Loading ...
Sorry, an error occurred while loading the content.

The Rogak Report: 02 Nov 2009 ** Service of Process on Insurers **

Expand Messages
  • Lawrence
    SERVICE OF SUMMONS ON INSURANCE DEPARTMENT IS VALID FOR BUFFALO CITY COURT NO-FAULT LAWSUIT Buffalo General Hospital v Erie Insurance Company 2009 NY Slip Op
    Message 1 of 3 , Nov 2, 2009
    View Source
    • 0 Attachment

      SERVICE OF SUMMONS ON INSURANCE DEPARTMENT IS VALID FOR BUFFALO CITY COURT NO-FAULT LAWSUIT

       

      Buffalo General Hospital v Erie Insurance Company
      2009 NY Slip Op 29438
      Decided on September 24, 2009
      Erie County Ct
      Pietruszka, J.
      Edited by Lawrence N. Rogak


      This was an appeal from a decision of the Buffalo City Court which dismissed no-fault suits against two insurers for lack of jurisdiction.

      Plaintiffs in this appeal are health care providers who provided medical care to various patients. These patients are all insureds of the two defendant insurance companies: Erie Insurance and Preferred Mutual. The Respondents provide no-fault insurance coverage in the City of Buffalo and throughout New York State. The Respondents denied these patients' first party no-fault insurance claims. The claims of the patients were thereafter assigned to the Appellants.

      The Appellants commenced these actions by serving Buffalo City Court summonses and complaints on the New York State Superintendent of Insurance at the NYS Department of Insurance's Albany offices under the authority of Insurance Law § 1212. On September 29, 2008 Judge Ogden ruled from the bench granting the Respondents' motions and both cases were dismissed for lack of personal service. The Buffalo City Court reduced its decisions to writing in orders granted October 20, 2008 (E14033/2008) and October 27, 2008 (E12518/2008).

      Plaintiffs argued that the insurers were properly served through the New York State Insurance Department in Albany. Their position is based upon the New York State Insurance Law §1212. The Appellants, therefore, contend that the Buffalo City Court rulings should be reversed.

      The Respondents contend that Judge Ogden's orders should be affirmed. They argue that the complaints of the Appellants should be dismissed because the method of service used did not confer personal jurisdiction over the Respondents upon the Buffalo City Court. Their argument is based upon Article VI, Section 1(c) of the New York State Constitution which states in pertinent part: "The Legislature may provide that processes, warrants and other warrants of town, village and city courts outside the City of New York may be served and executed in any part of the county in which such courts are located or in any part of any adjoining county." The Respondents argue that Buffalo City Court process was served on the parties in Albany, outside Erie County and its adjoining counties. The Respondents, therefore, contend that the Buffalo City Court ruling should be affirmed.

      "The issue before this Court is whether service of a Buffalo City Court Summons and Complaint upon the New York State Superintendent of Insurance in Albany provides the Buffalo City Court with personal jurisdiction over the Respondent insurance companies."

      "New York State Insurance Law §1212(b) states in pertinent part: 'Service of process upon any such insurer in any proceeding in any court of competent jurisdiction may be made by serving the superintendent' and that such 'Service of process so made shall be deemed to have been made within the territorial jurisdiction of any court in this state.'"

      "In order for an insurance company to be authorized to do business in New York State, a power of attorney must be filed in the office of the Superintendent of Insurance. The filing of the power of attorney subjects the insurance company, as well as its property within the State of New York, to the jurisdiction of New York State courts. Morgan v. Mutual Ben. Life Ins. Co., 104 N.Y.S. 185. This particular statute, which provides for service of process upon the Superintendent of Insurance, was intended to provide an avenue to serve a foreign insurance company within the territorial jurisdiction of any court of the State of New York regardless of capacity or geographical limitation."

      "While these actions appear to tread dangerously near state constitutional questions, they are, in reality, contractual matters. Pohlers v. Exeter Mfg, 293 NY 274, most closely correlates to the issues of these cases. As in the cases before this Court, the defendant in Pohlers was a foreign corporation which had expressly consented to service beyond the court's jurisdictional limitations as a requirement for operating in New York State. Also, from a practical standpoint, in both this cases, as well as in Pohlers, the courts presiding over the original claims were acting within their 'competent jurisdiction' because the underlying causes of action arose within the Buffalo and New York City limits, respectively."

      "As a matter of law, Pohlers ruled that 'Ordinarily a court can acquire jurisdiction of the person of a defendant only by service of process within the jurisdiction of the court; but that rule does not apply where the defendant has agreed in advance to accept, or does in fact accept, some other form of service as sufficient.'"

