Insurance Advocate March 11, 2019

Vol. 130 No. 5 | March 11, 2019

HOLD STILL This Won’t Hurt a Bit! 116th Congress Tries Healthcare Cures as Rhetorical Fever Soars LEGISLATIVE UPDATE - PAGE 12

Applied Files Petition Against NJ DOBI to Protect WC Buyers

PAGE 22

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Vol. 130 No. 5 | March , 2019

Contents

12 LEGISLATIVE UPDATE 4 Foreword: Remembering ARIAS Founder, Insurance Law Leader,

T. Richard Kennedy Steve Acunto, Publisher

6 HR Update: Nine Simple Steps to Avoid Employment Lawsuits

Alfred T. DeMaria

8 In the Associations: PIANJ Applauds State Senate, Assembly for Passage of Producer Duty-of-Care Bill

10 On the Level: Insurance Saves

Jamie Deapo

11

MSO: How Smart is Your Home?

Sue C. Quimby

22 In the News: Workers’ Comp Petition Filed in NJ 24 On My Radar: Fall from Cherry on Top But No Cake

Barry Zalma

26

Looking Back: February 26, 1994

28 Courtside: Exterior Public Stairways are “Sidewalks” and Require Prior Written Notice of Defects

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

Lawrence N. Rogak

30 Legal Update: Summary Suspension of a DFS License INSURANCE ADVOCATE / March 11, 2019 3

[ FOREWORD ]

STEVE ACUNTO, EDITOR & PUBLISHER

Remembering ARIAS Founder, Insurance Law Leader, T. Richard Kennedy

4 March 11, 2019 / INSURANCE ADVOCATE

great friend and a true catalyst in the insurance and reinsurance communities, Dick Kennedy was a leader in the field of insurance law and in reinsurance dispute arbitration.

Thomas Richard Kennedy (1935-2019), founder of the ARIAS, the national reinsurance and insurance arbitration society, passed away peacefully at the Avow Hospice House, in Naples, Florida on February 14, 2019 surrounded by his family. The cause was complications due to Parkinson’s Disease.

He was wholly committed to developing and maintaining attorney professionalism and independence, writing and presenting extensively on the subjects and serving as Chair of the ABA’s Standing Committee on Professional Discipline and NYSBA’s Standing Committee on Attorney Professionalism.

As Senior Partner of Werner & Kennedy and General Counsel to American Skandia, Inc. he was a pre-eminent member of the insurance bar throughout his 45-year career, serving as Chair of the American Bar Association Tort & Insurance Practice, Chair of the New York State Bar Association Insurance Section, President of the U.S. Chapter of the International Association of Insurance Law and member of the Federation of Insurance & Corporate Counsel and International Association of Insurance Counsel.

He was founder and the first Chair of the Board of Directors of ARIAS (AIDA Reinsurance and Insurance Arbitration Society), the leading insurance and reinsurance dispute resolution organization in the U.S. He was honored for his vision in creating the Society, assembling a stellar group of leaders in their respective fields to realize the dream of setting standards and procedures for arbitrators, streamlining the process of settlement and saving great litigation stresses and costs for company participants. He organized and led a group that included Ed Rondepierre, Ron Jacks, Dan Schmidt, Mark Hurwitz, Charles Foss, Charles Havens, Susan Mack, Robert Mangino, Charles Niles and for some years after, the finest legal practitioners in the field. A life long friend, he named this writer as group’s first executive director and worked closely to grow

the group to 300 members worldwide in its first two years. As a member of the Board of AIDA, the worldwide insurance law group, he interfaced with leaders from 38 countries and spread the concept of arbitration well beyond US borders.

Thomas Richard Kennedy was born on April 12, 1935 in Clayville, N.Y. He graduated from West Winfield Central School, class of 1953. After high school, he enlisted in the U.S. Army where he attended the Army Language School in Monterey, CA, completing a course in Russian and spending a year and a half in Germany monitoring Soviet troop movements during the Cold War. He received an Honorable Discharge and went on to earn a Bachelor of Arts in Political Science at Villanova University in 1961 and a LL.B at Syracuse University in 1964 where he was a member of both the Board of Editors of the Law Review and the National Moot Court team.

He loved golf, sailing, skiing, music and summering on Fishers Island. His first and foremost love was for his family who adored him. He and his wife Catherine celebrated 56 years of marriage in August. He is survived by his wife, Catherine, their daughters: Anne Marie Scott, Carolyn Cullen and Maureen Alves (Vinicius), their sons: Michael ( Jacqueline), Joseph and Stephen (Karen), and thirteen grandchildren: Emma and Lyla Scott; Nicole, Caitlin, Darcy and Riley Kennedy; Sarah, Ian and Meredith Cullen; Isabelle, Andrew and William Kennedy; and Thomas Kennedy Alves. He is also survived by several nieces, nephews and many friends. He was preceded in death by his sisters Jane and Marion and his granddaughter, Hope.

He is revered among friends for his dry sense of humor, his love of the good life in many of its incarnations, and for his kind, warm and caring spirit, returned to him by a devoted caregiver, Anna Quiroz who cared for him with kindness and love for the last 3 years of his life.

A memorial is planned for April in New York.

Dick would be the first to discourage praise for his work or public displays of affection for him, but these are due many times over by those of us who knew him, worked and played with him and owe him the debt of friendship and loyalty for all he did for so many.

May he rest in peace.

S I N C E

1 8 8 9

VOLUME 130 NUMBER 5 MARCH 11, 2019

www.insurance-advocate.com EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Alfred T. DeMaria Sari Gabay Lawrence N. Rogak Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Gina Marie Balog-Sartario 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x113 circulation@cinn.com PUBLISHED BY CINN Global Initiatives P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | info@cinn.com www.cinn.com President and CEO Steve Acunto

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[ HR UPDATE ]

ALFRED T. DEMARIA

Nine Simple Steps to Avoid Employment Lawsuits uYou’re striving to operate as efficiently as possible to increase your company’s profit margin. But then someone in the company steps on a legal landmine and you spend $50,000.00 to win a lawsuit. If you fight and win or lose, you could spend $150,000.00 or more, even on a weak case. You CAN take steps to prevent this scenario. Here are nine of them.

• M ake Reporting Complaints Easier. The earlier you learn of an employee’s complaint, the better.

You can’t fix a problem you don’t know about. Providing more than one option for employees to complain ensures that they can bring legitimate issues to management’s attention and that a supervisor cannot hide issues from upper management.

• Timeliness. Be proactive. Once you learn of a problem, you have to respond. The company’s response will obviously depend on the problem, but understand that the response –

Providing more than one option for employees to complain ensures that they can bring legitimate issues to management’s attention and that a supervisor cannot hide issues from upper management. or lack thereof – will be scrutinized.

Simply documenting the issue may be enough. Other times, an investigation that results in disciplinary action will be necessary.

