Insurance Advocate May 14, 2018

Vol. 129 No. 7 | May 14, 2018

CMSV’s Top Award to AUW’s Steve Menzies Past recipients have included other top insurance leaders

Gala Co Co-chair chair and College Trustee Pamela Newman, Chair of Aon’s Newman Group, Presents Award to Dolly Lenz, New York RE legend

May 14, 2018 | Volume 129 Number 8

16 C MSV’s Top Award to Applied’s Steve Menzies

Contents

4 Foreword: Bright and Good

Steve Acunto, Publisher 6

On the Level: The Sky Isn’t Falling, We are Merely Evolving Jamie Deapo

8

In the Associations: Big I New York Honors Industry Role Models

10 MSO: Insurance Issues for Child Day Care

Sue C. Quimby 12 In the Associations: Atti Elected Big I New York Chair of the Board 14 Guest Opinion: Mandates: the Other Side of the ‘Right to Healthcare’

Jane M. Orient, M.D. 22 Courtside: Court of Appeals Rules That PIP Statue of Limitations is Three Years for All Self Insurers

Lawrence Rogak 24 On My Radar: Sham Affidavit Fails to Defeat Summary Judgment

Barry Zalma

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

26

Looking Back: May, 1995 INSURANCE ADVOCATE / May 14, 2018 3

[ FOREWORD ]

STEVE ACUNTO

Bright and Good

S I N C E

1 8 8 9

VOLUME 129 NUMBER 8 MAY 14, 2018

EDITOR & PUBLISHER

uBrightway Insurance has opened five new stores this month. While they are down South for now, this enterprise bears attention.

Brightway President Talman Howard claims: “We offer a turnkey business solution that helps Franchise Owners realize their dream of business ownership with the support of a national brand.” Brightway Agency Owners receive comprehensive business support including customer service, carrier relationships, marketing, accounting and technology, according to the Company. “As a result, Brightway agencies consistently outsell other insurance agencies three-to-one,” they state in a press release, adding: “Brightway franchisees make more than three times the income of individuals who are self-employed in other businesses. For top performers, the gap is six-fold. What’s more, having an insurance background is not a prerequisite to becoming a Franchise Owner with Brightway. In fact, 40 percent of the above-average performing Brightway Franchise Owners did not have prior insurance experience. “ To learn more about business opportunities with Brightway, a national property/ casualty insurance retailers selling more than $521 million in annualized written premium, the company is amo0ng the largest personal lines agencies in the United States, visit BrightwayDifference.com.… No quacks need apply…In fact Aflac has proved to be just ducky when it comes to responsible corporate citizenship. In 2018, an estimated 1.735 million new cases of cancer will be diagnosed in the United States, according the National Cancer Institute. On top of being a devastating diagnosis, treating cancer is expensive, with the median monthly out-of-pocket cost estimated to be $703. Aflac, a cancer insurance pioneer, has launched its Aflac Cancer Protection Assurance plan. Aflac Cancer Protection Assurance provides more options to help meet the needs of policyholders through all life stages. Coverage is now offered for screening tests and surgeries performed on the basis of genetic testing results, and the wellness payout for early diagnosis is also increased. Other additional benefits include nonsurgical treatment such as immunotherapy, an annual care benefit to help manage costs with delayed effects, and surgery on a non-diseased body part. Also, every Aflac policyholder can explore My Cancer Circle, an on-line tool that helps caregivers coordinate volunteers and friends to assist with tasks such as meal preparation or transportation. Through Aflac’s partnership with CancerCare, policyholders can get personalized notifications and access instant messaging when they use the My Cancer Circle app. Other benefits of CancerCare available to everyone include: • Educational workshops and publications for both cancer patients and care partners and the bereaved.

• Counseling services – face-to-face, on-line or by phone, from licensed oncology social workers to help patients access practical assistance and resources.

Furthering its commitment to help patients facing cancer, Aflac recently announced the introduction of My Special Aflac DuckTM, a social robot created by Sproutel and Aflac to serve as a caring companion for children with cancer. This innovative, special companion, coupled with Aflac’s latest cancer product refresh, is an ongoing reflection of the company’s dedication to be there when policyholders need them most.

Aflac Cancer Protection Assurance is available through the work-site, as well as on agent-assisted individual-paid basis, and offered with high, medium and low options – all with Health Savings Account (HSA) compatibility.

To learn more about Aflac products and Aflac’s commitment to childhood cancer, visit aflac.com.[IA] 4 May 14, 2018 / INSURANCE ADVOCATE

Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Kelly Donahue-Piro Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Stephen M. Soble Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Director of Operations and Creative Services Gina Marie Balog-Sartario 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Media, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 613-1595 www.cinn.com | info@cinn.com President and CEO Steve Acunto

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[ ON THE LEVEL ]

JAMIE DEAPO

The Sky Isn’t Falling, We are Merely Evolving uSo much of what you read today is about the impending demise of the independent agent and their long standing system of providing individuals, families and businesses appropriate and effective insurance protection.

Disrupters are entering the marketplace who are leveraging technology to significantly speed up the process and replace many of today’s insurance workers with artificial intelligence. We’re told consumers, especially the younger ones, will be flocking to these new technology based direct providers of protection that offer convenience, speed and low cost.

Industry pundits warn independent agents that failure to aggressively compete with these disrupters will mean the demise of independent agents and their system of operation. They question why independent agents aren’t immediately mobilizing all their resources to meet this challenge. Are they not taking this threat seriously? Are they willing to lose large numbers of their clients to these disruptors? Don’t they understand the end is near?

The answer is many of them understand the threat and realize change is necessary. The problem is the average agency isn’t in a position to stop everything and implement all the necessary changes to meet this perceived challenge.

They have clients and prospects to take care of and for many it would require significant resources in both money and people that are not readily available.

For the average agency the answer lies in stepping back and looking at how they currently operate. What small but necessary changes can they make right now to improve how quickly and conveniently they provide protection for clients and prospects?

• Are they maximizing the use of their existing technology?

• Are they gathering and using important information about clients and prospects?

6 May 14, 2018 / INSURANCE ADVOCATE

Disrupters are entering the marketplace who are leveraging technology to significantly speed up the process and replace many of today’s insurance workers with artificial intelligence.

We’re told consumers, especially the younger ones, will be flocking to these new technology based direct providers of protection that offer convenience, speed and low cost.

•A re they being successful communicating with clients and attracting prospects?

•H ow convenient is it for clients/ prospects to take advantage of their services?

• I s their staff trained and equipped to provide quality service?

•H ow satisfied are their current clients with the services they provide?

•A re prospects greeted warmly and given the focused attention they deserve?

•A re they effectively using their website and social media?

•A re they promoting the benefits of working with an independent agent?

Small changes can produce big benefits. Their clients are with them because they feel they care and they’re currently satisfied with the service they provide.

Making small but positive changes will only further solidify their relationship and should assist them in getting referrals.

A number of the current issues with the independent agency system are industry problems and require change in the way carriers and current technology

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.

function. Individual agencies should push for these changes whenever and wherever possible but it’s’ going to take the industry as a whole to make these changes.

In closing, I just have one thing I would like to address. There are a number of so called industry “experts” who are out beating the drum for significant change now. Many either don’t understand or choose to ignore the realities of the average independent agency in today’s marketplace. This is borne out by the things they say and write. I believe that many of them love to hear themselves speak and have a problem pulling away from the refection in the mirror every morning. They seem to work in clicks where they each promote the ideas and the services of the others in the group.

