September 23, 2013 by C Acunto

VOLUME 124, NUMBER 16 / September 23, 2013

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Contents

September 23, 2013 | volume 124 number 16

[COVER STO RY ]

[ AD FEATURES]

DWD: Driving While Distracted Tech Age Kids Sound Alert

[FEATURES] 4

Foreword: Class. Steve Acunto, Publisher

Insight: State Producer Licensing: Going, Going…? Peter H. Bickford

On the Level: Negative Developments N. Stephen Ruchman, CPA

In the Associations: PIANY Elects Ofﬁcers for 2013-2014

Crackdown: A.G. Schneiderman Announces Sentencing of Former Insurance Agent

Guest Opinion: ObamaCare is About Your Money, Not Your Health Marilyn M. Singleton, M.D., J.D.

In the News: New Trusted Choice® Television Ads Air on National T.V.

On My Radar: The Too Honest Jeweler Barry Zalma

Guest Opinion: Retirement: Better Than It Used to Be Sharon Emek, Ph.D.

Courtside: Matter of Hronich v. Con Edison Betty Flood and Katlin Nash

Classiﬁeds

Looking Back: September, 1988

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MSO: Vehicle Safety for Children

Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / September 23, 2013 3

[ FORE WORD ]

Steve Acunto

Class.

VOLUME 124, NUMBER 16 SEPTEMBER 23, 2013

In this issue of the Insurance Advocate, we present PIANY’s new slate of officers for 2013-2014 and congratulate each of them for their service to date to their peers. We look forward to confirming the truth of “the best is yet to come”... PIANY cited Assemblyman Cahill for his service to the association and the industry during its recent meeting in Albany, whereupon officers and directors were elected...In this issue, we highlight a study that is alarming when looked at from the stand point of the insurance industry. Driving while distracted has become epidemic. I cannot tell you how often the brushes with guardrails and the sudden braking and the shear arrogance and indifference of drivers beset anyone who observes or nears distracted drivers. Young people will tweet over the stupidest things, but with a petulance and insistence that take up most of their drive time. There is very little understanding of how dangerous this is. Proving that distracted driving has become easier in accidents, but it is no less pernicious as a activity. Socially it’s a new kind of disease. The study sponsored by Plymouth Rock in the public service is something worth sharing with members of your staff and certainly with young people... Great to hear from old friend Richard Weghorn, scion of the Weghorn family (John C. Weghorn Agency on William Street). We knew Richard as a long time pro in the business, an active volunteer and a full time “class” professional...Enjoy the issue. [IA]

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EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Sari Gabay-Raﬁ Michael Loguercio Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x126 circulation@cinn.com PUBLISHED BY CINN Group, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 www.cinn.com | info@cinn.com President and CEO Steve Acunto

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[ INSIGHT ]

By Peter H. Bickford

State Producer Licensing: Going, Going . . . ?

ver the past several decades I have assisted a number of small to midsized brokerage firms with licensing and disciplinary matters with their State regulators. The majority of these matters involved inadvertent licensing lapses

state. While a first step in providing consistency, NIPR was primarily a tool for state regulators to have access to better, timelier information about licensees from other states. At first it did not significantly improve the licensing process for producers,

In other words, even if NARAB II is passed by the Senate and becomes law, it is not clear whether the National Registry will resolve the remaining major issues with producer licensing, or whether is will simply continue to provide an un-navigable maze of mixed signals and confusing overlaps. Only time will tell. Peter H. Bickford

through inadequate record keeping and monitoring rather than juicier issues like improper placements or premium trust account mismanagement. In the past these licensing lapses were generally local events worked out with the home state insurance department, even if the broker was licensed in other states. Over time, however, even small firms found it competitively necessary to expand into more than just a few local jurisdictions, but compliance capabilities did not necessarily keep up with the additional, inconsistent and burdensome paperwork and processing requirements of each jurisdiction, not to mention the additional monetary costs. According to the NAIC there are currently over 500,000 entities and 2 million individuals licensed as producers nationwide. Recognizing the inadequacies of the 50-state licensing system, in 1996 the NAIC initiated the National Insurance Producer Registry (NIPR), creating and overseeing an electronic system for tracking ongoing producer licensing changes from state to

and in some respects it magnified the consequences for inadvertent mistakes through this sharing of information. Real change to the inconsistent, costly and time-consuming multi-state licensing problem did not begin until after the passage of the Federal Graham-Leach-Bliley Act in 1999, which threatened the creation of the National Association of Registered Agents and Brokers (NARAB) if a minimum of at least 29 states did not agree to reciprocity or uniformity in producer licensing by 2002. This forced help led to NAIC adoption of the Producer Licensing Model Act in 2000 and the timely acceptance of reciprocity or equivalence by enough states to avoid the creation of NARAB. Also, over the succeeding years more states accepted NIPR standards thus improving reciprocity nationally. However, as most multi-state licensed producers know, while there is more consistency than in the past, true and complete reciprocity and uniformity still does not exist. Recognition of this fact by the indus-

try and regulatory communities has led to yet another stab at a Federal legislative fix – the National Association of Registered Agents and Brokers Reform Act, familiarly referred to as NARAB II. Unlike the first NARAB legislation, NARAB II does not fool around with the threat of creating a National registry – it does so. As of this writing, the legislation has been passed by the House and is pending in the Senate, and the prospects for passage appear to be good. The legislation creates a National Association “to provide a mechanism through which licensing, continuing education, and other nonresident insurance producer qualification requirements and conditions may be adopted and applied on a multi-state basis . . .” If the legislation becomes law, NARAB will be established with a board consisting of eight state insurance commissioners, 5 members with knowledge of p/c licensing and 2 with knowledge of life or A&H licensing. The board will set standards for licensing within the statutory framework. Once a producer is licensed in its home state, it is eligible for membership in NARAB. If it chooses membership, the producer is authorized to conduct its business in every state that meets NARAB’s criteria, which one presumes will include all states. Producers would also be free to bypass NARAB membership and seek licensing from other states in the old-fashioned manner. As stated by Jim Donelson, NAIC president and Louisiana insurance commissioner, “NARAB streamlines the multi-state agent licensing process through a regulator controlled board and preserves state enforcement of critical consumer protections.” But is this so? The legislation carves out for the states control over licensing in a producer’s home state, but also preserves continued on page 8

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[ INSIGHT ] producer appointment requirements; (3) supervising and disciplining resident and nonresident insurance producers; (4) establishing licensing fees for resident and nonresident insurance producers so that there is no loss of insurance producer licensing revenue to the State; and (5) prescribing and enforcing laws and regulations regulating the conduct

continued from page 6

other functions for the states that could cause ongoing overlap and confusion. Specifically, the legislation preserves for the states control over: “(1) licensing, continuing education, and other qualification requirements of insurance producers that are not members of the Association; (2) resident or nonresident insurance