• D o c u m e n t P e r f o r m a n c e Deficiencies. In this day and age, you must document everything. But performance problems and conduct violations are more important than other issues. If you want to discourage a lawsuit, make sure the employee you just fired for perfor-

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Mr. Zalma recently published on Amazon.com with links at the Zalma Books site, with the following: Non Fiction books: • “Insurance Fraud & Weapons to Defeat Insurance Fraud” In Two Volumes • “The Compact Book on Adjusting Liability Claims: A Handbook for the Liability Claims Adjuster” • “The Compact Book on Adjusting Property Claims” • “Ethics for the Insurance Professional” • “Rescission of Insurance” • “The Insurance Examination Under Oath”

• “Random Thoughts on Insurance Volumes IV and V: Digests from Barry Zalma’s Blog: ‘Zalma on Insurance’” Fiction: • “HEADS I WIN, TAILS YOU LOSE” • “Candy and Abel: Murder for Insurance Money” • “Murder And Insurance Fraud Don’t Mix” • “Murder & Old Lace”

Alfred T. DeMaria is a Senior Partner at Clifton Budd & DeMaria, LLP and is recognized as one of the preeminent management labor attorneys in the field. He has extensive experience in all areas of employment law, including advice on avoiding liability under disability, race, gender, age and related anti bias laws.

Mr. DeMaria advises on compliance with all federal, state and local laws governing the employment relationship, including the defense of lawsuits brought by employees against the companies that employ them.

Prior to his work at Clifton Budd & DeMaria, LLP, he served as a trial attorney with the National Labor Relations Board.

mance issues has already been written up at least twice.

• D on’t Make Exceptions. A big part of being perceived as a fair employer is consistent application of the rules. When you make an exception for one employee, you alienate the others. So, consistent application of policies regarding promotions, vacation, pay, assignments, awards, discipline, and termination is the only way to go.

• Train Your Front Line. Who needs it the most? Whoever interacts with employees more than any other level of management in your company?

Front-line managers. They handle the daytoday gripes that, if not handled properly, become lawsuits.

Train them to spot issues, to be proactive, and to be consistent.

CONTINUED ON PAGE 8

6 March 11, 2019 / INSURANCE ADVOCATE

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[ IN THE ASSOCIATIONS ]

HR UPDATE CONTINUED FROM PAGE 6

PIANJ Applauds State Senate, Assembly for Passage of Producer Duty-of-Care Bill u Trenton, N.J.—The Professional Insurance Agents of New Jersey applauds the state Senate and the state Assembly for passing its top-priority bills S-2475/A-2034, unanimously on Feb. 21 and Feb. 25, respectively. The bills, which would prohibit application of a fiduciary standard to insurance producers, will be sent to Gov. Phil Murphy for his consideration.

The bills were sponsored by Senate President Stephen M. Sweeney, D-3; Senate Commerce Committee Chair Nellie Pou, D-35; Assembly Speaker Craig Coughlin, D-19; and Assemblymembers BettyLou DeCroce, R-26, John McKeon, D-27, and Carol Murphy, D-7.

The bills also would strengthen the existing “affidavit of merit” statute that, in theory, makes sure that lawsuits must have some merit before proceeding, but which, in practice, often falls short of that goal.

“PIANJ has been a strong advocate for the passage of this legislation, and we applaud the state Legislature for working to clarify that insurance producers are expected to exercise ordinary and reasonable care and skill in renewing, procuring, binding or placing in-

Clarifying and standardizing the level of care that insurance producers are expected to exercise is one of PIANJ’s top legislative priorities for this legislative session. surance, and are fully liable for negligent actions—but that they are not subject to civil liability under standards governing the conduct of a fiduciary or a fiduciary relationship,” said PIANJ President Rip Bush, CPIA. “There are only a handful of states that have unclear laws regarding insurance producers’ duty-of-care, causing many questions to be resolved by case law, which is why the association urges Gov. Murphy to sign this legislation into law.”

Clarifying and standardizing the level of care that insurance producers are expected to exercise is one of PIANJ’s top legislative priorities for this legislative session. It also is addressing the importance of accurate quoting of automobile policies and combating personal auto step-down provisions in personal automobile policies.[IA]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com 8 March 11, 2019 / INSURANCE ADVOCATE

• Make Your Handbook a Tool, Not a Stumbling Block. An employee handbook is a tool that communicates a company’s expectations to its employees. It should include statements addressing at-will employment; equal employment and harassment issues; work hours; leave and accommodation under the FMLA and the ADA; workplace violence; trade secrets and confidentiality of information; work rules and the consequences for violating them; and other important issues., including the latest cascade of employment regulations created in NYC. • Terminate Slowly. The decision to terminate someone’s employment should at least (1) be reviewed by more than one manager, (2) involve someone with Human Resources training, and (3) be well documented. If you are unsure of important facts or someone is not available to review the decision, suspend the employee and wait.

Get counsel. A rush to judgment can be expensive.

• Consider Severance Agreements.

Sometimes paying a small amount early is smart. A severance agreement usually results in the company paying an employee a few weeks (or even months) of salary in exchange for the employee releasing all claims against the company.

If done correctly, this eliminates the chance of a lawsuit. If a mistake has been made, it often saves the company money.

• What Would a Jury Say? Think about how a jury would decide the justice of your termination. Unless you are sure a jury could decide in your favor, give the employee another chance.[IA]

A severance agreement usually results in the company paying an employee a few weeks (or even months) of salary in exchange for the employee releasing all claims against the company.

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[ ON THE LEVEL ]

JAMIE DEAPO

Insurance Saves u Seems like a weird title, doesn’t it? But when you really explore what insurance is all about it makes sense.

Insurance protection saves lives and businesses. Helps families and businesses continue to function after serious and sometimes tragic events. Brings people healing and hope when things look desperate. Allows every facet of life and business to operate with some measure of certainty. Without it the suffering and loss that would occur would be unimaginable and insurmountable.

I’m not talking about the fender bender that damages a vehicle. The door and patio furniture destroyed by the wind. The business that suffers a minor loss with very little impact to their day to day operations. I’m talking a serious auto accident with injuries; houses and businesses destroyed by fire, tornados and hurricanes and people who die or are seriously disabled and unable to do their job or support their family. These are the serious and tragic events that having insurance protection can in some ways help repair. Unfortunately insurance can’t repair the emotional damage these events cause but having protection can make things much more bearable.

What I don’t understand is since insurance protection is so important why do we trivialize it?

Just watch the ads on TV and you’ll see what I mean. Instead of talking about the importance of solid insurance protection most insurance advertising is meant to be funny or even worse is an insult to the intelligence of viewers. Is it any wonder why consumers don’t take insurance protection seriously? They see it is a necessary evil with little importance other than how much they pay.

Anyone who is willing to focus solely on the price of protection when talking to consumers is to blame for this as well.

If you treat it as a commodity you just confirm what consumers believe. Why not instead draw their attention to the possibility of a serious loss and how proper protection can put them, their families 10 March 11, 2019 / INSURANCE ADVOCATE

All you need to do is watch the news and you can see so many unforeseen situations that result in serious injuries, loss of life and major property damage. Just look at all the weather related natural occurrences of late and the lives and property that have been damaged or lost.

and their businesses back together. You need to impress upon them the inability to predict who will have a serious loss. It can strike anyone or anything at any time.

All you need to do is watch the news and you can see so many unforeseen situations that result in serious injuries, loss of life and major property damage.

Just look at all the weather related natural occurrences of late and the lives and property that have been damaged or lost. That doesn’t even take into consideration the possibility of lawsuits related to a person’s actions or negligence.

