Gramieri v City of New York

[*1] Gramieri v City of New York 2005 NY Slip Op 51334(U) Decided on August 5, 2005 Supreme Court, New York County Feinman, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 5, 2005
Supreme Court, New York County

Maria Gramieri, Plaintiff,

against

The City of New York and Bovis Lend Lease, Inc., Defendants. BOVIS LEND LEASE LMB, INC. s/h/a BOVIS LEND LEASE, INC., Third Party Plaintiff, ATLANTIC HEYDT CORPORATION, Third Party Defendant. VERIZON HEALTH PLAN, INC. Proposed Plaintiff-Intervenor.



102096/2002



For the Plaintiff:For the City: For Bovis Lend Lease:

Mark Gertler, Esq.Michael CardozoFrancine Scotto, Esq.

Eric H. Green, Esq.Corporation CounselNewman Fitch Altheim Myers, PC

295 Madison Ave.By: Natasha L. Godby, ACC14 Wall St.

New York NY 10017100 Church St.New York NY 10005-2101

(212) 532-2450New York NY 10007(212) 619-4350

For Atlantic Heydt:For Verizon Health:

Susan A. Romano, Esq.Ronald J. Korybski, Esq.

Joseph A. French & Assocs. PLLCKorybski & Levinson

20 Exchange Pl.150 Broadway, Suite 1307

New York NY 10005New York NY 10038

(212) 797-3544(212) 619-2100

Paul G. Feinman, J.

On January 8, 2001, plaintiff Maria Gramieri tripped and fell on a sidewalk on Chambers Street abutting the front of the building commonly referred to as the Tweed Courthouse, but now housing the City of New York's Department of Education and City Hall Academy. At the time, the building was undergoing its much-heralded renovation allegedly supervised by managing agent Bovis Lend Lease, LMB Inc. ("Bovis"). In 2002, plaintiff commenced a negligence action against the City of New York as the landowner and Bovis seeking in excess of $2.2 million in unspecified damages.[FN1] Bovis subsequently commenced a third-party action claiming indemnification or contribution against its contractor Atlantic Heydt Corporation ("Atlantic"), which was performing work at the Tweed Courthouse pursuant to a written contract.

The case is still in the pre-note of issue discovery phase and has not yet reached the calendar for the Court's mediation and early case settlement programs. Nonetheless, non-party Verizon Health Plan, Inc. ("Verizon") moves to intervene in this action pursuant to CPLR 1012(a)(2) and 1013 in order to guarantee that it will recoup the monies it has paid to plaintiff to reimburse her for medical bills.[FN2] Defendants City and Bovis and third-party defendant Atlantic all oppose intervention. The plaintiff, while not conceding Verizon's right to a lien, has no objection to intervention. For the reasons set forth below, intervention is denied as premature.

At the time of her accident, plaintiff was enrolled as a member of a self-funded employee welfare plan issued by Verizon, enacted in accordance with the Employee Retirement Income Security Act of 1974 (ERISA) (29 USCA §§ 1001 et seq.). Verizon argues that it is subrogated to the rights of plaintiff against the defendants "to the extent of payments made by the Health Benefits Plan as a result of the aforesaid incident" (Ord. to Show Cause Korybski Aff. ¶ 6). It points to § 7.14 of the Plan (Ord. to Show Cause Ex. C), entitled "subrogation," which states that the plan is subrogated to all claims, actions and rights of recovery by a covered person against a third-party or a third-party's insurer "to the extent of any and all payments made hereunder by the Plan." Section 7.14 further states that the covered person or her legal representative "shall execute and deliver such instruments and papers as may be required and do whatever else is necessary to secure such rights." In addition, the "costs of legal representation of the Plan. . . in matters relating to subrogation shall be borne solely by the Plan," while the "costs of legal representation of the Covered Person shall be borne solely by the Covered Person." Moreover, according to § 7.13, "[a]ny payment of benefits under any Participating Plan shall be made on condition and with the agreement and understanding that the Participating Plan shall be reimbursed therefor by the Covered Person . . . to the extent of the amount received by the Covered Person from any third party." It states that the "Covered Person shall grant to the Plan . [*2]. . a first priority lien against such settlement or judgment and shall assign to the Plan . . .any benefits the Covered Person may have under any insurance policies or other coverage to the extent of the Plan's . . . claim for reimbursement."

Verizon seeks to intervene pursuant to CPLR 1012(a)(2) and 1013. CPLR 1012 (a)(2) allows intervention when "the representation of the person's interest by the parties is or may be inadequate and the person is or may be bound by the judgment." CPLR 1013 gives the court discretion to grant a motion to intervene when the claim or defense and the main action have a common question of law or fact. Verizon argues that plaintiff does not have the same incentive to recover the monies which have been paid on her behalf as it does to recoup its payments, and for that reason alone, it has the right to intervene to protect its interests. It also argues that both its claim and plaintiff's arise out of the same acts and omissions (Ord. to Show Cause Korybski Aff. ¶¶ 13-14).[FN3] In addition, Verizon argues that if there were a judgment in favor of the defendants, that judgment might have a collateral estoppel effect on any subsequent subrogation action it might bring against the alleged tortfeasors (Ord. to Show Cause Korybski Aff. ¶ 15).