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of resident and nonresident insurance producers.” A couple of years ago, the Federation of Regulatory Counsel (FORC) prepared an excellent analysis of an earlier draft of the legislation, pointing out a number of issues raised by the state carve-outs. Many of these points continue to be relevant in the current iteration, including issues such as: • Multiple fees charged by NARAB and each state in which a producer is doing business; • The statutory status of a non-resident producer that is a NARAB member in view of the fact that it is technically only licensed by its home state; • The potential for multiple rules for appointments, standards of supervision and conduct; and • The continuing prospect of multiple disciplinary proceedings over one common event by the home state, NARAB, and possibly other states. In other words, even if NARAB II is passed by the Senate and becomes law, it is not clear whether the National Registry will resolve the remaining major issues with producer licensing, or whether is will simply continue to provide an un-navigable maze of mixed signals and confusing overlaps. Only time will tell. The NAIC and the major producer trade groups seem to be on board with the legislation, and we can hope that this support plus the efforts of the NAIC, NIPR, the new Association and the trade groups will apply the necessary desire and effort to make the national registry work seamlessly for the benefit of producers, regulators and consumers. Otherwise, this latest effort will just be one more layer of confusion and overlap that it seeks to eliminate. Which leads to a final question: When you constantly seek the power you need from the very people that threaten your existence, are you setting yourself up for an undesirable result? NARAB I apparently did not solve all the issues with the insurance producer licensing process, leading to a return to the trough for NARAB II. What if this effort still does not solve all the problems? Can the states go back to the Feds for yet another fix, or will the Feds finally say: “Enough is enough. We’ll just do it ourselves!” [IA]

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[ ON THE LEVEL ]

By N. Stephen Ruchman, CPA

Negative Developments

echnology is a wonderful thing. It makes our lives easier and our businesses more efficient; it continuously provides us with the ability to do things we never would have been able to do before; and it solves problems. It builds businesses and provides jobs. But, we have to keep up with it.

as we all had hoped. As we have progressed in our technological abilities, what formerly seemed like a good idea is now a complex and expensive process for insurers. It drives up the overall cost of auto insurance for everyone in New York state, and it has not proven to be a cost-effective deterrent to auto fraud.

As we have progressed in our technological abilities, what formerly seemed like a good idea is now a complex and expensive process for insurers. It drives up the overall cost of auto insurance for everyone in New York state, and it has not proven to be a cost-effective deterrent to auto fraud. N. Stephen Ruchman

Often, it seems that as soon as we master a particular tool, it becomes an antique and we need to move on. This is a familiar circumstance when it comes to our office tools, for example—we are constantly updating our computers, software and our agency management systems. While doing so can be inconvenient, we keep up via constant investment of money and education because these investments bring us to a new level of efficiency, convenience and service for our clients. Imagine if we settled with the great invention of mimeograph machines, party-line telephone service, or fax, and stopped there. While they were significant leaps forward when introduced, they became spring boards for our next steps—and businesses which didn’t keep up with progress were left behind. But government and even other businesses don’t always move as quickly as professional independent agents do. This is the case with the photo inspection process. When New York state mandated photo inspections some 30 years ago, the intent was to make use of what was then newer technology to help fight fraud. At the time, this seemed forward-thinking and even gave way to a new niche industry for getting the photo inspections done. Unfortunately, it was never as successful 10 September 23, 2013 / INSURANCE ADVOCATE

So we should progress, right? Drop the old, outdated process that’s costing everyone money and move on. When the bill first past many years ago, we didn’t have the facilities and technology to stop fraud, but now with automation there are many new tools to combat fraud now. Not so fast: Because this is a regulation, we can’t just agree that it is unnecessary and best forgotten—we have to repeal it. And while it seems like a no-brainer to save carriers and insureds time and money, we are now yoked with the mandate thanks to the lobbying efforts of certain interests that are making money off the requirement. PIANY has fought to reform the automobile photo inspection law for years. This year, as in others, the association was successful in obtaining sponsorship of a law (A.1305/S.4047, sponsored by Sen. Lanza and Rep. Zebrowski, among others) that would make it optional for carriers to participate in a photo-inspection requirement. Many of them have said they’d like to cease this burdensome process, but again, special interests held it up. You’d think even bureaucrats and lawmakers would agree to save the public money and relieve insureds and carriers alike from obviously inconvenient and unnecessary processes. Nobody wants this

anymore. Except for the one company that profits from taking the photos. This company, which employs just a few hundred people, has a strong lobby that takes to Albany and cries that these jobs are in jeopardy every time the photo inspection rule comes into question. While CarCo used to be simply a photo inspection administrator, the company’s website emphasizes that its success is now based on HR solutions, employee background checks and other screening and investigative services. This says to me that CarCo recognizes their auto inspection services aren’t going to sustain it forever. Even CarCo has moved on —yet the company, and its extremely active lobbyists, are holding the rest of us hostage.[IA] N. Stephen Ruchman, CPIA, is a retired partner of B&B Coverage LLC. A past president of the Professional Insurance Agents of New York State Inc., he is an active supporter of PIANY, and has sat on, or chaired, nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. A graduate of Michigan State University, with a major in insurance, Ruchman is past president of the Peninsula Counseling Center and a member and past president of the Rockville Centre Chamber of Commerce board of directors. He is division chair for the Insurance Division of the United Jewish Appeal and has served on the business advisory board of The First National Bank of Long Island. He can be reached via e-mail at nsruchman@gmail.com.

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LENMONT, N.Y.—Officers of Professional Insurance Agents of New York State Inc.were elected for the 2013-14 administrative year at the association’s annual business meeting today. • Alan Plafker, CPIA, of Manhasset. N.Y., was elected president. He is president and CEO of Member Brokerage Service LLC, in Briarwood, N.Y. • Tony Kubera, CIC, of Buffalo, N.Y. was elected president-elect. He is director of business development for Russell Bond & Co. Inc. in Buffalo. • Eugene Sandy, CIC, of Stony Brook, N.Y., was elected first vice president. He is director of marketing for the Millennium Alliance Group LLC in Syosset, N.Y. • John Parsons II, CIC, CPIA, AAI, of Skaneateles, N.Y. was re-elected vice president. He is executive vice president of Parsons and Associates Inc. in Syracuse, N.Y. • Michael P. Cracco of Massapequa, N.Y. was elected vice president. Cracco is president and owner of Completely Covered Insurance Agency Inc., in Massapequa. • Amy Bryan, of Cornwall, N.Y. was elected treasurer. She is owner of Bryan Insurance Agency in New Windsor, N.Y. • Jamie Ferris, AAI, CIC, CPIA, was elected secretary. Ferris is president of P.W. Wood & Son Inc. in Ithaca, N.Y. • Michael Skeele, CIC, CPIA, of DeRuyter N.Y., will serve as immediate past president. He is president of Skeele Agency in DeRuyter. Skeele Agency Inc. also has offices in Manlius, Cazenovia, Chittenango and New Hartford, N.Y. [IA]

