fire did $600,000 damage to that building. All the structures were insured blanket under one policy, just like Village Heights. What if our association had changed from a resident manager to a management company that hired contractors to do the work, and the former manager’s building had been vacant for more than 60 days while it was up for sale? We might have gone through the same ordeal as Village Heath. Solution: Get the insurer to agree before the loss that the vacancy exclusion applies to the percentage of all the buildings covered blanket, not separately to each specific building.[IA]

vii Village Heights Condominium Association v. The Cincinnati Insurance Co., No. 16-554, M.D. Pa., 2017.

12 May 29, 2017 / INSURANCE ADVOCATE

IN THE ASSOCIATIONS CONTINUED FROM PAGE 6

ness will come from your existing clients. When I started out in the life insurance business, I would go back to my clients every year, and as their families grew their needs increased. As I went into the prop-

The annual review is essential.

erty/casualty business, I continued this practice. I would have an annual review for each existing client and sell coverages because they were growing, or their worth and property was increasing in value. The annual review is essential. Not only is it doing the right thing for the insured, it also helps protect you, as an agent, from E&O exposures. And as I learned from my father, whenever I finished an annual review, I would not leave the room without a referral for one of my client’s friends, competitors or family members. How many of us forgo that annual review or leave it up to a CSR? There was a period in my early days when if you asked my clients who their insurance company was, they would say, “Steve Ruchman.” I was the face for the companies and my clients knew they could call me for all their needs. That’s a good thing. It’s not an inconvenience, it’s an opportunity. I’m excited for my grandsons as they embark on their education and careers. I know they will make many great friends and important contacts at school and I hope they remember the importance of the relationships they make along the way. These are the things that have made me rich.[IA]

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GGAâ&#x20AC;&#x2C6;Emerges as Generali Expands Market Presence in North America The North American CEO of Generali Global Assistance has undertaken some serious new activities for the global giant here in New York and in the US, and the effects are being felt industryÂwide.

uChris Carnicelli is on a mission. CSA Travel Protection, a leading provider of travel insurance, is now Generali Global Assistance. This corporate initiative is part of a broader organizational program to rebrand several Europ Assistance business lines in the United States to Generali Global Assistance. Europ Assistance is part of Generali. 14 May 29, 2017 / INSURANCE ADVOCATE

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“As Generali Global Assistance, the Company will be able to fully leverage the global scale and resources of one of the strongest and most successful corporations in the world. Further, the rebrand supports Generali Global Assistance’s North American business growth and aligns its operations as the company continues to expand its global leadership position in the insurance industry.” Carnicelli added, “This is another exciting step our company has taken to bring our global solutions and talents directly to our clients. In the U.S. travel insurance space, our partnership capabilities and service to customers is unrivaled—now having the global scale and resources of one of the 50 largest companies in the world puts us even further ahead in the quest to provide cutting-edge solutions to our business partners and end-clients.” Products and solutions carrying the CSA Travel Protection name will be transitioned over time to fall under the Generali Global Assistance brand, while retaining and enhancing the offerings and services to its customers that it has established over the past 25 years. Generali Global Assistance offers a full suite of innovative, vertically integrated travel insurance products and assistance services that protect consumers against risks associated with travel and helps resolve issues that may arise. These services span the entire travel insurance value chain, including underwriting, product design, commercial delivery and claims administration. Several new and enhanced travel insurance plans under the Generali Global Assistance brand are being launched in the U.S. marketplace shortly. Carnicelli concluded, “Our travel insurance and emergency assistance services unit has long been recognized for our uncompromising commitment to our customers’ peace of mind. We are committed to growing our leadership position in the travel insurance industry, and as such, we are continually improving the value we bring to our customers. Backed by the global resources and strength of Generali Group, we are in an even better position to enhance our value proposition.” Serious issues while traveling happen more often than consumers realize. One in six U.S. adults reported having to cut a trip short or change travel plans, and of

those affected, only 22% had travel insurance to protect their investment, according to a recent U.S. Travel Insurance Association survey. With a Generali Global Assistance travel protection plan, travelers can be reimbursed for unused, prepaid, nonrefundable trip costs if they need to cancel or interrupt a vacation for a covered reason. Additionally, the Company’s medical and dental coverage, as well as emergency assistance services, are designed to provide necessary medical, surgical and emergency dental care costs along with around the clock 24-hour Emergency Assistance services. However, that represents only a fraction of the Company’s offerings. One of Generali’s key differentiators is that its executive team has diversified experience across all insurance markets, including health, life, casualty, travel, property, liability and more. This unique expertise allows the Company the ability to offer innovative, customizable products that make travel safer and protect travel investments. On another front, Generali Global Assistance is the developer of the Iris® identity protection platform, and has published its latest whitepaper, in a series of reports highlighting the many aspects of identity theft, entitled Phishing and Tax Fraud: Understanding these Growing Crimes’ Effects on Businesses. According to the Identity Theft Resource Center, in 2016 just over 55 percent of the reported 1,093 U.S. data breaches were caused by spearphishing, an identity theft scheme targeting employees with access to sensitive data, whereby scammers send bogus emails that appear to come from a “trusted” source and request that confidential information be forwarded to cybercriminal enterprises. These emails may also include links or attachments that lead to malicious websites or install malware that has the capacity to disable an organization’s entire computer network. Last year, the IRS issued a consumer alert citing a 400 percent surge in spearphishing and malware incidents, putting both companies and consumers on notice that they must be aware of these scams and take precautions to secure sensitive data. Fortunately, there are measures that can help protect against these scams. Companies can institute educational programs for their workforce, utilize spam fil-

PRODUCTS AND SOLUTIONS CARRYING THE CSA TRAVEL PROTECTION NAME WILL BE TRANSITIONED OVER TIME TO FALL UNDER THE GENERALI GLOBAL ASSISTANCE BRAND, WHILE RETAINING AND ENHANCING THE OFFERINGS AND SERVICES TO ITS CUSTOMERS THAT IT HAS ESTABLISHED OVER THE PAST 25 YEARS.

ters, and update anti-virus software and firewalls. Consumers should file their taxes as soon as possible, sign up for Federal Trade Commission Scam Alerts, and never send emails with personally identifiable information attached. Eva Velasquez, President and CEO of the Identity Theft Resource, commented, “Both individuals and businesses have a shared responsibility to take action against these scams. The speed with which they occur and the lightning-fast pace with which they evolve means virtually everyone is a stakeholder in combatting hackers, scammers, and thieves. The companies that have incorporated a response strategy are the ones that will be less vulnerable to the web’s many cyber risks. Likewise, those individuals who have taken the time to be their own best advocate when it comes to protecting their identities will be less likely to fall victim.” Generali’s presence is becoming stronger here as well as its reach in several related product and service areas—a great model. Chris Carnicelli’s star is rising rapidly and he has hitched it to a winning formula at Generali.[IA] INSURANCE ADVOCATE / May 29, 2017 15