      "The court in Pohlers further notes that valid consent can also be exacted by the state. A parallel argument was also made in Jackson v. National Grange Mut. Liability Co., 83 N.Y.S 2d 330, which states that serving the Superintendent of Insurance constitutes service within the territorial jurisdiction of any and all courts of the state, regardless of their limitation or general jurisdiction, including a Justice Court."

      "There is no question that the Respondents are required to file a power of attorney with the Superintendent of Insurance in order to do business within the geographical limits of New York State. Pursuant to this power of attorney, the superintendent is authorized to accept service of process for any cause of action which originates out of a contract formed within New York State."

      "It is clear, pursuant to both Pohlers and New York State Insurance Law §1212, that the Respondents have already consented to acceptance of service of process by the Superintendent of Insurance by filing the power of attorney. Without such previous consent, it would be impossible for the Respondents to be doing business in New York in the first place. In essence, the state constitutional right under Article VI, Section 1(c) has been contractually waived by executing the power of attorney in favor of the Superintendent of Insurance. It should be noted that a constitutional right can be waived through the language of a contract as evidenced by the signing of a jury waiver form, which relinquishes the right to a trial by jury."

      "Finally, the underlying cause for these consolidated actions involves the collection of no fault insurance claims. The basis for such a claim has been made possible by New York State Insurance Law. From a policy standpoint, the benefit of the statute and the opportunity to bring an insurance claim to court reflects back to the authority of the state legislature and the practical application of Insurance Law §1212. To allow Article VI, Section 1(c) to take precedence in this service of process matter would nullify the acts of the state legislature and the provisions of Insurance Law §1212, could affect due process rights of the parties and deny a meritorious claimant's rightful day in court. Also, it is a well established rule of statutory construction that where a general provision is a odds with a provision that specifically, by its terms, applies to a particular situation, the more specific provision should be applied."

      "Therefore, having reviewed and considered the Record on Appeal and the briefs of both parties, and due deliberation having been had thereon, this Court finds that the Respondents were properly served, consistent with Insurance Law §1212 and, therefore, the Respondents' motions to dismiss were improperly granted by Judge Ogden on September 29, 2008."

      "Accordingly, the Orders of Buffalo City Court (Ogden, J.) dated October 20, 2008 (E14033/2008) and October 27, 2008 (E12518/2008) are hereby REVERSED and the matters REMANDED to Buffalo City Court for further proceedings not inconsistent with this Decision.  This decision shall constitute the Order of the Court in this matter and no other or further Order shall be required." 

      Comment:  Unless the statute of limitations was about to run on these suits, I have to wonder why these insurers bothered to move for dismissal for lack of jurisdiction.  It's no big deal to re-serve a summons if a court holds that it was served the wrong way the first time.

      I wonder, as well, why Buffalo City Court has become the only venue north of New York City to receive a significant number of no-fault suits.   Of the 62 counties in the State of New York, only the five counties of New York City, plus Nassau and Suffolk, and Buffalo (in Erie County), see regular no-fault litigation.   Why?  I don't know.  Since plaintiffs choose the venues, perhaps one of my readers from that side can offer an explanation.

      Larry Rogak

       

    • royamura
      That s my office s case, Larry, and here s why several of our no-fault insurers contested jurisdiction. Allowing providers to obtain Buffalo City Court
      Message 2 of 3 , Nov 3, 2009
      View Source
      • 0 Attachment
        That's my office's case, Larry, and here's why several of our no-fault insurers contested jurisdiction.  Allowing providers to obtain Buffalo City Court jurisdiction via service through the NYSID is a "big deal" because otherwise the providers would not be able to obtain good service over insurers that do not have offices in Erie County for Buffalo City Court's jurisdiction.  Unlike the New York City civil courts, Buffalo City Court only has jurisdiction over defendants that are present and are served within Erie County.  Service via the Superintendent of Insurance pursuant to Insurance Law § 1212 is the exception which, we successfully argued to Buffalo City Court Judge Jeanette Ogden, does not apply to Buffalo City Court by operation of the New York State Constitution.  You wouldn't see most of these suits being re-filed in Supreme Court, which would relegate the providers to arbitration.  So you see, regardless of how much of the SOL period is left, the summonses could not merely be re-served if Insurance Law § 1212 is not available to the plaintiffs for the method of service.  Hence, the big deal. 