Here is my request to them. No more Chicken Little – the world isn’t coming to an end, we merely are experiCONTINUED ON PAGE 12

[ IN THE ASSOCIATIONS ]

Big I New York Honors Industry Role Models Awards presented at insurance producer organization’s annual meeting uInsurance producer organization Big I New York spotlighted excellent performances over the past twelve months by insurers, a local trade group, volunteers and associates during an annual awards ceremony held. Acting for the final time in his capacity as Big I New York chair of the board, Richard MacDonald, CPCU, ARM, AIM presented the awards at the association’s 2018 Annual Business Meeting, held at the Westin Buffalo.

The Independent Insurance Agents Association of Western New York was honored as the 2018 Local Association of the Year. The award goes to the local association that has shown outstanding effort and accomplishment in local association meetings, legislative advocacy and public relations to enhance independent agents.

The Outstanding Company Partner Awards were presented to those insurers scoring the highest in their responses to a self-evaluation survey. The results were reviewed by representatives from local agent associations in New York affiliated with Big I New York. Survey questions focused on the products and services the insurers provide in areas strategic to supporting the independent agency system. MacDonald presented awards to: • Merchants Insurance Group: 2018 Top Company Partner (more than $100 million written premium in New York) • Security Mutual Insurance Co.: 2018 Top Carrier Partner (less than $100 million written premium in New York - upstate) • UPC/Interboro Insurance: 2018 Top Carrier Partner (less than $100 million written premium in New York - downstate) 8 May 14, 2018 / INSURANCE ADVOCATE

Acting for the final time in his capacity as Big I New York chair of the board, Richard MacDonald, CPCU, ARM, AIM presented the awards at the association’s 2018 Annual Business Meeting, held at the Westin Buffalo.

Monica Skibickyj, AAI, AIS, ACSR, of Lawley-Andolina-Verdi in Rochester, New York, will receive the Accredited Customer Ser vice Representative (ACSR) of the Year Award in a ceremony at a future date. Skibickyj is an account manager at the agency.

Ashley Smit of Norton and Siegel, Inc. in Babylon was presented with the Young Agent of the Year Award for her involvement in her community, the industry, and in Big I New York›s Next Generation Insurance Professionals Committee.

Lawrence Pistell, ARM of St. John›s University School of Risk Management, Insurance and Actuarial Science received a Distinguished Service Award.

This award goes to an individual who has made a lasting and otstanding contribution to Big I New York. MacDonald praised Pistell for the great insights he provides at board of directors› meetings and for his persistent willingness to volunteer his services to the association.

Allison Just, governance and meeting coordinator for Big I New York, also received a Distinguished Service Award.

In presenting the award, MacDonald cited her incredible attention to detail, willingness to assume additional responsibilities, and general positive attitude.

Mark Garvelli of Walsh Duffield Companies, Inc. in Buffalo earned the 2018 Vincent Alba Award. This award recognizes an individual who makes an outstanding contribution to IIABNY›s political effectiveness. MacDonald cited Garvelli for his contributions to the success of the organization›s political action committee.

The Thom McDaniel Exemplar Award went to Rosanne Fallon, CPCU. The McDaniel Award recognizes an insurance company executive, manager or employee that demonstrates unwavering support of the independent agency system.

Mark Hagan, CPCU, ARM, retired from Perry & Carroll, Inc. in Elmira, received the 1882 Award, the association’s highest honor. This award recognizes an individual who has most significantly contributed to Big I New York, the insurance industry and his community. It was the first time the association had given the award since 2016. Hagan served as Big I New York chair of the board from 2005 to 2006.[IA]

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Insurance Issues For Child Day Care

By Sue C. Quimby, CPCU, AU, CIC, CPIW, DAE - Assistant Vice President/Media Editor

CHILDREN ARE OUR MOST IMPORTANT RESOURCE. They are also our most vulnerable citizens, needing and deserving the best care possible.

When parents work, quality, affordable child care is extremely important. Day care is a growing industry. Insuring day care centers requires knowledge of the risks as well as the legal and insurance requirements. Helping clients understand these risks and requirements is another value-added service of the professional insurance agent.

A survey by the US Census Bureau in 2011 noted that 61% of children under 5 years old needed childcare assistance.

Much of this is provided by relatives.

However, almost a third of children, or about 7 million, are cared for by non-family members, nursery, day care center, in-home care, or Head Start facility, including before and after school care. This includes nearly 5 million in organized preschools or daycare centers (https:// journalistsresource.org). The U.S. Bureau of Statistics projects day care centers will have the fastest employment growth in the next two years (www.forbes.com).

For the insurance industry, this strong and growing market offers opportunity.

To be licensed, the center is required to carry day care liability insurance. Professional liability would be necessary to cover staff in the event of a negligence suit.

This is in addition to standard property, general liability and workers’ compensation coverages. Commercial auto would be needed if company vehicles are used to transport children. Corporal punishment and abuse coverage would also be important to the facility. Finally, umbrella or excess liability coverage should always be recommended to address claims that could exceed the primary coverage limits.

For the insurance industry in states like New York and New Jersey, the active regulatory oversight helps keep losses to a minimum. Most states, including New York and New Jersey, require child care facilities be licensed. The states have their own guidelines which include rigorous inspection schedules.

10 May 14, 2018 / INSURANCE ADVOCATE

In New York and New Jersey responsibility for child care regulation is the purview of the Office of Children and Family Services and The Department of Children and Families, respectively. The states require at least annual inspections that look at many categories of care. New Jersey has over 221 individual points of inspection. Broad sections include Supervision, Staff to Child Ratios, Activities & Discipline, Building Maintenance, and very importantly, Health & Fire Safety. Minimum staff levels are very important and are addressed in the inspection and licensing of care centers (www.ocfs.ny.gov) (www.nj.gov/dcf).

Fire safety is critical, since children are the most vulnerable in the event of a fire emergency. Between 2005 and 2009, fire departments from the U.S. reported an average of 590 fires annually in day‐ care centers, having an annual average of 8 civilian fire injuries and $4.5 million in direct property damage. Most of the fires occurred between 6:00 a.m. and 3:00 p.m. and the primary cause involved cooking equipment (64%) (www.nfpa.org).

In an emergency, children’s reactions often reflect the actions and temperament of their teachers. If teachers are nervous and upset, the children will be too. The importance of regular fire and safety drills cannot be overstated, so that everyone will remain calm and focused and know what to do in the event of a true emergency.

In addition to fire safety, the staff must be well trained in many areas. A good rule of thumb is to have at least two staff members trained in CPR, with all staff attending at least 10 hours of continuing education a year in various categories. A sad fact of the current time is the necessity to have lockdown drills to prepare for active shooters. This would include having the fire or police helping to determine safe places to hide.

The importance of the inspection and licensing aspect is demonstrated in a 2004 study published in the NY Times on shaken baby syndrome. It found that infants are by far the most vulnerable children in care, and most often die from being shaken, usually by a caregiver stressed by constant crying. Reports covering 1989 to 2003 found 203 shaken-baby deaths in care in a private home and none in a child care center (www. nytimes.com/2005).

Day care centers are a vital and growing segment of the economy, providing a necessary service to working families.

Helping these clients understand their exposures to loss and ways to further protect children is another sign of the true insurance professional.

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[ IN THE ASSOCIATIONS ]

Atti Elected Big I New York Chair of the Board Top elected officer chosen at group’s Annual Business Meeting u Insurance producer trade organization Big I New York elected Louis Atti, CPCU, as its chair of the board for the 2018-19 term. Atti was sworn in during a ceremony following Big I New York’s Annual Business Meeting, held at The Westin Buffalo. Atti is vice-president of The Evans Agency, LLC, a wholly-owned subsidiary of Evans Bancorp with nine locations throughout Erie County, New York.