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[ COVER ]

he results of a new “distracted driving” study conducted by New Jersey auto insurance group, Plymouth Rock Assurance has been released on the heels of a recent New Jersey court ruling finding that the sender of text messages, who knows that the recipient is driving and texting, may be held responsible for distraction and liable for the accident. It turns out parents are not setting the best example for their kids. The study provides distracted driving insights from Digital Natives, the first generation born into a digital world. Recognizing the dangers and citing texting while driving as one of the biggest safety problems on New Jersey’s roads today, the online poll of 1,000 New Jersey-based drivers ages 17 – 25 found that: • 57% witnessed a parent using a phone without hands-free technology. • 25% have witnessed a parent texting while driving – mimicking the behavior. • 73% witnessed a friend texting while driving. • 70% witnessed a friend using a phone without hands-free technology. • 36% attempted to alert the driver of another car to stop texting. • 82% believe the State of New Jersey should impose a heavy penalty for texting while driving – indicating the need for enforcement. The online poll found that, despite these stats , young drivers recognized the danger and cited texting while driving as one of the biggest safety problems on New Jersey’s roads. Texting while driving has surpassed both drunk driving and aggressive driving as dangerous behaviors and young drivers have indicated that they do

not approve; 36 percent have attempted to alert the driver of another car to stop texting and 82 percent of respondents believe the State of New Jersey should impose a heavy penalty for texting while driving – indicating the need for enforcement. “Distracted driving is one of the most dangerous issues currently affecting our roadways,” said Gerry Wilson, President and CEO of Plymouth Rock Management Company of New Jersey. “Years ago, motorists demanded an end to drunk driving. Our research demonstrates that even younger drivers are acknowledging that we must put an end to distracted driving,” he added. Plymouth Rock Assurance is committed to making New Jersey’s roads a safer place by exposing the dangers of distracted driving. The company is rallying New Jersey drivers to fight back against irresponsible driving practices and will attempt to set a new GUINNESS WORLD RECORDS® title for the Most Pledges to a Safety Campaign. The initiative will kick-off with an event on Saturday, September 21, at Six Flags Great Adventure in Jackson. Drivers interested in signing the pledge and helping to set a new GUINNESS WORLD RECORDS® can do so by visiting www.FightDistracted Driving.com. Plymouth Rock Assurance is a marketing name used by a group of separate companies that write and manage property and casualty insurance in multiple states. Insurance in New Jersey is offered by Plymouth Rock Management Company of New Jersey on behalf of High Point Property and Casualty Insurance Company, Teachers Auto Insurance Company of New Jersey, Palisades Safety and Insurance Association, and their affiliates. Each company is financially responsible only for its own insurance products. Here are some highlights.

DIGITAL NATIVES: A STUDY OF DISTRACTED DRIVING IN NEW JERSEY About this Study “Digital Natives” are people who have been born into the technology age and cannot conceive of generations past who lived without computers, the Internet, cell phones and the variety of mobile devices that exist today. The portability of technology has raised rapidly growing safety concerns on our roadways; so much so that states are enacting laws to curb the use of mobile devices while driving. Currently New Jersey prohibits the following: • Text messaging and use of video games while driving. • School bus operators using cell phones while driving. • Drivers under the age of 21 with learner’s permits or probationary licenses from all cell phone use, texting devices and other hand-held or hands-free wireless electronic devices while driving (includes iPods). On April 29, 2013, “Nikki’s Law” was passed by the New Jersey Assembly, requiring “appropriate signage” and variable message signs to warn against distracted driving. On August

14, 2013 Governor Chris Christie signed the legislation. Texting while driving has also been the substance of civil litigation. A couple riding a motorcycle was severely injured after being struck by a teenage motorist who had been exchanging texts with his girlfriend in Morris County in 2009. The couple sued the teenage driver’s girlfriend. The New Jersey Appellate court upheld a lower court ruling dismissing the lawsuit, stating the opinion that someone who texts a motorist is not liable for the driver’s negligent actions. However, the texter has a duty to refrain if the person knows the recipient is driving and likely to read the message. The Three Biggest Safety Problems on New Jersey Roads Standing out above all other potential hazards, Digital Natives see texting while driving (83%) as the most continued on page 16

INSURANCE ADVOCATE / September 23, 2013 15

[ COVER ] continued from page 15

serious problem on New Jersey roadways today. More than six in 10 (66%) perceived drunk driving to be the second biggest problem and less than half (48%) believed aggressive driving to be the third most serious driving issue. Only three in 10 (31%) believed that making calls while driving without using a hands-free device was a distracted driving problem. Obeying traffic laws (23%) was perceived as a more serious safety concern than road surfaces (16%) and browsing the Internet (11%). Recent news items have discussed the influence on driver attention to the road of phone calls while driving with hands-free technology yet only 3% saw this as a problem (Table 1).

Digital Natives & Driving Distracted Six in ten (61%) Digital Natives in this study admitted to sending a text message while driving. The number of youthful drivers participating in this study who are texting as they drive raises important considerations regarding the key influencers of this dangerous behavior. Are Digital Natives influenced merely by the rapidly advancing developments of mobile technology which offers choices in how and when they communicate? Is the use of mobile technology second nature to the extent that no thought is put into the risks inherent in texting while driving? What social influences exist? Are people in the everyday lives of Digital Natives influencing their behavior? According to the United States Census, Digital Natives are living at home longer than preceding generations. In New Jersey, one in four people between the ages of 18 and 31 are living with parents. Thus, interactions with their parents are more commonplace than peers living independently; including riding as a passenger of their cars. 16 September 23, 2013 / INSURANCE ADVOCATE

Learned Behavior? It appears that Digital Natives who admit to texting also have witnessed their parents, friends and even friendsâ&#x20AC;&#x2122; parents sending text messages while driving at a higher rate than total respondents and non-texters. Parents Three in 10 (30%) of those who text and drive say they have seen their parents do the same. One in four (25%) of total respondents reported seeing parents text and drive as did 18% of non-texters (Figure 2).

With Digital Natives living with their parents, it is reasonable to expect that there are occasions of riding as a passenger in their cars. Other factors, then, may be contributing to Digital Nativesâ&#x20AC;&#x2122; driving distracted. For example, 25% of total respondents, 19% of non-texters and 29% of texters have witnessed parents groom themselves while driving (e.g. apply makeup, comb/brush hair, shaving). Further, more than four (42%) in ten texters have been in the car with a parent driving aggressively and 66% say they have driven as a passenger with a parent who made a call without using a hands-free device (Table 2). continued on page 18

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[ COVER ] continued from page 16

ularly drive the speed limit compared to 73% of non-texters who indicate that they conform to speed limits (Figure 5).

Friends If Digital Natives are witnessing their parentsâ&#x20AC;&#x2122; distracted driving behavior, then they are seeing their friends do so at a higher rate. Six in ten (61%) of all respondents, more than half (51%) of non-texters and nearly nine in 10 texters (86%) have been with a friend who has texted while driving (Figure 3). Digital Natives also have friends that tend to be aggressive drivers. Six in ten (61%) of total respondents indicate that they have been in the car of friend driving aggressively. More than half of texters (55%) have friends who groom themselves as they drive. Texters also have witnessed nearly three times as many friends driving drunk (35%) as non-texters (13%) driving under the same circumstances (Figure 3). Deterrents & Solutions Many Digital Natives are concerned about their safety on New Jersey roadways. More than one in three (36%) have attempted to alert other drivers to stop texting while driving. The question remains, â&#x20AC;&#x153;Is there a deterrent?â&#x20AC;? We asked Digital Natives what New Jersey should do and they suggest the state save drivers from themselves. Most (82%) say the state should impose a significant fine (Figure 7).

