Insurance Advocate May 27, 2019 by C Acunto

Vol. 130 No. 10 | May 27, 2019

IMPACT: Life Insurance Bolsters State, Residents, Businesses

CMSV HONORS INSURANCE LEADERS

PAGE 4

Your New York DBL/PFL Partner

Learn more, please visit:

www.shelterpoint.com/AboutUs

Sheltering You.

Vol. 130 No. 10 | May 27, 2019

Contents

12 IMPACT: LIFE INSURANCE BOLSTERS STATE, RESIDENTS, BUSINESSES 4 Foreword: White, Griffin Honored at CMSV Gala Steve Acunto, Publisher 10 HR Update: Is Your Employee Handbook? Alfred T. DeMaria 11 In the Associations: 2nd Annual Surplus Lines and Reinsurance Forum Returns to the ULC; Draws 100 28 On My Radar: The Four Corners Rule Strikes Again to Require Defense Not Owed Barry Zalma 26 Looking Back: April 23, 1994 28 Courtside: On de novo appeal, Insurer Loses on Medical Necessity but Wins on Fee Schedule Issue

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

Denialâ&#x20AC;&#x2122;s Use of Non-Statutory Language Does Not

Make it Invalid Lawrence N. Rogak

33 Guest Opinion: Playing Political Games Does Not Improve Patient Care Marilyn M. Singleton, M.D., J.D. INSURANCE ADVOCATE / May 27, 2019 3

[ FOREWORD ]

STEVE ACUNTO, EDITOR & PUBLISHER

White, Griffin Honored at CMSV Gala

Cipriani’s Broadawy at Bowling Green

4 May 27, 2019 / INSURANCE ADVOCATE

he College of Mount Saint Vincent hosted its Scholarship Tribute Dinner at Cipriani 25 Broadway on May 1—and in doing so, raised a record $580K, providing academic scholarship opportunities for students, regardless of economic background. This year, the College honored two individuals for their strength of character, leadership, business acumen, and devotion to the common good: Mary A. Griffin and Richard A. White. Ms. Griffin and Mr. White weren’t the only honorable guests to take the stage— Mount senior nursing student Samannie Estriplet served as the evening’s student speaker. Samannie captivated the packed crowd as she shared her journey to the Mount. “Nine years ago, a natural disaster struck my home, Haiti,” said Samannie. “The 7.0 earthquake took more than a quarter of a million lives. I am fortunate to be one of the survivors. The event changed my life, but knowing education is one of the most important things that a child needs, my parents thought it was the best for me, and my sister, to come to the United States.” After completing middle school and high school in New Jersey, Samannie was stuck trying to find the college that was best for her. She searched, reflected, and prayed—realizing the Mount felt like home. She quickly settled in, exploring her passions in and outside the classroom. However, during her sophomore year, she was hit by yet another heartbreaking and life-altering challenge. “I found out that my parents, who were trying to put two daughters through college while rebuilding their lives in Haiti, could no longer help my sister and me with tuition…It seemed like I would have to leave the College.” But the Mount didn’t let that happen. Professors and advisors became mentors and friends, guiding Samannie as she navigated yet another obstacle.

“I’m thankful I did not have to face this challenge alone. People gave their time to help me. They did more than just listen—they recognized my desire and potential, and the College adjusted my financial awards so that I could stay.” Now, Samannie is ready to graduate and looks forward to a career in medical surgical nursing. She plans to utilize her education and skills as a nurse to help those in Haiti, as well as other parts of the world affected by disasters. The cause of students like her was advanced by the generous outpouring of support engendered by the honorees. Mary Griffin Mary Griffin, President and Chief Executive Officer of the Life Insurance Council of New York (LICONY), oversees New York’s leading life insurance organization, representing over 75 life insurer member companies and more than 20 allied professional firm members. Prior to joining LICONY in 2016, Ms. Griffin served as Senior Vice President with Citigroup’s Government Affairs Department . Her career also includes leadership positions at the American Insurance Association, the New Yo r k D e p a r t m e n t of Insurance under t h e a d m i n i s t ra t i o n of Governor Mario Cuomo, and on the staff Steve Acunto with LICONY President and honoree, Mary Griffin of the New York State Assembly. A notable leader, Ms. Griffin has had a remarkable impact throughout the insurance and government industries—she has been named Outstanding Woman in Government for her significant contributions to New York State and is a past two-time recipient of the Outstanding Government Affairs Representative award from the Northeast Financial Services Association. She attended Newton College of the Sacred Heart and earned a B.A. in American History from Boston College. Richard White Richard White is the Chief Executive Officer and a member of the Board of Directors of ShelterPoint Life Insurance Company, New York’s largest insurer of both Disability Benefits Law and CONTINUED ON PAGE 6

S I N C E

1 8 8 9

VOLUME 130 NUMBER 10 MAY 27, 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 gmb@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

CINN GROUP

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in January, July, August, and December by CINN ESR, Inc., P.O. Box 9001, Mt. Vernon, NY 10552. Periodical postage pending at Greenwich, CT and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, email: circulation@cinn.com or write: Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2019. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.

INSURANCE ADVOCATE / May 27, 2019 5

[ FOREWORD ] CONTINUED FROM PAGE 5

Paid Family Leave, with over 168,000 employer groups and covering 1.7 million insured employees. Mr. White has over 30 years of experience in creating and implementing effective strategies for business growth, diversification, product development, sales expansion, and operational excellence for several leading insurance companies. Prior to joining ShelterPoint in 2009, Mr. White was Executive Vice President of Domestic Markets with Pan American Life Insurance Company in New Orleans. He also spent nearly 20 years with The Guardian Life Insurance Companyâ&#x20AC;&#x201D;the same organization where he began his career in 1984 as a group sales representativeâ&#x20AC;&#x201D;culminating as Senior Vice President, Group Insurance. Mr. White serves as a member of the Board of Directors for The Insurance Federation of New York and serves on the Board of Directors for LICONY, where he works directly with fellow Mount Saint Vincent honoree Mary Griffin. He earned a B.S. in Business Administration from the University of Nebraska and holds certificates in Marketing Management from Columbia University, as well as in Organizational and Executive Coaching from New York University. Each year, the Scholarship Tribute Dinner further expands educational resources, making higher education accessible for all. Ms. Griffin and Mr. White join a growing list of prestigious insurance leaders honored at the event including Steven M. Menzies, Pamela J. Newman, Raul Rivera, William Fishlinger, Donald DeCarlo, David Walsh, Arcadio Casillas, William Flynn, and Thomas Moran. Proceeds from the event directly support scholarships for talented and deserving students. Join us in recognizing the generosity of our honorees, scholarship donors, and the recipients of their awards.

