This is a basic primer on New York law as pertaining to recovery of
no-fault
(AKA "PIP") payments. It by no means covers all the intricacies of
New York law, and therefore should be used as reference only. Some
issues of law may be
mentioned more than once on this page, where we felt the issue belongs
under more than one heading. This document is provided as a reference guide only and is provided subject
to this disclaimer. This page current as of February 4, 2016.
Click on individual terms to see how they are defined in New York PIP
Law or to access further discussion of a particular issue (note that
many of the definitions and discussions will come up in the frame at the
bottom of the page). The best way to view this guide is to browse
the table of contents in the top frame. Click on the subject of
interest, and you will see the discussion in the bottom frame.CLICK HERE IF YOU DO NOT SEE THE BOTTOM FRAME. Note that some terms are left undefined,
either because the definitions are intuitive, or because they are beyond the scope of this guide.
UPDATE LOG FOR THIS WEB PAGE In the future, additional information added to this web page will be listed here so that if you check this page periodically you can easily find updated information.
Added October 18, 2015: Added additional case references to recovery of PIP from other than automobiles (e.g. medical malpractice, dram shop claims) here.
Added October 8, 2015: Added further explanation to discussion of the fact that an insured's attorney is not entitled to a contingency fee on satisfying a PIP lien under N.Y. Ins. L.5104(b) and added similar discussion to satisfaction of APIP liens in discussion of APIP recovery.
N.Y.
Insurance Law § 5105 (a): Right to recover PIP if one car
involved is over 6,500 pound unloaded or a vehicle principally used
for transportation for hire.
N.Y. Insurance Law § 5104
(a):No recovery by one "covered person" against another
"coverd parson" of PIP. Also, no recovery of "pain and
suffering" from a "covered person" without reaching
the "serious injury threshold".
(a) Notwithstanding any other law, in any
action by or on behalf of a covered
person against another covered
person for personal injuries arising out of negligence in the use
or operation of a motor
vehicle in this state, there shall be no right of recovery for
non-economic
loss, except in the case of a serious
injury, or for basic
economic loss. The owner, operator or occupant of a motorcycle
which has in effect the financial security required by article six or
eight of the vehicle and traffic law, or which is referred to in
subdivision two of section three hundred twenty-one of such law,
shall not be subject to an action by or on behalf of a covered
person for recovery for non-economic
loss, except in the case of a serious
injury, or for basic
economic loss.
What this statute says:
If the vehicles involved in an
accident are "covered," they can not sue each other for
losses covered (or that should be covered) by PIP. They also cannot
sue for pain and suffering types of losses unless there was a
"serious injury." Note that section 5105,
discussed below, will introduce significant exceptions to this rule
(i.e. when one of the vehicles involved in the accident weighs
more than 6,500 pounds, or is a vehicle for hire).
A motorcycle which is properly insured is afforded the same
protection from suit. Note that this provision is
necessary, as the driver of a motorcycle does not fit the definition
of a "covered person." By the same token, this
indicates that this section does not deny the motorcycle driver the
right to sue. (This is discussed further in the notes below).
Notes on This Section:
PLEADINGS:
This statute allows law suits to recover two types of damages from a
covered person: "pain and suffering" type damages if
there is serious
injury and economic losses (i.e. medical bills, lost wages
etc.) that go beyond what should be covered by PIP (i.e. above basic
economic loss). CPLR
3016(g) reqiures that the complaint in such actions must specify
that these damages occured. Therefore:
In order for one covered person
to recover pain and suffering from a covered person, the complaint
must state that the plaintiff sustained serious injury as defined
in Insurance Law 5102(d). This rule also applies when an insurer
makes an underinsured motorist subrogation claim.
In an action to recover economic
losses beyond PIP (i.e. Additional PIP expenses of the insurer or
expenses incurred by the injured party), the complaint must
state that the plaintiff sustained economic loss greater than basic
economic loss as defined in 5102(a).
Failure to plead serious injury
and/or economic damages beyond basic economic loss is grounds for
dismissal.Monahan v. Twyman, 79 Misc.2d 44, 359 N.Y.S.2d
518 (Sup. Ct. Ulster Cty 1974), Agnostakios v. Laureano, 85
Misc.2d 203, 379 N.Y.S.2d 664 (N.Y.City Civ.Ct. 1976).
Accidents outside New York: This statute only precludes recovery of basic economic loss for an accident which occurs in New York. Federal Ins. Co. v. Barsky, 267 A.D.2d 275, 700 N.Y.S.2d 57(2nd Dept. 1999), c.f.Hunter v. OOIDA Risk Retention Group, Inc., 909 N.Y.S.2d 88 (2nd Dept. 2010). The Hunter
decision did not reach the question of whether OOIDA had common-law
subrogation rights to recover its PIP payments (since, again, 5104(a)
did not prevent such a recovery) or whether a lien under 5104(b) might apply if the tortfeasor is a "non-covered" person. Note that to the extent that
common-law PIP subrogation recovery would be permitted, it is likely
that those recovery rights would be limited by New York's Anti-Subrogation Law. NOTE:
we do not state any opinion as to the laws of any other State. Many
other states' laws prohibit recovery of PIP type losses for accidents in
their state and choice of law may favor that other state's laws. For further discussion of out of state accidents, see our discussions under section 5104(b) and 5105(b).
Out of state vehicles. Out of state vehicles can qualify as "covered
persons" if they are insured by companies authorized to issue
policies in NY or which have filed with the NY Commissioner of Motor
Vehicles authorizing the commissioner to accept service of process on
their behalf and stating that their policies will be varied to meet NY
insurance requirements. If these requirements are met, the vehicle is a
"covered person" for purposes of Ins. L. 5104 and 5105, Hunter v. OOIDA Risk Retention Group, Inc., 909 N.Y.S.2d 88 (2nd Dept. 2010) SeefurtherNationwide Ins. Co. v. Morigerato, 215 A.D.2d 994, 995 (3rd Dept. 1995), Aetna Life & Cas. Co. v Allstate Ins. Co. 616 N.Y.S.2d 838 (4th Dept. 1994), and Fireman's Ins. Co. v. Le Compte,
599 N.Y.S.2d 139 (3rd. Dept. 1993). For more information on how out-of-state vehicles can qualify as "covered person"s, please see the definition of "covered person".
This means that an out-of-state
vehicle that qualifies as covered person will not be subject to
recovery of PIP (except as provided in Section 5105(a), discussed below) and will not be subject to recovery of non-economic loss (i.e. pain and suffering) absent serious injury.
Federal Vehicles. Federal vehicles (e.g. post office vehicles) are included in the definition of "covered
persons" as the definition of "covered
person includes vehicles referred to Veh. and Traf. 321, a section that exempts federal vehicles from New York insurance requirements. I.e. the New York statute is designed to treat federal vehicles as "covered persons," but not to require them to carry New York insurance. SeeCooper v United States, 635 F. Supp. 1169 (S.D.N.Y., 1986). Generally, this means that under Ins. L. 5104(a) the federal government will not be subject to recovery of PIP for accidents involving a federal vehicle. As will be discussed below this is likely true even where Section 5105(a) would allow recovery from a "covered person". The federal government will also not be subject to recovery of non-economic loss (i.e. pain and suffering) absent serious injury. Patrello v. United States, 757 F. Supp. 216 (S.D.N.Y. 1991)
Note that although the federal government is generally not subject to PIP recovery, and because Federal vehicles are not required to afford PIP benefits to pedestrians they strike (or anyone else for that matter), Cooper allows a pedestrian struck by an at-fault federal vehicle to sue the United States for basic
economic loss (i.e. the losses that would be covered under PIP in almost any other accident in New York).