Safe Driving Speed is a critical factor in any crash situation and speeding is often a contributing factor in serious accidents. Driving within the speed limit can affect the risk of crash involvement as well as the severity of crashes. Distracted driving and speeding has the potential for deadly consequences. This study indicates that it is more common for texters to exceed the speed limit than other Digital Natives. Less than half (46%) say they reg18 September 23, 2013 / INSURANCE ADVOCATE

Apart from a fine, is it possible to influence Digital Natives to be safer, more responsible drivers? According to study respondents the two most influential factors are negative. The most frequent responses were experiencing an accident while riding in the passenger seat (71%); an increase in insurance rates was rated next; slightly higher (66%) than safe driver insurance premium discounts (62%). Other accident experiences; witnessing an accident while driving (61%), a friend or family member having an accident (60%) and a near-miss (52%), all seem to have less influence on safer driving. Paradoxically, a citation for a traffic violation (44%) was least impactful. [IA]

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[ CRACKDOWN ]

A.G. Schneiderman Announces Sentencing of Former Insurance Agent Defendant Sentenced to Up to Six Years on Prison, Ordered to Pay Full Restitution to Victims

OUGHKEEPSIE, N.Y.—Attorney General Eric T. Schneiderman announced the sentencing of a former Saratoga County insurance agent who defrauded an elderly couple of more than $300,000 over the course of a nearly eightyear period. Joseph A. Marvullo, 64, of Porter Corners, New York was sentenced in accordance with his plea agreement to two to six years of imprisonment and was ordered to pay full restitution to his victims by the Honorable Peter M. Forman in Dutchess County Court. Marvullo pleaded guilty to Grand Larceny in the Second Degree, a class C felony, this past July. “On behalf of these elderly victims and their family members, justice has been served against the criminal who brazenly abused their trust to steal from their life savings,” Attorney General Schneiderman said. “My office is committed to protecting all New Yorkers from scammers, especially our most vulnerable citizens. We encourage anyone who believes they are the victims of similar frauds to immediately report it to my office.” In a victim impact statement delivered in court today, one of the adult children of the victims said, "My mom and dad worked hard their entire lives, only to have nearly everything they had, in assets, stolen by this predator … I thank the New York State officials who helped bring justice to my parents." Under the terms of the plea agreement, Marvullo is also barred from any further employment or participation in any consumer, insurance, or investment matters. The judge noted that if Marvullo violates his plea agreement, he could be sent to prison for up to five to fifteen years. Marvullo met his victims through their church, and gained their trust in part by portraying himself as a fellow Christian. Once he gained their trust, he deceived them into turning over their life savings to him. Marvullo, who was a self-employed 20 September 23, 2013 / INSURANCE ADVOCATE

“My office is committed to protecting all New Yorkers from scammers, especially our most vulnerable citizens. We encourage anyone who believes they are the victims of similar frauds to immediately report it to my office.” - Attorney General Schneiderman

independent insurance agent and broker, induced his victims to liquidate valuable annuities and write checks directly to him. He lured his victims into his scheme by claiming that he could sell them higheryielding insurance and investment products than the annuities they owned. Between approximately December 27, 2000, and July 15, 2008, the victims wrote more than eighty checks totaling at least $308,652.71, payable directly to the defendant. Marvullo never used the checks they wrote to him to purchase any insurance or investment products on their behalf. Instead, he stole their money. When the victims sought to withdraw funds from the investments that Marvullo falsely claimed to have made on their behalf, he strung them along for years. He avoided meetings and calls while seeking to retain their trust and sympathy. He claimed various personal misfortunes, including health problems and marital troubles, and laced his emails with various religious references, typically signing them “GOD BLESS-JOE.” Any other investors or consumers who believe they were defrauded by this defendant, Joseph A. Marvullo, are requested to contact the Attorney General’s helpline at 800-771-7755.

The case was investigated by Office of the Attorney General Investigator Dennis Churns, under the supervision of Deputy Chief Investigator Antoine Karam. It was prosecuted by Assistant Attorney General Joshua Vinciguerra, under the supervision of Deputy Bureau Chief Stephen Maher, Bureau Chief Gail Heatherly, and Executive Deputy Attorney General for the Criminal Division Kelly Donovan. [IA]

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[ GUEST OPINION ]

By Marilyn M. Singleton, M.D., J.D.

ObamaCare is about Your Money, Not Your Health

he politics of selling the Affordable Care Act (ACA) focuses on promising health and wellness. Somehow, having “coverage” is supposed to get you to a primary care doctor, who will keep you healthy. And if he doesn’t, he will be held accountable by not being paid. The fact is that “healthcare reform” is not going to cure America’s health problems. Physicians, think tanks, and politicians are pointing out a myriad of problems with ACA. But most of them miss the main point, which starts with calling it “healthcare reform.” The term, and the conversation about it, conflates health care and medical care. But they are not the same thing. Individuals are in charge of their own health care. Physicians provide medical care to those who become sick. Health reform begins with making it clear that individuals’ health is in their own hands. The relationship between personal behavior and health is clear. Almost all of the illnesses that we can prevent are related to smoking, over-eating, lack of exercise, alcohol or drug abuse, high-risk behavior, or too much sun exposure. According to the CDC, 19 percent of all U.S. adults (43.8 million people) smoke tobacco. Almost one third of adults living below the poverty line smoke. Adverse effects include heart and vascular disease, stroke, emphysema, bronchitis, and cancer (lung, oral, esophageal, and likely bladder, kidney, and pancreas). Smoking tobacco is responsible for almost $200 billion in lost productivity and medical care expenditures per year. Under ACA, doctors will check a box saying they asked about smoking and counseled people to quit. But the decision is up to the patient. One third of American adults and 17 percent of children are obese. Consequences include fatty liver disease, type 2 diabetes, heart disease, high blood pressure, stroke, gallbladder disease, osteoarthritis, breathing problems, sleep apnea, pregnancy complications, and increased surgical risk. In 2011, the estimated annual medical care costs of 22 September 23, 2013 / INSURANCE ADVOCATE

“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying all the wrong remedies.” - Groucho Marx

obesity-related illness were nearly $200 billion, or 21 percent of annual medical spending in the United States. Such costs are expected to rise if we allow today’s obese children to grow into obese adults. Obesity must not become the new normal. Indeed, a recent study concluded that since black women are more likely than white women to be satisfied with their weight and have less social pressure to lose weight, merely maintaining their current level of obesity was a success! Prevention of obesity occurs at home: in the kitchen, at the dinner table, and while shopping. Not in the doctor’s office. One-fourth of American adults don’t participate in any physical activities. Exercise can lower the risk of heart disease, stroke, dementia, colon cancer, breast cancer in post-menopausal women, and endometrial cancer. More than half of all cancers related to lifestyle factors: 25-30 percent to tobacco, and 30-35 percent to obesity, physical inactivity, and poor nutrition. Certain cancers are related to sexually transmitted diseases such as hepatitis B, human papillomavirus infections (genital warts), or human immunodeficiency virus (HIV). Many skin cancers are caused by sun exposure. We will have healthier people only if patients value their own health as much as good doctors do. And doctors must practice what they preach—who is going to listen to an obese doctor or nurse?