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[ IN FOCUS ]

K E L LY D O N A H U E - P I R O

Over Half of Agents Have Never Had Sales Training uYes, you are hearing it straight from us—52% of insurance agents have never had any sales training. So if part of becoming an agent is the ability to sell insurance, where did we go wrong? Sales is an art form. There are people naturally born to be salespeople, but the rest of us have to work at it and continue to sharpen our skills. Now, it could be because insurance sales is easier than most types of sales. Yes, you are also hearing this from me. Everyone has to buy it and there is a deadline. Most sales start by convincing someone to make a purchase. Not insurance sales—if someone wants to have a home, vehicle or business, they know they are also going to be buying insurance. This is also what makes insurance sales different. Everyone has to have it and the competition is high. So in the changing insurance world where many agencies are not growing, how can we infuse a sales culture into agencies? You can always start with training. Now, be warned: everyone will leave inspired, grateful and ready to go. For the next two weeks you may even see a rise in sales. But then, just like everything in life, it will come to an end. We lose the magic of what we created and go back into old habits. Instead, we suggest creating a new culture which we are outlining below.

Once you get your license, you still need tools to be excellent. to be able to track the following for each producer: • Prospects Added • Quotes Completed • Closing Ratio • New Business When you look at math versus feelings, the conversation changes. There are no attacks, just good old, plain and simple, black and white numbers. Most producers hate to face their numbers. When they do, and they swallow their pride, they can then get to a place of honesty in addressing the numbers that they desire to change deep inside.

Tools Once you get your license, you still need tools to be excellent. These tools can be scripts, role playing, worksheets. Your license alone doesn’t help you sell insurance. Reading and studying your tools will. Now don’t be a typical producer who tries to break what is already working so they can put their stamp of approval on it. Instead, follow what thought-leaders teach and get outside of your comfort zone.

Coaching Salespeople Sometimes the biggest sales job producers do is to sell their manager on what they are doing every day. Preaching to a salesperson will not work. You need to coach them. Coaching people makes them feel vulnerable, helps them explore their preconceived notion and addresses the items holding them back. In our new APPX Sales Program, we plan biweekly team coaching calls with a workbook and clear strategy.

Tracking If you have a salesperson who keeps telling you how busy they are, it’s time to pump the brakes. Busy doing what? If it’s not selling insurance what is it? You have 18 May 29, 2017 / INSURANCE ADVOCATE

Training Training works when you have coaching, tools and tracking. Training enhances everything when there is a set foundation. Training alone without the other items will only give you temporary fleeting results. Instead, make the commitment to convert into a sales organization by doing some uncomfortable things. Converting into a sales organization will take a lot of hard work, discomfort and vulnerability. Just like addressing an area of your business or personal life you’d like to change, in order to develop it you must experience these things when going through the challenges. Make sure your agency has a solid insurance training strat-

Kelly Donahue-Piro, founder and president of Agency Performance Partners, is a no-nonsense effectiveness expert who has helped hundreds of insurance agencies identify and capitalize on sustainable improvement opportunities. Her specialties include agency culture assessment and change; management and supervisory coaching and benchmarking; customer retention strategy development; digital marketing strategy, planning and implementation; and sales planning, management and skillbuilding. In 2014, she created Agency Performance Partners with a mission to “partner with insurance entrepreneurs who dream to take their business to the next level and beyond, by relentlessly pursuing excellence in worldclass service and sales strategies.” The centerpiece of the organization’s transformational work is its Agency Performance AssessmentTM, a comprehensive survey tool Kelly created to zero in on organization-wide improvement opportunities and provide the foundation for a customized agency action plan. Mrs. Donahue-Piro is an engaging speaker who is available to conduct in-person and online agency success presentations that complement her firm’s one-on-one on-site and virtual consulting practice. Connect with her on social platforms, via email at kelly@agencyperformancepartners, or by phone at 401-415-6205.

egy. If you want to see real results, it’s what you continuously commit to. You can’t do this stuff temporarily or when you aren’t busy. You will always be too busy, you will never want to role play. Instead, to be great plan to do the stuff you don’t like! [IA]

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[ G UEST O PI N I ON ]

J A N E M . O R I E N T, M . D .

Universal Coverage Means Less Care uThe reported success of the Affordable Care Act (ACA or ObamaCare) is based on enrollment numbers. Millions more have “coverage.” Similarly, the predicted disasters from repeal have to do with loss of coverage. Tens of thousands of deaths will allegedly follow. Activists urge shipping repeal victims’ ashes to Congress—possibly illegal and certainly disrespectful of the loved one’s remains, which will end up in a trash dump. Where are the statistics about the number of heart operations done on babies born with birth defects, the latest poster children? How about the number of babies saved by this surgery, and the number allowed to die without an attempt at surgery—before and after ACA? I haven’t seen them. Note that an insurance plan doesn’t do the operation. A doctor does. The insurer can, however, try to block it. Also missing are figures on the number of courses of cancer chemotherapy given, or not given, or the time from diagnosis to death in cancer patients before and after ACA. Five-year survival of cancer patients in the U.S. is generally better than in countries that have universal coverage, or the type of plan progressives want to import. Again, the insurance plan isn’t medicine. You can get medicine without insurance, and if you have insurance it might refuse to pay. There are selected comparisons of change in mortality rates in states that did or did not expand Medicaid (such as New York vs. Pennsylvania). On the other hand, mortality did not decrease in one state (Oregon). These estimates—guesstimates really—are based on the weakest type of data, and the differences may have nothing to do with Medicaid. Maybe it was better AIDS treatments. We hope that the FDA does not use evidence this poor to evaluate drugs. But what effect did ObamaCare have on overall U.S. mortality? Between 2014 and 2015, U.S. mortality rates increased for the first time in decades. This primarily affected less-educated whites. Is ObamaCare the cause? There are

Medicaid expansion may have alleviated fears of medical bankruptcy, but we don’t know that more patients got treatment.

many factors involved, drug abuse probably being the most important. But I suspect that if repeal had happened in 2012 or 2013, it would have been blamed. We hear many complaints about medical bankruptcies. These happen because patients got their treatment, and then got a bill. Often the bills are outrageous, and hospitals may be ruthless in collection efforts. That is a serious problem, but it is not caused by lack of universal coverage. And remember, bankruptcy is a way out of debt. Creditors take a haircut. In contrast to medical debts, student loans cannot be discharged by bankruptcy but follow a person for life. Medicaid expansion may have alleviated fears of medical bankruptcy, but we don’t know that more patients got treatment. In single-payer Canada, there is no fear of a medical bill. But there might not be any treatment either. We do know that after Medicaid expansion, “nonprofit” hospitals are banking windfall profits while charity is essentially gone. In Oregon, Medicaid enrollment increased from 626,000 in 2013 to 1,056,000 in 2016. Providence Health & Services now has the biggest pile of cash reserves of local companies—$5.8 billion vs. $3 billion for Nike. Hospitals are using the cash to buy new assets, not to lower prices or improve quality. They pay their executives like a Fortune 500 company. The experts advocating for universal care know very well that resources are limited, and that spending (“costs”) must be contained. They also understand that the burgeoning bureaucracy and its minions and retainers must be well paid. So the answer is to cut services. Some plans

