Florida’s Statutory Scheme is Clear: No Duplicate Benefits in Underinsured Motorist Cases

The question of what protections insurers have in cases involving underinsured or uninsured (UM) motorists has long been a thorny one. An entire body of law has developed around the question, one constantly being reshaped by legislative revision and judicial interpretation. A key question within that area of law: what is the impact to the insurer of other settlement agreements with the underinsured motorist’s liability carrier?

This June, Florida’s Fourth District Court of Appeal visited this question in Liberty Mutual Insurance Co. v. Wolfson, 45 Fla. L. Weekly, June 26, 2020. In Wolfson, an underinsured motorist collided with an insured’s car, causing permanent injuries. The insured filed a claim under his UM policies and the insurers (Liberty Mutual) declined to pay. The insured sued, and in a trial solely on damages, a jury awarded $1.6 million to the insured. The insurers filed a motion to set off settlements which they argued duplicated part of the jury verdict. At an evidentiary hearing on that motion, the insurer was able to demonstrate that one insurer, Nationwide, had paid $100,000 on the claim and another insurer, AIG, had entered a release wherein it waived subrogation rights in exchange for a $480,667.50 payment. The trial court, in the Seventeenth Judicial Circuit in Broward County, denied the insurers’ motion, finding most vitally that no Florida Statute specifically authorizes one UM carrier to obtain a set-off for duplicate benefits paid by another UM carrier.

Liberty Mutual appealed, and the Fourth District Court of Appeal unanimously reversed. The Court held that the Florida Statute §627.727, controlled. That statue reads, in pertinent part:

“The coverage described in this section shall be over and above, but shall not duplicate, the benefits available to an insured under any workers’ compensation law, personal injury protection benefits, disability benefits law, or similar law; under any automobile medical expense coverage; under any motor vehicle liability insurance coverage; or from the owner or operator of the uninsured motor vehicle or any other person or organization jointly or severally liable together with such owner or operator for the accident; and such coverage shall cover the difference, if any, between the sum, of such benefits and the damages sustained, up to the maximum amount of such coverage provided under this section.” (Emphasis in opinion) Florida Statute §627.727(1) (2018).

The Court held that the phrase “similar law” within the text of §627.727(1) clearly contemplated and intended to encompass uninsured and underinsured motorists within the umbrella of §627.727 itself, which is a legislatively-enacted type of insurance coverage. Nehme v. Smithkline Beecham Clinical Labs, Inc., 863 So.2d 201, 205 (Fla. 2003) (“Under the doctrine of noscitur a sociis (a word is known by the company it keeps) one examines the other words used within a string of concepts to derive the legislature’s overall intent.”) Applying that rule in this case, the Court held that §627.727 plainly means that benefits provided under one UM policy cannot duplicate benefits already paid to an insured under another UM policy. The insurer, as a result, was entitled to set off those amounts already paid to the insured from the jury’s verdict. The Court’s message in Wolfson was clear: the Florida Legislature adopted §627.727 as a statutory scheme intended to protect insurers from paying out duplicate benefits in a variety of ways, including underinsured and uninsured motorist cases, and it is not, ultimately, the province of the Court to change or rewrite laws enacted by the legislature.

Drawing a Line in the Snow Regarding A Landlord's Potential Liability for a Commercial Property

Recently, the New Jersey Supreme Court addressed the question of whether the owner of a commercial property owes a duty to clear snow and ice from a demised property to prevent harm to a tenant’s invitees in Shields v. Ramslee Motors, 240 N.J. 479 (2020). Landlords of commercial properties routinely include clauses delegating the responsibility for maintenance and repairs of the demised property to the tenant as part of a lease. The Court made a distinction with a landlord’s non-delegable duty to maintain the adjacent sidewalk to the property with a duty to maintain the demised property itself.