        As to why Buffalo City Court seems to be the only other place outside of New York City where no-fault suits flourish, the explanation probably has a lot to do with the fact that a recent study showed that Erie County has approximately 4% of the no-fault billing volume but nearly 50% of the neck and back surgeries in New York State.  No joke.  I'll send the study to anyone who wants it and emails me.  Now, the reasons for that gross disproportion are too numerous and lengthy for this reply, but they may have much to do with the inundation of certain advertisements on billboard, radio, and television advertisement media (one of our most active local back surgeons is now even advertising aggressively on TV -- how many back surgeon TV ads are there in metro NYC?), as well as appellate court decisions holding that back surgical plaintiffs are entitled to more future pain and suffering damages than non-surgical back plaintiffs.  Of course they are, because back surgeries don't eliminate pain!   Although not a native Western New Yorker, I, for one, refuse to believe that the necks and backs here in Erie County are just more susceptible to herniations from low impact collisions than elsewhere in our state.  Someone's pushing neck and back surgeries up here. 

        Roy A. Mura, Esq.
        MURA & STORM, PLLC
        930 Rand Building
        14 Lafayette Square
        Buffalo, New York

        Roy: Thanks for the helpful input. You make a good argument, but the same argument has been attempted in the New York City Civil Courts on behalf of insurers with no offices in New York City and has been almost uniformly rejected. As for necks and backs in Western New York, I can just imagine the counter-argument: "It's just that more patients are getting the medical care they need here as opposed to the rest of the State!" -- Larry Rogak

      • Louis Schepp
        I would like to see that Study. Maybe sitting out in the cold watching the Bills lose, year after year, to everyone but the Jets, might have something to do
        Message 3 of 3 , Nov 3, 2009
        View Source
        • 0 Attachment
          I would like to see that Study.  Maybe sitting out in the cold watching the Bills lose, year after year, to everyone but the Jets, might have something to do with it.  Do the studies show what was happening during the good years?

          Louis J. Schepp, Esq.
          165 Circle Drive
          Plandome Manor, NY 11030
          516 365 5755
          Cell 516 978 5189
          Fax 516-717-3572




          On Nov 3, 2009, at 1:30 PM, royamura wrote:

           

          That's my office's case, Larry, and here's why several of our no-fault insurers contested jurisdiction.  Allowing providers to obtain Buffalo City Court jurisdiction via service through the NYSID is a "big deal" because otherwise the providers would not be able to obtain good service over insurers that do not have offices in Erie County for Buffalo City Court's jurisdiction.  Unlike the New York City civil courts, Buffalo City Court only has jurisdiction over defendants that are present and are served within Erie County.  Service via the Superintendent of Insurance pursuant to Insurance Law § 1212 is the exception which, we successfully argued to Buffalo City Court Judge Jeanette Ogden, does not apply to Buffalo City Court by operation of the New York State Constitution.  You wouldn't see most of these suits being re-filed in Supreme Court, which would relegate the providers to arbitration.  So you see, regardless of how much of the SOL period is left, the summonses could not merely be re-served if Insurance Law § 1212 is not available to the plaintiffs for the method of service.  Hence, the big deal. 

          As to why Buffalo City Court seems to be the only other place outside of New York City where no-fault suits flourish, the explanation probably has a lot to do with the fact that a recent study showed that Erie County has approximately 4% of the no-fault billing volume but nearly 50% of the neck and back surgeries in New York State.  No joke.  I'll send the study to anyone who wants it and emails me.  Now, the reasons for that gross disproportion are too numerous and lengthy for this reply, but they may have much to do with the inundation of certain advertisements on billboard, radio, and television advertisement media (one of our most active local back surgeons is now even advertising aggressively on TV -- how many back surgeon TV ads are there in metro NYC?), as well as appellate court decisions holding that back surgical plaintiffs are entitled to more future pain and suffering damages than non-surgical back plaintiffs.  Of course they are, because back surgeries don't eliminate pain!   Although not a native Western New Yorker, I, for one, refuse to believe that the necks and backs here in Erie County are just more susceptible to herniations from low impact collisions than elsewhere in our state.  Someone's pushing neck and back surgeries up here. 

          Roy A. Mura, Esq.
          MURA & STORM, PLLC
          930 Rand Building
          14 Lafayette Square
          Buffalo, New York

          Roy: Thanks for the helpful input. You make a good argument, but the same argument has been attempted in the New York City Civil Courts on behalf of insurers with no offices in New York City and has been almost uniformly rejected. As for necks and backs in Western New York, I can just imagine the counter-argument: "It's just that more patients are getting the medical care they need here as opposed to the rest of the State!" -- Larry Rogak


        Your message has been successfully submitted and would be delivered to recipients shortly.