On top of all that we have to admit that we live in a violent and frightening time where no one knows on any day if they, their family member or their business might not be involved in some tragic event. Please believe me when I say I’m not talking impending doom just the honest realization of the possibilities that exist in the world today.

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

That’s why I think having proper insurance protection is a serious responsibility that should not be relegated to 15 minutes or less. Consumers are making decisions that will impact their health and well-being as well as that of their families. They are also considering protection that will secure the financial wellness of themselves, their family and their business. Not something that should be taken lightly.

As insurance professionals, it’s our job to convince consumers of the serious nature of selecting insurance protection. To acknowledge the importance of insurance cost in the buying process but not to let it override proper protection.

They say consumers relate to stories so tell them a few based on your life and professional experience. Don’t fold at the first mention of cost or premium savings but instead focus on the purpose of coverage. To make the insured whole again. Too many consumers are being “penny wise and pound foolish” in making decisions on their insurance. It’s our professional responsibility to help them realize the risks they are faced with and provide them with the proper protection for themselves, their families and their business. As an industry and profession we do no one any favors by trivializing or ignoring that responsibility.[IA]

ADVERTORIAL

How Smart is Your Home?

By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE - Assistant Vice President/Media Editor u THE INTERNET OF THINGS (IoT) is a term used to describe everyday objects that are connected to the Internet.

Gone are the days when “high tech” meant a remote control for your tv or garage door. “Smart” technology offers convenience, energy, money and time saving, but it does have its drawbacks, particularly in the area of security.

Helping clients understand and assess the pros and cons of “smart” technology is another value-added service of the professional insurance agent.

A smart home is one whose appliances, lighting, heating and or electronics can communicate with each other and be controlled remotely – either from another room or another part of the world. Systems can be run off a timer, or manually. Lights can be turned on and off, doors unlocked, or temperature controlled to name a few of the functions. This helps homeowners save money by using their appliances more efficiently. The global smart home market is estimated to reach $40 billion by 2020. 57% of users say that smart technology in their home saves 30 minutes per day. 47% of millennials already have some type of smart home device (https://w w w.alarms.org/ smart-home-statistics/).

Security is the benefit most often stated as the reason for buying a smart home or smart home devices.

Conversely, security concerns have deterred some consumers f rom purchasing smart technology. Hackers may be able to access systems, or the technology may fail. Devices such as Amazon’s Alexa and Google’s Echo are “always on”. They start recording when they hear a “wake up” word. The technology is not perfect, however, and there have been cases where a device misinterpreted a conversation as the “wake” word and subsequently recorded and sent the conversation to someone on the owner’s contact list. Hackers have accessed baby monitors to take pictures and post on the Internet, and threaten the family.

Advances in technology allow us to do things that were once the stuff of science fiction movies.

There are ways to make your smart home safer. Home routers and security cameras typically do not have any built in security. Give the router a name that does not attach to you or your home address, and use WPA2 encryption. Use strong Wi-Fi passwords, and do not share them.

You can set up a guest network, one that is not connected to your smart home devices, for friends and family who need access. Be sure to update software. There have been a number of cases where a data breach occurred on a system when a patch to prevent the breach was already available. Two factor authentication is also recommended. If your system cannot be accessed without verification from your cellphone, it will reduce chances of hacking (https://us.norton. com/internetsecurity-iot-smart-homesecurity-core.html).

There are a myriad of smart devices sold by a multitude of vendors, accessed and controlled by a host of apps.

Some are wired, where others operate wirelessly. Whether or not a hub is needed depends on the system involved.

Smart hubs are a way to simplify and consolidate use of all of your home’s smart systems. Some devices, such as Amazon Alexa, Apple Siri or Google Assistant, allow you to control your system with your voice. Some support multiple protocols. Others use apps on mobile devices. Some systems do not require a hub.

Advances in technology allow us to do things that were once the stuff of science fiction movies. However, with increased accessibility comes potential new hazards. Helping clients understand the benefits and drawbacks of being “smart” is another sign of the true insurance professional.

R

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BY MARILYN M. SINGLETON, M.D., J.D.

HOLD STILL This Won’t Hurt a Bit! 116th Congress Tries Healthcare Cures as Rhetorical Fever Soars 12 March 11, 2019 / INSURANCE ADVOCATE

The 116th Congress has rolled out new health care legislation. The Republicans squandered their chance to repeal the ACA or otherwise bring medical care back into the hands of patients and physicians.

One could look at the push for Medicare for All as an acknowledgement that the ACA was not a success. The House Medicare for All caucus is in the process of revising the prior Medicare for All bill that had been floating around since 2003.

Apparently, the new bill will track Bernie Sanders’ Senate bill, S. 1804 (https://www.congress.gov/bill/115th-congress/ senate-bill/1804) which is more fleshed out. Sanders plans to finance his bill with the following: • 7.5 percent income-based premium paid by employers; 4 percent income-based premium paid by households; • make the personal income tax more progressive;

(Sanders’ white paper, “Options to Finance Medicare for All” can be downloaded here: https://www.sanders.senate.gov/download/ options-to-finance-medicare-for-all?inline=file) Out-of-Network Medical Billing As the AAPS lawsuit against California’s AB 72 works its way through the courts, the federal government is addressing the issue. Sen. Bill Cassidy, MD (R-LA) along with Sens.

Tom Carper (D-Del.), Todd Young (R-Ind.), Michael Bennet (D-Colo.) and Chuck Grassley (R-Iowa) have produced a draft bill, the Protecting Patients from Surprise Medical Bills Act, that would prevent an out-of-network health care provider from charging additional costs for emergency services to patients beyond the amount usually allowed under their insurance plan. The proposal would have the insurer pay any additional charges – which would be limited by law. The

[Senators] have produced a draft bill, the Protecting Patients from Surprise Medical Bills Act, that would prevent an out-of-network health care provider from charging additional costs for emergency services to patients beyond the amount usually allowed under their insurance plan.

• taxing capital gains and dividends the same as income from work; • limit tax deductions for the wealthy; • make the estate tax more progressive; • establish a wealth tax on the top 0.1 percent; • close the Gingrich-Edwards Loophole and create parity for wealthy business owners. Corporations would be made to pay their “fair share” by imposing a one-time tax on currently held offshore profits; imposing a Fee on Large Financial Institutions; (“This option closes the GingrichEdwards loophole which allows individuals who own and run an S-Corporation to game the system and avoid paying payroll taxes by claiming some income as business profits.”); • repealing corporate accounting gimmicks. (“This option would eliminate the “last-in, first-out” (LIFO) accounting method that allows corporations to manipulate their inventory and make it appear like they have lower profits.”)

bill would also require health care providers to give written notification to patients who receive emergency care at an outof-network facility before they receive any follow-up nonemergency care. That move is intended to warn patients before they are subject to additional costs at an out-of-network hospital. Patients also could not be charged more for care from out-of-network doctors at an in-network hospital.

(Full text: https://www.cassidy.senate.gov/imo/media/doc/ Discussion%20Draft-%20Protecting%20Patients%20from%20 Surprise%20Medical%20Bills%20Act.pdf) On January 30, 2019, H.R. 861, a bill to amend title XVIII the Social Security Act to prevent surprise billing practices was introduced by Rep. Lloyd Doggett (D-TX) and referred to the House Energy and Commerce and Ways and Means Committees.