Richard White with MC Steve Acunto

Honoree Mary Griffin was presented the award by past honoree, Raul Rivera

Dr. Charles L. Flynn, Jr., President of CMSV 6 May 27, 2019 / INSURANCE ADVOCATE

Real Dividends! $232 Million Paid

2 New Bu 019 siness B on 5

0% of fe us es for n ew and first two Renewa ls

“The staff at Friedlander Group is a pleasure to work with. They are extremely knowledgeable with the New York State workers’ compensation world and have the ability to save my clients money. Who can argue with knowledge and savings! Their claims staff has also assisted Silverstone greatly to keep the claims expense to a minimum. Thank you Donna Nygard for your support!” Derek Smith Director - Home Care Program Silverstone Group Omaha, Nebraska

Up to 25% Advance Discount Retailers

Wholesalers

Restaurants

Hotels

Oil Dealers

Retail Group of NY, Workers’ Comp. Safety Group #544*

Wholesale Group of NY, Workers’ Comp. Safety Group #551*

Restaurant Group of NY, Workers’ Comp. Safety Group #556*

Hotel Group of NY, Workers’ Comp. Safety Group #578*

Oil Dealer Group of NY, Workers’ Comp. Safety Group #582*

2017-18 2016-17 2015-16

40%* 40%* 40%*

35% average dividend since inception in 1992

2017-18 2016-17 2015-16

30%* 30%* 40%*

31% average dividend since inception in 1993

2016-17 2015-16 2014-15

35%* 35%* 35%*

35% average dividend since inception in 1993

2017-18 2016-17 2015-16

30%* 30%* 20%*

18% average dividend since inception in 2006

2017-18 2016-17 2015-16

30%* 30%* 20%*

15% average dividend since inception in 2010

Social Services Residential Care Social and Health Services Group of NY, Workers’ Comp. Safety Group #585*

2017-18 2016-17 2015-16

25%* 25%* 20%*

15% average dividend since inception in 2011

Residential Care Group of NY, Workers’ Comp. Safety Group #586*

2017-18 2016-17 2015-16

15%* 10%* 10%

8% average dividend since inception in 2012

*5% applied to increase the renewal advance discount

Fees paid to 560 Brokers

Online Video: www.friedlandergroup.com/presentation.html

Retail

2003 Bakeries 7998 Hardware Store 8001 Florist Store 8006 Food/Fruit/Deli/Grocery 8008 Clothing/Shoe/Dry Goods 8013 Jewelry Store 8016 Quick Printing 8017 Retail (Not Classified) 8031 Meat/Fish/Poultry Store 8033 Supermarkets 8039 Department Store 8043 Retail (including Food) 8044 Furniture Store 8046 Auto Accessories 8072 Book/Music Store 8105 Leather Store 8382 Self serve gas w/conv. store Residential Care Facilities

8864 Developmental Organizations 8865 Residential Care Facility Hotel/Motel 9052 Hotels NOC 9058 Restaurants in Hotels

Wholesale

4310 Greeting Card Dealer 7390 Beer/Ale Dealer 7999 Hardware Store 8018 Wholesale Store/NOC 8021 Meat, Fish Dealer-Wholesale 8032 Dry Goods, Clothing, Shoe 8047 Drug Store 8048 Fruit & Vegetables 8111 Plumbers Supplies Dealer-Wholesale Restaurant 9061 Clubs 9071 Full Service Restaurants 9072 Fast Food Restaurants– Including Drivers 9074 Bars & Taverns Social and Health Services 8854 Home Health Care – Prof. Employees 9051 Home Health Care – Non Prof. Employees 8857 Counseling – Social Work – Traveling Oil and Gas Dealer 5193 Oil Burner Installation 8350 Fuel Oil & Gas Dealer 8353 Gas Dealers, LPG & Drivers

*Underwritten by the State Insurance Fund Ask about low DBL rates exclusive to safety group members, underwritten by ShelterPoint Life Insurance Company, Great Neck NY

The Workers’ Compensation Leader in NY Call Cosmo Preiato at (800)394-7004 ext. 203 Fax: (914)694-6004 e-mail: cosmop@friedlandergroup.com 2500 Westchester Avenue, Suite 400A Purchase, New York 10577 www.friedlandergroup.com Safety and Workers’ Compensation Strategies To Unleash Productivity and Profits Featuring insightful interviews with experts, including Paul O’Neill, the 72nd Secretary of the U.S. Treasury by Adam Friedlander, now on Amazon https://safetyandworkerscomp.com/

[ FOREWORD ]

L-R: LICONY Past President Thomas Workman, David Melman of ShelterPoint Life, Chuck Flynn and Steve Acunto

Richard White picture with his daughter (l) Sarah and his wife Paula

L-R: Raul Rivera, Thomas Workman and Mary Griffin 8 May 27, 2019 / INSURANCE ADVOCATE

L-R: Harperâ&#x20AC;&#x2122;s Bizarre eitor, Avril Graham, Carole Acunto, Debbie Hamilton and Dennis Kugler

Debbie Hamilton and Carl de Barbrie

Steve Acunto with Maria Vullo, former Superintendent of the New York State DFS

L-R: Alice Kane, Pater Bickford, Richard White, Michaela Bickford and Carole Acunto

We are pleased to recognize the critical role of our partner insurance agents and brokers in helping us achieve another remarkable year. Thank you for your ongoing commitment to our company.

Berkshire Hathaway

GUARD

Insurance Companies

COMMERCIAL LINES | PERSONAL LINES See state availability at www.guard.com

[ HR UPDATE ]

Is Your Employee Handbook Up to Date? uNew York State insurance industry executives need to ensure that your Employee Handbooks and other policies are uptodate with recent legislation mandating new requirements for New York employers.

ARE YOUR ANTIHARASSMENT POLICIES UP TO DATE?

Both New York State and New York City enacted more stringent requirements related to sexual harassment prevention and training. While most employers already had policies regarding the prohibition of sexual and other forms of harassment, if they did not update those policies in 2018, they are likely not in compliance with the specific requirements of the new laws. New York state employers are now required to provide annual training to all employees regarding sexual harassment, adopt and distribute a written sexual harassment prevention policy, and provide to employees a complaint form for reporting sexual harassment. New York City also passed a similar law in 2018. The Stop Sexual Harassment in New York City Act provides that all employers, regardless of size, will be subject to the New York City Human Rights Law’s (“NYCHRL”) prohibition on genderbased harassment. The city law also requires all employers to display a poster and distribute an information sheet on sexual harassment to new employees at the time of hire. As the requirements for these new sexual harassment laws are rather extensive and the guidance concerning these new laws has been updated multiple times since their initial passage, employers are encouraged to carefully review their sexual harassment policies — even if their policies were recently updated — to ensure they comply with both the State’s and the City’s most recent iterations of guidance. Other states have similar rules and should be consulted. 10 May 27, 2019 / INSURANCE ADVOCATE

New York state employers are now required to provide annual training to all employees regarding sexual harassment, adopt and distribute a written sexual harassment prevention policy, and provide to employees a complaint form for reporting sexual harassment. DOES YOUR HANDBOOK INCLUDE REFERENCES TO YOUR STATE’S PAID FAMILY LEAVE LAW?

2019 brings new changes to the New York PFL. Beginning January 1, 2019, eligible employees are entitled to a total of ten weeks of paid family leave during any given fiftytwo week period, a twoweek increase from the 2018 benefit. During the 2019 calendar year, an employee is entitled to a maximum of fiftyfive percent of the employee’s average weekly wage, maxing out at $746.41. The number of weeks of leave and payment amounts are scheduled to continue, escalating until 2021. The PFL requires each employer to publish a written policy detailing employees’ rights and obligations under the PFL. When drafting a PFL policy suitable to the laws in your state, Human Resources insurance executives should give careful consideration to how paid family leave interacts with other potential leaves of absence, including under the FMLA, vacation or paid time off, and shortterm disability. In addition, if your policy specifies the number of weeks of available leave or the maximum payment rates, it will need to be updated to reflect the 2019 benefit increases.

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.

DOES YOUR EEO STATEMENT CAPTURE ALL PROTECTED CLASSES?

