United States: New York Insurance Full Disclosure Act of 2022: Significant Changes to CPLR
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On December 31, 2021, New York State Governor Hochul signed into law the Comprehensive Insurance Disclosure Act.
The purported justification for the act was to reduce the use of “delaying tactics” by requiring full disclosure of the primary, excess and umbrella policies involved in the claim.
These changes will be unduly onerous for both carriers and defense attorneys, for a multitude of reasons. It imposes on the insurer the obligation to immediately identify excess policies, eroded policies and other information or contracts that affect the available coverage.
Disclosure of full insurance policies
- Amended CPLR 3101(f)(2) now requires defendants to provide plaintiffs with competitive information for any insurance contract by which a judgment might be satisfied within 60 days of service of a response.
- This includes all primary, excess and umbrella fontsand a complete copy of such policies, including declarations, insurance agreements, conditions, exclusions, endorsements and similar provisions, such as an application for insurance.
- The defendants have a permanent obligation to ensure that the information remains accurate and complete, and
must provide updated information within 30 days of receiving the information which renders the prior disclosure inaccurate or incomplete.
– The obligation exists during the for the duration of the dispute and for 60 days after settlement or entry of final judgment in the case, including all appeals.
Insurance Policy Erosion
Disclosure includes any legal proceedings that have reduced or eroded, or may reduce or erode, those amounts available under any policy.
– Also requires the amount of attorneys’ fees that eroded or reduced the face value of the policy, and the name and address of any attorneys who received those payments.
Disclosure of Contact Information
Disclosure of contact information, including telephone number and email address, of anyone responsible for resolving the complaint.
– Includes TPAs and persons within the insurance entity to whom the TPA is accountable.
Certification of the information provided
The newly added section, CPLR 3122-b, requires that information provided pursuant to subdivision (f) of section 3101 be
certified by the defendant and his lawyer that the information is accurate and complete. This new article imposes an obligation upon receipt of the complaint.
Application to pending actions
- The text of the bill states that the law takes effect immediately and applies to all “pending actions”.
– Any information required by this law which has not previously been provided in pending cases must be provided within 60 days of the effective date of the law
– Carrier must look back and comply with ongoing litigation
Obligations of the carrier
- By March 1, 2022the carrier must determine whether the requirements of CPLR 3101(f) have been met and, if not, must provide the relevant information to defense counsel.
- Going forward with cases, the carrier must:
– At the beginning of a file, identify all the policies in question.
– At the start of a case, obtain copies of all policies at issue and identify any lawsuits that have reduced or eroded the policies.
– Continuously monitor the policies in question and immediately report any changes to the defense attorney.
– Provide name, phone number and email address of adjusters (including TPAs).
– Provide up-to-date contact information throughout litigation for policyholders.
– Notify the insured that his insurance application will be given to the plaintiff’s lawyer.
Obligations of defense counsel
- By March 1, 2022the defense attorney should review all pending cases to determine what insurance information was previously disclosed and collect missing information from the carrier (complete copies of policies, adjuster contact information, etc.)
Defense counsel must provide two certifications, one from the insured and a self-certification at the time of disclosure.
There is an ongoing obligation to ensure that the information disclosed remains accurate and complete throughout litigation.
The implementation of this law raises many questions, including the effects of disclosure on the negotiation of a settlement with plaintiff’s counsel. There is no indication of the consequences a party will suffer for non-compliance or for providing false information, even by mistake. The term “pending actions” is also not defined in the amended/new status, which is particularly relevant for actions settled with a pending motion and suspended actions. We anticipate a lot of litigation interpreting these new rules.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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