A member of the Big I New York board of directors since 2012, Atti has chaired the group’s audit and finance committees and served as chair of the board of IAAC, the group’s member services division. He is past president of the Independent Insurance Agents Association of Western New York. Atti is a former mayor and trustee of the Village of Angola and currently serves on the village’s Planning Commission. He has volunteered for local youth sports leagues, Habitat for Humanity and the Food Bank of Western New York. He and his wife Kathleen have two children.

In his remarks, Atti laid out Big I New York’s priorities for the coming year, including recruitment of new talent into the insurance industry; advocating for insurance agencies and brokerages with state lawmakers and regulators; assisting local agents’ associations; and helping agencies adapt to advances in technology.

John Cofini of BNC Insurance Agency in Rye Brook was elected to a one-year term as vice-chair and secretary-treasurer.

Big I New York members also elected and re-elected the following regional directors: • James Bastian of Advantage Partners, Inc. in Great Neck, to a two-year term representing the New York City metro-suburban areas

Louis Atti, CPCU

In his remarks, Atti laid out Big I New York’s priorities for the coming year, including recruitment of new talent into the insurance industry; advocating for insurance agencies and brokerages with state lawmakers and regulators; assisting local agents’ associations; and helping agencies adapt to advances in technology.

• Jessica Belleville Whitman of Belleville Associates in Tupper Lake, to a two-year term representing the state’s Capitol District and areas north • David Bodenstein of Mike Preis, Inc. in Callicoon, to a one-year term also representing the Capitol District north region • David MacLachlan, of Dominick Falcone Agency, Inc. and Falcone Associates, Inc. in Syracuse, to a two-year term representing the central and western areas of the state

• Maureen Tompkins of Rose & Kiernan, Inc. in East Greenbush, to a two-year term also representing the Capitol District north region • Michael Vanderwerker of Assured SKCG, Inc. in White Plains, to a two-year term also representing the New York City metro-suburban region Christopher Brassard, CIC of Ten Eyck Group in Albany won a two-year term as member representative on the Nominating Committee, which evaluates candidates for leadership positions and makes recommendations to the membership. Brassard is a past chair of the Big I New York board.

Earlier in the day, the board reelected Jeanne Salvatore of JMS Consulting to a two-year term as a director-at-large. [IA]

ON THE LEVEL CONTINUED ON PAGE 12

encing the effect of technology on the insurance business. Yes agents need to change to meet these challenges, but there are issues that limit how quickly it can happen.

Stop ignoring reality. Understand and appreciate the issues of the average agency and offer some realistic and viable solutions that will allow them to improve and better compete in the marketplace.

This is not a popularity contest. Save the acting for your personal YouTube posts. Make your messages simple and direct. It should be about providing solutions for change that can help improve the effectiveness of independent agents and the value they bring to protecting the public.

As an organization Big I New York exists because we believe that independent insurance agents serve customers best with trusted advice and the right coverage options to protect what matters most. Because of that we strive every day to assist our members in operating and growing their agencies efficiently and effectively. Anyone else who professes to care about independent agents and the independent agency system should do the same. [IA]

12 May 14, 2018 / INSURANCE ADVOCATE

IA_A

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[ GUEST OPINION ]

JANE M. ORIENT, M.D.

Mandates: the Other Side of the ‘Right to Healthcare’ uA “right to healthcare” is a seductive idea that many Americans accept without thinking. But we need to take a closer look at what this means. The total program being pushed by “rightto-healthcare” cheerleaders—primarily Democrats—is full of mandates. A mandate means you have NO right to opt out, except possibly through some limited exemptions. It starts with controlling the money, but increasingly involves your body—the treatments you MAY receive, the ones you may NOT have, and the ones that you MUST take, especially vaccines.

The old, if little-known news is that seniors have NO right to turn down Medicare Part A—unless they forgo all Social Security benefits and refund any they have already received. Seniors enrolled in Medicare have NO right to spend their own money on covered services, which may be unavailable or of poor quality at the Medicare-controlled price—unless they see an opted-out or nonenrolled physician.

Under the [Un]Affordable Care Act, Americans have NO right to opt out of costly “minimum essential benefits” and buy a low-cost catastrophic-only plan, derisively called “bare bones” or “junk” insurance—without paying a penalty.

(The penalty has thankfully been reduced to $0 under Trump’s tax reform, but the benefits mandate remains, so true insurance is still outlawed.) People and businesses have NO right to opt out of paying for other people’s lifestyle choices, such as abortion and contraceptives—with limited, hard-fought exceptions.

A patient enrolled in Medicaid has NO right to choose how to use his benefit. He generally cannot buy a private catastrophic-only plan plus a health savings account (HSA) or join a Direct Patient Care (DPC) practice, a new, non-insurance model in which patients pay a monthly membership fee.

Generally, Medicaid patients get stuck with a limited choice of physicians and may get auctioned off to the lowest-bidding managed-care plan. There 14 May 14, 2018 / INSURANCE ADVOCATE

are state waivers, but these are rare and hard-fought.

“Insured” patients—managed-care enrollees—have NO right to go out of network without paying a financial penalty that may be severe. They have NO right to access services in a competitive marketplace. Many independent physicians have been driven out of practice by Medicare, Medicaid, or health plans that limit payments to below cost, while richly rewarding hospital-owned entities with a generous facility fee. Free-standing centers may have been prevented by certificate-of-need laws, and physician-owned hospitals have been choked and new ones outlawed by ObamaCare. In California, under AB72, insured patients have NO right to pay a market price for an out-ofnetwork and otherwise unavailable service, because insurance plans will dictate allowable fees even for physicians with whom they have no contract.

In more recent news, legislation is being proposed in Congress (H.R. 365) to fix the situation that Americans now have NO right to use funds in their HSA to join a DPC practice and NO right to contribute to an HSA if they are a member of a DPC practice. And HSAs were supposed to be the patient’s own money!

(Look for Democrats to oppose this bill.)

It gets worse. It’s not just that patients have NO right to choose how to spend their money, but that they may have NO right to opt out of treatment. In New Jersey, a bill is being railroaded through the legislature to severely limit the religious exemption to the 74 shots children have to receive to be allowed to attend school. (So much for the “right” to a public education.) This was introduced by a Democrat just before Good Friday, Passover, and spring break.

Despite the short notice, parents, many with vaccine-injured children, showed up in droves to testify at a hearing. Only 64 were allowed to speak, for exactly 60 seconds each.

Parents have NO right to make health decisions, such as to forgo certain vaccines and self-isolate if there is an outbreak, as of currently rare measles.

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

They have NO right to practice their religion—and the state even defines what constitutes a genuine faith. They have NO right even to be heard.

It makes sense: if you have a “right” to healthcare, and the government is empowered to define it and obligated to provide it, you are part of the herd on the government ranch. It’s the population health that is important, not yours or your child’s.

And don’t believe that these “compassionate” or public-health-conscious politicians aren’t being driven by money.

Physicians may be tightly scrutinized lest they charge $5 too much or accept a sandwich or a notepad from a drug company. But how big a bonus do they get from insurance plans for nearly perfect vaccine compliance? How much of Medicare and Medicaid funding and insurance subsidies is enriching managed-care executives and big hospital systems while providing minimal care?

Americans need to look behind the “rights” rhetoric, see the chains, and follow the money.[IA]

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CMSV’s Top Award to A Today, Applied Underwriters remains the only US Workers’ Compensation insurer—ever—to hold an A+ rating for performance, security and stability…and the capacity to provide real care.