PIP can
be recovered if a vehcle is insured by a company not authorized in
New York or not meeting New York's required liability coverage:
In order to be insulated from PIP recovery, one must be a "covered
person." The definition of "covered person" requires
having insurance that meets the requirements of V&T 311(4),
which states that an automobile registered in New York must be
insured by an "insurer duly authorized to transact business in"
New York. Vehicles registered out of New York state must be insured
by "an authorized insurer" or by an unauthorized insurer
which has filed with the Commisioner of Insurance a letter
"consenting to service of process and declaring its policies
shall be deemed to be varied to comply with the requirements of this
article." If these conditions are not met, PIP and "pain
and suffering" can be recovered. Although it is not perfectly
clear, it seems that unauthorized insurers are subject to the
requirement of arbitration found in section 5105.
For more information on how out-of-state vehicles can qualify as "covered person"s, please see the definition of "covered person".
Motorcycles may recover Basic
Economic Loss and are not subject to the "serious injury"
requirement before recovering pain and suffering: This
statute only precludes recovery by one "covered person"
against another "covered person." "Covered person"
is anyone who is covered under PIP. N.Y. Insurance Law §
5102(j) defines a "covered person" as: "Any
pedestrian injured through the use or operation of, or any owner,
operator or occupant of, a motor vehicle . . ." The definition
of a "motor
vehicle," provided in § 5102(f) excludes a motorcycle.
Several cases have therefore held that a motorcycle driver can sue
for pain and suffering even without meeting the "serious
injury" requirement. Seee.g.Carbone v.
Visco, 115 A.D.2d 948, 497 N.Y.S.2d 524 (4th Dept. 1985). Basic
economic loss (i.e. what PIP would have coverd, except that PIP does not apply to motorcycles) should also be recoverable on behalf of a
motorcyclist based on this statute, but the anti-subrogation statute might get in the way of subrogation on behalf any insurer that paid those bills. SeealsoGoodkin v. U.S., 773
F.2d 19 (2nd Cir. 1984) and Laba v. Petrullo,191 Misc.2d 758,
742 N.Y.S.2d 787 (Dist. Ct. Nassau Cty, 2002) indicating that a
non-covered person is entitled to recover for economic loss.
PIP may be recovered from any tortfeasor that is not a motor vehicle: See discussion of this point under discusion of Ins. L. 5104(b).
N.Y. Insurance Law § 5104
(b): Recovery of PIP damages (and pain and suffering) from a
non-covered person.
(b) In any action by or on behalf of a
covered
person, against a non-covered person, where damages for personal
injuries arising out of the use or operation of a motor
vehicle or a motorcycle
may be recovered, an insurer
which paid or is liable for first
party benefits on account of such injuries has a lien against any
recovery to the extent of benefits paid or payable by it to the
covered
person. No such action may be compromised by the covered
person except with the written consent of the insurer, or with the approval of the court, or where the amount of such
settlement exceeds fifty thousand dollars. The failure of such person
to commence such action within two years after accrual gives the
insurer
a cause of action for the amount of first
party benefits benefits paid or payable against any person who
may be liable to the covered
person for his personal injuries. The insurer's
cause of action shall be in addition to the cause of action of the
covered
person except that in any action subsequently commenced by the
covered
person for such injuries, the amount of his basic
economic loss loss shall not be recoverable.
What this statute says:
A covered person may recover basic
economic loss (i.e. the losses covered by PIP) from a party at fault
for the accident. By extension, this will mean that the insurer who
pays PIP benefits may recover from a non-covered person who is at
fault. The balance of this subsection discusses how that recocvery
is made.
If the covered person sues the
non-covered person within two years of the accident , the
covered person's insurance company has a lien against their
recovery for the amount of PIP they paid. This means that:
The insurance company gets a
portion of its insured's recovery equal to their PIP payments. So,
if insurer has paid $25,000 in PIP, and the insured gets a $30,000
judgment, the insured keeps $5,000, and the insurance company gets
$25,000. Note that the PIP bills will be considered in the case
when the judge or jury assigns damages.
The insured must protect the
rights of the insurance company. This means that they can not settle
the case without the insurance company's permission unless a judge
signs off, or the recovery is at least $50,000, so that they can be
certain they can pay back all of the insurance company's PIP losses.
If the insured does not sue within 2 years of the
accident, the insurance company may then directly sue the
non-covered person at fault to recover its PIP costs. In this case,
the insured can still file suit as well, but will not be able to
sue for the PIP losses, since the insruance company has already
sued for that.
Notes on This Section:
STATUTE
OF LIMITATIONS for recovery of PIP from a non-covered person:The injured party has three years from the
date of accident to sue for damages. The insurance company's right
to sue begins only after two years have passed from the accident,
and runs three years from then. Example: If the date of accident is
January 5, 2005, the injured party can sue until January 5, 2008. If
the injured party has not sued by January 5, 2007, then the
insurance company can sue from January 5, 2007 through January 5,
2010. Safeco Ins. Co. of Amer. v. Jamaica Water Supply Co.,
83 A.D.2d 427, 444 N.Y.S.2d 925 (2nd Dept. 1981) (per Hopkins,
J.P.), aff'd 57 N.Y.2d 994, 457 N.Y.S.2d 245, 443 N.E.2d 493 (1982). NB: There is a different SOL for recovery of APIP and for the recovery of PIP from the insurer of a covered person.
A PIP
insurer asserting a lien should provide its insured's attorney with
documentation: In order to protect its lien, a PIP
insurer is best andvised to provide its insured's attorney with the
trial proof needed to include the PIP benefits in the jury verdict.
Hyde v. North River Ins. Co., 1981, 112 Misc.2d 855, 447
N.Y.S.2d 789, affirmed 92 A.D.2d 1001, 461 N.Y.S.2d 468.
The PIP
lien is created by operation of law. No notice is required. HOWEVER,
NOTICE IS CERTAINLY ADVISABLE: Since the PIP lien is provided
for by statute, it arises by law. Therefore, the failure of the PIP
carrier to inform its insured of its lien does not prejudice the
lien. General Acc. Ins. v. Roberts, 266 A.D.2d 791, 699
N.Y.S.2d 158 (3rd Dept. 1999), leave to appeal dismissed 94 N.Y.2d
899, 707 N.Y.S.2d 143, 728 N.E.2d 339 (2000). However, it is our
opinion that providing some notice of this lien will be advisable,
and will help avoid potential headaches later.
Out of state vehicles. Certain out of state vehicles can qualify as "covered
persons." See discussion above on how an out of state vehicle can qualify as a covered person. Out of state vehicles that qualify as "covered persons" will be entitled to recover
PIP from a non-covered person as provided in this section and if at
fault will not be subject to PIP recovery under this section (but will
be subject to recovery under N.Y. Ins. L. 5105 (a) if a vehicle involved is over 6500 pounds or a vehicle for hire).
Federal Vehicles. Federal vehicles are included in the definition of "covered
persons". See discussion above. Hence, federal vehicles will not be subject to PIP recovery under this section and an insurer paying PIP will not have a lien against its insured's claim against the federal government (where a federal vehicle was involved). As will be discussed below there likely is no right of recovery of PIP from the federal government even where Section 5105(a) would allow recovery from a "covered person").