Some patients place a higher priority on enjoying risky behavior than on their health. ACA will not make them healthy. It only shields them somewhat from the consequences of their actions by forcing people who do take care of their health to share their costs. Government cannot make us healthy, not even by trying to prohibit overindulgence or bad habits. Certainly, ACA’s massive new regulations, erosion of privacy, and higher taxes don’t bring health. But ACA’s subsidies compound our unhealthy reliance on government. ACA redistributes the money flowing through the system. But your health care is still your responsibility. We can make others share the health plan premiums, but the pain and suffering are still the patients’ to endure. [IA] Marilyn M. Singleton, MD, JD is a board-certified anesthesiologist and Association of American Physicians and Surgeons (AAPS) member. Despite being told, “they don’t take Negroes at Stanford”, she graduated from Stanford and earned her MD at UCSF Medical School. Dr. Singleton completed 2 years of Surgery residency at UCSF, then her Anesthesia residency at Harvard’s Beth Israel Hospital. She was an instructor, then Assistant Professor of Anesthesiology and Critical Care Medicine at Johns Hopkins Hospital in Baltimore, Maryland before returning to California for private practice. While still working in the operating room, she attended UC Berkeley Law School, focusing on constitutional law and administrative law. She interned at the National Health Law Project and practiced insurance and health law. She teaches classes in the recognition of elder abuse and constitutional law for non-lawyers. Dr. Singleton recently returned from El Salvador where she conducted make-shift medical clinics in two rural villages. Her latest presentation to physicians was at the AAPS annual meeting about challenging the political elite.

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[ IN THE NEWS ]

New Trusted Choice® Television Ads Air on National TV National “Life Changes” ad highlights situations that call for a Trusted Choice® independent insurance agent.

LEXANDRIA, VA.,—Trusted Choice® media buys on major cable networks started airing on Fox News in mid September featuring a new ad highlighting the need for an independent insurance agent for “life’s changes”. The ad features situations when consumers should count on their Trusted Choice® agent for their changing insurance needs including: bringing a new baby home, moving into a new home, opening a new business, buying a new car and retirement. “The ‘Life Changes’ ad highlights a few of the countless situations when Trusted Choice® agents help families and businesses protect themselves,” says Robert Rusbuldt, Trusted Choice® president and Independent Insurance Agents & Brokers of America president & CEO. “Independent insurance agents committed to their clients and living by the Trusted Choice® ‘Pledge of Performance’ understand that as life changes, so do insurance needs.” The commercial is available in a customizable form for member agents’ local

television advertising (See transcript below). “Life Changes” is part of a group of ads, including a series of real-life customer testimonials, produced by Trusted Choice® over the last two years. The commercial will enter an ad rotation that is part of a national media buy on Fox News Channel, MSNBC, CNN and other cable channels.

Over the next year, “Life Changes” will appear on Fox this week and the weeks of September 23, January 6, March 10 and June 30. On MSNBC, it will air the weeks of October 7, November 18, April 21, July 14 and July 28, including on that network’s popular “Morning Joe” program. For more information, go to www.TrustedChoice.com.[IA]

PHOTO CREDIT: YOSEF SCHLESINGER, VENTANA PRODUCTIONS INTERN

AD TRANSCRIPT VISUAL

AUDIO

FADE IN: Family carrying new baby into home from hospital, “It’s a Girl” sign Graphic: LIFE Family with SOLD sign in new empty home surrounded by moving boxes, taking own photo w/ sign. Graphic: HOME “Ribbon-cutting ceremony” at storefront, with giant scissors, people, balloons, etc. Graphic: BUSINESS Husband takes blindfold from wife’s eyes to reveal new car with bow in driveway. Graphic: AUTO Retirees biking, side-by-side through wooded lane Graphic: RETIREMENT Bob Rusbuldt, Trusted Choice® president, standing in neighborhood

(Music)

Closing narration and logo animation

To find a Trusted Choice independent insurance agent near you…visit TrustedChoice.com

26 September 23, 2013 / INSURANCE ADVOCATE

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[ ON M Y RADA R ]

By Barry Zalma

The Too Honest Jeweler The story that follows is based on fact. The names, places and descriptions have been changed to protect the guilty. This story was written for the purpose of providing insurers, those in the insurance business, and the insurance buying public sufficient information to recognize and join in the fight against insurance fraud.

he jeweler had learned to cut diamonds in Antwerp. For ten years he worked in a small office grinding facets onto stones of half a carat or less. The boredom of the job infuriated him. He had no future. He decided to emigrate to the United States where he could use his skills. He turned his savings into small diamonds which he purchased below wholesale from the marketplace in Antwerp. He started business immediately upon arrival, trading diamonds in the Los Angeles wholesale market. His knowledge as a cutter allowed him to make profitable trades and sales. He came to the United States on a tourist visa. He knew that the only way he could become a legal permanent resident was to have a business in place. The income he derived from his sales was sufficient to allow him to live in Southern California, but not set up a business. He needed a large influx of cash. After only a month working the wholesale jewelry market, the jeweler learned about insurance. It seemed to him that when they weren’t talking about gems all jewelers spoke about insurance. It was expensive. The insurers required them to install sophisticated alarm systems. The insurers required them to install safes that far exceeded any need of reasonable security. Other, less honest, jewelers used their insurance company to make a bad year into a good year. Cheating an insurance company, they explained, is simple. The insurance company would accept whatever books and records a jeweler gave them. Thus, not marking sold on an item in an inventory book, he could sell a gem twice. First, it is sold to the customer. Second, when the jeweler reports a loss it is sold to the insurance company. The jeweler saw insurance as a way of setting up a permanent business and becoming a legal resident of the United States. He got from his jeweler acquaintances 28 September 23, 2013 / INSURANCE ADVOCATE

Other, less honest, jewelers used their insurance company to make a bad year into a good year. Cheating an insurance company, they explained, is simple.

the name of an insurance broker who asked few questions. He contacted that broker. He told the broker that he was a diamond salesman who operated his business from his home. The broker presented an application to Underwriters at Lloyd’s, London since no American markets would accept such a risk. The Underwriters at Lloyd’s refused to insure the jeweler because he had insufficient security at his apartment. The jeweler was undaunted. He went to another insurance broker. This time he described his business premises as the location of one of his acquaintances. He put on the new application the address of the acquaintance. He also included the type of safe at the acquaintance’s premises, the type of alarm system and all other security devices of the premises. The jeweler described his inventory as $1,000,000 in loose diamonds. The jeweler knew, at the time he bought the policy that his inventory consisted of many very small diamonds whose values totaled no more than $10,000. He created an inventory book describing $1,000,000 in diamonds by merely placing a “0” after the total carat weight of the diamonds he had in inventory. The broker submitted the proposal to three insurers, including the Underwriters at Lloyd’s. Jewelers Protection & Indemnity Company of Puerto Rico quoted the lowest premium to him. He accepted that policy. One month later, he reported to Jewelers Protection & Indemnity Company that he had been the victim of an armed robbery.