Jane M. Orient, M.D. obtained her undergraduate degrees in chemistry and mathematics from the University of Arizona in Tucson, and her M.D. from Columbia University College of Physicians and Surgeons in 1974. She completed an internal medicine residency at Parkland Memorial Hospital and University of Arizona Affiliated Hospitals and then became an Instructor at the University of Arizona College of Medicine and a staff physician at the Tucson Veterans Administration Hospital. She has been in solo private practice since 1981 and has served as Executive Director of the Association of American Physicians and Surgeons (AAPS) since 1989. She is currently president of Doctors for Disaster Preparedness. Since 1988, she has been chairman of the Public Health Committee of the Pima County (Arizona) Medical Society. She is the editor of AAPS News, the Doctors for Disaster Preparedness Newsletter, and Civil Defense Perspectives, and is the managing editor of the Journal of American Physicians and Surgeons.

“incentivize” doctors to make more money by skimping on care. Others call for a “global budget”—the deliberate creation of scarcity. When the money is gone, treatment is canceled. There will be fewer beds, fewer CT scanners, fewer drugs, and fewer doctors. But all will be fair. No rationing by price, just by waiting lines, political pull—and death. There will be no medical bills to pay after a service, if you get any service. Only taxes in advance, service or no service. That’s why the universal care advocates count enrollees, not the number of services, and constantly harp on “excessive” treatment, even while planning to make patients wait months for an appointment.[IA] INSURANCE ADVOCATE / May 29, 2017 19

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[ COURTSIDE ]

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

Facebook Cannot Appeal Grant of Warrant to Search User’s Account, Holds Court of Appeals Matter of 381 Search Warrants Directed to Facebook, Inc. Edited by Lawrence N. Rogak In a novel ruling affecting internet privacy, New York’s top court holds that Facebook cannot appeal a court’s search warrant in a criminal case—issued under the federal Stored Communications Act– which compelled Facebook to grant prosecutors complete access to certain users’ accounts. Nor does Facebook have the right to see the affidavits which supported the granting of the warrant. The warrants were issued on probable cause in an investigation into disability beneﬁts fraud.–LNR

In July 2013, Supreme Court issued 381 warrants directed at Facebook upon a warrant application by the New York County District Attorney’s Office that was supported by an investigator’s affidavit.

In this matter, we are asked to determine the appealability of two Supreme Court orders. The first order denied Facebook, Inc.’s motion to quash certain warrants, issued pursuant to the federal Stored Communications Act, that sought the account information and communications of various Facebook subscribers in connection with a criminal investigation. The second order denied Facebook’s motion to compel disclosure of the affidavit supporting the warrant application. This case undoubtedly implicates novel and important substantive issues regarding the constitutional rights of privacy and freedom from unreasonable search and seizure, and the parameters of a federal statute establishing methods by which the government may obtain certain types of information. Nevertheless, while it may be tempting for this Court to address those issues, we must — in this case as in every other case — first ascertain whether we possess the necessary jurisdiction to do so under our own constitution and statutes. This presents equally important issues regarding the separation of powers among our three branches of government. With these principles in mind, because the orders resolving Facebook’s motions relate

to warrants issued in a criminal proceeding, and the Criminal Procedure Law does not authorize an appeal from either order, we are constrained by law to affirm the Appellate Division order dismissing Facebook’s appeals to that Court.

20 May 29, 2017 / INSURANCE ADVOCATE

I. In July 2013, Supreme Court issued 381 warrants directed at Facebook upon a warrant application by the New York County District Attorney’s Office that was supported by an investigator’s affidavit. The warrants, based upon a finding of probable cause, sought subscriber information and content from numerous user accounts in connection with a pending criminal investigation into allegations of widespread Social Security Disability fraud involving the crimes of larceny and filing a false instrument. The warrants directed Facebook “to retrieve, enter, examine, copy, analyze, and . . . search [each] TARGET FACEBOOK ACCOUNT for the . . . [specified] evidence and property, and . . . to bring it before the [c]ourt without unnecessary delay.” The specified evidence included, among other things, each target account holder’s profile information, contact and financial account information, groups, pho-

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.

tos and videos posted, historical login information, and “[a]ny public or private messages.” The warrants prohibited Facebook from notifying its subscribers or otherwise disclosing the existence or execution of the warrants, in order to prevent interference with the investigation. Facebook moved to quash the warrants, arguing that they were constitutionally defective because they were overbroad and lacked particularity; Facebook also challenged the nondisclosure component of the warrants. Supreme Court denied the motion, holding that Facebook lacked standing to assert any expectation of privacy or Fourth Amendment challenge on behalf of the individual account holders and that, in any event, the warrants were supported by probable cause and were not unconstitutionally overbroad. Supreme Court also rejected Facebook’s challenge to the nondisclosure clauses of the warrants, concluding that disclosure of the warrants to the subscribers would risk jeopardizing the ongoing criminal investigation. The court directed Facebook to immediately comply with the warrants. Facebook appealed Supreme Court’s order, and sought a stay thereof pending CONTINUED ON PAGE 22

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[ IN THE NEWS ]

Berkshire Hathaway GUARD Adds Commercial Auto Insurance in N.Y. uWILKES-BARRE, PA—Berkshire Hathaway GUARD Insurance Companies recently began offering Commercial Auto coverage in New York. The product can be written on a stand-alone basis or together with other complementary lines. The policy is aimed at accommodating the needs of a broad audience, including artisan contractors, repair and service operations, delivery and distributor classes, vehicles associated with auto service risks, and more. Smaller fleets and local/intermediate travel exposures are targeted. GUARD’s policy is ISO-based and features various liability and physical damage options, combined single limits up to $1 million, and a variety of optional coverages. According to GUARD Vice President of Commercial Auto Mike Hynes, “We have a Broad Form that allows us to address a dozen miscellaneous exposures at a single affordable price. We are pleased to be introducing this new line in New York and look forward to working with our agents in placing their accounts.” Hynes also notes that submissions are entered via an updated, online platform that takes advantage of business intelligence (such as automatically incorporated VIN data) to streamline the process. CEO Sy Foguel points out that the addition of Commercial Auto in New York is part of Berkshire Hathaway GUARD’s longterm strategy to feature One-Stop Insurance Shopping. “From us, New York businesses can now obtain Auto, Property/Liability (via a Businessowner’s Policy that can handle total insured values up to $25 million), Workers’ Compensation, Commercial Excess, and Disability coverages. Together, these lines are the basis of our BizGUARD Plus product suite in New York.” While Berkshire Hathaway GUARD has been writing Workers’ Compensation insurance in New York for decades, other lines were introduced in 2009. According to Executive Vice President Lyle Hitt, “New York is one of our top-five producing states, so we expect this new product to be of interest to New Yorkers. We are