The Court of Appeals has permitted intervention by a medical insurer so that it could establish its contractual right to reimbursement for any medical expenses which were included in a settlement agreement reached between the plaintiff and the defendant hospital and doctors and which excluded the insurer (Teichman v Community Hosp. of Western Suff., 87 NY2d 514 [1996]). In Teichman, the insurer did not have a lien on the funds but claimed a right of refund under its insurance contract. Teichman observed that the there was evidence that the settlement may have intended to include some payment for medical expenses, and held that it was therefore proper to allow intervention by the insurer to seek a refund of any medical expenses included in the settlement, "both prevent[ing] a potential double recovery by plaintiffs and assur[ing] that tortfeasors, not ratepayers, will ultimately bear the expense." (Teichman at 523).

Subsequently, in Humbach v Goldstein, 229 AD2d 64 (2d Dept. 1997), lv dismissed 91 NY2d 921 (1998), the Appellate Division, Second Department cited Teichman but held that where an insurer moved to intervene prior to the trial, its claim for subrogation and entitlement to reimbursement were premature because it had not reserved to itself any right to veto any proposed settlement agreement; moreover a lien existed in the insurer's favor as to third-party payments which were specifically identified as amounts paid for health care services, thus adequately protecting the insurer's rights.[FN4] Similarly, in Halloran v Don's 47 West 44th Street [*3]Rest. Corp., 255 AD2d 206 (1st Dept. 1998), the Appellate Division, First Department denied an insurer's motion to intervene on the grounds that it was premature as the insurer's contract gave it no right to reimbursement until the plaintiff actually recovered compensation for medical services, and because intervention would likely result in placing the interests of the insurer in impermissible conflict with those of the insured (see also, McGuire v Long Island Jewish-Hillside Med. Ctr., 237 AD2d 417 [2d Dept. 1997], lv dismissed 91 NY2d 922 [1998]).

Several trial courts have reached different results on the issue of intervention by an insurer depending, of course, on the facts. In Johnson v United Healthcare Serv. Corp., 173 Misc 2d 907 (Sup. Ct., Columbia County 1997), the court denied the proposed intervenor's motion due to the fact that plaintiff had filed a motion to approve a proposed compromise and settlement and asked the court to include the insurer's subrogation claim in the settlement, thus ensuring protection of the insurer's claim.

The trial court in Berry v St. Peter's Hosp. of the City of Albany, 173 Misc 2d 214 (Sup. Ct., Albany County 1997), granted the motion by two insurers to intervene where the plaintiff had previously settled with the hospital in a personal injury action and the monies were entirely earmarked as payment for conscious pain and suffering, so as to allow the insurers to protect their subrogation rights as concerned possible settlement with the other defendants. On appeal, however, the Appellate Division, Third Department reversed that part of the trial court's order, concluding that it was an abuse of the court's discretion to grant intervention by permission, given that the medical costs at issue were sharply contested, and that the insurers' presence at settlement discussions would be prejudicial to the plaintiff because they could veto any settlement that did not meet their needs (250 AD2d 63 [Third Dept. 1998], lv dismissed 92 NY2d 1045 [1999]).

In contrast, other courts have granted an insurer permission to intervene. In Nossoughi v Federated Dept. Stores, 175 Misc 2d 585 (Sup. Ct., New York County 1998), which it should be noted was decided before the Appellate Division, First Department's decision in Halloran, the court granted intervention but limited the participation of the intervenor's counsel to receiving all notices, did not allow the insurer's counsel to participate in the pre-trial phase of the litigation as long as the plaintiff's counsel "diligently pursue[d]" the claim for medical expenses, and left the insurer's participation at the time of trial to the discretion of the trial judge but held that no settlement that affected the claim for medical expense reimbursement was to be made without the insurer's consent (175 Misc 2d at 590-591). Notably, Nossoughi observed that a health care insurer could avoid the problem of having to assert an equitable right to subrogation by "providing in its contracts that any medical payment made by it is a lien on any payment (whether it be for medical expenses or otherwise), subsequently received by the insured in tort litigation relating to the injury" (175 Misc 2d at 590).[FN5]

Here, although plaintiff does not concede that Verizon has "the right to a lien," she does not object to Verizon's motion to intervene, conceding it has the right to claim "any damages they [*4]believe they have sustained," as long as its claim is limited to the medical payments incurred (Pl. Aff. in Part. Opp. ¶ 3). The two defendants and the third party defendant object on various grounds. The City argues that the lien provision in the insurance contract fully protects Verizon, that Verizon can only recover if the plaintiff recovers, and that its subrogation claim is subject to whatever defenses the City asserts, citing Humbach v Goldstein. The City further contends that it will be prejudiced if, as a matter of course, it has to defend itself in both the personal injury action and in subrogation actions (City Aff. in Opp. ¶ 7). Co-defendant/third-party plaintiff Bovis argues that Verizon's motion should be denied on grounds including that it has not established that its interests are not adequately represented, and that it is premature because there is no evidence that plaintiff and her attorney would not honor a lien. Third-party defendant Atlantic opposes to the extent that Verizon's proposed complaint would include Atlantic as a direct defendant even though plaintiff has no claim against Atlantic (Atlantic Aff. in Opp. ¶ 4).