In Shields, the landlord leased the property to a used car dealership where the lease stated the tenant “shall maintain the leased premises” and that the tenant “shall be solely responsible for the maintenance and repair of the land” during the tenancy. The plaintiff in the underlying action delivered a package to the tenant and slipped on accumulated ice and snow in the tenant’s driveway. The tenant settled with plaintiff and was dismissed from the action; the landlord filed for summary judgment. Ultimately, the Court held that the lease created a clear responsibility for the maintenance of the private driveway of the property upon the tenant as the landlord did not retain control and vested ownership, making the tenant the de facto owner, of the property based upon the unambiguous language of the executed lease.

The Court agreed with the landlord’s argument finding that the executed lease specifically provides that “TENANT shall maintain the leased premises” which delegated the duty of snow and ice removal for the driveway to the tenant. The Court defined “maintain” which is “[t]o care for (property) for purposes of operation productivity or appearance; to engage in general repair and upkeep.” Additionally, the Court found that the landlord’s right of re-entry did not create a duty for the landlord to remove any snow and/or ice. While the Court previously found that a landlord possesses a non-delegable duty to maintain the sidewalk, that duty does not extend to the demised property’s the driveway. Moreover, the landlord granted the tenant with exclusive possession thereby making it “‘unfair’… to hold the landlord responsible for ‘a condition of disrepair over which it had relinquished access.’” 

The Court addressed the idea of “control” to see if a different outcome would be reached when deciding the permissibility of delegating the removal of snow: The Court found no change in its analysis. The Court evaluated several factors and found that no relationship between the plaintiff and landlord existed; that it would be unfair to have an out-of-possession landlord responsible for the removal of transient weather build-up; and that no public policy interest is met by requiring the landlord to remove the snow and/or ice from a tenant controlled property. 

From a defense prospective, Shields teaches us the following: first, that it is important for the leases for commercial properties to specifically address the responsibilities of the tenants regarding the maintenance and the upkeep to the demised property; and second, that the landlord is aware that issues with a demised property can be attributed to a landlord if the landlord maintains control, albeit the Court neglects to advise on the amount of control, over the demised property.  Additionally, while Shields addresses only the distinction of liability between a landlord and tenant for the removal of snow and/or ice on the demised property, a court could easily apply the same analysis for any debris or defect on a demised property controlled and maintained by the tenant for tenant’s purposes.

Additionally, You Are Not Insured

Snow Removal Contractor’s Failure to Add Property Owner as an Additional Insured Did Not Cause the Owner Damage

In Michel v. Langel, No. A-4054 (App. Div. May 8, 2020), the New Jersey Appellate Division confirmed that a failure of a snow contractor to name the owner as an additional insured on its insurance policy resulted in no damages to the owner and the contractor’s duty to defend and indemnify did not cover the owner's negligence 

In the winter of 2015, Plaintiff was walking across a parking lot of a Shopping Center when she was struck by a car driven by one of the Defendants. The Appellate Division summarized the facts as follows: “[a]t the time of the accident, there were piles of snow on medians at the end of rows of parking spaces in the parking lot. It was alleged that the piles of snow impeded [the Driver’s] visibility as she made a left-hand turn just before her car struck [Plaintiff].” Plaintiff sued the driver of the vehicle, the owner of the Shopping Center, the Store she was in front of at the moment of the accident, and the Snow Removal Contactor responsible for the area. The Shopping Center and Contractor asserted crossclaims, and the Shopping Center demanded a defense and indemnification from the Contractor.

Depositions revealed that the property manager told the Contractor to plow and pile the snow in the median islands in front of the Store. Thus, the Contractor argued that the decision as to where to place the plowed snow was made by the property manager, who was controlled by the Shopping Center.

Thereafter the Store and Shopping Center moved for partial summary judgment against the Contractor contending that the Contractor breached its contractual agreement to name the Shopping Center as an additional insured and to defend and indemnify the Shopping Center. While the motion was pending the non-binding arbitration pursuant to Rule 4:21A awarded Plaintiff $450,000 in gross damages for a two-level cervical fusion, bilateral labral rotator cuff injury, and right shoulder arthroscopy. No party objected to the award, and a judgment was entered.