eager to build a solid book of Commercial Auto business and believe we have the product, the systems, and the team needed to succeed.” In October of 2012, GUARD Insurance Group was acquired by National Indemnity Company, which is a whollyowned subsidiary of Berkshire Hathaway—an international holding company with diverse interests that include insurance and reinsurance. In 2013, GUARD unveiled a new identity as Berkshire Hathaway GUARD Insurance Companies. Each of the organization’s carriers (AmGUARD, EastGUARD, NorGUARD, and WestGUARD) are rated A+ (“Superior”) by A.M. Best—a leading source of independent rating information on the insurance industry. In 2016, Berkshire Hathaway GUARD surpassed $1 billion in premium and issued over 200,000 policies. Agents interested in learning more can contact the company online at www.guard.com/apply.[IA]

uBUFFALO, NY—Merchants Insurance Group is proud to announce they have been named the 2017 Independent Agents Brand Champion by the Independent Insurance Agents & Brokers of New York (IIABNY). The award was given to Merchants “for excellence in the support and promotion of the Independent Agent brand.” Merchants was chosen for this award by a group of local association leaders and IIABNY staff. The award was presented May 11, 2017, at the IIABNY’s installation dinner at the Marriott Syracuse Downtown, Syracuse, NY. Merchants Insurance Group offers personal and commercial insurance through a network of more than 1,000 independent insurance agents throughout the Northeast and North Central United States. With corporate headquarters and regional operations located in Buffalo, NY, Merchants also operates offices in Hauppauge, NY; Mount Laurel, NJ; and Bedford, NH.[IA] IN THE PHOTO BELOW, L-R: MERCHANTS’ REGIONAL VICE PRESIDENT GREGORY ROBINSON, OF THE COMPANY’S WESTERN STRATEGIC BUSINESS CENTER, BUFFALO; JOHN SMITH, JR., IIABNY CHAIR OF THE BOARD 2016-17; AND MERCHANTS’ REGIONAL VICE PRESIDENT ANDREW MEEHAN, OF THE COMPANY’S EASTERN STRATEGIC BUSINESS CENTER, HAUPPAUGE.

Merchants Awarded “Brand Champion” by IIABNY

INSURANCE ADVOCATE / May 29, 2017 21

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[ COURTSIDE ] CONTINUED FROM PAGE 20

resolution of its appeal. After the Appellate Division denied Facebook’s application for a stay, Facebook complied with the warrants and furnished the requested digital data. While Facebook’s appeal was still pending, some of the targeted Facebook users were indicted for crimes stemming from the disability fraud investigation. The warrants and the investigator’s supporting affidavit were eventually unsealed by orders of Supreme Court, and Facebook was then permitted to notify the targeted individuals of the existence of the warrants. Despite the unsealing orders, however, the District Attorney’s Office refused to disclose the supporting affidavit to Facebook or the general public. Facebook, therefore, moved for an order compelling disclosure of the affidavit. The District Attorney’s Office opposed the motion, arguing that the unsealing orders did not render the affidavit available to the public, and asserting that the affidavit had not yet been provided to the targeted individuals who were being criminally prosecuted. Supreme Court denied Facebook’s motion to compel disclosure of the affidavit, and Facebook appealed that order, as well. In a single order, the Appellate Division dismissed both of Facebook’s appeals on the ground that they were taken from nonappealable orders. As relevant here, the Appellate Division explained that “direct appellate review of interlocutory orders issued in a criminal proceeding is not available absent statutory authority”. Inasmuch as “neither CPL article 690, governing warrants, nor CPL article 450, which sets forth when a criminal appeal can be taken, provides a mechanism for a motion to quash a search warrant, or for taking an appeal from a denial of such a motion,” the Appellate Division concluded that the orders denying Facebook’s motions were not appealable. In so holding, the Appellate Division rejected Facebook’s request that the court treat the warrants as civil subpoenas for appealability purposes. This Court granted Facebook leave to appeal (26 NY3d 914 [2015]), and we now affirm.

II. The warrants in question were issued, in accordance with the procedures of CPL article 690, pursuant to Title II of the Electronic Communications Privacy Act of 1986, officially entitled the “Stored Wire 22 May 29, 2017 / INSURANCE ADVOCATE

Inasmuch as “neither CPL article 690, governing warrants, nor CPL article 450, which sets forth when a criminal appeal can be taken, provides a mechanism for a motion to quash a search warrant, or for taking an appeal from a denial of such a motion,” the Appellate Division concluded that the orders denying Facebook’s motions were not appealable. and Electronic Communications and Transactional Records Access” and commonly referred to as the Stored Communications Act or the SCA (see Electronic Communications Privacy Act, Pub L 99—508, 100 Stat 1848 [1986] [codified as amended at 18 USC §§ 2701 et seq.]). When enacting the SCA, Congress observed that the “law must advance with the technology to ensure the continued vitality of the Fourth Amendment.” The SCA was, therefore, meant “to protect privacy interests in personal and proprietary information” transmitted through thenemerging computer-based forms of communication, but it was also enacted to strike a “balance” between privacy expectations and protecting “the Government’s legitimate law enforcement needs.” To that end, the SCA prohibits the providers of electronic communication and remote computing services from disclosing information regarding subscriber accounts, or the contents of subscriber communications, with certain exceptions provided elsewhere in the statute (see 18 USC § 2702 [a]). Section 2703 sets forth exceptions to the prohibition on disclosure with respect to the obligation of providers to release information to governmental authorities (see id. § 2703). Specifically, section 2703 sets forth three primary methods by which a governmental entity may obtain disclosure: (1) a “warrant” issued in accordance with state or federal criminal procedure by a court of competent jurisdiction; (2) an “administrative subpoena authorized by a

Federal or State statute or a Federal or State grand jury or trial subpoena); or (3) a court order granted under section 2703 (d) upon a showing of “specific and articulable facts” demonstrating “reasonable grounds” to believe that the information sought is “relevant and material to an ongoing criminal investigation.” The appropriate method to be used depends on the type of provider, the age of the communication sought, and whether the government seeks disclosure of contentbased information. For example, a governmental entity may obtain disclosure from an electronic communication service of the content of a communication stored for 180 days or less only with a warrant issued by a magistrate upon probable cause and in accordance with the applicable federal or state warrant procedures. Older communications held by an electronic communication service, or communications held for storage by a remote computing service, may be obtained either without notice to the subscriber pursuant to a warrant or with prior notice to the subscriber if the government uses a subpoena or obtains a court order for disclosure under subsection (d). A warrant, subpoena, or court order may be used to obtain certain non-contentbased information, such as a subscriber’s name, address, length of service, telephone records, or means of payment. The SCA provides that no cause of action will lie against a provider that discloses information “in accordance with the terms of a court order, warrant, [or] subpoena” issued under the statute. Nevertheless, subsection (d) of section 2703 allows “a court issuing an order pursuant to this section, on a motion made promptly by the service provider, to quash or modify such order, if the information or records requested are unusually voluminous in nature or compliance with such order otherwise would cause an undue burden on such provider.” The primary question before us in this appeal is whether — assuming, without deciding, the propriety of a motion to quash an SCA warrant (as opposed to a subsection [d] court order) in the first instance — an order resolving a motion to quash SCA warrants is appealable.