Verizon's claim that it is entitled to intervention as of right pursuant to CPLR 1012 (a)(2), because plaintiff will not vigorously pursue an adequate settlement as concerns medical expenses, is pure conjecture. Moreover, Verizon inexplicably ignores the contents of its contractual language asserting a lien when it argues that there is "no indication or evidence" that plaintiff would agree to satisfy its claim out of funds that may come to her by way of judgment or settlement (Korybski Reply Aff. ¶ 4). While it is true that plaintiff's papers do not concede the existence of the lien, but do acknowledge Verizon's "right to claim any damages . . . limited to medical payments incurred" (Gertler Aff. in Partial Opp. ¶ 3), it is apparent that plaintiff recognizes her obligation to repay Verizon for the expenses it has paid on her behalf.

Verizon also fails to make a sufficient case that it should be granted intervention by permission pursuant to CPLR 1013. The "proper test for intervention" is whether the insurer's claim would be adversely affected if intervention was not allowed, the existence of common questions of law and fact, and that no prejudice would be shown by allowing intervention (Teichman, 87 NY2d at 522). For the reason stated above, Verizon fails to show that its claim would be adversely affected if intervention were denied, given that its contract includes subrogation rights and a lien covering any amounts received by the "Covered Person" by way of settlement or judgment for claims arising out of bodily injury or illness (Not. of Mot. Ex. C, Plan ¶ 7.13). Moreover, similar to the insurer in Halloran v Don's 47 West 44th Street Rest. Corp., 255 AD2d 206, which is controlling in the First Department, Verizon Health Plan's motion is premature because according to the contract, it has no right to reimbursement until she actually recovers compensation for the medical services paid for. Accordingly, the motion by the proposed intervenor is denied as premature. However, the Court will direct that the parties promptly inform Verizon of any settlement or entry of a judgment, at which time Verizon, if so advised, can renew its application to intervene. It is

ORDERED that the motion by non-party Verizon to intervene is denied without prejudice to renewal upon settlement of the action or upon entry of a judgment. It is further

ORDERED that the plaintiff shall advise non-party Verizon within 7 days of acceptance any offer of settlement or entry of a judgment after trial in her favor.

This constitutes the Decision and Order of the Court. The parties are reminded that they are scheduled to appear at a compliance conference on August 17, 2005, at 2:00 p.m. in Room 103 of 80 Center Street, New York, New York. [*5]

The court has mailed courtesy copies of this decision to counsel.

Dated: August 5, 2005 ____________________________________

New York, New York J.S.C. Footnotes

Footnote 1:None of the parties has submitted a copy of the bill of particulars indicating whether the plaintiff's lawsuit is for past and future pain and suffering, lost wages, or past and future medical expenses, or something else. However, paragraph 24 of the verified complaint makes clear that "plaintiff was ... required to seek and obtain medical care and attention ... and ... will be compelled to do so in the future."

Footnote 2:Plaintiff's bills, as of March 19 2003, allegedly totaled $34,304.00, of which Verizon has reimbursed her $22,111.95 (OSC Korybski Aff. ¶ 5; Ex. B).

Footnote 3:Verizon has included its proposed verified complaint which incorporates the same allegations of negligence as set forth in plaintiff' complaint (OSC Ex. D). The proposed complaint is captioned Verizon Health Plan, Inc., individually and as subrogee of Maria Gramieri v The City of New York, Bovis Lend Lease, Inc. and Atlantic Heydt Corporation.

Footnote 4:Humbach also held that pursuant to CPLR 4545( c), the court would be required to reduce the amount awarded to the plaintiff by the amount of insurance reimbursement paid and therefore the insurer would not be able to recover its entire outlay since, under equitable subrogation, it had no rights greater than those of its insured (Humbach at 67). This assertion has been disputed, notably in Omiatek v Marine Midland Bank, N.A., 9 AD3d 831 (4th Dept.), app. dismissed, 3 NY3d 738 (2004); Kelly v Seager, 163 AD2d 877 (4th Dept. 1990); Nossoughi v Federated Dept. Stores, Inc., 175 Misc 2d 585, 589-590 (Sup. Ct., New York County 1998).

Footnote 5:Verizon Health Plan's contract includes a provision very similar to that advocated by Nossoughi (see, Ord. to Show Cause Ex. C, Plan, ¶ 7.13).