Thereafter the partial summary judgment motion was decided, and the trial court found that the Contractor’s failure to name the Shopping Center as an additional insured did not cause the Owner any damages because the insurance policy excluded coverage for the negligence of the additional insured party. Even if the Shopping Center had been named as an additional insured, it would not have been covered for its own negligence. The court noted that nothing in the agreement between the Contractor and Shopping Center prevented the Contractor from obtaining a policy excluding coverage for the negligence of the additional insured.

The Appellate Division reasoned that both the insurance and the indemnification provisions in the contract between the Contractor and the Shopping Center was protecting the Shopping Center from claims arising out of negligent or intentional actions by Contractor and its employees. Those provisions did not protect the Shopping Center from claims arising out of the Shopping Center’s own, independent, negligent acts. (In this case directly or indirectly deciding where to place snow piles). The Appellate Division concluded that the contract was consistent with indemnification provisions, which generally do not protect the party being indemnified from its own negligence.

Business Interrupted: But Not So Fast

NEW JERSEY’S PROPOSED BUSINESS INTERRUPTION INSURANCE BILL

Currently, COVID-19 is wreaking havoc and disrupting businesses worldwide. Businesses everywhere have begun to look towards their business interruption insurance policies in an effort to mitigate losses associated with the Pandemic.

As many of us in the industry know, it is common that business interruption insurance does not provide coverage for pandemics such as COVID-19, as these policies often have a requirement for “physical” damage, which is not present in a pandemic scenario. During past catastrophe level events, such as the SARS outbreak in 2002-2003, courts widely construed, or ignored the “physical” damage requirement. However, despite past precedent, the “physical” damage requirement in most policies has not been removed.

In the Northeast, we have begun to hear radio commercials from law firms who are actively seeking out clients whose business interruption insurers have denied claims. Moreover, some firms have begun to add COVID-19 business interruption insurance policy review advertisements on their webpages. Clearly, our adversaries are anticipating a vast amount of denials that may warrant legal representation in order to be addressed.

In an effort to combat these coverage denials, New Jersey recently joined several other states when the NJ Assembly introduced Bill A-3844.[1], to provide a mechanism by which certain business that suffer business interruption losses as a result of COVID-19 may recover from their insurer if they had business interruption insurance in force as of March 9, 2020, which is the date that Governor Murphy declared Public Health and State of Emergencies.

In short, the Proposed Bill provides coverage for business interruptions due to pandemic as follows:

1.     Every insurance policy insuring against property damage, which includes loss of use and business interruption, shall be construed to include among the covered perils, coverage for business interruption due to global virus transmission or pandemic;

2.     The coverage required by the Act shall indemnify an insured, subject to the policy limits, for losses caused by business interruption for the duration of the declared State of Emergency; and 

3.     The Act applies to businesses with less than 100 employees, who work 25 hours or more per week.

On its date of introduction, March 16, 2020, the Proposed Bill was approved to advance to a second reading, however, it was removed from the legislative calendar after insurance industry representatives raised concerns about the potential consequences (e.g., premiums were not calculated to include pandemics, etc.). The Bill, in its current form, will not likely be passed, however, it will be interesting to see the changes that are discussed between the legislators and the insurance industry moving forward. 

When “Good Faith” Reporting Goes Wrong

New York’s Highest Court Holds Public Health Law § 230 (11) (b) Does Not Have a Private Cause of Action

The State of New York Court of Appeals recently held in Dr. Robert D. Haar, M.D. v. Nationwide Mutual Fire Insurance Company (November 21, 2019, No. 81) that a doctor cannot sue an insurance carrier for reporting him to state authorities for insurance fraud.  More specifically the Court held that N.Y. Pub. Health Law 230(11)(b) does not create a private right of action for bad faith and malicious reporting to the Office of Professional Medical Conduct. (“OPMC”)

Plaintiff, an orthopedic surgeon, treated patients insured by a specific automobile insurance company.  The Defendant insurance company later filed complaints with OPMC alleging insurance fraud.  OPMC declined to impose discipline against Plaintiff.  Plaintiff then commenced an action asserting that Defendant's complaints lacked a good-faith basis in violation of Public Health Law § 230 (11) (b) and interposed a separate cause of action for defamation.  Defendant removed the matter to federal court, moved to dismiss, and the United States District Court for the Southern District of New York granted Defendant’s motion.  The District Court noted that if presented with the issue of interpretation of New York State law, it would hold that § 230 (11) (b) did not imply a private right of action.