16 May 14, 2018 / INSURANCE ADVOCATE

The College of Mount Saint Vincent continued its tradition of honoring leading financial services executives as the 171 year old Bronx, NY based College presented its top award to Steve Menzies, President and Founder of Applied Underwriters, Inc.. Also honored was New York Super Broker Dolly Lenz, CEO and Founder of Dolly Lenz Real Estate LLC. The two were feted at CMSV’s annual Scholarship Tribute Dinner, Monday, April 23rd at Cipriani, 25 Broadway in New York. The annual event drew 400 guests and resulted in the raising of $500K for the College’s many scholarships and academic programs.

Steve Menzies is a recognized national insurance and philanthropic leader who founded Applied Underwriters in 1994 and serves as the company’s president. Mr. Menzies began the startup company to focus on providing several value driven options for workers’ compensation insuring and is responsible for better than $2B in revenues, insuring thousands of businesses across the country. After years of rapid growth, Applied Underwriters opened an operations center in Omaha, Nebraska, which further established the company as a leader in the insurance business. In 2006, the privately held company partnered with Warren Buffett’s Berkshire Hathaway Inc., and sustains that relationship to this date.

“Through care for injured workers and through high standards of service, Mr. Menzies has led Applied Underwriters to offer customers a unique and successful blend of financial and business benefits for over three decades. His extensive business experience allows Applied Underwriters to continue to offer the highest quality insurance services, including workers’

tudent Owen Smith ‘18

Dolly Lenz, New York RE Legend and co-honoree

Charles L. Flynn, Jr., President of the College

o Applied’s Steve Menzies compensation claims, flexible risk financing, and efficient payroll processing services to a national clientele, “according the President of the College, Dr. Charles Flynn, adding: “For these achievements and for his active philanthropy, we selected Steve for our top accord.”

Mr. Menzies, who is Vice Chairman of the San Francisco Opera, has bolstered its worldwide leadership status in the cultural world and has led several arts and cultural initiatives across the country. In commending Mr. Menzies for the award, Steve Acunto, Publisher of the Insurance Advocate and a Trustee of the College spoke of Menzies’ accomplishments: “Since the great age of America’s business Titans in the 1800’s, there has developed a steady commerce between great acumen in the corporate world and dedicated philanthropy. To that tradition, we may add the name Steve Menzies, a leader who has added a distinctly new, intellectually creative edge to his businesses here in the US, in China, and South America and, who, conversely, has brought an experienced CEO’s perspective to the arts and educational institutions he leads. Steve has been called “a bold intellectual in the CEO’s chair”, “one of the most generous and giving people in the Corporate world” and simply, “The wizard” by Bloomberg. He is a serial entrepreneur whose achievements include the creation of Applied

Gala Co-chair Steve Acunto, Publisher of the Insurance Advocate®, with honoree Steve Menzies, President and Founder of Applied Underwriters, Inc.

INSURANCE ADVOCATE / May 14, 2018 17

Gala Co-chair and College Trustee Pamela Newman, Chair of Aon’s Newman Group, Presents Award to Dolly Lenz, New York RE Legend

…Steve Menzies has created a success formula that includes compassion for the injured worker, devotion to the delivery of meaningful help to those who suffer, passion for the future of the arts and dedication to the quality of life – all, as an ideal example of responsible corporate leadership and a devoted cultural and social citizenship.

18 May 14, 2018 / INSURANCE ADVOCATE

Underwriters 24 years ago, providing a unique insuring format for Workers’ Compensation that favors the safety and well-being of millions of US businesses’ employees. Today, Applied Underwriters remains the only US Workers’ Compensation insurer—ever—to hold an A+ rating for performance, security and stability…and the capacity to provide real care. As a CEO, Steve has been all about setting and advancing standards in the workplace and for giving business owners and operators a financial “dividend” —a real incentive—for their observance of best practices. While growing Applied, Steve’s cornerstone support of cultural institutions has made a substantial, concrete difference in the future of the arts. Through his stewardship- as Chairman of its Capital Fund and Vice Chairman of the Board, the San Francisco Opera has grown to be one of the world’s leading cultural institutions, plain and simple, with an $85MM year budget and the attraction of the world’s leading performers. At the same time, looking ahead to the future of the art form itself, Steve has taken under his wing Opera Parallel, the avant garde opera company that is captivating younger, enthusiastic audiences. Fellow native New Yorker, Steve Menzies has created a success formula that includes compassion for the injured worker, devotion to the delivery of meaningful help to those who suffer, passion for the future of the arts and dedication to the quality of life – all, as an ideal example of responsible corporate leadership and a devoted cultural and social citizenship. It is thus my great honor to commend Steve Menzies to the favorable attention of the College of Mount St. Vincent.…and to our guests’ applause.”

In accepting the award, Mr. Menzies observed that the College selected a Broadway location for its Gala:.

“I was raised in New York and, although I live in San Francisco, hearing “Broadway” brought back for a moment that great New York State of Mind. From the Financial District, up to Herald Square, Times Square, the Theater District, up further to Lincoln Center— the Metropolitan Opera— and up to my alma mater, Columbia, on 116th Street, and then all the way up to the northern tip of the Bronx in Riverdale, home to Mount Saint Vincent —it feels great to be on Broadway…..and on a stage and in a starring role!”

Mr. Menzies praised the Sisters of Charity who founded the College, calling it an extraordinary place with an abiding mission and a long history of providing transformative educational experiences for students from New York, neighboring states and from several countries around the world.” The mission of the College and the mission of Applied Underwriters, share some commonalities: each serves a higher societal purpose through our endeavors, each centers its mission on care, each betters those we

touch and each stands on the firm ground of high standards and principled action. Applied was born some years back as I worked upon a rethinking of the role of insurance in caring for injured workers.

I believed that, with a higher purpose in mind, a fresh, newly styled insurance company would be able to develop a new way for risk to be transferred so that businesses could confidently and better than adequately compensate injured workers and care for them responsibly. Today, we have realized that goal and we are proud to give economic benefit to our clients’ businesses all across America who share that goal: giving injured workers the respect and fair compensation they deserve. Insisting, as the College does, upon meaningfully high standards of performance and upon an unremitting focus upon the social importance of our mission, we join in a success formula. Like the College, we sustain a commitment to excellence beyond the letter of our contracts and beyond our basic obligations.”

Mr. Menzies recounted an experience as a leader that paralleled the experience of the College’s leaders: “One of our Company’s great gains came about through personal involvement, just as with the College. Dr. Flynn and I have shared our experiences that go beyond the usual. An example: ten years before the opioid crisis was written or spoken about, we thought we’d discovered a trend by examining our patient records, so I went out to Omaha and visited our in house pharmacy only to find that we had plenty of white coats working hard for sure, but in a rather sparse pharmacy that had basically two things: a supply of antibiotics and a huge barrel sized inventory of Oxycontin.

Today we operate an MD managed pharmacy that actually helps patients and gets them into the productive side of the social and workforce equation.

The College does that kind of service every day as a result of personal involvement and has been cited for its amazing results in advancing its graduates to higher socio-economic levels. These are not accidents; it takes personal commitment at every level.”

He concluded by addressing graduating students: “May I conclude by addressing the students here tonight, many of whom will be graduated in a few weeks. It was only when I saw the potential for a sound societal outcome in my work, that I was truly inspired to look past the paycheck and the routine.

It allowed me to come up with an idea that changed workers’ compensation insurance and that served real people in real ways, giving that much more meaning to our work, as well as the work of my company.

Please don’t ever lose sight of that. This College has great aspirations and hopes for all of you. Your education here has prepared you well for your future. Do always remember to look to the examples of the College, your devoted faculty, and the Sisters of Charity for your inspiration in promoting the common good … and please do seek to be associated with companies and institutions that have a good “soul.”