Accidents outside New York: Unlike 5104(a), discussed above, which explicitly applies only to New York accidents (to prohibit recovery of PIP from a "covered person"), and Section 5105, which per
Hunter v. OOIDA Risk Retention Group, Inc., 909 N.Y.S.2d 88 (2nd Dept. 2010) only permits reovery for accidents in New York (against a "covered person" in accidents involving certain qualified vehicles), see below, there is no indication in the statute whether this section, permitting a lien against the insured's bodily injury claim where the tortfeasor is not a "covered person" applies to accidents outside of New York. Note that an Insurance Department opinion on April 30, 2003, accessible here says that under New York law a PIP insurer may assert a lien on a claim by its insured against a non-coverd person for an accident outside of New York. Insurance Department, Opinions of General Counsel, Opinion Number 03-04-35. However, the more recent passage of the Anti-Subrogation Lawmay apply and affect these rights. NOTE:
we do not state any opinion as to the laws of any other State. Many other states' laws prohibit recovery of PIP type losses for accidents in their state and choice of law may favor that other state's laws. For further discussion of out of state accidents, see our discussions under section 5104(a) and 5105(b).
Insured's attorney is not entitled
to contingency fee on the lien amount:Breier v.
Government Emp. Ins. Co., 79 A.D.2d 967 (1st.
Dept. 1981)("[T]he contingency fee arrangement between the plaintiff Breier and her counsel could not be enforced against the lienor"). See furtherAllstate Ins. Co. v. Denbleyker, 280 A.D.2d 204, 206 (4th Dep't 2001)(addressing an APIP lien and agreeing with Breier). The Breier court noted that "[s]ome of us feel that there might be a claim in quantum meruit, but we do not reach that aspect."
Thus, if an insurance company pays $50,000 in PIP, and
the insured recovers $100,000 from a defendant who is not a "covered
person," the Insurance company gets $50,000 (perhaps less some quantum meruit compensation for the attorney), and the attorney
and his/her client share the remaining $50,000 as per their
retainer.
N.Y. Insurance Law § 5105
(a): Right to recover PIP if one car involved is over 6,500 pound
uloaded or a vehicle principally used for transportation for hire.
A carrier paying PIP (or workers' compensation benefits that would have been covered by PIP if workers' compensation did not apply), may recover against
a responsible party provided that one of the motor vehicles involved
in the accident either weighs 6,500 pounds unloaded or is a vehicle
for hire. NOTES:
The vehicle which is over 6,500 pounds or a vehicle for hire need
not be the vehicle at fault in the accident.
This statute can be difficult to parse. The reference to "which another insurer would otherwise be obligated to pay pursuant to subsection (a) of section five thousand one hundred three of this article or section five thousand two hundred twenty-one of this chapter" refers to the worker's compensation carrier, meaning that if a worker's compensation carrier pays benefits which would otherwise have been covered by a PIP carrier, then the compensation carrier has the same right to recover under this statute. Note that per Insurance Law 5102(b)(2), worker's compensation is primary over PIP where both coverages would otherwise apply.
A PIP carrier who paid PIP benefits to its insured which was
injured as a passenger on a bus may not recovery from the insurer of
the bus unless the person was an operator, owner, or employee of the
owner or operator of the bus.
The right of an insurer to recover
PIP from adverse insuer is a direct right:. I.e. the
right is not "subrogated" from the insured, but a separate
right held by the insurer. This means, among other things, that a release signed
by the insured will not destroy the right to PIP loss transfer.SeeState Farm Mut. Auto. Ins. Co. v. City of Yonkers,
21 A.D.3d 1110, 801 N.Y.S.2d 624, (2nd Dept. 2005) andDoherty v. Barco Auto Leasing Co., 144 A.D.2d 424 (2nd Dept.
1988). The same is not true for the subrogation rights on Additional
PIP, which is seen as an actual subrogation right rather than a
statutory right. An insured signing a release may affect APIP recovery
rights. SeeNationwide Ins. Co. v.
Mocchia, 663 N.Y.S.2d 640 (2ND Dept 1997). This different status of APIP probably is not affected by the fact that the new New York anti-subrogation law
carves out an expception for APIP, since this exception merely affirms
the APIP subrogation right, rather than creating a direct statutory
right to recover APIP.
Out of state vehicles. Certain out of state vehicles can qualify as "covered
persons." See discussion above on how an out of state vehicle can qualify as a covered person. Out of state vehicles that qualify as covered persons will not be subject to recovery of PIP except as provided in this section and will be entitled to recover PIP in accordance with this section. Although it is not perfectly clear, it seems that out-of-state insurers that meet the "covered person" definition will be required to participate in arbitration of loss-transfer claims under section 5105(b). SeeMatter of Purex Indus. v Nationwide Mut. Ins. Co. 110 A.D.2d 67, 493 N.Y.S.2d 176 (2nd Dept. 1985).
Federal Vehicles. Although federal vehicles are included in the definition of "covered
persons", see discussion above, federal vehicles are likely not subject to recovery of PIP even where a vehicle involved in the accident weighs over 6,500 pounds or is a vehicle for hire. Although there is no case directly on point, several factors suggest that PIP is not recoverable in this situation. Some of these factors are:
Section 5105 allows recovery "from the insurer of any other covered person." As noted in Liberty Mut. Ins. Co. v. United States, 490 F. Supp. 328, 334 (E.D.N.Y. 1980), which deals with the former NY PIP law, which had an identical definition of insurer, the federal government (even if considered a self-insured) does not meet the definition of insurer, which is an insurer providing the insurance required by New York law, whereas the federal government is exempt from New York insurance requirements by Veh. & Traf. L. 321. Significantly, the statute explicitly includes federal vehicles within the definition of covered
person but does not do so for the definition of insurer.
As discussed below, Section 5105(b) limits the right of recovery of PIP to arbitration, whereas the Federal Tort Claims Act requires all claims be filed in Federal District Court. See 28 U.S.C. § 2401(b) and 2675(a). A number of federal cases indicate that where state law limits a right of recovery to a particular forum, the federal government will not be subject to such claims. SeeLiberty Mut. Ins. Co. v. United States, 490 F. Supp. 328, 334 fn9 (E.D.N.Y. 1980), Cont'l Ins. Co. v. United States, 335 F. Supp. 2d 532 (D.N.J. 2004), and US Fidelity & Guaranty Co. v. US, 728 F. Supp. 651, 656 (D. Utah 1989). As Liberty Mutual puts it, "With a circularity so typical of the law, the Tort Claims Act thus waives the immunity of the United States on the substantive side while simultaneously pre-empting the applicable State law on the procedural side."
Section 5105 creates a right of recovery "from the insurer of any other covered person." The Federal Tort Claims act, on the other hand, allows recovery from the federal government "in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. § 2674 (2000). This provides for a right of recovery where an individual would be liable, but does not explicitly provide for a right of recovery where an insurer of an individual would be liable. SeeCont'l Ins. Co. v. United States, 335 F. Supp. 2d 532, 542-543 (D.N.J. 2004), US Fidelity & Guaranty Co. v. US, 728 F. Supp. 651, 655 (D. Utah 1989).
N.Y. Insurance Law § 5105
(b): Disputes between insurers must be resolved through arbitration
(Arbitration Forums).
(b) The sole remedy of any insurer
or compensation
provider to recover on a claim arising pursuant to subsection (a)
hereof, shall be the submission of the controversy to mandatory
arbitration pursuant to procedures promulgated or approved by the
superintendent. Such procedures shall also be utilized to resolve all
disputes arising between insurers
concerning their responsibility for the payment of first
party benefits.