Many states have broadened the definitions of “sexual orientation” and “gender” under various antidiscrimination laws common in the northeast. Sexual Orientation: Under some expansive new definitions, “sexual orientation” is defined as “an individual’s actual or perceived romantic, physical or sexual attraction to other persons, or lack thereof, on the basis of gender.” Gender: New, broader definitions define “gender” as “actual or perceived sex, gender identity, and gender expression including a person’s actual or perceived genderrelated selfimage, appearance, behavior, expression, or other genderrelated characteristic, regardless of the sex assigned to that person at birth.” In late 2018, the New York City CONTINUED ON PAGE 34

[ IN THE ASSOCIATIONS ] u The 2nd Annual Surplus Lines and Reinsurance Forum was held on Wednesday, May 22, 2019, at the historic Union League Club in New York City. This year’s event was cosponsored by ELANY, IFNY and Stroock & Stroock & Lavan. The event’s co-chairs, Francine L. Semaya, Esq., Board member of the Insurance Federation of New York, Inc. (IFNY) and a Legal and Insurance Regulatory Consultant, and Howard W. Greene, Esq., Director of Strategic Initiatives, Excess Lines Association of New York (ELANY), put together another creative and informative program with dynamic speakers. The Surplus Lines – Serving Unmet Needs panel consisted of Nanc y McCabe, Compliance Francine Semaya moderates the Surplus Director, Nor th Lines and Reinsurance Panel. America, Willis Seated, L-R: Nancy McCabe; Jon Lipton; Richard E. Jodoin; and Maya Cruz Towers Watson; Jon Lipton, CIC, CRIS, President, Castle Rock Capacity, LLC, an Epic Company; Maya Cruz, CPCU, Area Vice President, Risk Placement Services, Inc.; and Richard E. Jodoin, Vice Chairman, Allied World Assurance Company US. The panel was moderated by Francine Semaya for Howard Greene, who was unable to make this year’s event. The Reinsurance Panel – Insurance Business Transfers – Pros and Cons James Wrynn moderated the Reinsurance Panel. Seated L-R: Matthew Gendron, Esq., was moderated by and Robert Redpath James J. Wrynn, Senior Managing Director, Global Insurance Services, FTI Consulting and former Superintendent of the New York State Department of Insurance. The panel consisted of Matthew Gendron, Esq., General Counsel for the Rhode Island Insurance Division and Robert Redpath, Senior Vice President and US Legal Director at Enstar. Glen Mulready, Commissioner of the Oklahoma Insurance Department, was schedule to particiThe Former Commissioners’ Roundtable, pate in this panel but moderated by Francine Semaya were, the harsh weather in seated L-R: Katherine Wade; Kevin McCarty; the Midwest put a and James J. Wrynn halt on travel plans. The Former C ommissioners’

2nd Annual Surplus Lines and Reinsurance Forum Returns to the ULC; Draws 100

CONTINUED ON PAGE 29 INSURANCE ADVOCATE / May 27, 2019 11

IMPACT: Life Insurance Bolsters State, Residents, Businesses

12 May 27, 2019 / INSURANCE ADVOCATE

LICONY Commissions Report: Life Industry’s Economic Contributions to New York State Booming The Life Insurance Council of New York received a report prepared by Ernst & Young titled “New York life insurance industry size, economic contributions and recent trends”. “The report we received today illustrates that New York’s life insurance companies are an economic pillar of New York,” said Mary A. Griffin, President and CEO of LICONY. “The state’s life industry offers valuable protections, invests in infrastructure and is a major employer. Despite these contributions, some of the data shows a lack of growth in the industry in the last 15 years. We urge policymakers to work with New York’s life industry to foster new growth and help us offer valuable life products in ways that appeal to the modern consumer.”

JOB CREATION AND ECONOMIC GROWTH

The report shows that the life industry directly employs over 72,000 people in the state including over 32,000 at life insurance carriers and over 40,000 at life insurance agencies. In 2016, the life insurance industry supported state and local tax payments of over $3.4 billion. The industry’s direct contribution consisted of sales and excise, individual income, property, and other taxes paid by its employees, as well as several taxes and fees paid. The New York life insurance industry is also a prominent source of investment for New York businesses, real estate, and other activities. In 2016, life insurance company investments in New York totaled $482 billion. The majority of this investment ($388 billion) was in stocks and bonds.

PROTECTING NEW YORK FAMILIES

The report also outlines the valuable protection life insurance companies offer New Yorkers. Data concludes that: • • •

8.2 million New Yorkers have a life insurance policy in-force The face value of all life insurance policies in-force in the state was over $32 trillion (2017) New York life insurance beneficiaries received over $6.7 billion – averaging $26 million per business day – in 2017

WORRISOME TRENDS

Even with these significant protections for New York families and contributions to the state economy the report also revealed some worrisome trends. The report examined select data from 2000 - 2017 and found: The total numbers of in-force policies owned by individuals is down 14 percent since 2003 Total life insurance industry employment (carriers plus agents) fell 11.5% between 2000 and 2016 - compared to 9.8% nationally. “With defined benefit pension plans and personal savings on the decline, New Yorkers need life and annuity products now more than ever,” said Mary Griffin. “Fostering growth in the life industry will help more New Yorkers prepare for retirement and get the coverage they need to financially protect themselves and their loved ones.”

INSURANCE ADVOCATE / May 27, 2019 13

IMPACT New York life insurance industry size, economic contributions, and recent trends

14 May 27, 2019 / INSURANCE ADVOCATE

This report presents information on the size of the life insurance industry in New York, the industry’s economic and tax contributions made to the state economy, and recent industry trends. Information is presented on industry employment, wages, number of insurers, and life insurance policies owned by New York residents. Industry employment, wages, and insurers in New York are compared to a set of ten states that include:     

California Connecticut Florida Illinois Iowa

    

Massachusetts Ohio Pennsylvania Texas Virginia

These states include seven of the largest states in terms of premiums written for life insurance policies, plus three states with sizeable insurance industries as a share of private, nongovernment, industry employment (Connecticut, Iowa and Virginia). The life insurance industry consists of two segments: 1. Life insurance carriers that are primarily engaged in underwriting (assuming risk and charging premiums) of policies. 2. Insurance agencies and individual agents that are primarily engaged in the selling of life insurance policies.

Key findings Key findings from the analysis include: Importance of the life insurance industry to New York State ►

►

In 2017, 86 companies were domiciled in New York. Of the peer states, New York had the second highest number of domiciled life insurers (only Texas had more with 102). Total life insurance industry employment, including life insurance carrier employees and agents, was 72,847 in 2016 (most recent data available). See Table ES-1 on page ii. o

Based on US Census Bureau data, there were 32,298 employees at life insurance carriers in New York in 2016 – more than any of the peer states. New York’s share of US life insurance carrier employment was 8.8% in 2016. Life insurance carrier employment comprised 0.39% of all private employment in New York in 2016, which was above the US average of 0.29%.

Employment at New York insurance agencies that sell life insurance was estimated to be 40,549 in 2016. This includes employees at insurance agencies as well as individual agents that sell life insurance.

The analysis estimates that average compensation (wages plus benefits) for employees of the life insurance industry was $163,146 in 2016. See Table ES-1 on page ii. EY | i

►

Average compensation of life insurance carrier employees was $192,870, which included $128,403 in salary and wages and $64,467 in benefits (or 33% of total compensation).

Average compensation of life insurance agents was $141,772, which included $94,384 in salary and wages and $47,387 in benefits.

There were over 8.2 million individual and credit life insurance policies in force (group data was not available) in New York in 2017 with a face amount (value upon death or policy maturity) of $2.4 trillion. In 2017, $12.7 billion in premiums were written for New York residents owning life insurance policies. Payments made by life insurance companies to New York beneficiaries of life insurance policies totaled $6.8 billion in 2017. Average daily payments per business day were $26.0 million in 2017. Table ES-1. Employment and average compensation of the New York life insurance industry, 2016

Employment Wages Benefits Total Compensation

NY insurance carriers 32,298 $128,403 $64,467 $192,870

NY insurance agencies 40,549 $94,384 $47,387 $141,772

NY life insurance industry 72,847 $108,615 $54,532 $163,146

Source: EY analysis using US Census Bureau County Business Patterns; US Census Bureau Nonemployer Statistics; New York Department of Financial Services Annual Report for Year Ended December 31, 2012

Economic and tax contributions of the industry in New York ►

►

In 2016, the life insurance industry supported 188,247 New York jobs, 1.5% of statewide employment that year. The life insurance industry directly employed 72,847 workers in 2016 and supported an additional 115,400 employees in the broader economy. The overall employment multiplier is 2.6, which can be interpreted to mean that for every 10 direct life insurance industry jobs an additional 16 jobs are supported elsewhere in the New York economy. See Table ES-2 on page ii. The New York life insurance industry directly or indirectly supported $34.1 billion of value added, 2.2% of New York’s total GDP in 2016. Of this amount, $12.3 billion was earned directly by life insurance carrier and agency employees as labor income (wages and benefits) and $8.6 billion was labor income of employees at businesses that sell to the life insurance industry (suppliers) or at businesses where life insurance and supplier employees spend their money (e.g. restaurant or grocery store). See Table ES-2.

