Court of Appeals Determines Impact Of Policy Rescission on Additional Insured Status

In Admiral Ins. Co. v. Joy Contracting, Inc., Admiral, Joy Contracting’s excess insurer, argued that coverage was not available to its proposed additional insureds because the policy it had issued to Joy Contracting should be rescinded, reformed or declared void based upon Joy’s misrepresentations during the application process.  Joy Contracting had held itself out to Admiral as merely being a drywall contractor, when Joy was, in fact, involved in the exterior construction of the condominium.  It was Joy Contracting that had rented a crane that ultimately collapsed, killing 7 people and injuring many others. 

Relying on its earlier decision in Lufthansa Cargo, AG v. New York Mar. & Gen. Ins. Co. (40 A.D.3d 444 [1^st Dept. 2007]) and of the Second Department in BMW Fin. Servs. v. Hassan (273 A.D.2d 428 [2^nd Dept. 2000], lv. denied 95 N.Y.2d 767 [2000]), the First Department held, however, that the innocent additional insureds were unaffected by Joy Contracting’s misrepresentation.  

The First Department granted leave to appeal to the Court of Appeals, and on appeal the Court of Appeals reversed the First Department and reinstated Admiral’s causes of action for rescission, reformation and a declaration voiding the Joy Contracting policy.

Initially, the Court of Appeals distinguished BMW Fin. Servs. and Lufthansa, AG on the basis that, in each of those cases the insurer was specifically made aware of the additional insured when it undertook to provide coverage. The Court of Appeals observed that “the named insureds’ misrepresentations did not deprive the insurer of knowledge of or the opportunity to evaluate the risks for which it was later asked to provide coverage.” In short, since both BMW and Lufthansa were named additional insureds, they were considered “separate parties” whose interests were known to the insurers, whereas, by contrast, in Admiral v. Joy, Admiral underwrote the risk as though Joy Contracting was a drywall contractor, “not the obviously much greater risk presented by exterior construction work with a tower crane at a height many stories above grade.”

The Court of Appeals also distinguished its prior decisions in Morgan v. Greater N.Y. Taxpayers Mut. Ins. Assn. (305 N.Y. 243 [1953]) and Greaves v. Public Ser. Mut. Ins. Co. (5 N.Y.2d 120 [1959]), upon which BMW Fin. Servs. and Lufthansa, AG were based. Unlike the matter before the Court, neither Morgan nor Greaves involved rescission of the named insured’s policy. As such, the Court of Appeals went a step farther and declined to support BMW Fin. Servs. and Lufthansa, AG to the extent that those decisions could be read to expand the holdings of Morgan and Greaves. Simply stated, the Court found that rescission of the policy to the named insured would leave nothing for which the additional insured could be considered “additional,” because “by definition [the additional insured] must exist in addition to something” (emphasis in original).

First Department Affirms Increased Pain and Suffering Award for Amputated Ring Finger, but As A Matter of Law Sets Aside Finding of Negligence Against Plaintiff

In Once v. Service Ctr. Of N.Y., the First Department affirmed additur for a partial ring-finger amputation and searched the record to grant plaintiff judgment on liability. The trial court ordered additur to $200,000 from a jury verdict of $60,000, increasing the awards for past pain and suffering from $50,000 to $75,000 and future pain and suffering from $10,000 to $150,000 over 27 years. Plaintiff had the distal portion of his ring finger amputated in a power-saw accident.

The jury had also apportioned 70% liability to the plaintiff, and the trial court reduced plaintiff’s apportioned liability to 15%. Yet, the First Department went further by searching the record, as plaintiff did not appeal from the judgment, to grant plaintiff judgment on liability. The Court stated that there “was no evidence that plaintiff misused the saw,” which had no guard in violation of the Industrial Code.

Corrections Officer Not Entitled To The Extraordinary Protections of Labor Law § 240(1)

In Bolster v. Eastern Bldg. & Restoration, Inc., the plaintiff was a corrections officer who was injured when workers dropped a doorframe on his shin and foot at a prison construction site.  The Third Department affirmed the dismissal of plaintiff's Labor Law § 240 & 241(6) claims.   The Court held, however, that the officer could proceed on claims under section 200 and common-law negligence.

As to Labor Law § 240, the Third Department noted that the section does not cover site security workers who do not participate in construction activities. Here, the Court found that the corrections officer did not participate in the construction work and was present to escort workers to and from the prison work site. Despite being present during the construction work, his job was simply to ensure that no contraband was smuggled into the prison and that the workers were safe from inmates. As a result, the Court concluded that the section 240 claims were properly dismissed because the officer was not a covered worker (a similar result recently reached by the First Department in Kutza v. Bovis Lend Lease LMB).

On the other hand, the corrections officer was a covered person under section 241(6) because he lawfully frequented the work site, but the officer failed to allege a violation of a relevant rule or regulation as a predicate to section 241(6) liability. The Third Department held that the plaintiff’s injuries were unrelated to the proffered regulations involving inspections or dropping steel from buildings. The Court concluded that this accident occurred simply because workers lowering a doorframe purposefully dropped it to their feet when it was at a waist-high level.

First Department Addresses The Scope Of The Duty Of A Primary Care Physician

In Burtman v. Brown, the First Department addressed whether the plaintiff’s primary care physician had a duty to supervise or override a course of treatment initiated by another physician actively treating the plaintiff.  More specifically, at issue was the care provided by a primary care physician in possession of a radiology report that was ordered by the plaintiff's obstetrical practice showing two abdominal masses.  The obstetrical group ordered the radiology report after discovering the masses during a pregnancy checkup.  The report declared that the masses were "consistent with benign lipoma" and the obstetrical group decided to take a wait-and-watch approach.  The plaintiff claimed that based on the radiology report in the primary care physician's possession, she should have discussed it with the plaintiff and sent her for a biopsy.  The plaintiff, however, did not have a biopsy until more than a year later.  According to the plaintiff, by then the biopsy results showed a potential malignancy requiring a wide radical excision.    

The First Department held that "[i]n this case" the motion court erred in finding that the primary care physician had an independent duty to assess the plaintiff's condition and order diagnostic testing such as a biopsy.  According to the Court, the question of a duty is a legal question for the court and is generally not an appropriate subject for expert opinion.  In that regard, the Court held that there is "no legal authority for the view that a primary care physician has an independent duty to assess the course of treatment set and monitored by another physician."  Thus, the defendant’s status as the plaintiff’s primary care physician is not dispositive as to whether a duty exists.  Instead, the question turns on whether the primary care physician undertook to advise the plaintiff about her condition and whether the plaintiff relied on that advice.  Since it was undisputed that the primary care physician was not involved in setting or monitoring the course of treatment for the plaintiff's abdominal masses, the Court held that there was no duty and granted summary judgment for the primary care physician.

In dissent, Judge Tom argued that primary care physicians, by their nature, should owe a duty with respect to the general health of their patients.  Thus, according to Judge Tom, where a physician has undertaken to provide primary medical care, there is a duty to advise the patient of those conditions known to the physician that pose a threat to the patient's health so that the patient may make an informed decision whether to seek further treatment. Furthermore, as the physician primarily responsible for the patient's care, there is an additional duty to take such appropriate medical action as might be necessary to diagnose and treat the condition, either personally or by way of referral to a qualified practitioner.  Judge Tom, therefore, would have affirmed finding that the primary care physician should have reviewed the radiology report with the plaintiff and sent her for a biopsy.