CONTINUED ON PAGE 14 INSURANCE ADVOCATE / March 11, 2019 13

CONTINUED FROM PAGE 13

The text is not available and this title on the surface applies only to Medicare.

The ACA Lives On On January 3, 2019, H.R. 83, Responsible Path to Full Obamacare Repeal Act was introduced by Rep. Andy Biggs (R-AZ) and referred to the House Appropriations Committee, the Education and the Workforce, and six other committees.

This bill would repeal the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, effective at the beginning of FY2020. Provisions of law amended by those Acts would be restored.

(Full text: https://www.govtrack.us/congress/bills/116/hr83/text) On January 3, 2019, H.R. 185, the ObamaCare Repeal Act, was introduced by Rep. Steve King (R-IA) and referred to the House Committee on Appropriations Committee and Education and Workforce Committee, and 6 other com-

quirement for health insurers to accept every employer and every individual applying for coverage; (3) the prohibition against health insurers discriminating against individuals based on health status factors; (4) the prohibition against collecting genetic information in connection with issuing health insurance, and (5) the requirements for workplace wellness programs connected to health insurance.

(Full text: https://www.govtrack.us/congress/bills/116/hr692/text) On January 10, 2019, S. 80, the Jobs and Premium Protection Act was introduced by Sen. John Barrasso, MD (R-WY) referred to the Senate Finance Committee. This bill would repeal the annual fee on health insurance providers enacted by the ACA. (Full text: https://www.govtrack.us/congress/bills/116/s80/text) On January 10, 2019, H.R. 458, the Affordable Limited Health Coverage Act was introduced by Rep. Jeff Fortenberry (R-NE) and referred to the House Education and Labor and

If the amendments take effect, the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA), and Internal Revenue Code are revised to maintain PPACA consumer protections.

mittees. This bill would repeal the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, effective as of their enactment.

Provisions of law amended by those Acts are restored.

(Full text: https://www.govtrack.us/congress/bills/116/hr185/text) On January 18, 2019, H.R. 692, the Pre-existing Conditions Protections Act of 2019 was introduced by Rep. Greg Walden (R-OR) and referred to the House Education and Labor and Energy and Commerce Committees, and one other committee. This bill sets forth amendments that would take effect in the case of the repeal of the Patient Protection and Affordable Care Act (PPACA). If the amendments take effect, the Public Health Service Act, the Employee Retirement Income Security Act of 1974 (ERISA), and Internal Revenue Code are revised to maintain PPACA consumer protections.

Specifically, the bill would maintain (1) the requirement for health insurance to cover preexisting conditions; (2) the re14 March 11, 2019 / INSURANCE ADVOCATE

Energy and Commerce Committees, and one other committee. The bill would prohibit implementation of the revised definition of short-term, limited duration insurance, i.e., coverage must be less than three months in duration, including any period for which the policy may be renewed. This would permit such insurance to provide up to 12 months of coverage.

(Full text: https://www.govtrack.us/congress/bills/116/hr458/text) HSAs/Favorable Tax Treatment for Medical Costs On January 3, 2019, S. 12, the Health Savings Act of 2019 was introduced by Sen. Marco Rubio (R-FL) and referred to the Senate Finance Committee. This bill would modify the requirements for health savings accounts (HSAs) to: (1) rename high deductible health plans as HSA-qualified health plans; (2) allow spouses who have both attained age 55 to make catch-up contributions to the same HSA; (3) make Medicare Part A (hospital insurance benefits) beneficiaries CONTINUED ON PAGE 16

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eligible to participate in an HSA; (4) allow individuals eligible for hospital care or medical services under a program of the Indian Health Service or a tribal organization to participate in an HSA; (5) allow members of a health care sharing ministry to participate in an HSA; (6) allow individuals who receive primary care services in exchange for a fixed periodic fee or payment, or who receive health care benefits from an onsite medical clinic of an employer, to participate in an HSA; (7) include amounts paid for prescription and over-the-counter medicines or drugs as “qualified medical expenses” for which distributions from an HSA or other tax-preferred savings accounts may be used; (8) increase the limits on HSA contributions to match the sum of the annual deductible and outof-pocket expenses permitted under a high deductible health

The bill also allows a medical care tax deduction for periodic provider fees, including (1) periodic fees paid to a primary care physician for a defined set of medical services or the right to receive medical services on an as-needed basis; and (2) pre-paid primary care services designed to screen for, diagnose, cure, mitigate, treat, or prevent disease and promote wellness.

(Full text: https://www.govtrack.us/congress/bills/116/hr457/text) On January 3, 2019, H.R. 81 was introduced by Rep. Andy Biggs (R-AZ) and referred to the House Ways and Means Committee. This bill would allow an individual taxpayer a deduction from gross income for insurance premiums paid for the health care coverage of the taxpayer and the taxpayer’s spouse and dependents. The bill makes the deduction available whether or not the taxpayer itemizes other deductions.

(Full text: https://www.govtrack.us/congress/bills/116/hr81/text)

This bill would allow an individual taxpayer a deduction from gross income for insurance premiums paid for the health care coverage of the taxpayer and the taxpayer’s spouse and dependents. The bill makes the deduction available whether or not the taxpayer itemizes other deductions. plan; and allow HSA distributions to be used to purchase health insurance coverage.

The bill also would: (1) exempt HSAs from creditor claims in bankruptcy, and (2) reauthorize Medicaid health opportunity accounts. It would allow a medical care tax deduction for: (1) exercise equipment, physical fitness programs, and membership at a fitness facility; (2) nutritional and dietary supplements; and (3) periodic fees paid to a primary care physician and amounts paid for pre-paid primary care services.

(Full text: https://www.govtrack.us/congress/bills/116/s12/text) On January 10, 2019, H.R. 457, the Health Savings Account Act was introduced by Rep. Jeff Fortenberry (R-NE) and referred to the House Ways and Means Committee. This bill modifies the requirements for health savings accounts (HSAs) to (1) increase the maximum contribution limits for HSAs to match the sum of the annual deductible and out-ofpocket expenses permitted under a high deductible health plan, (2) allow individuals who receive primary care services in exchange for a fixed periodic fee or payment to participate in an HSA, and (3) permit HSAs to be used for fitness center memberships.

16 March 11, 2019 / INSURANCE ADVOCATE

On January 11, 2019, H.R. 519, the Tax Free Health Insurance Act of 2019 was introduced by Rep. Steve King and referred to the House Ways and Means Committee. This bill allows an individual taxpayer a deduction from gross income for insurance premiums paid for the health care coverage of the taxpayer and the taxpayer’s spouse and dependents. The bill makes the deduction available whether or not the taxpayer itemizes other deductions.

(Full text: https://www.govtrack.us/congress/bills/116/hr519/text) On January 10, 2019, S. 110, the Medical Expense Savings Act was introduced by Sen. Susan Collins (R-ME) and referred to the Senate Finance Committee. This bill would make permanent the reduction in the adjusted gross income threshold that must be exceeded before a taxpayer is allowed to claim an itemized tax deduction for medical expenses. That is, in 2017, the threshold was temporarily reduced from 10% to 7.5% for 2017 and 2018. This bill makes the 7.5% threshold permanent.