EY | ii 16 May 27, 2019 / INSURANCE ADVOCATE

►

Employment at supplier businesses of the life insurance industry is concentrated in professional services and other financial service sectors. An estimated 20,544 of the 31,530 jobs indirectly-supported by the New York life insurance industry are in the finance and insurance and professional and technical services industries. See Figure 8 on page 12. Total economic activity by the life insurance industry generated an estimated $3.4 billion in state and local taxes in New York in 2016. This amount includes taxes paid by both businesses and individuals on their income, purchases, and property. These estimates are based on statewide average annual tax collections, comparing total state and local tax collections (for each tax) to overall state personal income. See Table 10 on page 14. Table ES-2. Economic and tax contributions of the life insurance industry in New York, 2016 Billions of 2016 dollars; number of full-time and part-time employees

Output Value added Labor income Employment State and local taxes

Direct contribution $30.7 $20.3 $12.3 72,847 $2.1

Indirect contribution $7.8 $5.2 $3.7 31,530 $0.6

Induced contribution $13.2 $8.6 $4.9 83,870 $0.7

Total economic contribution $51.7 $34.1 $20.9 188,247 $3.4

Overall multiplier 1.69 1.68 1.70 2.58 1.61

Note: Employment includes self-employed persons. Figures may not sum due to rounding. Source: EY analysis using the 2016 IMPLAN model of New York State.

Trends in the New York State life insurance industry ►

►

Employment at New York life insurance carriers decreased between 2000 and 2016 by nearly 16%. However, employment at life insurance carriers in New York increased 4% between 2012 and 2016, while employment nationally decreased 1.2%. Consequently, New York’s share of life insurance carrier employment nationally increased from 8.4% in 2012 to 8.8% in 2016. Total life insurance industry employment (carriers plus agents) fell 11.5% between 2000 and 2016 compared to 9.8% nationally. The number of individual and credit life insurance policies in force for New York residents declined 3.8% between 2012 and 2017. The face amount of policies owned by New York residents increased 13.5% between 2012 and 2017, but at a slightly slower pace than nationwide (14.3% increase). Premiums written on life insurance policies, or the amount charged annually on life insurance policies owned by New York residents, remained the same from 2012 to 2017 compared to an 8.6% increase nationally. The face amount of policies purchased increased 21% between 2012 and 2017 in New York from $190 billion to $230 billion. EY | iii INSURANCE ADVOCATE / May 27, 2019 17

Table 1 . Life insurers domiciled in New York and comparison states, 2012 and 2017 Texas New York Illinois Ohio Iowa Pennsylvania Connecticut Massachusetts California Florida Virginia

2012 117 85 57 40 26 33 27 16 14 11 4

2017 102 86 50 39 32 31 22 14 11 9 3

# Change -15 1 -7 -1 6 -2 -5 -2 -3 -2 -1

% Change -13% 1% -12% -3% 23% -6% -19% -13% -21% -18% -25%

United States

850

767

-83

-10%

10.0%

11.2%

New Yorkâ&#x20AC;&#x2122;s share of US domiciled life insurance companies

Source: American Council of Life Insurers (ACLI) Life Insurer Fact Books, 2012 and 2017. ACLI tends to release an updated Life Insurer Fact Book in the fourth quarter of each calendar year, containing data for the previous calendar year; 2018 life insurer data are not yet available. Analysis: EY

Table 2. Employment at New York life insurance carriers, 2000-2016

2000 2012 2016 Change 2000-2016 % change

NY life insurance carrier employment

US life insurance carrier employment

38,367 30,993 32,298 -6,069 -15.8%

491,081 370,269 365,677 -125,404 -25.5%

NY share 7.8% 8.4% 8.8% +1.0pp

Source: US Census Bureau County Business Patterns NAICS 524113.

New York had the largest number of employees at life insurance carriers of the peer states in 2016 at 32,298. As shown in Figure 1, New York had over 5,000 more employees at life insurance carriers than the second largest state (Texas) and 8,000 more employees than the third largest state (Connecticut). See also Appendix Table 1.

EY | 1 18 April 29, 2019 / INSURANCE ADVOCATE

Looking out for those you look after. Everyone deserves a Guardian. At Guardian, we provide much more than insurance. Because like you, we know what we do involves real people with lives and dreams. Itâ&#x20AC;&#x2122;s why we offer benefits designed to help your employees plan, secure and look after the futures they are building for themselves and their loved ones. Everyone deserves a Guardian.

Learn more at guardianlife.com

GuardianÂŽ is a registered trademark of The Guardian Life Insurance Company of America. New York, NY | 2018-68648 Exp 10/2020

Table 3. Life insurance carrier employment as a share of total private industry employment, 2016

State Connecticut Iowa Massachusetts New York Pennsylvania Ohio Texas Illinois Florida Virginia California US average

Life insurance carrier % of total private industry employment 1.56% 1.49% 0.50% 0.39% 0.37% 0.26% 0.26% 0.19% 0.18% 0.16% 0.11% 0.29%

Source: US Census Bureau County Business Patterns

Life insurance agency employment Insurance agency employment includes licensed agents, as well as administrative staff and other employees, at establishments where the primary activity is selling insurance. There is no single industry code for life insurance agencies since many agencies sell several types of products. Table 4 provides an estimate of employment at insurance agencies that sell life insurance. Employment was estimated using three data sources: (1) employment at insurance agencies from US Census Bureau data on insurance agency NAICS code 524210, (2) employment at sole proprietorships that sell insurance (e.g. self-employed person licensed to sell insurance products) from US Census Bureau nonemployer establishment data, and (3) New York Department of Financial Services annual study that reports that in 2012 75% of authorized agents sell life/accident/health in New York and in 2016 65% of authorized agents sell life/accident/health in New York.1,2 Employment at agencies and self-employed agents were added together in each year and multiplied by the appropriate share selling life insurance (75% or 65% respectively) to estimate the share of insurance agency employment in New York related to life insurance. Employment at all insurance agencies (not just life) totaled 48,047 in New York in 2016 (see column A). There were 14,291 self-employed insurance agents (see column B) in New York for total agency employment of 62,338 (column C) in 2016. An estimated 40,549 employees (62,388 * 65%) worked at businesses that sold life insurance policies in 2016 in New York. Agency employment has decreased during the past sixteen years due to the decline in agents selling life insurance, decreasing 7.8% since 2000, and 5.9% since 2012.

20 April 29, 2019 / INSURANCE ADVOCATE

BONDING FACILITY

CONTRACT CONSTRUCTION

ADMINISTRATION

COURT BONDS

LICENSES & PERMIT

CUSTOM BONDS

FIDELITY BONDS

All Types of Surety & Fidelity Bonds

CARRIER BONDS

JANITORIAL BONDS

STANDARD RATES | Treasury Listed Sureties | Immediate Binding Facilities

Call Our Highly Experienced Team For All Your Bonding And Surety Needs!