III. That the SCA draws a distinction between warrants and subpoenas, and the content that may be obtained therewith, is

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[ COURTSIDE ] of critical significance with respect to a determination of appellate jurisdiction over the appeal from the denial of Facebook’s motion to quash. It is a fundamental precept of the jurisdiction of our appellate courts that “‘no appeal lies from a determination made in a criminal proceeding unless specifically provided for by statute’” (People v Lovett, 25 NY3d 1088, 1090 [2015], quoting People v Pagan, 19 NY3d 368, 370 [2012]; see NY Const, art VI, § 3 [b]; People v Bautista, 7 NY3d 838, 838-839 [2006]; People v Hernandez, 98 NY2d 8, 10 [2002]; People v De Jesus, 54 NY2d 447, 449 [1981]; People v Zerillo, 200 NY 443, 446 [1911]). No provision of the Criminal Procedure Law articles that govern appeals — which are among “‘the most highly structured and highly particularized articles of procedure’” (Hernandez, 98 NY2d at 10, quoting People v Laing, 79 NY2d 166, 171 [1992]) — authorizes an appeal to either an intermediate appellate court or to this Court from an order denying a motion to quash or vacate a search warrant (see CPL art 450; CPL 470.60). Moreover, no civil appeal may be brought from an order entered in a criminal action or proceeding (see NY Const, art VI, § 3 [b]; CPLR 5601; CPL 450.90). Consequently, we have held for decades that “no appeal lies from an order denying . . . an application to vacate a search warrant . . . as this is an order in a criminal case, and an appeal from such an order is not provided for” by statute (Matter of Police Benevolent Assn. of N.Y. State Police v Gagliardi, 9 NY2d 803, 803804 [1961]; see also Matter of Abe A., 56 NY2d 288, 293 [1982]). By contrast, a motion to quash a subpoena issued prior to the commencement of a criminal action, even if related to a criminal investigation, “is civil by nature” (Matter of Abrams [John Anonymous], 62 NY2d 183, 192 [1984]; see Matter of Newsday, Inc., 3 NY3d 651, 652 [2004]; People v Santos, 64 NY2d 702, 704 [1984]). Thus, an order resolving a motion to quash such a subpoena is a final and appealable order in a special proceeding that is “not subject to the rule restricting direct appellate review of orders in criminal proceedings” (Matter of Abrams, 62 NY2d at 192; see Matter of Newsday, 3 NY3d at 651 n). In the instant matter, Facebook concedes that an order addressing a motion to quash a warrant is not appealable, but Facebook contends — and the dissent

Thus, the framework of execution for SCA warrants ensures efficiency and minimizes intrusion into the provider’s business while promoting and protecting legitimate law enforcement interests in criminal investigation.

agrees — that, despite being denominated as “warrants,” SCA warrants are more analogous to subpoenas than to traditional search warrants involving tangible property because they compel third parties to disclose digital data. Thus, Facebook and the dissent urge us to treat Supreme Court’s first order denying its motion to quash the warrants as an appealable order denying a motion to quash subpoenas. This argument is unpersuasive. It is true that the method of compliance with an SCA warrant has some characteristics that resemble a response to a subpoena. Most prominently, an SCA warrant compels a third party — here, Facebook — to compile and turn over digital data under its control, and the presence of a law enforcement officer is not required for service or execution of the warrant (see 18 USC § 2703 [g]). A traditional search warrant, by comparison, authorizes law enforcement to enter, search, and seize property (see CPL 690.05 [2]). These differences in execution, however, can be easily explained by the nature of the material sought. The service provider is more likely to be better equipped to access and conduct a search of its own digital information than law enforcement personnel (see generally United States v Bach, 310 F3d 1063, 1067 [8th Cir 2002]), and the data may be stored in different locations. Thus, the framework of execution for SCA warrants ensures efficiency and minimizes intrusion into the provider’s business while promoting and protecting legitimate law enforcement interests in criminal investigation. Despite the minor similarities between SCA warrants and subpoenas, in this postdigital world, we are not convinced that SCA warrants — which are required under the statute to obtain certain content-based information that cannot be obtained with

a subpoena due to heightened privacy interests in electronic communications (see 18USC § 2703 [a], [b] [1] [A]; S REP 99-541, 1986 US Code Cong & Admin News at 3559) — should nevertheless be treated as subpoenas. Initially, the SCA plainly distinguishes between subpoenas and warrants, and there is no indication that Congress intended for SCA warrants to be treated as subpoenas. Indeed, to so hold, would be to ignore the plain language of the SCA in contravention of the rules of statutory interpretation (see People v Jones, 26 NY3d 730, 733 [2016]; Matter of DaimlerChrysler Corp. v Spitzer, 7 NY3d 653, 660 [2006]). As the Second Circuit recently explained, “warrants and subpoenas are, and have long been, distinct legal instruments. Section 2703 of the SCA recognizes this distinction and, unsurprisingly, uses the ‘warrant’ requirement to signal (and to provide) a greater level of protection to priority stored communications, and ‘subpoenas’ to signal (and provide) a lesser level. Section 2703 does not use the terms interchangeably. Nor does it use the word ‘hybrid’ to describe an SCA warrant. . . . We see no reasonable basis in the statute from which to infer that Congress used ‘warrant’ to mean ‘subpoena’” (Matter of Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corp., 829 F3d 197, 214 [2d Cir 2016] [internal citations omitted], rehearing denied ___ F3d ___, 2017 WL 362765 [2d Cir Jan. 24, 2017]). Notably, the Second Circuit is not alone in refusing to equate SCA warrants with subpoenas. The Eighth Circuit has also observed that, “[w]hile warrants for electronic data are often served like subpoenas (via fax), Congress called them warrants and . . . Congress intended them to be treated as warrants.” Significantly, under our own jurisprudence, we must “look to the true nature of a proceeding and to the relief sought in order” to determine whether the proceeding is a special civil proceeding giving rise to an appealable order or, instead, a criminal proceeding for which an appeal must be statutorily authorized (Matter of Abrams, 62 NY2d at 191). Conducting that analysis here, we conclude that an SCA warrant — and the relief sought in a challenge to such a warrant — arises in a criminal, not a civil, proceeding. CONTINUED ON PAGE 25

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[ O N M Y R A DA R ]

BA R RY Z A L M A

Arson-for-Profit Fails—Life in Prison Without Parole Stupid and Vicious Attempt at Insurance Fraud Fails I have reported often that arson-forprofit is the most dangerous, deadly, and stupid way to steal money from insurance companies, because there is always evidence left after the fire and people are killed and injured as a result of the set fire. When the criminals are stupid, do not understand fire and the explosive nature of the accelerants used, they will invariably find themselves in state or federal prison. A perfect example of the incompetent arsonist, a jury convicted Mark Leonard of two counts of murder for which the trial court imposed consecutive life sentences without parole in Mark Leonard v. State of Indiana, Supreme Court of Indiana, — N.E.3d —-, 2017 WL 1649843, No. 71S001509-LW-539 (May 2, 2017).