(Full text: https://www.govtrack.us/congress/bills/116/s110/text)

CONTINUED ON PAGE 18

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Drug Prices On January 10, 2019, S. 102, Prescription Drug Price Relief Act of 2019, was introduced by Sen. Bernie Sanders (I-VT) and referred to the Senate Health, Education, Labor, and Pensions Committee. This bill would establish a series of oversight and disclosure requirements relating to the prices of brand-name drugs.

The bill would require the Department of Health and Human Services (HHS) to review at least annually all brandname drugs for excessive pricing; HHS must also review prices upon petition. If any such drugs are found to be excessively priced, HHS must (1) void any government-granted exclusivity; (2) issue open, nonexclusive licenses for the drugs; and (3) expedite the review of corresponding applications for generic drugs and biosimilar biological products. HHS must also create a public database with its determinations for each drug.

ily targeted to the general public.

(Full text: https://www.govtrack.us/congress/bills/116/s73/text) Medicare On January 9, 2019, S. 62, the Empowering Medicare Seniors to Negotiate Drug Prices Act of 2019 was introduced by Sen. Amy Klobuchar (D-MN) and referred to the Senate Finance Committee. This bill would allow the Centers for Medicare & Medicaid Services to (1) negotiate drug prices under the Medicare prescription drug benefit, and (2) institute a price structure for the reimbursement of drugs covered under the benefit.

(Full text: https://www.govtrack.us/congress/bills/116/s62/text) On January 8, 2019, H.R. 275, the Medicare Prescription Drug Price Negotiation Act of 2019 was introduced by Rep. Peter Welch (D-VT) and referred to the House Energy and Commerce and Ways and Means Committees. This bill would require the Centers for Medicare & Medicaid Services (CMS)

If any…drugs are found to be excessively priced, HHS must (1) void any government-granted exclusivity; (2) issue open, nonexclusive licenses for the drugs; and (3) expedite the review of corresponding applications for generic drugs and biosimilar biological products.

Under the bill, a price is considered excessive if the domestic average manufacturing price exceeds the median price for the drug in Canada, the United Kingdom, Germany, France, and Japan. If a price does not meet this criteria, or if pricing information is unavailable in at least three of the aforementioned countries, the price is still considered excessive if it is higher than reasonable in light of specified factors, including cost, revenue, and the size of the affected patient population.

The bill also requires drug manufacturers to report specified financial information for brand-name drugs, including research and advertising expenditures.

(Full text: https://www.govtrack.us/congress/bills/116/s102/text) On January 10, 2019, S. 73, the End Taxpayer Subsidies for Drug Ads Act was introduced by Sen. Jeanne Shaheen (D-NH) and referred to the Senate Finance Committee. This bill would prohibit tax deductions for expenses relating to direct-to-consumer advertising of prescription drugs. “Directto-consumer advertising” is any dissemination, by or on behalf of a sponsor of a prescription drug product, of an advertisement that is (1) in regard to the drug product, and (2) primar-

to negotiate with pharmaceutical companies regarding prices for drugs covered under the Medicare prescription drug benefit. Current law prohibits the CMS from doing so.

(Full text: https://www.govtrack.us/congress/bills/116/hr275/text) On January 11, 2019, H.R. 520, the Protecting Life Until Natural Death Act was introduced by Rep. Steve King (R-IA) and referred to the House Energy and Commerce and Ways and Means Committees. The bill would exclude coverage of advance care planning services under the Medicare program.

(Full text: https://www.govtrack.us/congress/bills/116/hr520/text) Medicaid Funding On January 4, 2019, H.R. 259, the Medicaid Extenders Act of 2019 was introduced by Rep. Frank Pallone (D-NJ) and signed into law on January 24, 2019. This law alters several Medicaid programs and funding mechanisms.

(Sec. 2) The law makes appropriations for FY2019 for, and otherwise revises the Money Follows the Person Rebalancing Demonstration Program. (Under this proCONTINUED ON PAGE 20

18 March 11, 2019 / INSURANCE ADVOCATE

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gram, the Centers for Medicare & Medicaid Services must award grants to state Medicaid programs to assist states in increasing the use of home and community care for longterm care and decreasing the use of institutional care.)

(Sec. 3) The law temporarily extends the applicability of Medicaid eligibility criteria that protect against spousal impoverishment for recipients of home and community-based services.

(Sec. 4) The law reduces the federal medical assistance percentage (i.e., federal matching rate) for states that have not implemented asset-verification programs for determining Medicaid eligibility.

(Sec. 5) The law reduces funding available to the Medicaid Improvement Fund beginning in FY2021.

(Full text: https://www.govtrack.us/congress/bills/116/hr259/text)

More Federal Standards On January 15, 2019, S. 116, the Modernizing Obstetric Medicine Standards Act of 2019 (MOMS Act) was introduced by Sen. Kirsten Gillibrand (D-NY) and referred to the Senate Health, Education, Labor, and Pensions Committee.

The bill would have HHS establish pregnancy and postpartum safety and monitoring practices and maternal mortality and morbidity prevention “Maternal safety bundles.”

The best practices would include the following: (i) Obstetric hemorrhage; (ii) Maternal mental, behavioral, and emotional health; (iii) Maternal venous and thromboembolism; (iv) Severe hypertension in pregnancy, including preeclampsia; (v) Obstetric care for women with substance abuse disorder; (vi) Postpartum care basics for maternal safety; (vii) Reduction of racial and ethnic disparities in maternity care; (viii) Safe reduction of primary cesarean birth; (ix) Severe maternal

The bill would amend the Medicare program to provide coverage for most dental services. “Dental and oral health services” means services (as defined by the Secretary) that are necessary to prevent disease and promote oral health, restore oral structures to health and function, and treat emergency conditions...

Dental Care On January 3, 2019, S. 22, the Medicare Dental Benefit Act of 2019 was introduced by Sen. Benjamin Cardin (D-MD) and referred to the Senate Finance Committee. The bill would amend the Medicare program to provide coverage for most dental services. “Dental and oral health services” means services (as defined by the Secretary) that are necessary to prevent disease and promote oral health, restore oral structures to health and function, and treat emergency conditions, including (1) routine diagnostic and preventive care such as dental cleanings, exams, and x-rays; (2) basic dental services such as fillings and extractions; (3) major dental services such as root canals, crowns, and dentures; (4) emergency dental care; and (5) other necessary services related to dental and oral health (as defined by the Secretary).

(Full text: https://www.govtrack.us/congress/bills/116/s22/text) On January 3, 2019, H.R. 96 was introduced by Rep. Julia Brownley (D-CA) and referred to the House Committee on Veterans’ Affairs Committee. This bill would require Veterans Affairs to furnish dental care in the same manner as any other medical service.

(Full text: https://www.govtrack.us/congress/bills/116/hr96/text) 20 March 11, 2019 / INSURANCE ADVOCATE

morbidity review; (x) Support after a severe maternal morbidity event; (xi) Ways to empower and listen to women before, during, and after childbirth to ensure better communication between patients and health care providers; and (xii) Other leading causes of maternal mortality and morbidity, including infection or sepsis and cardiomyopathy.

(Full text: https://www.govtrack.us/congress/bills/116/s116/text) [IA] Dr. Singleton is a board-certified anesthesiologist. She is also a Board-of-Directors member and Presidentelect of the Association of American Physicians and Surgeons (AAPS). 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.