U.S. SURETY SERVICES AGENCY, INC. 65 Broadway, Suite 1104, New York, NY 10006 Phone: 212-968-9100 â&#x20AC;¢ Fax: 212-248-0380 WATS: 800-924-0398

Table 4. Estimated life insurance agency employment in New York, 2000-2016

2000 2012 2016 Change 2000-2016 % change

Employment at insurance agencies with paid employees (A) 45,286 43,386 48,047

Insurance agency "nonemployer" establishments (B) 13,543 14,288 14,291

Total employment at insurance agencies & brokerages (A + B = C) 58,829 57,674 62,338

Estimated life insurance agency employment (C * X%) 43,962 43,099 40,549

2,761 6.1%

748 5.5%

3,509 6.0%

-3,412 -7.8%

Note: NAICS code 524210 was used for employment at insurance agencies with paid employees. Nonemployer establishments include corporations, partnerships, and proprietorships that have no paid employees. Estimated insurance agencies selling life insurance is from the New York Department of Financial Services annual report on the share of authorized insurers that sell life/accident/health insurance. Sources: US Census Bureau County Business Patterns; US Census Bureau Nonemployer Statistics; New York Department of Financial Services Annual Report for Year Ended December 31, 2012.

Licensed agents for life insurance (in all industries) The section above describes employment at insurance agencies and self-employed agents in New York where life insurance is sold. A different measure of insurance agency employment is the number of New York residents who have a license to sell life insurance. According to the New York Department of Financial Services, there were 97,660 agent licenses issued to New York residents to sell life/accident/health insurance in 2017.3 However, the licensed agent figure is likely too high since it includes all people with a life insurance license in all industries, not just at an establishment where the primary activity is selling insurance, and likely includes licensed individuals who are not actively selling insurance. Total life insurance industry employment (carriers plus agencies) Table 5 shows life insurance carrier plus estimated life insurance agency employment in New York in 2000, 2012, and 2016. Total life insurance industry employment fell 11.5% in New York between 2000 and 2016 compared to 9.8% nationally. The result is that New Yorkâ&#x20AC;&#x2122;s share of the total life insurance industry declined from 7.4% in 2000 to 7.2% in 2016. Between 2012 and 2016, employment in the life insurance industry in New York declined 1.7% compared to 4.6% nationally.

22 May 27, 2019 / INSURANCE ADVOCATE

EY | 4

YEARS

Founded 1999

THE

SMARTEST COVERAGE for New Yorkâ&#x20AC;&#x2122;s unique landscape.

From the coast to upstate, Interboro and UPC Insurance offer a variety of products designed for New York. Smart coverage means rather than a hurricane deductible, we offer a customizable windstorm deductible that can match your All Other Perils (AOP) deductible, potentially saving thousands of dollars. Count on us at the time of greatest need. Peter N. Resnick

Nelson N. Gochez

Interboro President of Insurance UPC NE Regional Sales Director presnick@upcinsurance.com 516-399-6000

New York Territory Sales Manager ngochez@upcinsurance.com 516-399-6001

upcinsurance.com

800-861-4370

HOMEOWNERS | FLOOD | CONDO/CO-OP | TENANTS

Table 5. Estimated employment in New York life insurance industry, 2000-2016

2000 2012 2016 Change 2000-2016 % change

NY life insurance carriers 38,367 30,993 32,298

Est. NY life insurance agencies 43,962 43,099 40,549

New York total 82,329 74,092 72,847

US total 1,120,046 1,059,583 1,010,427

NY share 7.4% 7.0% 7.2%

-6,069 -15.8%

-3,412 -7.8%

-9,481 -11.5%

-109,619 -9.8%

-0.2pp

Note: NAICS code 524210 was used for employment at insurance agencies with paid employees. Nonemployer establishments include corporations, partnerships, and proprietorships that have no paid employees. Estimated insurance agencies selling life insurance is from the New York Department of Financial Services annual report on the share of authorized insurers that sell life/accident/health insurance. Sources: US Census Bureau County Business Patterns; US Census Nonemployer Statistics; New York Department of Financial Services Annual Report for Year Ended December 31, 2012; New York Department of Financial Services Annual Report for Year Ended December 31, 2017.

Total life insurance industry employment is shown in Figure 2 for New York and peer states. New Yorkâ&#x20AC;&#x2122;s estimated employment of 72,847 in 2016 is the third highest of the peer states, following California (90,601 employees) and Texas (83,240 employees). See also Appendix Table 1.

3See

New York Department of Financial Services Annual Report to the Governor and Legislature for the year ended December 31, 2017, issued June 15, 2018. See page 51 for the number of licenses issued to sell life/accident/health insurance.

Figure 2. Life insurance industry employment (carriers and agents) in New York and peer states, 2016 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

Sources: EY analysis using US Census Bureau County Business Patterns; US Census Bureau Nonemployer Statistics; New York Department of Financial Services Annual Report for Year Ended December 31, 2017.

24 May 27, 2019 / INSURANCE ADVOCATE

Overview of economic and tax contributions The life insurance industry’s economic contributions extend beyond the activity at insurance carrier and agency offices. There are three components of total contribution:

►

Direct contributions (life insurance industry) are the employment, labor income, value added, output and taxes of life insurance companies and agencies.4 Direct taxes include insurance corporation franchise tax (Article 33), general corporate franchise tax (Article 9A), and Section 206 assessments paid by life insurance companies.

►

Indirect contributions (supplier-related) are the result of the life insurance industry’s purchases from suppliers (e.g. professional services) and the subsequent rounds of supplier purchases in the New York economy. 5

►

Induced contributions (consumption-related) are related to consumer spending in New York by life insurance industry and supplier employees. Spending by employees at New York restaurants and stores supports employment in these other industries.

Figure 6 below illustrates how spending by employees and supplier purchases flow through the New York economy to create indirect and induced impacts. Figure 6. Overview of the components of economic contribution Components of the life insurance industry's direct contribution

New York life insurance carriers

New York life insurance agencies and agents

Multiplier drivers

NY input purchases

Related economic activity

Indirect effect

NY labor income

(supplier-related)

NY input purchases

Induced effect

NY labor income

(consumption-related)

The direct, indirect, and induced contributions are described in terms of the following indicators: ►

Economic output for the insurance industry is premiums received (revenue) less expected claims.

Detailed information on the estimation and data sources used to define the employment and average earnings in the New York life insurance industry are included in the EY report, “New York Life Insurance Size and Recent Trends,” dated April 23, 2019. 5 The amount and nature of the industry’s in-state suppliers was determined by the 2016 New York IMPLAN model.

EY | 9 INSURANCE ADVOCATE / May 27, 2019 25

►

Value added is equivalent to gross domestic product (GDP). It is defined as economic output less purchases of operating inputs and includes labor income (wages and benefits), company profits and indirect business taxes.

►

Labor income includes the value of wages and benefits for employees and self-employed income.

►

Employment consists of full- and part-time employees.

►

Tax contributions consist of state and local taxes, including taxes on property, sales, and income.

The estimated economic impacts presented in the following tables are based on estimated employment and compensation in the New York life insurance industry during 2016 and reflect average economic relationships in the state from the IMPLAN model of New York State. Indirect and induced effects are driven by (1) input purchases by the life insurance industry and its suppliers; (2) the percentage of each type of commodity that is purchased from within the state; and (3) household consumption profiles for life insurance industry employees and suppliers. This analysis is based on industry multipliers for two industries representing the two sectors of the life insurance industry: (1) IMPLAN industry 437 insurance carriers and (2) IMPLAN industry 438 insurance agencies and related activities. The New York life insurance industry’s total economic contributions to the New York economy in 2016 are summarized in Table 7. The life insurance industry supported a total of $34.1 billion of New York GDP in 2016, of which $20.9 billion was labor income to workers. The industry was also a substantial source of employment, with nearly 73,000 direct workers supporting more than 115,000 jobs elsewhere in the economy. The overall multipliers of the industry are shown in the table below. The labor income multiplier of 1.70 means that for every $1 earned by employees in the life insurance industry employees in industries indirectly-supported by the life insurance industry earned $0.70. Table 7. Estimated economic contributions of the life insurance industry in New York State, 2016 Billions of 2016 dollars; number of full- and part-time employees

Output Value added Labor income Employment

Direct contribution $30.7 $20.3 $12.3 72,847

Indirect contribution $7.8 $5.2 $3.7 31,530

Induced contribution $13.2 $8.6 $4.9 83,870

Total economic contribution $51.7 $34.1 $20.9 188,247

Overall multiplier 1.69 1.68 1.70 2.58

Note: Employment includes self-employed persons. Figures may not sum due to rounding. Source: EY analysis using the 2016 IMPLAN model of New York State.