What this statute says:
Where one insurer or workers'
compensation provider is trying to recover based on section
5105(a), the insurer must take the other insurer to binding
arbitration. The Superintendent of Insurance can set the rules for
the arbitration. NOTE that in 11 N.Y.C.R.R. 0(b) the Superintendent
selected Arbitration Forums as the exclusive arbitrator for these
matters.
Insurers who disagree as to which company should provide PIP benefits (priority of payment) must also arbitrate this question (but see note below regarding a PIP carrier who seeks recovery from compensation carrier who should be primary).
Click
here to read 11 N.Y.C.R.R. 65.10 which are the Superintendent's
regulations for arbitration authorized by this section. This link
will open in a new tab. To return to this window, close the new tab.
Notes on This Section:
STATUTE
OF LIMITATIONS for recovery of PIP from the insurer of a covered person - Three years from each payment.: The right to recover PIP from the insurer of a covered person (when a vehicle for hire or vehicle weighing over 6,500 pounds
is involved in the accident) is a statutory right. It is governed by the three-year statute of limitations for liabilities created by statute. C.P.L.R. 214(2). c.f.Motor Veh. Acc. Indemnification Corp. v. Aetna, 89 N.Y.2d, 214, 221 (1996). C.f.Matter of Liberty Mut. Ins. Co. and Hanover Ins. Co., 307 AD2d 40 (4th Dept. 2003). The right of recovery attaches with each PIP payment. So, if the date of loss was January 5, 2005, and the first PIP payment was on January 10, 2005, then arbitration must be initiated by January 10, 2008 in order to recover for all payments. If arbitration is filed thereafter, it will be timely for any payments made less than three years before the arbitration was innitiated.Motor Vehicle Acc. Indemnification Corp. v. Aetna, 89 N.Y.2d 214, 221-222, 652 N.Y.S.2d 584 (1996) ("[S]ince MVAIC . . . did not make its demand for compulsory arbitration until October 20, 1992, the three-year Statute of Limitations had actually run as to that payment and as to all other payments made more than three years
before the date of the demand."). Read the New York State
Insurance Department analysis of this rule here
and here
(links open in a new window). NB: There is a different SOL for recovery of APIP and for the recovery of PIP from a non-covered person.
You must
use Arbitration Forums: The regulations at 11
N.Y.C.R.R. 65.10(b) require that Arbitration Forums, Inc. be
used for PIP arbitration.
Self-insurers
are insurers and therefore are subject to the arbitration
requirement. Those seeking to recover PIP from self-insurers, and
self-insurers seeking to recover from other insurers, must
arbitrate. SeeCity of Syracuse v. Utica Mut. Ins. Co.,
90 A.D.2d 979, 456 N.Y.S.2d 571 (4th Dept. 1982), affd. 61 N.Y.2d
691, 472 N.Y.S.2d 600, 460 N.E.2d 1085(1984), Criterion Ins. Co.
of Washington, D. C. v. Commercial Union Assur. Co., 89 Misc.2d
36, 41, 390 N.Y.S.2d 953, 958 (N.Y. Sup. Ct. 1976), and Click
here to read 11 N.Y.C.R.R. 65.10 which treats self-insurers as
insurers.
Out of state vehicles. Certain out of state vehicles can qualify as "covered
persons." See discussion above on how an out of state vehicle can qualify as a covered person. Although it is not perfectly
clear, it seems that out-of-state insurers that meet the "covered
person" definition will be required to participate in arbitration of
loss-transfer claims as required in this section. SeeMatter of Purex Indus. v Nationwide Mut. Ins. Co. 110 A.D.2d 67, 493 N.Y.S.2d 176 (2nd Dept. 1985).
Out of state accidents will never create 5105(b) recovery rights. In Hunter v. OOIDA Risk Retention Group, Inc.,
909 N.Y.S.2d 88 (2nd Dept. 2010), a New York insured was injured in an
accident in Connecticut. Both vehicles in the accident qualified as
"covered persons" under New York law, and Connecticut law did not
prohibit recovery. OOIDA sought to recover PIP under N.Y. Ins. L.
5105(a). The court found that 5105(a) did not apply, because 5105(a)
only allows for recovery "to the extent that such other covered person
would have been liable, but for the provisions of this article" - i.e.
5105(a) applies only when 5104(a) prohibits recovery from a covered
person - and 5104(a) only prohibits PIP recovery from a covered person
"arising out of negligence in the use or operation of a motor vehicle in this state." (i.e. New York. emphasis added). The Hunter
decision did not reach the question of whether OOIDA had common-law
subrogation rights to recover its PIP payments (since, again, 5104(a)
did not prevent such a recovery). Note that to the extent that common-law PIP subrogation recovery would be permitted, it is likely
that those recovery rights would be limited by New York's Anti-Subrogation Law. For further discussion of out of state accidents, see our discussions under section 5104(a) and 5104(b). NOTE:
we do not state any opinion as to the laws of any other State. Many
other states' laws prohibit recovery of PIP type losses for accidents in
their state and choice of law may favor that other state's laws.
Federal Vehicles. Although Federal vehicles are included in the definition of "covered
persons", see discussion above, federal vehicles are likely not subject to recovery of PIP even where a vehicle involved in the accident weighs over 6,500 pounds or is a vehicle for hire. Although there is no case directly on point, several factors suggest that PIP is not recoverable in this situation. These factors include:
Section 5105 allows recovery from "from the insurer of any other covered person." As noted in Liberty Mut. Ins. Co. v. United States, 490 F. Supp. 328, 334 (E.D.N.Y. 1980), which deals with the former NY PIP law, which had an identical definition of insurer, the federal government (even if considered a self-insured) does not meet the definition of insurer, which is an insurer providing the insurance required by New York law, whereas the federal government is exempt from New York insurance requirements by Veh. & Traf. L. 321. Significantly, the statute explicitly includes federal vehicles within the definition of covered
person but does not do so for the definition of insurer.
As discussed below Section 5105(b) limits the right of recovery of PIP to arbitration, whereas the Federal Tort Claims Act requires all claims be filed in Federal District Court. See 28 U.S.C. § 2401(b) and 2675(a). A number of federal cases indicate that where state law limits a right of recovery to a particular forum, the federal government will not be subject to such claims. SeeLiberty Mut. Ins. Co. v. United States, 490 F. Supp. 328, 334 fn9 (E.D.N.Y. 1980), Cont'l Ins. Co. v. United States, 335 F. Supp. 2d 532 (D.N.J. 2004), and US Fidelity & Guaranty Co. v. US, 728 F. Supp. 651, 656 (D. Utah 1989). As Liberty Mutual puts it, "With a circularity so typical of the law, the Tort Claims Act thus waives the immunity of the United States on the substantive side while simultaneously pre-empting the applicable State law on the procedural side."
Section 5105 creates a right of recovery "from the insurer of any other covered person." The Federal Tort Claims act, on the other hand, allows recovery from the federal government "in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. § 2674 (2000). This does not explicitly provide for a right of recovery where the insurer of the individual would be liable. SeeCont'l Ins. Co. v. United States, 335 F. Supp. 2d 532, 542-543 (D.N.J. 2004), US Fidelity & Guaranty Co. v. US, 728 F. Supp. 651, 655 (D. Utah 1989).