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Applied Underwriters Petitions NJ Regulators for Confirmation of Captive Reinsurance and its Use in its Widely Accepted Workers’ Compensation Format Petition Would Protect NJ Businesses and Employees Action Holds Potential Implications for Reinsurers, Captives Nationwide

u New York, N.Y.—A Petition filed March 4th against New Jersey’s Department of Banking and Insurance seeks confirmation from State regulators that the State’s existing insurance laws do enable captive insurance formats to continue to function as established, for the benefit of businesses and their employees, notably a program for Workers’ Compensation insurance offered by Applied Underwriters, one of the petitioners.

The action holds that regulators have misinterpreted the longstanding, essential role that reinsurance plays in a widely used workers’ compensation insuring format and has attempted to restrict the program in direct violation of section 531 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which precludes state insurance regulators from rewriting the terms of an out-of-state reinsurance contract. The Petition requests confirmation that Applied’s program is a valid captive reinsurance arrangement under New Jersey law and should be affirmed at a time when the format’s desirability among businesses is growing as a preferred risk transfer vehicle among Applied’s many New Jersey based clients and their employees. The Petition protects the clients of independent agents who have implemented the Applied programs as a sound, wise choice, an alternative to “off the shelf ” policies in which the buyer has little influence on costs and little benefit from favorable outcomes.

22 March 11, 2019 / INSURANCE ADVOCATE

Applied’s Petition sets forth the generally accepted definitions and standard, permitted uses of reinsurance as employed in its format and underlines the potential damage that the undue tampering or undoing of the enabling regulations would visit upon New Jersey businesses and their employees.

Applied’s Petition sets forth the generally accepted definitions and standard, permitted uses of reinsurance as employed in its format and underlines the potential damage that the undue tampering or undoing of the enabling regulations would visit upon New Jersey businesses and their employees, according to Shand Stephens, partner, DLA Piper, LLC, attorney for Applied. Mr. Stephens noted that Applied, a national A+ rated Workers’ Compensation insurance provider, offers policies to businesses of all sizes that reward business owners by providing participation in the favorable financial and pricing outcomes resulting from their observation of best practices in workplace safety.

According to Mr. Jeffrey Silver, General Counsel for Applied based in its Omaha Operations Center, Applied’s basic captive format, which dates back

conceptually to the 1950’s and is typical of the thousands of captives in operation successfully in every jurisdiction including New Jersey, has received increasingly wide acceptance among business leaders across the nation who prefer to take greater responsibility for their workplace safety standards and operations and thus opt to self-fund the primary portion of their costs up to a relatively high limit, where reinsurance is then invoked in cases of extreme loss.

Mr. Silver stated: “This mechanism is highly prized in New Jersey and across the country, since it gives business owners a sound alternative to passive insurance structures and it stabilizes costs.

The success of our programs underscores the effectiveness of loss control and the sought-after approach we have adopted in caring for injured workers, from our first-of-its-kind in house phar-

[ IN THE NEWS ]

“The success of our programs underscores the effectiveness of loss control and the sought-after approach we have adopted in caring for injured workers, from our first-of-its-kind in house pharmacy to our in-house doctors, nurses and client care professionals who work diligently for our insured clients and their injured staff members.”

macy to our in-house doctors, nurses and client care professionals who work diligently for our insured clients and their injured staff members”.

“We believe,” he concluded, “that business owners and managers should be enabled to insure their enterprises in this manner and we intend to fight to continue to optimize workplace safety practices in New Jersey and in the other states in which we provide coverage.

Our Petition advances that cause.”[IA]

Applied Underwriters®, founded in 1994, designs and provides business services and insurance solutions to meet the real world needs of every size business nationwide. Rated ‘A+’ (Superior) by A.M. Best, Applied offers optimal coverage through independent agents and brokers across America. Applied is recommended consistently as the preferred workers’ compensation insurance provider to best manage businesses’ risks through innovative and unique products, providing

sound alternatives in an often flatly redundant market. Applied enjoys one of the highest customer retention rates in the industry­—over 90%—and is known for its promotion and realization of best practices in worker safety.

Through its EquityComp® product, Applied continues to offer larger insureds the potential to realize significant savings over other market competitors. Applied is a key resource in the large risk market segment offering both EquityComp® and JumboGC® coverage in all states and all areas, with multi-state risks seamlessly insured.

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INSURANCE ADVOCATE / March 11, 2019 23

[ ON MY RADAR ]

BARRY Z ALMA

Fall from Cherry on Top But No Cake Business Exclusion Clear and Enforceable uWhen a farmer allows individuals access to the farm so they can pick cherries off trees in the orchard and buy the cherries at a lesser price than pre-picked cherries it is doing the business of farming. That is a reason why most farmers will buy a business liability policy to protect against the exposure of injury to the public picking cherries off the farmer’s trees. A homeowners policy is not designed to cover business losses.

In Western National Assurance Company v. John And Linda Robel, Individually And As Husband And Wife; And Robel’s Orchard, A Washington Corporation And/Or Sole Proprietorship Owned By John And Linda Robel; Vicki Posa, A Single Person, No. 35394-0III, Court Of Appeals Of The State Of Washington Division Three (October 23, 2018) resolved an appeal by Vicki Posa from the trial court’s order granting summary judgment to respondent Western National Assurance Company concerning the existence of insurance coverage under a homeowners policy for an injury occurring in an orchard.

FACTS

Ms. Posa was injured in a fall from a three-legged ladder while picking cherries at a Green Bluff area orchard operated by John and Linda Robel. The Robels offered both pre-picked and u-pick options for customers.

Ms. Posa and a companion arrived at the Robel orchard to pick cherries for themselves. Ms. Posa and her companion spoke to a man named John and each were outfitted with a basket that strapped to the body of the picker. They were directed to the appropriate section of the orchard and told where ladders could be located.

The ladders are ten feet tall and three-legged. While using a ladder, Ms. Posa became unbalanced as the basket filled. She fell, breaking her hand and 24 March 11, 2019 / INSURANCE ADVOCATE

“4. ‘Business’ means a trade, a profession, or an occupation including farming, all whether full or part time. This includes the rental of property to others. It does not include the occasional rental for residential purposes of the part of the ‘insured premises’ normally occupied solely by ‘your’ household.”

left foot. She also sustained injuries to her neck, hip, and shoulder. She underwent two surgical procedures and was expected to have additional surgery.

Ms. Posa filed suit against the Robels seeking compensation for her injuries.

She alleged that the Robels, doing business as Robel’s Orchard, had failed to maintain the orchard in a safe manner and also had failed to properly instruct her on use of the ladder. Western National appointed an attorney to defend the suit and counsel appeared for the Robels.

Western National sued the Robels and Ms. Posa seeking declaratory relief. Western National asserted that the Robel’s homeowner’s policy did not provide liability coverage for the couple’s business operations. The Robels did not appear in the declaratory action and, at some point, filed for bankruptcy protection. Ms. Posa appeared and defended the declaratory action.

In response to the summary judgment motion, Ms. Posa contended that the business was farming and that the occasional self-pick customer was not

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant 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 practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 51 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Mr. Zalma’s books are available as Kindle books or paperbacks at Amazon. com and can be reached at http:// zalma.com/zalma-books/ Mr. Zalma’s reports can be found on Tumbler at https://www.tumblr.com/search/ bzalma on Facebook at https://www. facebook.com/barry.zalma and you can follow him on Twitter at https:// twitter.com/bzalma.