Plaintiff appealed and the Second Circuit, recognizing an Appellate Division split, certified the above-noted question.  In Ahmed Elkoulily, M.D., P.C. v New York State Catholic Healthplan, Inc., 153 AD3d 768, 771- 772 (2d Dept 2017), the Second Department found that the law does not create a private cause of action.  Earlier in Foong v Empire Blue Cross & Blue Shield, 305 AD2d 330, 330 (1st Dept 2003), the First Department held that the law did create an implied right of action.  This Appellate Division split allowed for the same law to be interpreted differently in the state.

The Court identified “essential factors” to be considered in determining whether a private right of action can be fairly implied from the statutory text: “(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme[.]” (citing Sheehy v Big Flats Community Day, 73 NY2d 629, 633 (1989).

The Court concluded that there was not a private right of action because Plaintiff failed to demonstrate that he fell within the class the legislature intended to benefit by enacting Public Health Law § 230 (11) (b).  The Court reviewed the law’s legislative history and found the intent of the law was to protect specific people and entities – including insurance companies form making good-faith reports to OPMC.  The Court concluded that the law, on its face, was intended to benefit persons or entitles that report suspected medical misconduct, not medical professionals accused of misconduct.

This case stands for the proposition that diligent investigation and reporting of suspected medical, insurance, and other types of fraud remains a statutory priority.  Carriers and people with good faith information should not hesitate to report same to the appropriate authorities.

New York’s “Storm in Progress” Defense Still Viable Where a Landowner Takes Steps to Remediate Snow and Ice Accumulations During the Storm

We recently obtained summary judgment in New York Supreme Court, Queens County pursuant to New York’s “storm in progress” doctrine. Generally, under New York’s “storm in progress” doctrine, a landowner is deemed to not have notice of a potentially dangerous condition, such as an accumulation of snow or ice, until a reasonable period of time passes after the cessation of a snowstorm. However, an exception to this doctrine may apply where the landowner undertakes to remove snow or ice during the course of the ongoing storm and subsequently causes, creates, or exacerbates a slippery condition.

In this case, the plaintiff alleged that he was caused to sustain a relatively serious trimalleolar fracture of his ankle after slipping and falling on an accumulation of ice and/or snow during the course of a snowstorm. He further alleged that the defendant-landowner caused or exacerbated a slippery condition by shoveling the sidewalk prior to his accident. However, we argued that the “storm in progress” doctrine applied and that the defendant-landowner did not cause or exacerbate any allegedly dangerous conditions. We highlighted that, although the landowner was in the process of shoveling the portion of the sidewalk where the plaintiff alleged that he fell, the landowner had fully shoveled and spread salt over that portion of the sidewalk.

Agreeing with the landowner’s arguments, the New York Supreme Court ruled that the “storm in progress” doctrine applied. The Court further held that, by shoveling and salting the portion of the sidewalk where plaintiff allegedly fell, the landowner did not create, cause, or exacerbate any allegedly slippery condition on the sidewalk. As such, the plaintiff’s Complaint was dismissed in its entirety.

Based on this ruling, it is important to note that, should landowners elect to begin snow or ice remediation activities during the course of an ongoing storm in New York, they should take all reasonable steps to ensure that no dangerous conditions are created as a result of their activities. If they insist on cleaning during an ongoing storm, by both shoveling and spreading salt, landowners can still avail themselves of the protections of the “storm in progress” doctrine and prevent otherwise costly cases from proceeding to trial.