EY | 10 26 May 27, 2019 / INSURANCE ADVOCATE

Figure 7 shows that the life insurance industry had a higher overall employment multiplier than many other sectors of the New York economy in 2016. For example, every 10 life insurance industry jobs supported 16 jobs elsewhere in the state, while every 10 jobs in the entertainment and accommodations industry supported only 5 indirect and induced jobs. Finance and insurance industries tend to have high employment multipliers due to the high wages of employees. Figure 7. Employment multipliers of New York finance and insurance industries and other industries Employment multiplier

Finance & insurance

3.00 2.50 2.00 1.50

2.75

2.58

2.39

Other industries 2.42

2.20

1.87

1.80

1.56

1.45

1.00 0.50 0.00

Source: EY analysis using the 2016 IMPLAN model of New York State. Note: The life insurance industry employment multiplier of 2.58 can be interpreted to mean that for every 10 direct life insurance industry jobs an additional 16 jobs are supported elsewhere in the New York economy.

Indirect and induced employment supported by direct life insurance industry activity is shown in Figure 8. The industries in which the life insurance industry had the largest employment impacts include health, social services, and education; retail and wholesale trade; and hotels, restaurants, and entertainmentâ&#x20AC;&#x201D;industries that largely sell to individual consumers, rather than to other businesses. In each of these industries, the impacts were concentrated in induced employment resulting from life insurance employee spending, rather than indirect jobs resulting from the spending of life insurance companies.

EY | 11 INSURANCE ADVOCATE / May 27, 2019 27

[ ON MY RADAR ]

BARRY Z ALMA

The Four Corners Rule Strikes Again to Require Defense Not Owed Careful Pleading Requires Defense When Evidence Does Not uCourts like those in Florida that apply the four corners rule of insurance contract interpretation of the duty to defend allow a plaintiff ’s lawyer to skillfully draw a complaint that will require the defendant’s insurer to defend even when it is clear from existing evidence that there is no coverage. Although Florida allows an insurer to bring extrinsic evidence to the court when seeking to defeat an obligation to defend, that ability is severely limited by Florida law. In Advanced Systems, Inc., Etc. v. Gotham Insurance Company, Etc., No. 3D18-1744, Third District Court of Appeal State of Florida (April 17, 2019) careful – perhaps devious – pleading was the support used by Advanced Systems, Inc. to obtain review of the trial court’s determination that Gotham Insurance Company had no duty to defend or indemnify Advanced Systems under a commercial general liability policy.

BACKGROUND

This case arose after a foam fire suppressant system in an aircraft hangar failed and resulted in damage to several airplanes. Orion Jet Center LLC, the hangar’s owner, filed suit against Moss & Associates, LLC, the general contractor that constructed the aircraft hangar. Moss brought a third-party complaint against Advanced Systems, the subcontractor that installed the hangar’s fire suppression system. Advanced Systems, in turn, tendered defense to Gotham, its insurer. Gotham insured Advanced Systems with a commercial general liability policy under its Fire Suppression Insurance Program (the “Policy”). The policy excluded liability for pollution caused damage. The Policy defined “pollutants” as “any solid, liquid, gaseous or ther28 May 27, 2019 / INSURANCE ADVOCATE

It is time that the four corners rule, or the eight corners rule, where the court only reads the complaint and the policy to determine coverage, be removed from any appellate jurisprudence.

mal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The Policy did not define “irritant,” “contaminant,” or “chemicals.” Because Gotham did not respond to the tender of defense, Advanced Systems filed a complaint for declaratory judgment against Gotham. Both filed motions for partial summary judgment on the issue of Gotham’s duty to defend and indemnify. In support of its motion, Gotham attached the declaration of Christopher Ward, a claims specialist. Mr. Ward attached a copy of the Material Safety Data Sheet (“MSDS”) for Chemguard C2, which Gotham claims is the name of the foam fire suppressant that was released into the aircraft hangar. Based on the MSDS, which details Chemguard C2’s chemical composition, Gotham argued that the fire suppressant foam was a “pollutant” and therefore excluded from coverage under the Policy. Over Advanced Systems’ objection, Gotham relied on the MSDS submitted with its motion for summary judgment stating the material was discussed on the internet as a pollutant. The trial court entered an order granting Gotham’s motion for summary judgment, specifically relying on the MSDS to conclude that

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. His blog, Zalma on Insurance is available at http://zalma.com/blog and his videoblog, Zalma’s Insurance 101 is available at http://www.zalma.com/ videoblog/

the Total Pollution Exclusion operated as a bar to coverage and any duty to defend because the released foam constituted a “pollutant” within the meaning of the Policy.

ANALYSIS

Under Florida law, an insurer’s duty to defend is separate and distinct from its duty to indemnify, and it is more extensive. A liability insurer’s obligation, with respect to its duty to defend, is not determined by the insured’s actual lia-

[ ON MY RADAR ] bility but rather by whether the alleged basis of the action against the insurer falls within the policy’s coverage. In Florida the court only looks to the allegations in Moss’s third-party complaint against Advanced Systems to determine whether Gotham has a duty to defend. An insurer’s duty to defend a complaint depends solely on the allegations in the complaint filed by a third party against the insured. The insurer must defend even if the allegations in the complaint are factually incorrect or meritless. As such, an insurer is obligated to defend a claim even if it is uncertain whether coverage exists under the policy. Once a court finds that there is a duty to defend, the duty will continue even though it is ultimately determined that the alleged cause of action is groundless and no liability is found within the policy provisions defining coverage. Finally, because Gotham relies on an exclusion to deny coverage, it has the burden of demonstrating that the allegations of the complaint are cast solely and entirely within the policy exclusion and are subject to no other reasonable interpretation. Although Gotham agrees that the general rule in Florida is that an insurer’s duty to defend is determined from the allegations in the complaint, it argues that the trial court properly considered extrinsic evidence of Chemguard C2’s chemical composition because an exception to the general rule applies where an insurer’s claim that there is no duty to defend is based on factual issues that would not normally be alleged in the underlying complaint. Florida courts have, in “special circumstances,” considered extrinsic facts, such cases are best viewed as exceptional cases in which courts have crafted an equitable remedy when it is manifestly obvious to all involved that the actual facts placed the claim outside the scope of coverage. In exceptionally rare cases, however, where the complaint omits a reference to an uncontroverted fact that, if pled, would have clearly placed the claim outside the scope of coverage, equity may relieve an insurer from its duty to defend. Regardless of the provisions of the policy, it also contained an exception to the pollution exclusion with specific

timing and notice requirements. The court can permit evidence beyond the complaint showing that the insured was unable to satisfy the timing and notice requirements. Here the extrinsic evidence was not uncontroverted or manifestly obvious to all so as to preclude coverage. The appellate court’s review of the transcript of the summary judgment hearing reveals that Advanced Systems consistently contested the nature and composition of the released fire suppression foam. Similarly, Advanced Systems repeatedly objected to the use of evidence not in the record and beyond the scope to determine whether a duty to defend existed. The record before the court contained no objective fact that is manifestly obvious to all involved, nor are there uncontroverted facts that simply were not pled in the Underlying Action or in Moss’s third-party complaint. Therefore, the court concluded that the alleged facts in Moss’s third-party complaint fairly and potentially bring Moss’s suit within policy coverage and that the trial court erred in relying on extrinsic evidence to determine that a duty to defend did not arise below.