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within the scope of the farm’s primary operation. The trial court determined that the business exclusion provision was not ambiguous and operated to deny coverage for Ms. Posa’s injuries.

ANALYSIS

The appellate court was asked to determine whether a customer’s self-picking of cherries is a part of the business of farming.

Interpretation of an insurance policy is a question of law. Insurance policies are construed as contracts, so policy terms are interpreted according to basic contract principles. The policy is con-

[ ON MY RADAR ] sidered as a whole, and is given a fair, reasonable, and sensible construction as would be given to the contract by the average person purchasing insurance.

If the language is clear, the court must enforce the policy as written and may not create ambiguity where none exists.

A clause is only considered ambiguous if it is susceptible to two or more reasonable interpretations. If an ambiguity exists, the clause is construed in favor of the insured.

The policy issued by Western National includes the following definition: “4. ‘Business’ means a trade, a profession, or an occupation including farming, all whether full or part time. This includes the rental of property to others. It does not include the occasional rental for residential purposes of the part of the ‘insured premises’ normally occupied solely by ‘your’ household.”

The policy excluded from liability coverage any “bodily injury . . . resulting from activities related to the ‘business’ of an ‘insured’, except as provided by Incidental Business Coverage.” Against the exclusions, Ms. Posa argues that there are at least factual questions about whether or not the Robels were engaged in the “business” of farming, whether self-service picking falls within the farming business, and whether instructing on proper ladder use falls within the couple’s “business.”

The appellate court found that the only conclusion to draw from the evidence is that the Robels were engaged in the business of farming. They had a cherry orchard and sold the produce to the public. That is how farming works—a crop is planted and eventually harvested for the benefit of those who consume the crop.

Whether or not the Robels made much money from u-pick operations does not change the nature of their business. The fact that there were different options for harvesting the produce likewise does not alter those facts; the identity of the harvester does not change the nature of a farming operation. It was the orchard produce that drew Ms. Posa to the Robel farm on that fateful day. The fact that the Robels may not have been working that particular day does not

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[ COURTSIDE ]

LAWRENCE N. RO GAK

Exterior Public Stairways are “Sidewalks” and Require Prior Written Notice of Defects Hinton v Village of Pulaski Edited by Lawrence N. Rogak The Court of Appeals rules here that an exterior public stairway which connects a sidewalk with a municipal parking lot is the equivalent of a sidewalk, and therefore the municipality that owns it must have prior written notice of a defect as a condition precedent to liability for injuries.—LNR uThe Village of Pulaski is a town of a few thousand people in Oswego County, NY, about ten minutes’ drive from Lake Ontario. This is fishing country, and the heart of this fishing county is Salmon River. “Unique in the Northeast, the Salmon River is an angler’s mecca. Thousands of trophy Chinook and coho salmon, steelhead, rainbows and brown trout, driven the by urge to spawn, run its length each year. Twelve miles of classic riffs, pools, and runs are accessible to those who would test its waters with rod and reel” (Oswego County Tourism, Visit Oswego County, New York: Where to Fish).

Locals will tell you the one of the best fishing spots on the Salmon River is the “Black Hole,” on the west end of Pulaski. The south bank is part of a salmon run, but the north bank is public. At the peak of the season, hundreds of anglers ply the waters at the Black Hole. The throng regularly blocked the streets, so the Village installed signage directing anglers to park in an adjacent car park normally used by the Village Department of Public Works. From there, anglers must walk down a stairway, cross Riverview Drive, and walk further down the undeveloped bank before they reach the Black Hole. That stairway is the subject of this appeal. It is a “railway tie” stairway, made of com28 March 11, 2019 / INSURANCE ADVOCATE

The Village of Pulaski Code provides, in relevant part, that “no civil action shall be maintained” against defendant Village of Pulaski for personal injury sustained as a result of a defect in “any street, highway, bridge, culvert, sidewalk or crosswalk” unless prior written notice of the alleged defect is provided to the Village... pacted earth nosed with recycled railway ties, many of which still include the rusted nails they once had. The stairs are steep, irregularly spaced, with the space between the nosings made of grasses and muddy strands with potholes and muddy clumps (which were exacerbated due to a recent heavy rain). The railings were rickety and wooden, and at a low height; there was also less railing on one side than the other. The stairway was built by the Village.

Mr. Hinton, the plaintiff in this case, is a licensed fishing guide and owns a fishing lodge. He makes his living renting out rooms to anglers and taking them fishing. On October 19, 2013, at the height of the season, finding his schedule unexpectedly free, he decided to spend the afternoon fishing without clients. Although Mr. Hinton preferred less congested spots, he decided to give the Black Hole a try. He drove to the DPW parking lot as the signs instructed, gathered his things, and started down the stairway. About a third of the way

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.

down, he tripped—possibly over a rut in the stairs or one of the spikes protruding from the stairs—and went down head over heels. He broke his left ankle, severely injured his knee and suffered various sprains. As he explained in his deposition “my fishing season ended on that day,” costing him both medical bills and his livelihood. Faced with those serious financial consequences, Mr. Hinton sued the Village, alleging that the Village had allowed the stairs to deteriorate and become a hazard to members of the public, and that his injuries were caused by the Village’s negligent maintenance of the stairway.

The Village of Pulaski Code provides, in relevant part, that “no civil action shall be maintained” against defendant Village of Pulaski for personal injury sustained as a result of a defect in “any street, highway, bridge, culvert, sidewalk or crosswalk” unless prior written notice of the alleged defect is provided to the Village (Village of Pulaski Code § 122-14; see also Village Law § 6-628).

Plaintiff commenced this action against the Village after he fell while descending an exterior stairway that connects a public road to a municipal parking lot.

The Village did not receive prior written notice of the alleged defect before plaintiff commenced suit, and the Village

[ COURTSIDE ] moved for summary judgment dismissing the complaint. Supreme Court granted the motion, and the Appellate Division unanimously affirmed.

In Woodson v City of New York, this Court determined that a stairway may be classified as a sidewalk for purposes of a prior written notice statute if it “functionally fulfills the same purpose that a standard sidewalk would serve” (93 NY2d 936, 937-938 [1999], citing Donnelly v Village of Perry, 88 AD2d 764, 765 [4th Dept 1982] [holding that steps between a roadway and public sidewalk were “the equivalent of a sidewalk” because they “provide(d) a passageway for the public”] and Youngblood v Village of Cazenovia, 118 Misc 2d 1020, 1022 [Sup Ct, Madison County 1982] [holding that steps are “essentially sidewalks laid on slopes, often connecting two stretches of sidewalk”], affd on opn below 93 AD2d 962 [3d Dept 1983]; see also Groninger v Village of Mamaroneck, 17 NY3d 125, 129 [2011] [parking lot served the “functional purpose” of a highway, thereby triggering a notice requirement]).