A sentence of life without parole is subject to the same statutory standards and requirements as the death penalty.

daughter and the family cat. No one was home at the time of the explosion. Ultimately authorities concluded natural gas was intentionally leaked into the Shirley home through a modification of the fireplace and that a delayed timing device was triggered, which caused an explosion equal in force to approximately three tons of TNT.

BACKGROUND

FACTS AND PROCEDURAL HISTORY

Late in the evening of November 10, 2012, a massive explosion that could be heard more than ten miles away awakened the neighborhood of Richmond Hill. Richmond Hill residents made their way outside to find homes in a “shredded” state, a state of complete “chaos”, and variously described what they saw: “smoke,” insulation falling like snow, “debris absolutely everywhere,” “total destruction,” a “war zone,” rubble “up to my knees,” people “running” and screaming, people “disoriented” and “dazed,” “devastation,” “raining ash” and cinder, a “blast zone.” Firefighters at a station nearby heard and felt the explosion, and even before emergency calls came in, they set out in the direction of a large plume of…debris and smoke. Approaching the neighborhood, these first responders observed several houses on fire. Nearly thirty homes were damaged severely enough that they had to be demolished. Others suffered extensive but repairable damage. The home at the epicenter of these events was owned by Monserrate Shirley, a nine-year resident of Richmond Hill. Her boyfriend, Mark Leonard, also lived at the residence along with Shirley’s teenaged

Initially both Leonard and Shirley denied any wrongdoing. Shirley later agreed to cooperate with authorities. According to Shirley, for several months Leonard had planned to destroy the house by fire in a scheme to collect insurance money. At Leonard’s urging, Shirley increased the amount of insurance coverage on the contents of the house from $160,000 to $300,000. Leonard then recruited a friend—Gary Thompson—to help set the fire. In preparation for the arson-for-profit fire, Shirley arranged a hotel room for herself and Leonard at an out-of-town casino and arranged an overnight babysitter for Shirley’s daughter. She also boarded her cat at a kennel. As it turned out, the fire did not occur that night. Apparently, Thompson was not able to set it because he had gotten pulled over by a police officer and could not get into Shirley’s house. Their plan having failed, Leonard told Shirley it “ha[d] to be done” and they were “going to do it again[.]” On the evening of November 1, 2012, Leonard’s brother, Bob Leonard, visited Shirley’s home. Leonard and Bob spoke and after Bob left, Leonard told

24 May 29, 2017 / INSURANCE ADVOCATE

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.

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[ ON MY R A DA R ] Shirley that Bob was going to set a small fire so they could collect the insurance money and that they would pay Bob $10,000. Leonard and Thompson cut a piece of cardboard and used it to block the flue to the fireplace chimney so that gas coming from the fireplace would stay in the house. The plan was for a spark from the thermostat to ignite the gas from the fireplace. On Friday, November 9, 2012—for the third weekend in a row—Shirley again arranged for a room at the casino, a place for the cat at a kennel, and a babysitter for her daughter. The following evening Shirley and Leonard were seated at the bar inside the casino when she received a telephone call telling her something terrible had happened in her neighborhood and asking if she and her daughter were all right. Shirley then called a neighbor, who informed Shirley that her house had exploded and there was nothing left. Shirley’s house was next door to the home of husband and wife Dion and Jennifer Longworth. Their home was also destroyed in the explosion. It was reduced from a two-story residence to a seven-foot pile of rubble. Despite the best efforts of firefighters and neighbors to rescue the couple, neither survived. Mrs. Longworth died an “almost sudden death” from what the medical examiner referred to as “blast injuries[.]” Mr. Longworth survived the initial blast but ended up trapped in the basement of his house. He was alert, relatively uninjured, and communicating with neighbors through a hole in the house at ground level. However, the house was on fire. Firefighters tried to pull Mr. Longworth out of the hole but the fire kept getting closer to where they were working to get him out. The heat became so intense that even wearing protective gear firefighters had to back away. Mr. Longworth sustained thermal injuries and charring over 90% of his body. His ultimate cause of death was inhalation of hot gases and soot, and carbon monoxide poisoning. Both Mr. and Mrs. Longworth had to be identified through their dental records. Extensive discovery and pre-trial proceedings ensued. After several delays, including a change of venue from Marion County, the guilt phase of Leonard’s jury trial began June 4, 2015 and concluded July 14, 2015, generating a twenty-two-volume transcript and over eighteen hundred exhibits. Following the guilt phase of trial, the jury found Leonard guilty as charged

on all counts. Leonard had previously waived his right to trial by jury for the penalty phase of the trial. Therefore, the trial court conducted a hearing before the bench. It found the State proved each of the three charged aggravating factors beyond a reasonable doubt. The trial court also found the State proved “beyond a reasonable doubt” that the three aggravating circumstances “far outweigh the mitigating circumstances considered.”

DISCUSSION There was sufficient evidence to support a murder conviction when the defendant started a fire in a house when it was occupied. Although Leonard’s victims were not in the same structure as the explosion and resulting fire, the record is clear the homes were in very close proximity— approximately ten feet apart. Aggravating Circumstances The State sought life without parole based on three aggravating circumstances. A sentence of life without parole is subject to the same statutory standards and requirements as the death penalty. Constitutionality of Indiana’s Life Without Parole Statute Leonard challenges as unconstitutional Indiana’s life without parole statutory sentencing scheme. According to Leonard this is so because the statute does not require the jury, or as in this case the trial court, to find that the aggravating circumstances outweigh the mitigating circumstances beyond a reasonable doubt. The evidence in this case is sufficient to sustain the murder convictions; the State proved the aggravator beyond a reasonable doubt; and Indiana’s life without parole statute is not unconstitutional.