CMSV Trustee: John F. Caruso ‘82 and Elizabeth Caruso

CMSV Team Members: Kristin Yanniello ‘13, Associate Director for Alumnae/i Relations and Giving and Leah Munch ‘12, Director for Public Relations

Among many insurance leaders participating, Richard White, CEO of ShelterPoint Life Insurance Company with his wife, Paula

INSURANCE ADVOCATE / May 14, 2018 19

Greeting guests: Susan L. Whitney ‘72, Chair of the Board of Trustees, Mary Courtney ‘72, and guest

CMSV Alumnae and Trustees: Gail Vance Civille ’65 and Joan M. Squires ’73

Dinner supporters: With Gala Chairman, Steve Acunto (C), Insurance Counsel Shand Stephens of DLA Piper and Carl deBarbrie, leading New York broker with REMC

20 May 14, 2018 / INSURANCE ADVOCATE

Dolly Lenz, long considered one of the highest-producing residential brokers in New York, has managed the sales and marketing efforts of many of New York’s most illustrious properties. Known as the “Queen of Real Estate,” Ms. Lenz has sold an unprecedented $10 billion in property, including her record-setting sales of a $57 million triplex penthouse and the New York Foundling’s $45 million West Village Mansion.

Named one of the top women in real estate by Fortune magazine, she worked at various agencies before establishing her own ultra-luxury sales and marketing firm in 2013, including Sotheby’s International Realty and the former Prudential Douglas Elliman, where she served as vice chairman.

Ms. Lenz majored in accounting at Baruch College and received a master’s degree in managerial auditing/accounting from The New School. She serves on various charitable boards including the NYC Police Athletic League and The Chopra Foundation. She is also a member of the U.S. Trust-Bank of America Business Advisory Board and Lincoln Center’s Women’s Leadership Council.

Scholarship Tribute Dinner honorees are recognized for their personal, professional, and civic achievements that uphold the College’s mission—to foster an understanding of our common humanity, a commitment to human dignity, and a full appreciation of our obligations to each other, according to Dr. Charles Flynn, President of CMSV. Founded in 1847 by the Sisters of Charity, the College of Mount Saint Vincent offers nationally recognized liberal arts education and a select array of professional fields of study on a landmark campus overlooking the Hudson River. Committed to the education of the whole person, and enriched by the unparalleled cultural, educational, and career opportunities of New York City, the College equips students with the knowledge, skills, and experiences necessary for lives of professional accomplishment, service, and leadership in the 21st century.

Past honorees include insurance professionals and leaders such as: Pamela Newman (AON), Arcadio Casillas (Preferred Compensation), Donald T. DeCarlo (AmCOMP), David Walsh (Amalgamated Life Insurance Company), Bill Fishlinger (Wright Risk), Raul Rivera (NBL), and many others.

Deborah Hamilton (L) and Carole Haarman Acunto

Past honoree and chairman of Mutual of America, Thomas J. Moran (far right) with his guests

Mount Saint Vincent students celebrate at the annual fundraising gala. Many particpated in the Gala’s success

James Wrynn, former Superintendent of the New York State Insurance Department with Michael Piccione

Professor of English Robert Jacklosky with his wife, Elizabeth Dwyer

Richard and Paula White with Applied’s General Counsel Jeff Silver who traveled in from Omaha INSURANCE ADVOCATE / May 14, 2018 21

[ COURTSIDE ]

LAWRENCE RO GAK

Court of Appeals Rules That PIP Statute of Limitations is Three Years for All Self Insurers Contact Chiropractic, P.C. v New York City Tr. Auth.

Edited by Lawrence N. Rogak Resolving a long-standing split between the First and Second Departments, the Court of Appeals holds that the statute of limitations on a No-Fault claim against a self-insured entity is three years from the date of loss. This decision is a boon to such self-insurers as the New York City Transit Authority and some of the major auto rental companies.—LNR This appeal presents the question whether the three-year statute of limitations set forth in CPLR 214 (2) applies to no-fault claims against a self-insurer.

We conclude that it does.

BACKGROUND AND MOTION PRACTICE

In January 2001, Girtha Butler sustained personal injuries in a motor vehicle accident involving a bus on which she was a passenger. The bus was owned by defendant, New York City Transit Authority. It did not have no-fault coverage and instead was self-insured with respect to that risk. Plaintiff, Contact Chiropractic, P.C., subsequently provided health services to Butler for the personal injuries she sustained in the accident. Butler assigned to plaintiff her right to recover first-party benefits from the self-insured defendant. To that end, plaintiff submitted its claims, bills, and no-fault verification forms to defendant between March 14, 2001 and August 27, 2001.

On January 8, 2007, plaintiff commenced this action seeking, among other things, reimbursement for allegedly outstanding invoices. After joining issue, defendant moved for an order to, among other things, dismiss the complaint “based on plaintiff ’s failure to commence the action within the three22 May 14, 2018 / INSURANCE ADVOCATE

year statute of limitations.” Defendant contended that the three-year statute of limitations under CPLR 214 (2), which applies to actions to recover upon a liability created or imposed by statute, governs this case because defendant was self-insured at the time of the subject accident and therefore had no contract for insurance with respect to that loss, as opposed to CPLR 213 (2), which establishes a six-year period of limitations for an action based upon a contractual obligation or liability. Defendant relied upon authority of the Appellate Division, First Department, providing that a self-insured’s “obligation to provide nofault benefits arises out of the no-fault statute,” and that “the three-year statute of limitations as set forth in CPLR 214 (2)” applies to disputes with respect to the payment of such benefits by a self-insured (M.N. Dental Diagnostics, P.C. v New York City Tr. Auth., 82 AD3d 409, 410 [1st Dept 2011]).

In opposition to the motion, plaintiff maintained that the six-year statute of limitations controls this case. For its part, plaintiff relied upon authority of the Appellate Division, Second Department, providing that an injured person’s “claim for uninsured motorist benefits against a self-insured vehicle owner, while statutorily mandated, remains contractual rather than statutory in nature and, as such, is subject to the six-year statute of limitations” (Matter of ELRAC, Inc. v Suero, 38 AD3d 544, 545 [2d Dept 2007], lv denied 9 NY3d 811.

Civil Court denied the motion, holding that a six-year statute of limitations applies to no-fault benefit claims against both insurers and self-insurers. The court reasoned that “neither self-insured nor governmental status supports a shortened statute of limitations”; in

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.

support of that point, the Court noted that the Second Department has applied a six-year statute of limitations to no-fault claims, regardless of whether the prospective payor has an insurance policy or is self-insured.

Defendant subsequently moved for leave to renew the motion, and the court granted renewal but adhered to the prior determination. In this order, the court acknowledged the “split of authority” in the Appellate Division with respect to this statute of limitations question, and deemed controlling the Second Department case law applying a six-year statute of limitations in cases such as this one on the ground that “nofault matters . . . are arguably contractual in nature, even when dealing with a self-insured entity such as defendant.”

THE APPEALS IN THE LOWER COURTS

On appeal, the Appellate Term affirmed the order determining the motion to renew and applying the six-year statute of limitations to this matter (42 Misc 3d 60 [App Term, 2d Dept, 2d, 11th, and 13th Jud Dists 2013]), reaCONTINUED ON PAGE 28

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[ ON MY RADAR ]

BARRY Z ALMA

Sham Affidavit Fails to Defeat Summary Judgment Insured May Not Lie to Avoid Summary Judgment uNo one likes to have an insurance claim denied even if the insurer has a good reason for denying the claim.