He had an appointment with a retail jeweler in Cerritos, California to show his loose diamonds. The jeweler arrived in Cerritos early and stopped at the local Denny’s to have lunch. He had all of his inventory in a small leather pouch in his inside coat pocket. It was a warm spring afternoon. When he pulled into the parking lot of Denny’s Restaurant, his window was rolled down. As he turned off his engine he looked to his left and saw a black man holding a chromeplated pistol. The pistol pointed at the jeweler’s mouth. The black man demanded his wallet. The insured complied. The man instructed the insured to put his hand on the dash and his face on the steering wheel. Frightened, he did as they told him. The black man than reached into the window and struck him across the forehead with the pistol. The jeweler was unconscious for a short time and awoke with his head slumped against the steering wheel. The thief must have reached into his coat pocket because the pouch containing the diamonds was gone. The loss was highly suspicious. It came soon after the policy was issued. It happened in a way that appeared to be physically impossible. The bruise was on the right side of the jeweler’s head. It seemed that the armed robber would have had to reach in across the insured’s face and then double back with his pistol to strike him as described. The insurer retained counsel to examine the jeweler under oath. The jeweler, on the recommendation of his insurance broker, retained counsel to represent the insured’s interest. Counsel for the insured became quite bored with the proceedings. The insurer’s attorney, being familiar with the intricacies of a Jewelers’ Block policy and the warranties made by an insured when purchasing a Jewelers’ Block policy, inquired in copious detail about each statement made in the proposal for Jewelers’ Block insurance. The insured responded to each question thoroughly. The Insured delayed his responses, however, because of the need for

[ ON MY RADAR ] a French language interpreter. The insured’s counsel, well over sixty years of age, could take it no longer. He fell asleep on the sofa in the office of the attorney for the insurer. While the insured’s counsel slept, the insured admitted that he operated his business from his home. He also admitted that he did not have an alarm system in the home that he did not have a safe in the home and that he did not do business at the location specified on the proposal. Rather, it was the business location of a friend who would occasionally let him to store his inventory in the friend’s safe. Counsel asked, when faced with these truthful responses, why the insured had listed a business address for his jewelry business when, in fact, he had none. The jeweler explained that when he had honestly reported his business arrangements he could not get insurance. Counsel for the insurance company completed the examination under oath shortly thereafter. He awakened counsel for the insured and wished them a good day. Counsel for Jewelers Protection & Indemnity Company then advised his client to immediately rescind the policy of insurance for willful material breaches of warranty and misrepresentation of material fact. The testimony by the jeweler clearly established that the jeweler knew that he was not eligible for insurance with anyone, including Lloyd’s Underwriters, because of a lack of security. The jeweler intentionally and willfully misrepresented the state of his business and security to get the insurance. There was never an agreement between the insured and the insurer about the risk the insurer was asked to take. The policy was obtained, without question, by fraud. The insurer agreed and counsel advised the insured’s attorney of the rescission. Counsel referred the attorney for the insured to the line and page number of the transcript of the examination under oath where the jeweler admitted to misrepresentation on the proposal form. The jeweler met with his lawyer to discuss his future actions. He could not understand why he did not recover $1,000,000 from his insurance company like his friends had suggested. The lawyer, although drowsy, was familiar with the law. He had no intention of becoming a party to a fraud. He explained to the jeweler what he had done, even if done without malice, was sufficient

to allow an insurance company to rescind the policy for fraud. The lawyer explained to the jeweler that his actions were not only wrong civilly, but, in California, an attempt to defraud an insurer was also a criminal offense. If the jeweler was not careful he might be arrested and spend five years in the state penitentiary. He could also be shipped out of the country as an undesirable alien. The lawyer suggested that the jeweler leave well enough alone. The insurance company seemed willing to close out their books without payment and not pursue criminal prosecution. If he upset them, he might find himself facing criminal charges. Finally, because the lawyer knew of the fraud, he refused the jeweler’s request to file suit against the insurer. The jeweler’s attempt at fraud could have been successful. His mistake was not knowing enough about insurance law. His mistake was giving the lawyer for the insurance company facts that enabled the insurance company to rescind his policy. His mistake was to retain an honest, albeit sleepy, lawyer to represent him and refuse to awaken the lawyer during his examination under oath. To be a competent and effective perpetrator of insurance fraud, it is necessary to know when to lie and when to tell the truth. The jeweler did not. He told the truth when he should have lied. He lied when he should have told the truth. [IA]

Barry Zalma, Esq., CFE, has practiced law in California for more than 40 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. Mr. Zalma recently published the ebooks, “Zalma on Insurance Fraud – 2013”; “Zalma on California Claims Regulations – 2013 ; “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Insurance Fraud – 2012 ; “Zalma on Diminution in Value Damages – 2012,”“Zalma on Insurance,” “Heads I Win, Tails You Lose — 2011,” “Arson for Profit” and others that are available at www.zalma.com/zalmabooks.htm. Mr. Zalma can also be seen on World Risk and Insurance News’ web based television programing.

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4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 http://zalma.com/blog Zalma Insurance Consultants provides expert advice to counsel for insurers and counsel for policyholders. Advice from Zalma Insurance Consultants is indispensable to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative and legal work. INSURANCE ADVOCATE / September 23, 2013 29

[ GUEST OPINION ]

By Sharon Emek, Ph.D.

Retirement: Better Than It Used to Be

an there be too much of a good thing? When it comes to retirement, yes. Abe Lemons, a college basketball coach from the 1950s through the 1980s, once said: “The trouble with retirement is that you never get a day off.” For working stiffs, it seems an impossibility that you could have too much retirement.

finds vintage insurance professionals (those over age 50) to work remotely from home for insurance firms that need experienced, expert workers. To date, WAHVE has placed more than 130 workers at insurance firms on long-term, remote outsourcing assignments. We are providing retail and wholesale brokers with people to handle commercial lines and personal lines processing

The annual yield of graduates from the nation’s risk management and insurance programs meets only 10 to 15 percent of the talent needed in the industry.

Sharon Emek, Ph.D.

But people in your company or around the industry who are contemplating retirement have another thought: Retirement seems daunting, even if they seem eager to cut back on their work pace. Retired people tell me they quickly grow bored, and even those looking forward to retirement want to “sort of ” retire. Meanwhile, employers—the ones who have benefitted from the knowledge and experience that older workers provide— have to fill the gaps when losing a longserving professional. As I thought about these trends, they seemed to present a great opportunity. So, through the fruits of inspiration and perspiration, I created a company that now provides solutions for both: 1) Experienced insurance professionals who want to continue working in retirement and achieve a new work-life balance. 2) Insurance ﬁrms who need to recruit and retain quality workers but who face cost constraints and who often face a labor shortage in their local markets. The company I dreamed up and launched in 2010 is called WAHVE (Work at Home Vintage Employees). WAHVE 30 September 23, 2013 / INSURANCE ADVOCATE

and system work such as policy checking, preparing and quoting renewals, issuing certificates of insurance, claims and handling customer service issues, and full account management/CSR work. What’s more, we also have provided agencies with experienced workers to help them expand into new lines of business. WAHVE’s genesis couldn’t have happened at a better time for American insurance. Boomers are retiring in droves, draining talent and experience at a time when recruiting of young people often falls short. And the heralded solution of outsourcing overseas has left customers frustrated when there is a gap between expectations and delivery. I’m probably most proud of two things: 1) WAHVE has created a way to keep talent in the industry and pass along institutional knowledge. 2) There’s more than just an all-ornothing definition of retirement. Instead of ending their careers, insurance professionals now have new options in redeﬁning or resetting their careers. WAHVE keeps jobs here in the United States. “You’re getting people that have been in the business for a very long time,” said Michael Romeo, executive vice presi-

dent at Industrial Coverage/UNFCU Financial Services, an agency in Patchogue, New York that turned to WAHVE to find workers. “They bring their work ethic and knowledge to the agency. They aren’t just going through the motions.” Many agencies have found WAHVE professionals suited to customer service and processing work. “They help us do all the little things agencies always want to do but struggle to get done,” said Romeo. “And with today’s technology it works very, very well.” Industrial Coverage relies on WAHVE professionals as CSRs in their commercial and personal lines books of business. It’s a similar story at Cook Maran & Associates in Southampton, New York. As Danielle McHeffey, commercial service manager, said: “One of our wahves handles our endorsements and audits. She can see right away if there’s a mistake and can contact the carrier herself to get it fixed. With WAHVE, they already know commercial insurance and know the systems. There’s very little training required.” “Out of sight” doesn’t mean “out of mind,” reported McHeffey: “The nicest thing has been the feeling that they’re actually part of our office. There really is no separation, and our wahves are considered an integrated part of our commercial insurance department.” Time and language barriers make it difficult for overseas outsourcers to deliver a similar connection. That’s why foreign outsourcing companies focus almost exclusively on cost. While McHeffey could hire an employee, “you wouldn’t get the same experience level. We may pay more per hour than if we hired a new assistant, but there’s also more work completed per hour with WAHVE. They work quickly and aren’t being continually interrupted by phone calls. Because they can focus on the task at hand and bring enough experience to the table, they’re easily able to get more done. That’s where you see the payoff.” The oldest boomers (born 1946-64) celebrated their 65th birthday in 2011. continued on page 35