ZALMA OPINION As readers of ZIFL are aware, there are many easy, non-dangerous ways to steal from an insurance company. Arson-forprofit is not one of those ways. Mr. Leonard and his girlfriend plotted to destroy their home but, because they were not knowledgeable, it took them three tries to start the fire and explosion, succeeding on the third try to destroy their house and a good part of their neighborhood and murdering their next-door neighbors in a most painful and disgusting manner. Life in prison without parole was a kind sentence.[IA]

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Unlike a subpoena, which finds broad use in civil matters, an SCA warrant is not “civil by nature.” As with a traditional search warrant, an SCA warrant may be issued only to a governmental entity, upon a showing of probable cause, and pursuant to statutory warrant procedures (see 18 USC § 2703 [a], [b] [1] [A], [c] [1] [A]). In addition, while a subpoena does not commence a criminal proceeding because it is not issued by a court, the issuance of a warrant by the court does just that (see CPL 1.20 [18]; Cayuga Indian Nation of N.Y. v Gould, 14 NY3d 614, 634 [2010]; Matter of B. T. Prods. v Barr, 54 AD2d 315, 319 [4th Dept 1976], affd 44 NY2d 226 [1978]). While the dissent claims that this “misses the point,” it is, in fact, the crux of the matter. A motion to quash a subpoena that was not issued by the court may commence a separate civil proceeding; there is no authority or, indeed, logic, upon which we may conclude that a motion to quash a warrant that actually commenced a criminal proceeding, gives rise to yet another proceeding — this time civil in nature — that can somehow be separated from the warrant itself. Additionally, because SCA warrants are governed by the same substantive and procedural laws as traditional search warrants (see generally CPL art 690; CPL art 700; People v Tambe, 71 NY2d 492, 500 [1988]), there is simply no basis in law for distinguishing such warrants from their traditional counterparts for jurisdictional purposes. Moreover, a challenge to a subpoena, even where related to a criminal investigation, is “limited in scope, challenging only the validity of the subpoena or the jurisdiction of the issuing authority,” and “substantial delay in the proceedings is unlikely” to result from permitting appeals from orders deciding such motions (Matter of Santangello v People, 38 NY2d 536, 539 [1976]). By contrast, the issuance of a warrant potentially has significant Fourth Amendment implications. A challenge to criminal warrants, such as the one Facebook raised here, will often seek review of a neutral magistrate’s original determination of probable cause upon a sworn affidavit and compliance with the strictures of the Fourth Amendment. It can hardly be disputed that such relief is, quintessentially, of a criminal CONTINUED ON PAGE 28

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nature. Accordingly, based on a review of the nature of the proceeding and the relief sought — not merely on strict adherence to the term “warrant,” as the dissent claims — we conclude that the orders below related to criminal search warrants issued in connection with a criminal investigation and, therefore, the order denying Facebook’s motion to quash is one made in a criminal proceeding (see Matter of Abrams, 62 NY2d at 191. Thus, the order is not appealable (see Matter of Police Benevolent Assn. of N.Y. State Police, 9 NY2d at 803-804; see also Matter of Alphonso C., 38 NY2d 923, 924 [1976]). Indeed, to hold otherwise would be to impermissibly and judicially create a right to appeal in a criminal matter that has not been authorized by our legislature (see NY Const, art VI, § 3 [b]; Hernandez, 98 NY2d at 10).

IV. The dissent posits that Facebook must have a right to appeal in state courts, despite the absence of any statutory predicate under state law, on the ground that the SCA provides Facebook with a right

J U S T

The dissent posits that Facebook must have a right to appeal in state courts, despite the absence of any statutory predicate under state law, on the ground that the SCA provides Facebook with a right to bring a motion to quash in the first instance and, thus, “normal federal rights of appeal apply.” to bring a motion to quash in the first instance and, thus, “normal federal rights of appeal apply.” While we decline to opine on the propriety of a motion to quash a warrant under 18 USC § 2703 (d), suffice it to say that the dissent’s argument, which is essentially a preemption argument, relies on two flawed premises. First, the dissent inaccurately characterizes the SCA as authorizing a “freestanding cause of

R E L E A S E D -

N E W

T H I R D

action” for providers to move to quash SCA warrants (dissenting op at 8). Second, the dissent concludes that an SCA “warrant” is equivalent to an “administrative subpoena,” despite the clear and unmistakable distinction between the two intended by Congress, as reflected in the statutory language of the SCA. The SCA — which recognizes a variety of causes of action in connection with the release of electronic data that do not apply here (see 18 USC § 2707) — does not provide a third party with an independent cause of action under section 2703 (d) to challenge the issuance of either a warrant, subpoena, or court order. Rather, that section merely authorizes the provider to make a “motion” to a court that has already issued an “order” (id. § 2703 [d]); in other words, section 2703 (d) provides for a motion in an already-existing proceeding, not the commencement of a new and separate proceeding. Nor does the SCA provide a third party who makes a motion to quash with an express right to appeal the determination of such a motion. The federal courts of appeals have jurisdiction over “final decisions” of the federal district courts (28

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[ COURTSIDE ] USC § 1291). A final decision is one that, unlike the orders at issue here, “‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment’” (Coopers & Lybrand v Livesay, 437 US 463, 467 [1978], quoting Catlin v United States, 324 US 229, 233 [1945]). Generally, due to this limitation on federal appellate jurisdiction, “one to whom a subpoena is directed may not appeal the denial of a motion to quash that subpoena but must either obey its commands or refuse to do so and contest the validity of the subpoena if he is subsequently cited for contempt on account of his failure to obey” (United States v Ryan, 402 US 530, 532 [1971]; see Cobbledick v United States, 309 US 323, 330 [1940]). As the dissent notes, federal courts have held that “[a] district court order enforcing a subpoena issued by a government agency in connection with an administrative investigation may be appealed immediately without first performing the ritual of obtaining a contempt order” (United States v Construction Prods. Research, Inc., 73 F3d 464, 468 [2d Cir 1996]. However, this is a narrow exception to the general rule barring appeals from motions to quash due to a lack of finality, which rule “applies whether the subpoena is issued in connection with civil and criminal actions, or grand jury proceedings, and whether the person (or entity) seeking to prevent enforcement of the subpoena is a party to the litigation or a non-party witness” (Matter of Air Crash at Belle Harbor, New York on November 12, 2001, 490 F3d 99, 104 [2d Cir 2007]; Construction Prods. Research, Inc., 73 F3d at 469; see 28 USC § 1291; Ryan, 402 US at 532-533). Notably, the exception permitting appeals of administrative subpoenas has not been extended to warrants, as “an order denying the suppression of evidence or denying a motion to quash a warrant in a criminal trial is interlocutory and generally not appealable by a private party until a final judgment in the case has been rendered” (Matter of 949 Erie St., Racine, Wis., 824 F2d 538, 540 [7th Cir 1987]; see Matter of Consol. Rail Corp., 631 F2d 1122, 1125 [3d Cir 1980]; see also Di Bella v United States, 369 US 121, 129 [1962] [“An order granting or denying a pre-indictment motion to suppress does not fall within any class of independent proceedings otherwise recognized by this Court, and there is every practical reason for denying it such recognition. To