Accidentally
suing instead of arbitrating will still cover the Statute of
Limitations: 11
N.Y.C.R.R. 65.10(d)(5)(i) specifies that if a matter that should
go to Arbitration Forums is "inadvertently placed in
litigation," the case can be discontinued for purposes of
submitting the matter to Arbitration Forums, and for Statute of
Limitations purposes it will be counted as if the matter was filed
with Arbitration Forums on the day that the litigation was
instituted.
Statute
of Limitations will be extended if there is a coverage dispute:
11
N.Y.C.R.R. 65.10(d)(5)(i) specifies that if there is a dispute
as to coverage pending, the running of the Statute of Limitations is
delayed until the matter is resolved.
Note the following ironic scenario. A is a passenger in B's car or is struck by B's car as a pedestrian and B is at fault. In general, since PIP follows the vehicle involved in the accident, B's insurer would provide A with PIP. However, if A were in the course of employment and entitled to workers' compensation, then A's compensation carrier would be primary and B's carrier would be off the hook. Now, let's say that a 6500 pound vehicle or vehicle for hire was involved in the accident. A's workers' compensation carrier remains primary for PIP, but now has the right to seek loss-transfer recovery from B's insurer. The fact that A's worker's compensation insurer was primary over B's auto insurer for PIP does not preclude A's insurer from seeking this loss-transfer recovery from B's auto insurer. SeeNew York News, Inc. v. State Ins. Fund, 157 A.D.2d 651 (2nd Dept., 1990) and A.I. Transp. v. N. Y. State Ins. Fund, 301 A.D.2d 380 (1st Dept., 2003). Note, however, that if A were at fault for A's own injury (for example if A were driving), then A's compensation provider would be primary for A's injuries and could probably not seek loss-transfer recovery from A's auto insurer, because loss transfer under Ins. L. 5105(a) only permits recovery from the insurer of an "other covered person" (emphasis added).
If an insurer is presented with a PIP claim, but believes that another insurer should be responsible under the rules of priority of payment, this does not raise a coverage question (which might be resolved in court). Rahter, the insurer should first pay the claim and then seek reimburesement from the other insurer through arbitration. M.N. Dental Diagnostics, P.C. v. GEICO, 81 A.D.3d. 541 (1st Dept. 2011).
N.Y. Insurance Law § 5105
(c): Amounts recovered for PIP do not diminish adverse insurer's
liability policy limits for other claims.
(c) The liability of an insurer imposed by this section shall not
affect or diminish its obligations under any policy of bodily injury
liability insurance.
What this statute says:
If a insurer is liable to pay
another insurer in PIP loss transfer (i.e. The insurer of a culpable
automobile in a case where one of the vehicles involved is over
6,500 pounds .or a vehicle for hire), that payment does not diminish
the policy limits for other purposes. This means that an insurer
seeking loss transfer from another insurer, does not have to worry
that this will negatively effect, for example, the amount available
for its insured to recover in a bodily injury case.
Warranty: 4 years per UCC codified at N.Y. U.C.C. 2-725(1). This SOL runs from tender of delivery unless the warranty "explicitly extends to future performance."
Malpractice: 3 years for other than medical,
dental or podiatric malpractice, regardless of whether the underlying
theory is based in contract or tort N.Y.C.P.L.R. 214(6). For medical,
dental or podiatric malpractice, 2 1/2 years from the "of the act,
omission or failure complained of," except for foreign objects left in a
patient, 1 year from discovery/discovery of facts which would
reasonably lead to discovery. N.Y.C.P.L.R. 214-a.
The effect on subrogation rights if the insured signs a release for the adverse party: One
common defense against a subrogation claim is that the company's
insured has already signed a release to the adverse party. Example:
Insurance company (I) paid a $5,000 property damage claim to client
(C), and attempts to subrogate against adverse party (A). A (or A's
insurance company) claims that C signed a release, releasing A from
any further liability. While this can be a valid defense, it very
often is not, as there are several exceptions that can be
exploited:
Release
signed after claim was paid: If I paid its insured (C) before C
signed the release, then the right of subrogation survives. This is
because the subrogation right attaches at the point that I paid the
claim. Once the subrogation right attached, it is I's right, and
not C's right, so C could not sign that right away. A good case
discussing this rule is Allstate Ins. Co. v. Mazzola, 173 F.
3d 255, 260 (2nd Cir. 1999).
Adverse
party/insurance company knew/should have known subrogation rights
existed: An otherwise valid release will not be effective if the
released party (A or A's insurance company) knew or should have
known that someone had subrogation rights. Hartford Ins. Group v.
Posen, 511 N.Y.S. 2d. 1, 2 (N. Y. City Civ. Ct., 1986).
Therefore, it is good policy for an insurance company to send a
notice of subrogation rights to the adverse party and adverse
insurance company as soon as it becomes aware of a claim or
potential claim. If such notices were not sent, one can still
argue that the adverse "should have known" of the
potential subrogation rights.
Releases
will never affect PIP loss transfer rights. This is because the
right of loss transfer (i.e. one insurance company arbitrating
against another insurance company) is considered a separate right
created by statute (N.Y. Insurance Law 5105). It is not a right that
is "subrogated" from the insured, and therefore the
insured has no power to destroy it. SeeState Farm Mut.
Auto. Ins. Co. v. City of Yonkers, 21 A.D.3d 1110, 801 N.Y.S.2d
624, (2nd Dept. 2005) andDoherty v. Barco Auto Leasing
Co., 144 A.D.2d 424 (2nd Dept. 1988).The same is not true for the
subrogation rights on Additional PIP, which is seen as an actual
subrogation right rather than a statutory right. An insured signing a
release may affect APIP recovery rights. SeeNationwide Ins. Co. v.
Mocchia, 663 N.Y.S.2d 640 (2ND Dept 1997). This different status of APIP probably is not effected by the fact that the new New York anti-subrogation
law carves out an expception for APIP, since this exception merely
affirms the APIP subrogation right, rather than creating a direct
statutory right to recover APIP.
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Offices of Jan Meyer and Associates Home PageAdditional PIP may be subrogated:N.Y.Insurance Law § 5104 (a) prohibits only the recovery of "basic
economic loss" which means the first $50,000 of medical
expenses and lost wages. It does not prohibit recovery of Additional
PIP ("APIP") payments. SeeAllstate Ins. Co. v.
Mazzola 175 F. 3d 255 (3rd Cir. 1999). Note that the
antisubrogation law passed in New York in 2009 (discussed generally here) explicitly allows APIP
recovery (N.Y. Gen. Obl. L. 5-335(b)). It may, however, prohibit
recovery for other economic losses (e.g. medpay). Some additional
notes:
There are two methods for
recovering APIP. The insurer may assert a lien against its
insured's personal injury claim, or it may make a direct suit
against the party at fault. Aetna Cas. and Sur. Co. v. Jackowe,
96 A.D.2d 37, 468 N.Y.S.2d 153 (2nd Dept. 1983), Fowler v. Pebble
Hill Bldg. Corp., 120 A.D.2d 486, 487-488, 501 N.Y.S.2d 690, 692
(2nd Dept. 1986) . Because the insured's case might fizzle if their
noneconomic claim is barred due to serious injury threshold, a
backup suit may be in order if one goes the lien route. Additionally,
one is wise to get an explicit agreement from the insured's attorney to
protect this lien, or otherwise one should probably assert one's own
claim either by intervention (where allowed) or by a direct suit against
the tortfeasor.