In the twenty years since Woodson was decided, the Legislature — “though fully capable of corrective action” — has done nothing to “signal disapproval” of this interpretation (Matter of Acevedo v New York State Dept. of Motor Vehs., 29 NY3d 202, 225 [2017]). As the identical question has been long since resolved by this Court, the present case involves the application of settled precedent — not statutory interpretation (see Matter of State Farm Mut. Auto. Ins. Co. v Fitzgerald, 25 NY3d 799, 819-820 [2015] [noting that an “extraordinary and compelling justification is needed to overturn precedents involving statutory interpretation” because, “if the precedent or precedents have misinterpreted the legislative intention embodied in a statute, the Legislature’s competency to correct the misinterpretation is readily at hand”]; Matter of Eckart, 39 NY2d 493 [1976] [“Generally, once the courts have interpreted a statute any change in the rule will be left to the Legislature, particularly where the courts’ interpretation is a long-standing one”]; Heyert v Orange & Rockland Util., 17 NY2d 352, 360 [1966] [noting that “established precedents are not lightly to be set aside”

The courts below correctly applied Woodson in holding that the stairway at issue “functionally fulfills the same purpose” as a standard sidewalk, and therefore plaintiff was required to show that the Village received prior written notice of the allegedly defective condition. because “the remedy (is) ordinarily with the Legislature”]; see also People v Taylor, 9 NY3d 129, 148 [2007] [“Stare decisis is deeply rooted in the precept that we are bound by a rule of law—not the personalities that interpret the law”]). We see no compelling reason to overrule our longstanding precedent.

The courts below correctly applied Woodson in holding that the stairway at issue “functionally fulfills the same purpose” as a standard sidewalk, and therefore plaintiff was required to show that the Village received prior written notice of the allegedly defective condition. In its motion for summary judgment, the Village established that plaintiff failed to plead or prove prior written notice. Plaintiff did not raise a triable issue of fact in opposition, and therefore summary judgment was properly awarded to the Village. Plaintiff ’s remaining arguments lack merit or are unpreserved for review.

One dissenting judge noted that because the Village’s prior written notice law did not specify that it applied to stairways, the Court was wrong in deciding that a stairway can be a type of sidewalk.[IA] 2019 NY Slip Op 01261 Decided on February 21, 2019 Court of Appeals

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ON MY RADAR CONTINUED FROM PAGE 25

change the nature of their operation.

They farmed by producing a crop, not by harvesting seven days a week.

Similarly, it cannot seriously be contested that using a ladder to pick cherries from a cherry tree is not part of the farming task of harvesting the crop. Any negligence in failing to properly instruct on the use of the three-legged ladder was related to the family’s farming operations. In short, the business exclusion applied to the Robels’ cherry orchard.

The appellate court concluded that the self-pick operations are part of the business operations of the orchard. The business exclusion to the homeowners policy precluded liability coverage and, therefore, the trial court correctly concluded that there was no coverage under the policy for Ms. Posa’s business-related injury and that Western National did not owe a duty to defend or indemnify the Robels.

ZALMA OPINION

A cherry orchard is a business. Ms Posa was injured as a customer of that business. She was injured while picking cherries from the Robels’ orchard.

Had the Robels’ puchased a business or farm policy that covered their liability to third parties as a result of the operation of the farm Ms. Posa and the Robels would have a case against Western National or the farm insurer.

They took their chances and lost resulting in bankruptcy.[IA]

Had the Robels’ puchased a business or farm policy that covered their liability to third parties as a result of the operation of the farm Ms. Posa and the Robels would have a case against Western National or the farm insurer. They took their chances and lost resulting in bankruptcy.

INSURANCE ADVOCATE / March 11, 2019 29

[ LEGAL UPDATE ]

SARI GABAY, ESQ.

Summary Suspension of a DFS License uTypically, when an insurance agent, broker, or other licensee is investigated by the New York State Department of Financial Services (“DFS”), even if there is a violation of applicable insurance laws or regulations but the conduct does not rise to the level of “untrustworthiness” and/or “incompetence,” DFS may offer a compromise, by way of a stipulation, in which a respondent may admit to a statutory and/or regulatory violation and pay a penalty. For instance, in a failure to obtain signed 2119 service fee agreements, in addition to a fine, DFS may require a licensee to return service fees collected, or otherwise make restitution. In other instances, where, for example, DFS recommends license revocation, a hearing is held in which a licensee is provided with due process and an opportunity to challenge the recommendation of revocation. Even where a licensee timely submits a written request for a hearing, it may take numerous months until such a hearing is scheduled. All the while, the licensee remains licensed and can generally conduct business as usual, until at least a final determination by DFS is rendered following a hearing, and even longer if the decision (if unfavorable) is appealed to court by way of an Article 78 proceeding.

In very rare cases, however, the Superintendent of DFS may exercise its “summary suspension” power, which has the immediate effective of stripping a licensee of its license (at least temporarily), following issuance of a citation which sets forth the alleged wrongful conduct, but prior to a hearing with respect to the allegations. This extreme power is codified in Section 401 of the State Administrative Procedure Act (“SAPA”), which applies to adjudicatory proceedings of state agencies where notice and a hearing in connection with licensing is required. DFS, like other 30 March 11, 2019 / INSURANCE ADVOCATE

This extreme power is codified in Section 401 of the State Administrative Procedure Act (“SAPA”), which applies to adjudicatory proceedings of state agencies where notice and a hearing in connection with licensing is required. state agencies, may exercise this power under SAPA if the agency finds that “public health, safety, or welfare imperatively requires emergency action, and incorporates a finding to that effect in its order, summary suspension of a license may be ordered.” Effectively, a license is immediately suspended until a hearing, and SAPA requires the hearing to be “promptly instituted and determined.”

Recently, on January 25, 2019, DFS invoked its summary suspension power against a Brooklyn based insurance brokerage - Superior Service Group Ltd. and its sublicensee - and issued an order, without any details of the conduct at issue, suspending respondents’ insurance producer licenses until further order of the Superintendent. On January 31, 2019, DFS issued a Circular Letter notifying all insurers authorized to do business in New York of the suspension and instructing all such insurers to report any indication of respondents’ selling, soliciting or negotiating insurance, adjusting insurance claims, or other action in violation of the order.

Eventually, when DFS’ investigation is complete and the proceeding concludes, the basis for the extreme measure of summary suspension should be publicly available by way of a Freedom of Information Law Request, and may even be gleamed from DFS’ monthly

Sari Gabay is a go-to insurance regulatory lawyer representing insurance agents, brokers and public adjusters in Department of Financial Services’ investigations, complaints, and hearings and in relicensing applications.

She represents sellers and purchasers of insurance agencies and other businesses. Sari also reviews and interprets insurance policies and advises homeowners, venues, and other policyholders in insurance coverage disputes, in addition to her general law practice. Sari is a frequent speaker and author on issues in the insurance industry, and most recently spoke on October 3, 2018 on DFS’ Regulation 208 and the ensuing Article 78 proceeding. Sari is also among PIA’s Circle of Consultants.

summary of disciplinary actions. There are not many instances of summary suspension by DFS in recent years, though conduct such as the mishandling of premium funds would likely so effect the public welfare to “imperatively require(s) emergency action.”

Of note, a summary suspension order alone is not a final determination by a state agency. As such, a court would not have subject matter jurisdiction of an appeal from a summary suspension order. Rather, only following a hearing before DFS and the issuance of a final determination, can a respondent appeal the final determination by way of an Article 78 proceeding in court, and even then there is a very limited window to timely do so and a respondent would have to successfully demonstrate the DFS’ decision was “arbitrary and capricious.”[IA]

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