In litigation, as in every aspect of insurance, both parties to the insurance contract owe an obligation to deal fairly and in good faith with each other and do nothing to deprive the other of the rights available under the policy.

FACTS

In Joseph Jugan; Robin Jugan v.

Economy Premier Assurance Company, No. 17-2410, United States Court of Appeals For The Third Circuit (March 22, 2018) the insureds, Joseph and Robin Jugan own a home in Fleetwood, Pennsylvania, which they insured under a homeowners insurance policy (the “Policy”) issued by MetLife. Their homeowners policy excluded from any coverage losses or damage resulting directly or indirectly from “freezing of a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or of a domestic appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing.” That “Absolute Freezing Exclusion” stated that it did “not apply if you have used reasonable care to maintain heat in the building or if you shut off the water supply and drained the plumbing and appliance of water.”

Sometime between February 1, 2015, and March 13, 2015, while the Jugans were away, water leaked from their dishwasher, causing damage to their home and its contents. MetLife hired an expert, a certified engineer, to investigate the loss. He did so and issued a report stating that the water damage was due to a frozen dishwasher solenoid valve that fractured due to freezing in the water supply line to the dishwasher. He further concluded that the water froze because of insufficient heat within the home, which he “attributed to the ther24 May 14, 2018 / INSURANCE ADVOCATE

That “Absolute Freezing Exclusion” stated that it did “not apply if you have used reasonable care to maintain heat in the building or if you shut off the water supply and drained the plumbing and appliance of water.” mostat for the hot water baseboard heat [having been] set too low[.]”

Since 2009, the Jugans had frequently left the home empty, sometimes for weeks at a time.

Mr. Jugan suffers from a brain tumor that requires him to take prescription narcotics. The tumor and the medications have led to forgetfulness, including a failure to recall events. He did not remember adjusting the digital thermostat on the main floor, and he could not definitively state whether the thermostat was set at 62°F before he left.

He also did not remember adjusting the analog thermostat in the basement, and he could not remember the temperature it was set at when he left that day. But Mr. Jugan testified that he kept a thermometer on an interior wall of the basement, and that it generally read 54°F year round.

The Jugans sued MetLife for breaching the Policy after MetLife denied coverage. MetLife moved for summary judgment on that claim. When it did so, Mr. Jugan filed an affidavit containing averments that he said raised genuine issues of material fact barring summary judgment. The District Court applied the sham affidavit doctrine, striking certain averments that contradicted Mr. Jugan’s earlier testimony without suffi-

Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.

He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www. nationalunderwriter.com/ZalmaLi brary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide.

The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/ Store/ProductDetails.aspx?produc tId=214624, or 800-285-2221 which is presently available.

Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

[ ON MY RADAR ] cient explanation, while crediting other averments that did not contradict other evidence in the record.

The District Court granted summary judgment in favor of MetLife with respect to the Jugans’ claim under Coverage A of the Policy, after deciding that no reasonable jury could find that the Jugans had used reasonable care to maintain heat in their home. The Jugans timely appealed.

DISCUSSION

Pennsylvania law provides that “[t]he interpretation of an insurance policy is a question of law.” Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins., 908 A.2d 888, 897 (Pa. 2006). The primary goal in interpreting a policy is to determine the parties’ intentions as manifested by the policy’s terms.

Pennsylvania law places the initial burden of establishing the existence of insurance coverage on the insured.

After the insured has met that burden, the burden shifts to the insurer to prove the applicability of an exclusion in the insurance policy. If the insurer demonstrates that an exclusion applies, the burden shifts back to the insured to prove an exception to the exclusion, such that the damages claimed are covered notwithstanding the exclusion.

It is undisputed that the Jugans met their burden of establishing that the loss they suffered falls within the Policy’s affirmative grant of coverage – specifically, Coverage A. Furthermore, the District Court’s conclusion was also correct that MetLife met its burden of proving the applicability of the Policy’s Absolute Freezing Exclusion. The Jugans did not provide any evidence to rebut that expert’s determination that the water leakage was due to freezing.

The Jugans pointed to no evidence showing that they used reasonable care to maintain heat in their home. They argue that, because Mr. Jugan testified that he only asked his neighbors to check on the home if he thought he had forgotten to do something, the District Court erred by relying on Mr. Jugan’s testimony that his neighbors had access to the home, had previously been asked to check on the home at other times, and were never asked to check on the home before the loss that occurred here. But

A reasonable homeowner would have wanted to check to make sure that the radiators worked before he went away in the winter… establishing a reason for failing to ask a neighbor to check on the home is not in itself evidence of reasonable care.

A reasonable homeowner would have wanted to check to make sure that the radiators worked before he went away in the winter, even if that homeowner, like Mr. Jugan, had never experienced any problems in past. It does not matter that the Jugans had a thermometer in the basement generally observed over two decades to stay at 54°F and that the basement heat was almost always set at its low setting of 40°F, because other evidence suggests Mr. Jugan never tested the basement radiators after they were shut off for repairs the previous summer. That was a material change that rendered reliance on past experience unreasonable. In fact, Mr. Jugan testified that there was no way to know whether the radiators worked at all while he was absent from the home in early 2015.

The Third Circuit concluded that the District Court did not misapply the sham affidavit doctrine when it struck several averments from Mr. Jugan’s affidavit. The sham affidavit doctrine provides that “[w]hen a nonmovant’s affidavit contradicts earlier deposition testimony without a satisfactory or plausible explanation, a district court may disregard it at summary judgment in deciding if a genuine, material factual dispute exists.” Daubert v. NRA Grp., LLC, 861 F.3d 382, 391 (3d Cir. 2017).

Averments that are “entirely unsupported by the record and directly contrary to … testimony,” or that are “offered ‘solely’ to defeat summary judgment,” may properly be disregarded.

Mr. Jugan’s earlier deposition testimony that he could not say whether the main level thermostat was set to 62°F and that he does not remember the temperature at which the basement thermostat was set at the time of the loss. The Jugans were not free to defeat summary judgment by making last-ditch averments di-

rectly contrary to the established record.

The District Court properly decided the question of reasonable care at summary judgment because there was insufficient evidence upon which a reasonable jury could find that the Jugans exercised reasonable care to maintain heat in their home, given the unrebutted expert testimony and Mr. Jugan’s admissions during discovery.

ZALMA OPINION

It is not nice to lie to a judge.

In many ways it can be criminal conduct. When an affidavit is submitted in opposition to a motion for summary judgment that is directly contradictory to earlier testimony at deposition without a reasonable excuse for the changed or different testimony, the court must ignore it and, in my opinion, punish the person for the false testimony. In this case the case was dismissed as an appropriate punishment.[IA]

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[ COURTSIDE ] CONTINUED FROM PAGE 22

soning “that the intent of the legislature was not to impose a lesser duty on a public carrier which posts a bond than the duty imposed upon an owner who purchases insurance.” On further appeal, the Appellate Division affirmed the Appellate Term’s order, concluding that the Appellate Term had Hide message history “correctly determined that an action by an injured claimant, or his or her assignee, to recover first-party no-fault benefits from a defendant who is self-insured, is subject to a six-year statute of limitations, since the claim is essentially contractual, as opposed to statutory, in nature.”

ANALYSIS

This case arises from the no-fault law, which “is aimed at ensuring prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists.’” We previously have recognized the complex “nature of the statutory and regulatory scheme of the No-Fault Law”, characterizing it as a “Rube-Goldberg” like maze. This matter is another illustration of the intricacy of that law.