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[ COURTSI DE ]

By Betty Flood and Katlin Nash

Matter of Hronich v. Con Edison

lbany, N.Y.—The New York State Court of Appeals heard the case brought by Antonio Hronich’s widow Gaudenzia Hronich against his former employer Con Edison Company of New York, Inc., Sedgwick Claims Management Service, Inc., and N.Y.S. Workers’ Compensation Board and the Special Disability Fund. Antonio Hronich, a long-time employee of Consolidated Edison, was diagnosed in 1993 as having asbestosis and asbestos-related pleural disease. The Workers’ Compensation Board found he was permanently partially disabled as a result of occupational lung disease and awarded him disability benefits in proportion to his lost earning capacity. He later developed thyroid cancer, which spread to his lungs. Antoinio Hronich died in 2007 and his wife, Gaudenzia Hroncih, filed this claim for death benefits under Section 16 of the Workers’ Compensation Law. Her medical expert, “Dr. Ploss offered the only medical opinion on causation of death. He stated there was ‘no doubt’ that ‘this man died of Hurthle cell cancer of the thyroid gland’ and that the lung condition were a minor factor. The doctor apportioned 80% of the causation of death to the tumor and 20% to the compromised lungs from asbestos exposure,” as described by Jill B. Singer, council for the respondent. The Workers’ Compensation Law Judge held that Hronich’s death was causally related to his occupational lung disease and that liability for benefits may not be apportioned between work-related and non-work related causes of death. The Workers’ Compensation Board upheld the determination. The Appellate Division, Third Department affirmed, rejecting Con Edison’s argument that the claimant’s death benefits should be apportioned to reflect the degree to which thyroid cancer was the primary cause of Antonio Hronich’s death. The Court cited its 2009 decision in Matter of Webb v. Cooper Crouse Hinds Co. (62 AD3d 57), which held that apportionment 32 September 23, 2013 / INSURANCE ADVOCATE

“…it is well-settled that a work-related injury need not be the sole cause of death in order for the death to be compensable. The same is true for workplace injuries where pre-existing conditions may impact the occurrence of the workplace injury.…”

between work-related and non-work related causes of death is not available based, in part, on “the absence of any indication in Workers’ Compensation Law Section 16 that death benefits are to be apportioned in the same manner as disability benefits” under Workers’ Compensation Law Section 15(7). Jill Singer argued for the respondent in her brief to the Court of Appeals that “appellant and the City of New York argue that the Third Department improperly denied apportionment in a compensable death claim where the death was due in part to non-work related thyroid cancer.” Singer, council for The Special Disability Fund, argued in her brief the issue before the Court is “one of pure statutory interpretation of WCL Section 15(7), and whether it prohibits apportionment in death claims based upon non-compensable prior conditions. The plain language of the statute offers no support for the Board and the Third Department’s conclusion. The statute allows for apportionment in death claims and draws no distinction between compensable and non-compensable prior conditions.” Singer’s number one argument in her

brief is that the Workers’ Compensation Law provides for apportionment in death and disability claims. Singer argued “it is wellsettled that a work-related injury need not be the sole cause of death in order for the death to be compensable. The same is true for workplace injuries where pre-existing conditions may impact the occurrence of the workplace injury. However, it is well-recognized that the employer’s liability is reduced in proportion to causation assigned to the pre-existing condition attributable to the workrelated disability or death. The legislature recognized this equitable principle in WCL Section 15(7) providing for apportionment of benefits in both disability and death claims.” Singer in the respondents Brief continued, “In the very first sentence of WCL section 15(7) it is acknowledged that, ‘the fact that an employee has suffered previous disability or received compensation therefore shall not preclude him from compensation for a later injury nor preclude compensation for a later injury nor preclude compensation for death resulting therefrom.’ Moreover, it goes on to state, ‘in determining compensation for the later injury or death…an employee who is suffering from a previous disability shall not receive compensation for a later injury…in excess of the compensation allowed for such injury when considered by itself and not in conjunction with the previous disability.” “The Court must give meaning to the plain language of the statute. ‘In constructing statutes, it is a well-established rule that resort must be had to the natural signification of the words employed, and if they have a definite meaning, which involves no absurdity or contradiction, there is no room for constriction, and courts have no right to add to or take away from that meaning. Thus, the Court cannot ignore the reference to death claims,” continued Jill Singer. “Although Courts generally give deference to the practical construction and interpretation of statutes by agencies charged continued on page 34

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a political king over and sale of life.”

“If we would not submit to an emperor we should not submit to an autocrat of trade, with the power to prevent competition...”

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urgood Marshall U.S. V. Topco Assoc., 405 U.S. 596 (1972)

e freedom guaranteed each and every business, no matter how small, is the freedom to compete – to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster.”

e Supreme Court of the United States agrees with the provisions of the Sherman Antitrust Act “The public interest is best protected from the evils of monopoly… by the maintenance of competition.” Justice Harlan Stone U.S. v. Trenton Potteries Co., 273 U.S. 392 (1927)

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[ COURTSIDE ] continued from page 32

with implementing them if not unreasonable; here, the Board’s interpretation is clearly not reasonable. The statute clearly and unambiguously mentions ‘death’,” explained Jill Singer, council for the respondent. Singer concluded the respondent’s first argument by writing, “There is nothing in the statute that would support limiting apportionment in death claims to those involving only workrelated factors. WCL Section 15(7) does not distinguish between workrelated or non-work related factors. It only mentioned ‘previous disability’ and its impact upon subsequent injury or death benefits. Thus, the distinction drawn by the Board and affirmed by the Court is unsupported,” argued Singer, council to The Special Disability Fund. Singer’s second argument in the brief to the Court of Appeals argues “this Court’s instant decision limiting apportionment of death benefits is inconsistent with statute and precedent.” She argues, “There is a tougher standard

and be disabling in a compensation sense for apportionment to be appropriate.” The Appellate Division rejected Con Edison’s argument citing its 2009 decision of Matter of Webb v. Cooper Crouse Hinds. The Jill Singer in her argument to the Court of Appeals used Webb v. Cooper to emphasize her argument. “In Webb v. Cooper, 62 A.D.3d 57 (3rd Dept. 2009), the Court refused to consider apportionment in part based upon the Board’s decision in Buffalo Forge Company 2005 WL 1794390 (Work. Comp. Bd., (July 25, 2005)), and the absence of any indication in WCL Section 16 that apportionment is recognized in death claims. This, the Webb Court overlooked the plain language of WCL Section 15(7) which clearly applies apportionment to both disability and death claims; and its reliance upon Buffalo was misplaced.” “In Buffalo, the Board Panel changed its position with respect to apportionment in death claims. It explained that there was a lack of judicial authority for such appor-

There is a tougher standard in place for nonwork related conditions as opposed to work-related conditions. The non-compensable condition must impact the claimant’s ability to function at work and be disabling in a compensation sense for apportionment to be appropriate.”