Insured's attorney is not entitled
to contingency fee on an APIP lien.Allstate Ins. Co. v. Denbleyker, 280 A.D.2d 204, 206 (4th Dep't 2001) stated that, "although the services of defendant's attorneys led to the availability of the fund against which Allstate placed its lien, the contingency fee agreement was between the defendant and her attorneys and cannot be enforced against one not a party to the agreement, in this case the lienor." CitingBreier v. Government Emp. Ins. Co., 79 A.D.2d 967 (1st. Dept. 1981)(which addressed a PIP lien). The Breier court noted that "[s]ome of us feel that there might be a claim in quantum meruit, but we do not reach that aspect." Thus, if an insurance company pays $50,000 in APIP, and the insured recovers $100,000 from a defendant, the Insurance company gets $50,000 (perhaps less some quantum meruit compensation for the attorney), and the attorney
and his/her client share the remaining $50,000 as per their retainer.
APIP may be recovered even if serious injury
threshold is not reached. This is because 5104 only excludes
basic economic loss, and only requires serious injury for recovery
of non-economic losses. See Colvin v. Slawoniewski, 15
A.D.3d 900, 789 N.Y.S.2d 368 (4th Dept. 2005), Tortorello v.
Landi, 136 A.D.2d 545, 545-546, 523 N.Y.S.2d 165 (2nd Dept.,
1988).
Note that the tortfeasors must have acted negligently at
the same time, for instance two negligent drivers causing an accident
in which another person is injured (as opposed to one person who is
injured and then later on is the victim of medical malpractice).
A and B negligently injure C
and C sustains $10,000 in property damages and $100,000 dollars in
bodily injury. C sues A only, who is found to be 50% at fault. A is
liable for $10,000 in property damage, since this limitation to joint
and several liability does not apply to property damage), but only
liable for $50,000 of the bodily injury.
How does the Plaintiff's own negligence figure into this situation?
Say, for instance Plaintiff is found 5% at fault, while A is found 50%
at fault and B is found 45% at fault? Do we include Plaintiff's fault
int he math, and therefore find that A is not more than 50% liable and
therefore not jointly and severally liable for B's 45%, or do we just
look at the two tortfeasors, and conclude that A is more than 50% liable
and thus subject to joint and several liability. The statute is not at
all clear on this issue. However, the highly influentcial treatise New
York Practice by professor Siegel (§ 168B) argues that the Plaintiff's
percentage should not be included and thereofre A is jointly and
severally liable. Robinson v. June, 167 Misc.2d 483, 637 N.Y.S.2d 1018 (Sup. Ct. Tompkins County, 1996) agreed with this conclusion.
THERE ARE SOME VERY IMPORTANT LIMITATIONS TO THIS EXCEPTION TO JOINT AND SEVERAL LIABILITY.
When these exceptions apply, the joint tortfeasor may be found liable
for 100% of the damages even if they are not more than 50% at fault.
Some of these exceptions come from N.Y.C.P.L.R. § 1601 itself, while
there are other exceptions that appear in N.Y.C.P.L.R. § 1602. Here are
some of the key exceptions:
Claims for economic damages (e.g. property damage). This point is explicit in CPLR 1601.
Wrongful death claims. Ryan v. Beavers,
170 A.D.2d 1045, 566 N.Y.S.2d 112 (4th Dep't 1991) ("The court correctly
found that the CPLR article 16 affirmative defense of defendants
Martinez and Speilberg does not apply to plaintiff's cause of action for
wrongful death, which involves economic loss.").
Intentional conduct or conduct with
reckless disregard for the safety of others. CPLR 1602(5), (7), &
(11). Note that in determining whether an unintentional tortfeasor's
responsibility is over 50%, any percentages assigned to intentional
tortfeasors are counted. Chianese v Meier, 98 NY2d 270, 278 (2002).
"Any person held liable by reason of his
use, operation, or ownership of a motor vehicle or motorcycle, as those
terms are defined respectively in sections three hundred eleven and one
hundred twenty-five of the vehicle and traffic law." CPRL 1602 (6).
Note that the definitions in the VTL do not include police and fire
vehicles, farm vehicles, and certain construction vehicles (so that
these particularly vehicles can still take advantage of the limitation
on joint and several liability).
A settles with C for $5,000. A
then sues B saying that B was 50% responsible for the accident. A
cannot recover from B.
General Obligations Law 15-108(b)
provides that a settling tortfeasor is also not subject to a claim
of contribution from another tortfeasor. General Obligations Law
15-108(a) provides that once a tortfeasor settles, the remaining
tortfeasor is only liable for the lesser of his share of the fault
or the remaining unpaid damage.
Example:
A settles with C for $2,000. C
then sues B for the remainign $3,000. Even if B is found 80%
liable, A can only recover $3,000. If B is found 20% liable
(meaning that A was really 80% liable and should have paid $4,000),
C recovers only $1,000 from B, and in the end is "out" $1,000.
Note, finally, that this rule
covers only contribution, not indemnification.
Example:
General Contract (GC) hires
Subcontractor (SC) to do some work, and the contract says SC will
indemnify GC for any liability arising from SC's work. SC's work
causes injury to P. GC settles with P. GC can recover from SC under
indemnification. Mas v. Two Bridges Associates, 75 N.Y.2d
680 (1990).
The same is true, for example, with a
party that settles because it is vicariously liable for the act of
another.
Example:
Employee E employs worker W, who causes damage, Employee E
is vicariously liable and may pay a claim to the injured party.
However, a party that is vicariously liable is entitled to
indemnification from the party principally at fault, and thus,
after settling, E can seek indemnification from W. Rogers v.
Dorchester Associates, 32 N.Y.2d 553, 566 (1973).
In any action to recover damages for personal injury, injury to
property, or wrongful death, the culpable conduct attributable to the
claimant or to the decedent, including contributory negligence or
assumption of risk, shall not bar recovery, but the amount of damages
otherwise recoverable shall be diminished in the proportion which the
culpable conduct attributable to the claimant or decedent bears to the
culpable conduct which caused the damages.
The statute only applies to bodily injury claims. It does not affect subrogation of property damage claims.
This statute only applies if the insured has entered into a settlement with the tortfeasor.
If the insured's case goes to verdict, contractual and equitable rights of recovery may still exist. Rink v State of New York, 27 Misc 3d 1159, 1164 (Ct. of Claims, 2010), Affirmed 87 A.D.3d 1372 (4th Dept., 2011), Rizzo v. Moseley, 913 N.Y.S. 2d. 905 (Sup. Ct. Westchester 2010)("General Obligations Law § 5-335 only applies where there is a settlement however, and thus does not implicate a health insurer's subrogation rights where the action goes to verdict"). Note, however, that pursuant to N.Y.C.P.L.R. 4545, except where permitted by statute, costs for which the bodily injury claimant was insured may not be included in the verdict in favor of the injured party. Therefore, the insurer would have to file suit separately to preserve this claim (which could be extinguished if the injured party settles). Rink and Rizzo support the ability of the insurer to intervene in the bodily injury case, although such intervention is generally disfavored in the first, second, and third appellate departments in New York (as mentioned in Rink and Rizzo).
Similarly, if the insured does not seek reimbursement from
the tortfeasor (or at least has yet to settle his or her claim),
subrogation rights still exist.