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regard such a disjointed ruling . . . as the termination of an independent proceeding, with full panoply of appeal and attendant stay, entails serious disruption to the conduct of a criminal trial”]; Matter of Search of Elec. Communications in the Account of chakafattah gmail.com at Internet Serv. Provider Google, Inc., 802 F3d 516, 525 [3d Cir 2015]). This makes sense because the rationale behind the exception allowing appeals of administrative subpoenas is that an “administrative proceeding is self-contained and, unlike in the case of a grand jury or trial, there is no ‘further judicial inquiry which would be halted were the offending [subpoenaed party] permitted to appeal’” (Matter of Air Crash at Belle Harbor, 490 F3d at 105, quoting Construction Prods. Research, Inc., 73 F 3d at 469). This exception is facially inapplicable to warrants issued in criminal proceedings. Contrary to the dissent’s assertion, neither the Second Circuit (nor any other court directly addressing appealability) has determined, or even suggested, that an order denying a motion to quash an SCA warrant would be treated as a final order in an independent proceeding or as an order resolving a motion to quash an administrative subpoena for finality and appealability purposes. Indeed, recognizing the finality limitation on the appellate jurisdiction of federal courts, the parties in Matter of Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corp. (829 F3d at 205) stipulated to a contempt finding so as to secure appellate jurisdiction. Furthermore, the Second Circuit’s conclusion that the plain language of the SCA evidences Congress’s intent to recognize the legal distinction between warrants and subpoenas profoundly undermines the dissent’s prediction that orders pertaining to such warrants would, for appealability purposes, be CONTINUED ON PAGE 30

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treated as orders relating to subpoenas (see Matter of Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corp., 829 F3d at 205). Nor are we persuaded that federal law would otherwise preempt our dismissal of these appeals, which rests “squarely on . . . neutral state rules for administering state court” jurisdiction (Johnson v Fankell, 520 US 911, 912 [1997]). “The general rule, ‘bottomed deeply in belief in the importance of state control of state judicial procedure, is that federal law takes the state courts as it finds them,’” and “states thus have great latitude to establish the structure and jurisdiction of their own courts” (Johnson, 520 US at 919, quoting Hart, The Relations Between State and Federal Law, 54 Colum L Rev 489, 508 1954]). Our jurisdictional limitations do not discriminate against third-party provider claims under the SCA but, rather, “reflect the concerns of power over the person and competence over the subject matter that jurisdictional rules are designed to protect” (Haywood v Drown, 556 US 729, 739 [2009]). Moreover, our holding does not impose any burden on any right the SCA may provide to Facebook to move to quash the warrants at issue here. The SCA provides no express right to appeal, and the United States Supreme Court “has never held that the States are required to establish avenues of appellate review” (M.L.B. v S.L.J., 519 US 102, 111 [1996], quoting Rinaldi v Yeager, 384 US 305, 310 [1966]; see Johnson, 520 US at 919; Kohl v Lehlback, 160 US 293, 299 [1895] [“the right of review in an appellate court is purely a matter of state concern”]).

V. To the extent Facebook and the dissent argue that SCA warrants will escape judicial review if orders relating to motions to quash such warrants are deemed not appealable, that argument is also flawed. By its very nature, a warrant is subject to judicial review because it cannot be issued unless a neutral magistrate makes a finding of probable cause and particularity (see US Const, 4th Amend; NY Const art I, § 12). In addition, there are avenues of relief available to those subjects of SCA warrants who are ultimately prosecuted and who may, therefore, challenge the validity of the warrant on statutory or constitutional grounds, as well as potential civil remedies for those who are not for30 May 29, 2017 / INSURANCE ADVOCATE

“That the Legislature has not authorized an appeal from an order in a criminal proceeding is conclusive; and ‘any arguments for a change in the practice, however persuasive, must be addressed to the legislature.’” mally accused (see generally 18 USC § 2707; 42 USC § 1983; Bivens v Six Unknown Named Agents of Fed. Bur. of Narcotics, 456 F2d 1339, 1347 [2d Cir 1972]). While Facebook’s concerns, as a third party, about overbroad SCA warrants may not be baseless, we are mindful that there are counterbalancing concerns that militate against authorizing appellate review of warrants issued in connection with criminal prosecutions outside of the review that may be sought by a criminal defendant following conviction. For example, we have cautioned that we must abide by the statutory authorizations for appeals in criminal cases in order to “limit appellate proliferation in criminal matters, . . . because litigation may be compounded unduly by protracted and multifarious appeals and collateral proceedings frustrating the speedy resolution of disputes” (Matter of State of New York v King, 36 NY2d 59, 63 [1975]). Indeed, the United States Supreme Court has recognized this very same concern for limiting appeals in criminal actions in the interest of expedient justice (see Ryan, 402 US at 532). Any debates about the balancing of such concerns is beside the point, because the weighing of these policy considerations is not ultimately within our province. “That the Legislature has not authorized an appeal from an order in a criminal proceeding is conclusive; and ‘any arguments for a change in the practice, however persuasive, must be addressed to the legislature’” (Matter of Santangello, 38 NY2d at 539-540, quoting Cohen and Karger, Powers of the New York Court of Appeals, § 188, at 707). We “may ‘not resort to interpretative contrivances to broaden the scope and application’ of unambiguous statutes to ‘create a right to appeal out of thin air’ in order to ‘fill the . . . void, without trespassing on

the Legislature’s domain and undermining the structure of article 450 of the CPL’” (People v Stevens, 91 NY2d 270, 279 [1998], quoting Laing, 79 NY2d at 170-171, 172; see Hernandez, 98 NY2d at 10). Until such time as the legislature may deem it appropriate to provide statutory authorization for appellate review, we have every faith in the competence and efficacy of our trial courts to resolve any motions properly brought by providers under the SCA in state courts. Inasmuch as there is no statutory predicate for Facebook’s appeal from the order denying its motion to quash the SCA warrants that were issued in a criminal proceeding (see CPL art 450; CPL 470.60), nor any other legal basis for such appeal, we must affirm the Appellate Division’s dismissal of Facebook’s appeal insofar as taken from that order. Supreme Court’s order denying Facebook’s motion to compel disclosure of the affidavit is, likewise, not appealable, although Facebook may explore other procedural avenues to raise its claim (see Matter of Newsday, 3 NY3d at 652). In light of our holding, we have no occasion to consider, and therefore do not pass on, the merits of the parties’ arguments regarding Facebook’s standing to assert Fourth Amendment claims on behalf of its users, whether an individual has a reasonable expectation of privacy in his or her electronic communications, the constitutionality of the warrants at issue, or the propriety of the District Attorney’s refusal to release the supporting affidavit. Nor do we pass on the question of whether 18 USC § 2703 (d) authorizes a motion to quash an SCA warrant in the first instance. Due to the absence of jurisdiction for Facebook’s appeal to either this Court or the Appellate Division, these issues remain open. Accordingly, the order of the Appellate Division should be affirmed, without costs. [IA] 2017 NY Slip Op 02586 Decided on April 4, 2017 Court of Appeals

Stein, J.

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