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[ COURTSIDE ]

[ GUEST OPINION ]

tionment; pinpointing a lack of citation to WCL Section 15(7) in caselaw; and lack of support of apportionment of death benefits between work-related and non-work related causes. Therefore, apportionment had been acknowledged as valid by the Court even if the ultimate outcome did not result in apportionment. Thus, the Board’s decision in Buffalo outright rejecting apportionment in a death claim based upon non-work related factors lacks validity and authority,” argued Singer in her brief. Singer continued the argument by writing, “In Webb, the Court rationalized that WCL Section 16 did not give any indication that death benefits were to be apportioned like in disability claims; and thereby gave deference to the Board’s conclusion that apportionment was not available between non-compensable and compensable conditions without any statutory analysis. Yet, this determination directly circumvents the plain language of WCL Section 15(7) and the Court’s own precedent.” “Rejecting the plain language in WCL Section 15(7), and baring apportionment in death claims involving non-compensable conditions, leads to the unjust result of increasing the liability of employers where the work related component may be only an insignificant and minimal factor in the claimant’s demise. This disparaging result is clearly demonstrated in the present case where the only credible medical evidence supports a death caused primarily by unrelated thyroid cancer,” continued Jill Singer. In conclusion Singer argues in the brief, “On behalf of the Special Disability Fund, Special Funds Conservation Committee respectfully requests that the Court’s decision, refusing to revisit its Decision in Webb, and finding apportionment unavailable in death claims, be reversed.” Con Edison’s attorney Steven M. Scotti argued in his brief to the Court of Appeals, “The plain language of Section 15(7) expressly provides that a previous disability will not preclude compensation for a later injury or ‘death resulting therefrom,’ and that compensation for death will be determined on the basis of the decedent’s ‘earning capacity at the time of the later injury’ causing death. This section clearly authorizes apportionment in death benefit claims. The Legislature used the term ‘death’ twice

continued from page 30

continued on page 38

Every day, another 10,000 Americans turn 65, according to Pew Research Center. There’s going to be a lot of insurance brainpower transitioning out of traditional jobs between now and 2030, when the last of the boomers hit 65. At the same time, a McKinsey study notes that the annual yield of graduates from the nation’s risk management and insurance programs meets only 10 to 15 percent of the talent needed

Baby boomers are retiring in droves, draining talent and experience at a time when recruiting of young people often falls short.

in the industry. How can the insurance industry soften the blow? Widen our dragnet. Yes, pulling in younger workers is important. But so is holding on to talent, harnessing the industry’s experience through innovative solutions such as WAHVE. When it comes to keeping talent in our industry, there can’t be too much of a good thing. Whether you’re a vintage worker looking for an opportunity or an agency principal or hiring manager in need of an experienced, quality worker, learn more at WAHVE.com.[IA] Sharon Emek is founder and CEO of Work At Home Vintage Employees (WAHVE.com) and a principal of independent agency CBS Coverage Group, New York.

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continued from page 35

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[ COURTS I D E ]

38 September 23, 2013 / INSURANCE ADVOCATE

in Section 15(7) and did so to apply the apportionment provisions to death benefit claims.” It says, “Apportionment appropriately confines compensation to the injury caused by employment” and “prevents a windfall to claimants at the expense of employers for injuries that were not related to employment.” Within their brief Con Edison’s council Steven Scotti argued, “There was inadequate analysis by the Supreme Court, Appellate Division to abrogate the clear intent and meaning of the statute supporting apportionment in any claim for compensation.” Scotti and Co-counsel David W. Faber argue in their brief, “The Board’s changed position was accepted in the Supreme Court, Appellate Division’s ruling in Matter of Webb v. Cooper Crouse Hinds Co., 62 A.D.3. 57 (3d Dep’t 2009). The Appellants are not stating that the Board is bound by its original interpretation of the statute, but Appellants are asserting that the Board’s original interpretation was correct and that the Appellate Division accepted the Board’s changed position without analyzing Section 15(7) and 10, and without recognizing the Appellate Division’s prior decisions that applied the apportionment test to a death benefit claim.” Faber and Scotti, the attorney’s for Con Edison continued, “The fundamental principal supporting apportionment, embedded in the WCL and codified in Section 15(7) and Section 10, should not have been so easily discarded without proper consideration of the issue presented. There was no discussion of the statutory provisions in the decision below or in Webb. The Supreme Court, Appellate Division below provided no analysis of Section 10 or Section 15(7) or of the earlier decisions where the Section 15(7) apportionment test was applied in claims for death benefits. Moreover, the reasons set forth in the Webb decision to deny apportionment in a death benefit claim have been shown to be insufficient.” David W. Faber and Steven Scotti continued Con Edison’s argument, “The Board’s Brief fails to address Appellant’s specific objections to the ratio decidendi supporting the Webb decision. The precept that a claim for work-related death is a separate and distinct legal proceeding brought by the ben-

eficiary’s dependents, that the work-related condition need only be a contributing factor to the death, and that apportionment language is absent in WCL Section 16 have all been shown in the original Brief for Appellants to be inadequate to abrogate the clear intent and meaning of WCL Section 25(7).” “The apportionment principle set forth in the WCL applies to death benefit claims, whether that apportionment is based on a disability due to a work-related or nonwork-related injury or condition. There is no legal basis to carve out from the apportionment test only those death benefit claims where apportionment is based on a non-work-related disability. The plain language and Legislative intent expressed in Section 15(7) support the fundamental principle embedded in the statute, expressed generally in Section 10, that liability be apportioned in proportion to causation,” explained Con Edison’s council Faber and Scotti. In conclusion Faber and Scotti argued, “Wherefore, the Appellants respectfully request that the Order of the Appellate Division affirming the Workers’ Compensation Board be reversed and the case remanded to the Board for determination on apportionment.” The State of New York, represented by attorney Michael Cardozo in its brief to the Court of Appeals presented the question “did the Appellate Division, Third Department, err in ruling that WCL Section 15(7) does not permit apportionment between work-related and non-work related medical conditions in a death case.” The City of New York’s interest in the case as described in their brief by attorney Michael Cardozo is “the City of New York is a self-insurer of its employees’ workers’ compensation benefits. The Workers’ Compensation Division of the Law Department administers the claims of all City employees and represents the City at hearings held before the Workers’ Compensation Board.” The brief of the City of New York concluded with “the order appealed from should be reversed,” according to Michael A. Cardozo, Corporation of The City of New York. The New York State Court of Appeals heard the case of the Matter of Hronich v. Con Edison on September 9, 2013.[IA]

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E x p e c t big thing s in workers’ c omp ens ation. E x p ec t to s ave a third of your c lient s 3 0% or more. E x p ec t bro ad ac c e pt anc e and few c l ass limit ations nationw id e. E x p e c t c omp etiti ve c ommissions. F or infor m ation c all ( 8 7 7 ) 2 3 4 - 4 4 5 0 or v isit au w.c om /us.

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