Where this law applies, it eliminates any insurer's subrogation/lien rights that are not explicitly allowed by the anti-subrogation statute (the exceptions are in Gen. Obl. L. 5-335(b)). Previously, the statute restricted subrogation "[e]xcept where there is a statutory right of reimbursement," however, the 2013 amendments eliminated this language. The following are recovery rights that the ant-subrogation law carves out. Note that short-term disability payments pursuant to Workers Comp. L. 227 seem not to have been carved-out, and hence are most likely no longer subrogable in New York:
PIP and OBEL (see note on OBEL, above, explaining that in all respects, OBEL is treated the same as PIP). This is based on the exception for recovery rights "specifically authorized pursuant to article fifty-one of the insurance law."
APIP. This is based on the exception for "a subrogation claim for recovery of additional first-party benefits." Note that it would seem that Medpay is not recoverable as there is no carve-out for Medpay.
Worker's Compensation. This is based on the exception for recovery of benefits paid, "pursuant to a policy of insurance or an insurance contract providing workers' compensation benefits."
Medicare and Medicaid
Self-funded ERISA plans are not subject to this law (due to federal preemption), while fully-funded ERISA plans will likely be affected by the anti-subrogation law.
It is our interpretation (as well as the interpretation we have seen in a number of commentaries) that ERISA will preempt the New York ant-subrogation law for self-funded plans only. This seems to be confirmed by the recent decision in Wurtz v. Rawlings Co., LLC, 761 F.3d 232 (2d Cir. 2014). Click here for a legal memo discussing this piont. Thus, if such a plan allows for subrogation/lien rights then the plan's language will preempt the anti-subrogation statute as well as any other New York law that might prevent subrogation. In the context of a lien placed on an injured party's recovery, some consideration should probably also be given to whether the plan has language that overrides New York's "Made Whole Doctrine," seee.g.Winkelmann v. Excelsior Ins. Co., 626 N.Y.S.2d 994 (1995).
Tort claims Notice and Statutes of Limitation.Note: as discussed above, the tort claims notice and SOL requirements regarding
government entities does not apply to recovery of PIP from the insurer of a "covered person" through arbitration pursuant to Ins. L. 5105, but presumably would apply to recovery pursuant to Ins. L. 5104(b) against a government entity that is not a "covered person" (i.e. the liability doesn't arise from negligence of an operator of a motor vehicle or a pedestrian, e.g. a pothole situation). Also note that the notice requirements and SOL can be very case specific and there are lots of special rules. It is probably best to file your notice of claim within 90 days and to sue within 1 year 90 days in order to be on the safe side. This is particulralry true as there is a good deal of confusion as to whether a legal entity falls under the General Municipalities Law or the Court Of Claims Act (which covers claims against the state, but includes such entities as the New York State Thruway Authority and the City University of New York).
Tort Claims Notices:
Against municipalities, etc.:Generally, if you are going to make a tort claim against a government entity, you will need to make a notice of claim within 90 days of the accident. SeeGen. Mun. L. 50-e which covers most local government entities, and Gen. Mun. L. 50-i which requires 30 days to pass from the notice of claim before suit is filed. NB: Recent amendments to 50-e permit serving a notice of claim through the New York Secretary of State (with a $250 fee per Gen. Mun. L. 53), but in that case Gen. Mun. L. 50-i requires the notice to be filed 40 days prior to filing suit. Note that per Gen. Mun. L. 50-i, when filing suit, the Complaint must recite that the notice was filed and that the required time has passed since it was filed.
Against New York State: For claims against NY State one may file suit within 90 days or serve a notice of intention to file a claim within 90 days. SeeCt. Cl. Act 10(3)
There are provisions to relax these filing rules at the discretion of the court, SeeGen. Mun. L. 50-e(5) and Ct. Cl. Act 10(6). Note that under Gen. Mun. L. 50-e(5) the latest time to file for this relief is when the SOL would expire against the government entity you are suing, whereas under Ct
Cl. Act 10(6) the latest time to file for this relief is whatever the Statute of Limitations would be if you were suing a private individual for the same claim.
Generally, whether leave to file late appeal should be granted is judged by particular standards largely involving the excuse for the failure to file in time and the prejudice to the government entity by allowing the claim to go forward. However, Matter of St. Paul Guardian Ins. Corp. v. Pocatello Fire Dist., 90 A.D.3d 761, 762 (2nd Dept., 2011) indicates that as long as the government entity has actual notice of the the facts constituting the claim, and has not been prejudiced by the late notice, then no excuse for the failure to file a timely notice is required.
Note that an insurer filing suit in subrogation may rely on the tort claims notice filed by its insured. Hartford Ins. Co. v City of New York, 29 AD3d 519 (2nd Dept. 2006).
Statutes of Limitations:
Against municipalities, etc.:The SOL is one year and 90 days (2 years for a wrongful death claim), per Gen. Mun. L. 50-i. NOTE: Previously, certain entities such as the Port Authority used to have a 1 year SOL. N.Y.C.P.L.R. 217-a specifies that the SOL for suit against any state agency, political subdivision of the state, agencies of political subdivisions, etc. is the greater of 1 year 90 days or whatever is statutorily specified for the specific entity.
Against New York State:The SOL for a tort claim against New York state is 2 years (1 year for an intentional tort, though for claims against state agencies is expanded to 1 year 90 days by N.Y.C.P.L.R. 217-a). Ct. Cl. Act 10(3-a) and (3-b). Note that this time limit can be expanded per Ct. Cl. Act 10(6) up to the time one would have had if one were suing a private entity, and subject to the court's discretion.
Requirement of written notice of a defect in the road. Under
Gen. Mun. L. 50-e(4), a municipality may limit its liability for a defect in a road to those situations where the
municipality had prior written notice of that defect. Defects that can be treated this way include "dangerous or
obstructed condition of any street, highway, bridge, culvert, sidewalk or crosswalk, or of the existence of snow or ice
thereon." Some important notes:
In order to exempt itself from liability, the municipality must have a law on its books requiring that it receive
written notice of defects before it can be held liable for them.
Municipalities may not exempt themselves from liability for any other issue other than a defect in the street/sidewalk
itself. For instance, a municipality may not require written notice before it can be held liable for its failure to
maintain or erect traffic control devices such as stop signs. Adams v. Town of Lisbon, 170 A.D. 2d 901 (3rd. Dept.
1991), Fitzpatrick v. Barone, 215 A.D. 2d 351 (2nd Dept. 1995), compareForsythe-Kane v. Town of
Yorktown 249 A.D.2d 505 (2 Dept. 1998)(foliage obstructing line of sight is an obstruction in the street and may
require written notice).
Note that this law merely allows a municipality to require written notice in particular situations before it can
potentially be held liable. In all cases, whether the municipality had actual or written notice of the defect will be a
significant part of determining whether the municipality was negligent.
Immunity for certain vehicles absent "reckless disregard." There
are a number of statutes that exempt public entities/workers from liability for simple negligence. For instance, Veh. &
Traf. L. 1103 (b) states that the rules of the road generally do not apply to anyone working on highways (which means
any public street, not just highways as the term is used in general and includes work such as snow removal) and that such
workers are exempt from liability unless the person acts with "reckless disregard for the safety of others." SeefurtherRiley v County of Broome, 95 N.Y. 2d 455 (2000)(holding that hazard vehicles have the same immunity
as others "engaged in work on a highway."). Similarly, Veh. & Traf. L. 1104 excuses emergency vehicles from certain
rules of the road, but states that they can be held liable if they act with "reckless disregard." Saarinen v. Kerr,
84 N.Y.2d 494, 501 (1994) provides a standard for "reckless disregard" in the context of emergency vehicles, and Riley v
County of Broome, 95 N.Y. 2d 455, 466-467 (2000) states that the same standard applies to the exemption in section 1103
as well. This is how Saarinen explains the standard:
Faced squarely with this question of statutory interpretation for the first time, we hold that a police officer's
conduct in pursuing a suspected lawbreaker may not form the basis of civil liability to an injured bystander unless the
officer acted in reckless disregard for the safety of others. This standard demands more than a showing of a lack of "due
care under the circumstances" — the showing typically associated with ordinary negligence claims. It requires evidence that
"the actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so
great as to make it highly probable that harm would follow" and has done so with conscious indifference to the outcome
(Prosser and Keeton, Torts § 34, at 213 [5th ed]; see, Restatement [Second] of Torts § 500).
