Recent Developments in New York Insurance Law: Part One

The past month has seen a number of noteworthy New York court decisions regarding the insurance industry. This week, we identify a few that make life harder for insurers.

For example, on March 5, 2014, the Appellate Division, Second Department issued a decision in Maimonides Medical Center v. First United American Life Insurance Co., 2014 NY Slip Op. 01441, determining that there is an implied private right of action under New York Insurance Law § 3224-a, the Prompt Pay Law, which “sets forth time frames within which an insurer must either pay a claim, notify the claimant of the reason for denying a claim, or request additional information” and for that reason, health care providers can sue insurers that fail to meet the requirement of the Prompt Pay Law.

In a decision likely to increase litigation against insurance brokers, on February 25, 2014, the New York Court of Appeals issued a decision in Voss v. Netherlands Insurance Co., 2014 NY Slip Op. 01259, finding that a question of fact on the existence of a “special relationship” between insureds and their insurance broker precluded dismissal of a negligence claim against the broker for failing to recommend to insureds to which the broker had sold business interruption coverage that they purchase more coverage when their businesses grew.

Finally, on March 11, 2014, the Appellate Division, First Department issued a decision in CashZone Check Cashing Corp. v. Vigilant Insurance Co., 2014 NY Slip Op. 01565, holding that an insurance policy covering money “in transit” covered money that was embezzled from an armored car service’s vault because the service’s “act of collecting money from the Federal Reserve Bank and transporting it to [the service's] vault, in order to place it in the form necessary for its transportation and delivery to the [insured's ATM's], was one continuous shipment process.” Thus, “[a]s long as the cash remained in the possession of the armored car service making the delivery, and the stop was in service to the delivery, we consider the property to have been ‘in transit’ until the contemplated delivery was completed.”

We welcome suggestions regarding court decisions, upcoming oral arguments or other developments in the area of litigation in the Commercial Division of the New York State Courts or the Eastern District of New York that we should blog about.

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