Our review begins with Vehicle and Traffic Law § 312 (1) (a), which provides, in pertinent part, that “no motor vehicle shall be registered in this state unless the application for such registration is accompanied by proof of financial security which shall be evidenced by proof of insurance or evidence of a financial security bond, a financial security deposit or qualification as a self-insurer under [Vehicle and Traffic Law § 316].”

Inasmuch as the registrant of a motor vehicle may prove “financial security” through, among other things, evidence of a “financial security bond” (Vehicle and Traffic Law § 312), it follows that registration of a motor vehicle in this state is not contingent upon proof of insurance. To the extent a registrant elects to forego insurance, the alternative form of financial security chosen (be it self-insurance under Vehicle and Traffic Law § 316 or the financial security bond referenced in § 312) must satisfy Insurance Law § 5103, which 28 May 14, 2018 / INSURANCE ADVOCATE

generally requires the payment of nofault benefits (minimum amounts of which are specified in 11 NYCRR 651.1) and which applies its provisions to any contract for insurance that does not meet the demands of that article (Insurance Law § 5103 [h].

In matters involving questions with respect to no-fault claims against insurance companies liable for no-fault benefits due to the issuance of an insurance policy, the Appellate Division has applied a six-year statute of limitations.

This dispute, however, arises from an instance in which the party responsible for the payment of no-fault benefits is self-insured and, as noted, the law is unsettled regarding what statute of limitations applies to no-fault benefit claims involving such entities.

We conclude that the three-year statute of limitations as set forth in CPLR 214 (2), which governs disputes with respect to penalties created by statute, should control this case. There is no dispute “that it is the gravamen or essence of the cause of action that determines the applicable Statute of Limitations,” or that a three-year limitations period applies to “an action to recover upon a liability. . . created or imposed by statute” (CPLR 214 [2]; cf. CPLR 213 [2] [imposing a six-year statute of limitations upon actions involving contractual obligations and liabilities]).

Moreover, although the three-year period of limitation in «CPLR 214 (2) does not automatically apply to all causes of action in which a statutory remedy is sought,» that condition does attach to instances in which liability would not exist but for a statute.

The no-fault benefits in dispute are not provided by a contract with a private insurer. Instead defendant has met its statutory obligation by self-insuring.

No-fault is a creature of statute. Our holding in Aetna Life Ins. Co. is directly applicable here. As we stated in that case, «first-party benefits are a form of compensation unknown at common law, resting on predicates independent of the fault or negligence of the injured party.» In the absence of private law requiring defendant to pay first-party benefits (that is, in the absence of a contract for insurance), the only requirement that defendant provide such

remuneration to the assignee as a result of the accident appears in relevant parts of the Vehicle and Traffic Law and the Insurance Law. Consequently, the source of this claim is wholly statutory, meaning that the three-year period of limitations in CPLR 214 (2) should control this case.

Finally, we note that our holding here does not reduce the no-fault liability or obligations of self-insurers, or curtail the substantive no-fault rights of injured parties or their assignees as against such self-insurers. Statutes of limitations are considered procedural because they are deemed as pertaining to the remedy rather than the right. Therefore, applying the three-year statute of limitations set forth in CPLR 214 (2) does not alter the substantive protections afforded under the no-fault law to those with a claim against a self-insurer.

Accordingly, the Appellate Division order should be reversed, with costs, that branch of defendant’s motion which was to dismiss the complaint as timebarred granted, and the certified question answered in the negative.

STEIN , J. (concurring): I concur in the majority’s analysis and conclusion. However, I write separately to point out that, on this appeal, we do not resolve the question of whether insurance companies who issue contractual insurance policies covering no-fault claims are subject to a three- or six-year statute of limitations, as that question is not before us.

GARCIA , J. (dissenting): I would hold that an action to recover no-fault benefits — whether from insurers or self-insurers — is subject to the six-year statute of limitations. As the majority acknowledges, the lower courts have, for decades, held that a no-fault claim against an insurance company is subject to the six-year limitation (majority op at 6 [collecting cases]). And this Court has cited to the “applicable six-year Statute of Limitations” for such claims (Gurnee v Aetna Life & Cas. Co., 55 NY2d 184, 193 [1982]). Despite accepting that premise, the majority holds that the same claim against a self-insurer — on the same theory of liability — is subject to the three-year statute of lim-

[ COURTSIDE ] itations. By electing to be self-insured, defendant stands in the same position as any other insurer under the No-Fault Law. A different statute of limitations for self-insurers, essentially providing a shorter limitations period for those who demonstrate “financial security,” is an unfortunate result and one not required by our precedent. Accordingly, I dissent.

I.

As the name suggests, New York’s “C omprehensive Motor Vehicle Insurance Reparations Act,” commonly referred to as the “No-Fault Law” (see Insurance Law § 5101 et seq.) requires that “every owner of a motor vehicle provide him [or her] self, members of the owner’s household, operators, occupants and pedestrians with compensation for basic economic loss’ resulting from injuries occasioned by the use of that vehicle in this State, regardless of fault” (Montgomery v Daniels, 38 NY2d 41, 46 [1975]). “The legislation foreclosed recovery for pain and suffering by persons who had suffered relatively minor injuries in automobile accidents, but balanced this by providing a way to obtain prompt and full recovery for basic economic loss” (Gurnee, 55 NY2d at 193). The No-Fault Law imposes equal liability for the payment of no-fault benefits on insurers and self-insurers alike (see Insurance Law § 5103 [a] [1]; Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224 [1986]).

Reimbursement payments for basic economic loss, known as “first-party benefits” (Insurance Law § 5102 [b]), must be made “as the loss is incurred” and benefits become “overdue if not paid within 30 days after the claimant supplies proof of the fact and amount of loss sustained” (id. § 5106 [a]). Accordingly, the accrual date for a cause of action against an insurer or self-insurer based on its failure to pay first-party benefits is the date when the payments became overdue (see Motor Vehicle Acc. Indemn. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 222 [1996]).

The No-Fault Law does not provide a statute of limitations for actions to recover first-party benefits from insurers or self-insurers. Accordingly, in determining the appropriate limitations period, “it is necessary to examine the

substance of that action to identify the relationship out of which the claim arises and the relief sought” (Hartnett v New York City Tr. Auth., 86 NY2d 438, 443444 [1995], quoting Solnick v Whalen, 49 NY2d 224, 229 [1980]). The touchstone is “the gravamen or essence of the cause of action” rather than the form in which it is pleaded (Western Elec. Co. v Brenner, 41 NY2d 291, 293 [1977]).

A claim in contract is subject to the six-year statute of limitations in CPLR 213 (2), which “includes a cause of action for indemnification, whether the obligation to indemnify arises expressly or by operation of law” (David D. Siegel, New York Practice § 35, at 46 [5th ed 2011]). By contrast, the three-year statute of limitations applies to “an action to recover upon a liability, penalty or forfeiture created or imposed by statute except as provided in sections 213 and 215” (CPLR 214 [2]). The three-year limitations period “does not automatically apply to all causes of action in which a statutory remedy is sought, but only where liability would not exist but for a statute’” (Gaidon v Guardian Life Ins. Co. of Am., 96 NY2d 201, 208 [2001], quoting Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 174 [1986]).

The majority’s application of the three-year statute of limitations in CPLR 214 (2) forecloses any recovery here, despite the fact that defendant made no payments or adjustments whatsoever with respect to the claims, bills, and no-fault verification forms submitted by plaintiff. I would apply the six-year statute of limitations in CPLR 213 (2) and hold that plaintiff ’s action was timely.

II.