ZALMA OPINION

It is time that the four corners rule, or the eight corners rule, where the court only reads the complaint and the policy to determine coverage, be removed from any appellate jurisprudence. It creates a disservice to litigants and allows a plaintiff to carefully draft a complaint that will compel coverage where the facts and the law require a finding of no coverage for defense or draw a complaint to punish the defendant by alleging facts that could never be covered by the policy. It is for that reason that many states allow an insurer to use facts extrinsic to the pleading to determine the existence or non-existence of coverage requiring an insurer to defend. To do otherwise is provides a plaintiff with an unfair advantage over a defendant or its insurer.[IA]

IN THE ASSOCIATIONS CONTINUED FROM PAGE 11

Roundtable, moderated by Francine L. Semaya, Esq., consisted of the following panelists: Kevin McCarty, former Commissioner of Insurance for the State of Florida; Katherine Wade, former Commissioner of Insurance for the State of Connecticut; and James J. Wrynn, former Superintendent of the New York State Department of Insurance. A cocktail reception was held directly after the event which provided an informal setting for colleagues and old friends to catch-up and continue the dialogue of important issues facing the insurance industry today.[IA] IFNY is one of New York’s insurance industry’s most widely respected not-for-profit insurance associations, communicating ideas among all sectors of the industry and bringing public and private interests together for the benefit of all. IFNY’s membership includes every segment of the insurance industry, including insurance companies, brokerages and agencies, law, accounting, consulting and other professional service firms. IFNY provides its members with extensive networking and educational opportunities as well as an annual calendar of events that brings together the “best and brightest” in the insurance field to ensure that industry intelligence is shared and that support for best practices in insurance business, law and regulation earns the understanding of leaders across the spectrum. ELANY is a nonprofit charged with facilitating and encouraging compliance with the excess and surplus line insurance law of New York. Created by statute and operating since 1989, ELANY facilitates communication between brokers and regulators; supports and encourages compliance with laws and regulations, including review and stamping of insurance documents; conducts financial review and oversight of non-admitted insurance markets; provides continuing education for excess line brokers; advocates before legislators and regulators; maintains an information database for reporting to regulators and assisting members with tax reporting; safeguards members, consumers and the marketplace against fraud; protects state revenues, and; serves as an industry representative organization. INSURANCE ADVOCATE / May 27, 2019 29

[ LOOKING BACK ]

INSURANCE ADVO CATE - 26 YEARS AGO

30 May 27, 2019 / INSURANCE ADVOCATE

INSURANCE ADVO CATE - 26 YEARS AGO

[ LOOKING BACK ]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com

INSURANCE ADVOCATE / May 27, 2019 31

[ COURTSIDE ]

LAWRENCE N. RO GAK

On de novo Appeal, Insurer Loses on Medical Necessity but Wins on Fee Schedule Issue Allstate Insurance Company v Buffalo Neurosurgery Group Edited by Lawrence N. Rogak Insurance Law 5106(c) pemits a de novo review of a No-Fault master arbitrator’s award over $5,000. In this case, Allstate appealed from an arbitration award to a medical provider on both medical necessity and fee schedule issues. Supreme Court ruled in favor of the provider on both issues. But the Appellate Division reversed, finding that, while Allstate’s medical opinion was insufficient to overcome the presumption of medical necessity, it did prove that the charges were in excess of the fee schedule.—LNR

WE AGREE WITH THE SUPREME

uThis action pursuant to Insurance Law § 5106(c) arises from a motor vehicle accident that occurred on February 6, 2013. Christopher Krull allegedly was injured in the accident, and he underwent spinal fusion surgery performed by P. Jeffrey Lewis of the defendant, Buffalo Neurosurgery Group. The defendant, as assignee of Krull, submitted a claim to the plaintiff insurer for no-fault insurance benefits for the surgery and related care. The plaintiff denied the claim. The defendant submitted the matter to arbitration. The arbitrator determined that the defendant was entitled to no-fault compensation in the principal sum of $11,352.46, plus interest and attorney’s fees. The plaintiff appealed the award to a master arbitrator, who affirmed the award. On August 19, 2015, the plaintiff commenced this action pursuant to Insurance Law § 5106(c) for a de novo determination of the defendant’s claims for no-fault insurance benefits. The plaintiff then moved for summary judgment on the complaint. In an order dated December 9, 2016, the Supreme

Court denied the motion and, upon searching the record, awarded summary judgment to the defendant, concluding that the master arbitrator had properly affirmed the award of benefits to the defendant in the principal sum of $11,352.46, plus interest and attorney’s fees. The plaintiff appeals. Insurance Law § 5106(c) permits a de novo adjudication of a no-fault insurance claim where the master arbitrator’s award is $5,000 or greater, exclusive of interest and attorney’s fees. Here, we agree with the Supreme Court’s denial of that branch of the plaintiff ’s motion which was for summary judgment on so much of the complaint as, in effect, sought a determination that it was not obligated to pay the defendant no-fault benefits relating to Krull’s surgery, since the surgery was not medically necessary. The peer review reports submitted in support of that branch of the motion failed to demonstrate, prima facie, that the surgery performed on Krull was not medically necessary. In light of the plaintiff ’s failure to meet its prima fa-

32 May 27, 2019 / INSURANCE ADVOCATE

COURT’S DETERMINATION THAT THE PLAINTIFF ESTABLISHED ITS PRIMA FACIE ENTITLEMENT TO JUDGMENT AS A MATTER OF LAW ON THAT BRANCH OF ITS MOTION WHICH WAS FOR

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.

SUMMARY JUDGMENT ON SO MUCH OF THE COMPLAINT, AS, IN EFFECT, SOUGHT A DETERMINATION THAT THE AMOUNT OF THE BENEFITS SOUGHT BY THE DEFENDANT WAS NOT IN ACCORDANCE WITH THE WORKERS’ COMPENSATION FEE SCHEDULE.

cie burden, we need not consider the sufficiency of the opposing papers on that issue. We agree with the Supreme Court’s determination that the plaintiff established its prima facie entitlement to judgment as a matter of law on that branch of its motion which was for summary judgment on so much of the complaint, as, in effect, sought a determination that the amount of the benefits sought by the defendant was not in accordance with the workers’ compensation fee schedule. Contrary to the court’s determination, however, the defendant, in opposition to that prima facie showing, failed to raise a triable issue of fact. Accordingly, that branch of the plaintiff ’s motion should have been granted. Since the defendant’s submissions were not sufficient to establish that the arbitrator and the master arbitrator were correct in awarding the defendant nofault insurance benefits in the principal sum of $11,352.46, the Supreme Court should not have searched the record and awarded summary judgment to the defendant.[IA] 2019 NY Slip Op 03749 Decided on May 15, 2019 Appellate Division, Second Department