It is important to note that the reckless disregard standard appplies only in certain situations. An excellent discussion
of the reckless disregard standard and highway and emergency vehicles can be found here. Some key restrictions are as follows:
The reckless standard only applies to road work vehicles when they are "actually engaged in work on a highway,"
Veh. & Traf. L. 1103(b). According to Guzman v. Bowen, 38 A.D.3d 837, 837-838 (2nd Dept. 2007) the "work on
a highway," must be "construction, repair, maintenance or similar work" (probably including towing and snow/ice removal)
and not general municipal work such as garbage collection. Where a highway vehicle is not engaged in such "work on a
highway," regular standards of negligence will apply rather than the reckless disregard standard. SeeGuzman,
38 A.D. 3d at 838.
The reckless disregard standard applies to emergency vehicles only when they are "authorized emergency vehicle[s] . .
. involved in an emergency operation" and only when their negligent act relates to particular rules from which Veh. &
Traf. L. 1104(b) excempts such vehicles ((a) stopping/standing/parking in an intersection; (b) proceeding past red lights/stop
signs but only after slowing down as may be necessary for safe operation; (c) exceeding the speed limit; and (d) disregarding reguations on directions of movement or turning in specific directions). Thus, in Kabir v County of Monroe, 16 N.Y.3 (2011), a police officer looking down at his terminal for several seconds and thus rear-ending a car in front of him was not engaged in one of the activities specifically permitted in Veh. & Traf. L. 1104(b) and the regular negligence standard, rather than the reckless disregard standard applied. Also, it seems that the courts will construe whether an emergency vehicle was engaged in the listed activities quite narrowly. In Lograsso v City of Tonawanda, 87 A.D.3d 1390 (4th Dept. 2011) the court wrote that, Defendant "did not in fact proceed past a stop sign, conduct that is exempted from the rules of the road under section 1104 (b), but rather he stopped and looked both ways before he proceeded into the intersection and struck plaintiff's vehicle. Thus, the court properly concluded that his 'injury-causing conduct . . . is governed by the principles of ordinary negligence.'" (citations omitted)
Note that although Veh. & Traf. L. 1104(c) states that an emergency vehicle may only engage in the permitted conduct if it has engaged its sirens, courts have held that use of sirens is not required in order for the emergency vehicle to qualify for the reckless disregard standard, Nikolov v Town of Cheektowaga, 96 A.D.3d 1372, 1373 (4th Dept. 2012), although whether or not a siren was engaged may be probative of whether the operator of the emergency vehicle acted with reckless disregard. Seee.g.Badalamenti v. City of New York, 30 A.D.3d 452, 453 (2nd Dept. 2006).
Vicarious Liability Of Motor Vehicle Owners Except As Superceded By Federal Law: Veh. & Traf. L. 388 provides that the owner of an automobile is liable for the deaths or injuries caused by someone operating that vehicle with the owner's express or implied permission. Therefore, if John is driving Ed's car and gets in an accident, Ed can be sued for those damages. Some important notes:
There is a strong presumption that a person operating a vehicle is doing so with the owner's permission. SeeLancer Ins. Co. v. Republic Franklin Ins. Co., 304 A.D.2d 794, 797 (2nd Dept. 2003). Note that where a renter of a vehicle allows another person to drive the vehicle, that person, even if not authorized on the rental agreement, is considered to have "constructive permission" to operate the vehicle. Id. at 795-797 seefurtherMurdza v. Zimmerman, 99 N.Y.2d 375, 380-381 (2003) and M.V.A.I.C. v. Cont'l Nat'l Am. Group Co., 35 N.Y.2d 260 (1974). Note that this rule would probably still require the rental company to act as insurer of the driver even in light of the Graves Amendment discussed below.
An owner may place restrictions on the permission given to a person to operate his/her vehicle, and if those restrictions are violated, the use of the vehicle ceases to be permissive. Burmaster v. State, 7 N.Y.2d 65, 70 (1959). This is true only if the deviation from the permission is sufficient enough. For example, where the owner of a car had requested the driver to take her automobile to pick up a pizza and to "bring it right back", the driving the vehicle around while waiting for the pizza to be ready was not a sufficient deviation to negate the owner's liability. De Lancey v. Nationwide Ins. Co., 26 A.D.2d 631 (2nd Dept. 1966).
The fact that the driver lacks a driver's license does not negate permission, Carter v. Travelers Ins. Co., 113 A.D.2d 178 (1st Dept. 1985), however, it may serve to rebut the presumption of permission thus leaving a question of fact regarding permission. SeePayne v. Payne, 28 N.Y.2d 399, 406 (1971).
Rental vehicles require state minimum liability coverage which includes anyone operating the vehicle with the renter's persmission, even if the person was not authorized on the rental agreement.Lancer Ins. Co. v. Republic Franklin Ins. Co., 304 A.D.2d 794, 795-797 (2d Dep't 2003).
The rental company's coverage must be primary coverage and, to the extent of state minimums, the rental car company/its insurer may not seek to recover its liability payments from its renter or from a person driving the rental vehicle with the renter's permission, even if that driver was not authorized on the rental agreement.ELRAC, Inc. v. Ward, 96 N.Y.2d 58 (N.Y. 2001) held that N.Y. Veh. & Traf. L. 370 requires rental companies to provide primary coverage for state minimums. That insurance must inure to the benefit of permissive users, and the rental car company may not seek indemnification from the renter/permissive user for damages paid within state minimums. That this requirement includes drivers who are not on the rental agreement but are permitted by the renter to drive the vehicle is discussed in Lancer Ins. Co. v. Republic Franklin Ins. Co., 304 A.D.2d 794, 795-797 (2d Dep't 2003). Note that ELRAC v Masara, 96 N.Y.2d 847 (2001) seems to come to a contrary conclusion, at least regarding property damage coverage, but this decision was regarding a property damage claim at a point where New York law did not require property damage liability coverage. SeeLancer, 304 A.D.2d at 797-798 and Matter of Allstate Ins. Co. v ELRAC Inc., 26 Misc. 3d 1234A (N.Y. Sup. Ct., Kings County, 2010). Note furhter that these rules would likely not apply to damage to the rental vehicle itself.
New York liability policies include coverage for damages to vehicles rented by the insured and the insured's resident relatives. N.Y. Ins. L. 3440(b) requires that liability policies covering less than five private passenger vehicles include an endorsement covering the insured for liability for damages to rental cars rented under a term of thirty or fewer continuous days. Note that the coverage for rental vehicles comes out of the liability policy, not the collision policy, and hence is not subject to a deductibleSeethis opinion of the State Insurance Department. Coverage is also not subject to a the liability poicy limit. Seethis opinion of the State Insurance Department
Note that as discussed above the "Graves Amendment" protects a rental car companies from vicarious liability, but DOES NOT protect the rental car company/its insurer from the insurance obligations on a rental car.