As the majority notes, it is well settled that an action to recover first-party benefits from an insurance company is premised on the terms of the insurance contract and so subject to CPLR 213 (2)’s six-year statute of limitations (see majority op at 6). The First, Second, and Third Departments have long held that a no-fault claim asserted by an insured against an insurer is contractual in nature and therefore subject to the six-year statute of limitations (see Mandarino v Travelers Prop. Cas. Ins. Co., 37 AD3d 775, 776 [2d Dept 2007] [holding “that a no-fault claimant’s right

(or that of his or her assignee) to recover first-party benefits derives primarily from the terms of the relevant contract of insurance”]; Benson v Boston Old Colony Ins. Co., 134 AD2d 214, 215 [1st Dept 1987]; Micha v Merchants Mut. Ins. Co., 94 AD2d 835, 836 [3d Dept 1983]).

This Court has also recognized that the six-year limitation applies to claims seeking withheld or overdue first-party benefits (Gurnee, 55 NY2d at 193)[FN4].

In an analogous context, we applied the six-year statute of limitations to an uninsured motorist claim against the Motor Vehicle Accident Indemnification Corporation (MVAIC) under the relevant insurance policy (see Matter of De Luca, 17 NY2d 76, 79 [1966]).

There is no dispute that a no-fault action against an insurer is subject to the six-year statute of limitations governing contractual obligations.

III.

The issue then is whether a self-insurer should have a different limitations period than an insured who pays a premium for coverage. Considerations of public policy and fundamental fairness militate against that outcome. Those considerations should control given that application of a uniform six-year limitations period finds support in our case law.

A.

Contrary to the majority’s assertion, the absence of a contract does not necessarily mean that an action against a self-insurer is fundamentally statutory in nature. The term “insurer” is defined in the No-Fault Law as “the insurance company or the self-insurer, as the case may be” (Insurance Law § 5102 [g]).

Although technically a self-insurer, defendant is nonetheless considered the functional equivalent of an “insurer” for the purposes of administering nofault coverage. Indeed, self-insurance is different from insurance only insofar as “the self-insurer has assumed the risk of personally satisfying any tort judgments against it” (ELRAC, Inc. v Ward, 96 NY2d 58, 74 [2001]). But, in this context, the obligation to provide no-fault benefits is functionally the same for insurers and self-insurers. We therefore «attach no CONTINUED ON PAGE 30 INSURANCE ADVOCATE / May 14, 2018 29

[ COURTSIDE ] CONTINUED FROM PAGE 29

legal significance to whether the [defendant] is self-insured or carries insurance coverage (Ryder Truck Lines, Inc. v Maiorano, 44 NY2d 364, 372 [1978]).

As a corporation carrying passengers for hire, defendant “may choose one method or the other to make economic provision to assure discharge of its financial obligations. Its liability, however, is unaffected by the implementing mechanism it selects” (id.).

The lack of a meaningful difference between insurers and self-insurers is confirmed by settled precedent. In Allstate Ins. Co. v Shaw (52 NY2d 818 [1980]), this Court resolved the question whether self-insured entities were required to provide uninsured motorist benefits. We answered that question in the affirmative, holding that self-insurers had to provide the same minimum coverage as insured entities with insurance policies. We then extended the rationale in Shaw to hold that Workers› Compensation Law § 11 does not bar an employee from recovering uninsured motorist benefits from his self-insured employer in connection with an accident that occurred while the employee was driving the employer›s vehicle (see Matter of Elrac, Inc. v Exum, 18 NY3d 325, 327-328 [2011]). In so holding, we noted that “[a]n action against a self-insurer to enforce the liability recognized in Shaw is, in our view, essentially contractual. The situation is as though the employer had written an insurance policy to itself, including the statutorily-required provisions” (id. at 328 [emphasis added]).

By electing to be self-insured, defendant assumes the obligation to provide nofault and uninsured motorist coverage and “[w]ith that, [defendant] undertook all the duties and responsibilities of an insurer” (Ward, 96 NY2d at 77). Defendant, in other words, is in the same position as any other insurer for the purposes of providing coverage. The instrumentality of nofault coverage — whether a certificate of self-insurance or a policy of insurance — is immaterial to the obligation to indemnify. Plaintiff ’s claim against a self-insurer is therefore properly viewed as a breach of contract governed by the six-year statute of limitations.

Citing our decision in Aetna Life Ins. Co. v Nelson (67 NY2d 169 [1986]), the majority nonetheless posits that 30 May 14, 2018 / INSURANCE ADVOCATE

no-fault coverage is a creature of statute. In Nelson, we observed that the “no-fault concept . . . modifies the common-law system of reparation for personal injuries under tort law . . . and that first-party benefits are a form of compensation unknown at common law, resting on predicates independent of the fault or negligence of the injured party (id. at 175 [citation omitted]). In short, «the No-Fault Law does not codify common-law principles; it creates new and independent statutory rights and obligations in order to provide a more efficient means for adjusting financial responsibilities arising out of automobile accidents.» We therefore applied CPLR 214 (2)›s three-year statute of limitations to an insurance company›s action to enforce a statutory lien, pursuant to a specific provision of the No-Fault Law, on a judgment awarded to a plaintiff who had already been paid first-party benefits (see Nelson, 67 NY2d at 174175; Insurance Law § 5104 [b]). That third-party claim, which did not exist at common law, “could not be properly viewed as arising out of any contract” (Mandarino, 37 AD3d at 777). The present case, involving a direct claim for indemnification by an injured party or the party’s assignee, is readily distinguishable. That self-insurers may avoid purchasing an insurance policy does not alter the basis of their liability.

B.

As we have consistently recognized, a defendant “may not, merely because it is a self-insurer, decrease the obligations it owes to its insureds” (Ward, 96 NY2d at 77; see Shaw, 52 NY2d at 820). Giving self-insurers, based on no substantive difference in their obligation to pay, a shorter limitations period than those who obtain insurance policies, leads to arbitrary and inequitable outcomes in the provision of no-fault benefits.

Consider the scenario of a private automobile, insured through a policy of insurance, colliding with a public bus, insured through a certificate of self-insurance. The driver of the car and a passenger on the bus suffer relatively minor injuries requiring medical treatment.

They both seek payment for first-party medical benefits from those obligated to pay. Under the majority’s holding,

the injured driver will have six years to file suit based on the failure to pay firstparty benefits, but the injured passenger will have only three years. By the mere fortuity that a public bus company is “self-insured,” the injured passenger is put at significant disadvantage. From an injured claimant’s perspective, however, the right to recover benefits from a self-insurer is no different than the equivalent right under a contract of insurance issued to a private automobile owner (see Matter of Country-Wide Ins. Co. [Manning], 96 AD2d 471, 472 [2d Dept 1983], affd 62 NY2d 748 [1984]).

The rule now put forward by the majority raises the troubling appearance that an equally-deserving claimant could be barred from recovering benefits merely because the offending party effectively «bought» self-insured status. In making insurers and self-insurers equally liable for no-fault benefits, I do not believe the Legislature ever contemplated such an outcome.

IV.

An action to recover no-fault benefits from an insurer is subject to the six-year statute of limitations in CPLR 213 (2). Applying the same six-year limitation to self-insurers would make the limitations period consistent across all no-fault claims. Our precedent supports this outcome and it is consistent with the public policy underlying no-fault liability. Allowing six years for bringing claims against an insured but only three years for bringing claims against a self-insurer is both unfair and unnecessary. Accordingly, I dissent.

Order reversed, with costs, that branch of defendant’s motion which was to dismiss the complaint as time-barred granted and certified question answered in the negative.

2018 NY Slip Op 03093 Decided on May 1, 2018 Court of Appeals Fahey, J.

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