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

Playing Political Games Does Not Improve Patient Care u Now that it is the political season where divisiveness rules the day, the bevy of President wannabes’ interest in maternal health is suspect. After all, none of them have joined the many maternal health advocates who praised the President for signing into law the Preventing Maternal Deaths Act which gives grants to the states to help identify the causes of maternal mortality. According to the Centers for Disease Control and Prevention, black and American Indian/Alaska Native women are about 3 times as likely to die from a pregnancy-related cause as white women. These politicians are neither epidemiologists nor medical personnel yet they have diagnosed differences in maternal outcomes of black women as a product of racism. Their racial pandering serves to foment disharmony rather than initiate an honest examination of the problem. Of course, those vying for political real estate will not preface their theories with some medical facts: uterine leiomyomas (fibroids), a cause of post-partum hemorrhage, are present in three times as many black women as white women. Or that the higher rates of high blood pressure in black Americans may be due to a gene that makes them more salt sensitive. Perhaps this contributes to the 50 percent higher incidence of hypertension of pregnancy (pre-eclampsia/eclampsia) in black women than in any other racial or ethnic group. White and Hispanic women have substantially the same rate of the disease and Asian and Pacific Island women have the lowest rate of any ethnic group. As a noted black female obstetrician patient safety and risk management expert called the cause of pre-eclampsia a “mystery” and noted, “older schools of thought attempted to use socioeconomic sta-

tus as a reason to explain the problem, but it doesn’t hold up under statistical analysis.” Do these politicians who label medical personnel as racists also tell you that 11 percent of obstetrician-gynecologists are black women (same as the general black population) and they were more likely than white or Asian ob-gyns to practice in federally funded underserved areas and areas with high poverty levels? Are these physicians racists? Health problems are multifactorial and must be rigorously researched. While bias and social factors cannot be ignored, painting medical care personnel as racists will not advance the conversation. Nor will depriving medical personnel of their religious rights eliminate discrimination in the delivery of medical care. Right of conscience laws have been on the books since the 1970s but the rules had been weakened and medical personnel began reporting workplace retaliation and harassment for their beliefs. Thus, the recently finalized Protecting Statutory Conscience Rights in Health Care rule ensures that medical personnel have the right to abstain from delivering certain medical services on the basis of religious beliefs or moral convictions. The ink was barely dry on the final rule when San Francisco filed a lawsuit claiming it was “discriminatory.” The lawsuit alleges that the rule “prioritizes providers’ religious beliefs over the health and lives of women, lesbian, gay, bisexual, or transgender people, and other medically and socially vulnerable populations.” First, as far as vulnerable populations, it appears black women have no trouble finding abortion providers: 49 percent of abortions are performed on white women and 40 percent on

[ GUEST OPINION ]

Dr. Singleton is a board-certified anesthesiologist. She is also a Boardof-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. While still working in the operating room, she attended UC Berkeley Law School, focusing on constitutional law and administrative law. She interned at the National Health Law Project and practiced insurance and health law. She teaches classes in the recognition of elder abuse and constitutional law for non-lawyers.

black women despite the fact that black women of childbearing age make up 14 percent of the population. Second, the lawsuit assumes that many physicians will wantonly begin to discriminate against LGBT patients. No one in the emergency room is asking the sexual history of a hemorrhaging patient. Physicians who abide by the Oath of Hippocrates pledge to do no harm to their patients. Many physicians in their medical judgment do not believe that, for example, assisted suicide, sexchange surgery, and hormone blockers are harmless. Additionally, some surgeons simply have no desire to perform certain procedures just as breast cancer surgeons have no interest in bowel surgery. The lawsuit contends that it is “the fundamental obligation of the medical profession and the right of patients to receive quality patient care.” The best care will come from physicians familiar and comfortable with the treatments sought. Certainly, in San Francisco with a major medical school and several large CONTINUED ON PAGE 34 INSURANCE ADVOCATE / May 27, 2019 33

[ COURTSIDE ]

Denial’s Use of NonStatutory Language Does Not Make it Invalid Jason Loid v Merchants Preferred Insurance Company Supreme Court, Erie County, index no. 806494/2018 Joseph R. Glowina, j uIn a no-fault suit with several interesting issues, the Supreme Court has upheld a master arbitrator’s ruling that Merchants Preferred Insurance Company timely denied a hospital bill. Claimant was helping his friend use a pickup truck to pull down dead trees. The truck was insured by Merchants. The friend tied a strap around a dead tree and hooked it onto the truck’s hitch ball. As the pickup truck’s owner moved the truck in order to bring down the tree, the tree fell on the claimant, causing injuries that required surgery. The accident occurred on 10/10/2014. Claimant retained counsel right away, but the first notice was provided to Merchants 34 days after the accident. Strong Memorial Hospital sent a bill to Merchants for surgery that was performed on 10/20/2017. There was no evidence as to when or how the bill was sent, but Merchants received it on 12/23/2014. Merchants promptly denied the bill based on late notice of the accident. Merchants’ denial language, according to claimant, deviated from the Regulations in that it stated that late notice would be excused upon a showing that it was “impossible” to comply with the time limit (the word “impossible” not being in the regulations). Claimant filed for AAA arbitration. After five hearings, with testimony from the claimant, the arbitrator issued an award upholding the denial. Claimant appealed to a master arbitrator, who affirmed the lower arbitrator’s award and stated that he was doing so on the merits. Claimant then filed this Petition to vacate the arbitration award. In denying the Petition, the Court held that the claimant had not met his 34 May 27, 2019 / INSURANCE ADVOCATE

“It is the Master Arbitrator’s role to assure that the arbitrator reached his decision in a rational manner, that the decision was not arbitrary and capricious, incorrect as a matter of law, in excess of policy limits or in conflict with other designated no fault arbitration proceedings... ”

burden in establishing grounds to vacate the arbitration award. “It is the Master Arbitrator’s role to assure that the arbitrator reached his decision in a rational manner, that the decision was not arbitrary and capricious, incorrect as a matter of law, in excess of policy limits or in conflict with other designated no fault arbitration proceedings.... Contrary to the allegations in the Petition, the denial of the claim was upheld on the basis of late notice of the claim and a timely denial thereof.” Comment: All the issues raised by claimant in the Petition were considered and rejected by the lower arbitrator and the master arbitrator.[IA]

GUEST OPINION CONTINUED FROM PAGE 33

health systems, competent physicians who are well-versed in transgender surgery, sterilization, pregnancy termination, and euthanasia are available. The lawsuit is a political stunt. No doubt some patients have experienced professionally unacceptable treatment. Fortunately, the universe filled with ethical professionals that this U.C. San Francisco-trained black female physician inhabits is more common than not. I have taken care of thousands of patients in public and private hospitals across the country. I’ve worked with hundreds of medical personnel, some of whom were not particularly warm and fuzzy with any of their patients. I cannot tell you what was in their hearts, but they always behaved professionally and competently.[IA]

HR UPDATE CONTINUED FROM PAGE 10

Council approved a bill to prohibit employment discrimination and discriminatory harassment or violence based on an individual’s reproductive health choices. On January 25, 2019, New York State passed the Gender Expression NonDiscrimination Act (“GENDA”), which extends protections for transgender and nongenderconforming persons by explicitly adding gender identity and expression as a protected class under the New York Human Rights Law. Employers should ensure these new definitions are reflected in their Employee Handbook’s EEO statement and any other discrimination, harassment, or retaliation policies applicable in your state.

IS YOUR HANDBOOK READY FOR 2019?

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com

Employee Handbooks and policies received a lot of recent attention in many states. We predict there will be even more changes to come in 2019. Insurance industry executives must be on their toes by constantly reviewing your Employee Handbook to ensure you are in compliance with the everchanging employment law landscape.[IA]

Years

in the business says a lot about us

And one thing stands out:

Staying Power - No Matter the Market Conditions Lovell Safety Management continues its track record of providing affordable workers’ compensation insurance for the following industries: • Building Metal Trades • Cleaners • Construction • Electrical Manufacturers • Hospitals • Municipalities • Launderers and Cleaners

• Printers • Painters and Decorators • Paper Products Manufacturers • Retail Lumber • Roofers and Sheet Metal Workers • Truckers, Movers, and Warehouse people

Lovell Safety Management Co., LLC 110 William Street, New York, NY 10038-3935

212-709-8600 | 1-800-5-LOVELL www.lovellsafety.com

Expect big things in workers’ compensation. Most classes approved, nationwide. It pays to get a quote from Applied.® For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com. ©2019 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.