Roman Catholic Diocese of Rockville Ctr. v Certain Underwriters at Lloyd's London
Annotate this CaseDecided on November 25, 2008
Supreme Court, Nassau County
Roman Catholic Diocese of Rockville Centre, Plaintiff,
against
Certain Underwriters at Lloyd's London, and London Market Companies, Defendants.
12973/07
COUNSEL FOR PLAINTIFF
Anderson, Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020
COUNSEL FOR DEFENDANTS
Nelson, Levine, De Luca & Horst, LLC
120 Broadway, Suite 955
New York, New York 10271
Leonard B. Austin, J.
In this action, Plaintiff, Roman Catholic Diocese of Rockville Centre
("Diocese"), seeks to recover from its excess Workers' Compensation insurer, Defendants,
Certain Underwriters at Lloyd's London and London Market Companies ("Lloyd's"), certain
statutorily mandated contributions which it made between October 1, 1976 and September 1,
1996. The Diocese moves for summary judgment on Defendants' seventh affirmative defense
pursuant to CPLR 3212. Lloyd's cross-moves, also pursuant to CPLR 3212, for summary
judgment dismissing the complaint in its entirety.
[*2]
BACKGROUND
For a period of twenty years between 1976 and 1996 (the "covered period"), the Diocese obtained a series of excess insurance policies from Lloyd's. The policy limits of liability provided for a self-retention by the Diocese up to a certain designated amount. For example, Policy Number 650/GHV 051176 extended coverage in excess of an annual aggregate of $1,200,000. It also provided for a limit that the Diocese was to pay from its own "Assured Loss Fund" for any single loss. For the amount below its annual aggregate loss fund, the Diocese was self-insured. As such, through a third-party administrator, the Diocese paid losses and established reserves for claims. The Diocese's Uninsured Perils Fund was established in 1985.
A.Administrative Cost Fund
During the covered period, the Diocese, as a self insurer, was required to pay assessments towards the administrative expenses of the Workers' Compensation Board. Workers' Compensation Law § 151(2)(b) provides, in pertinent part, that "(t)he chair shall assess upon and collect a proportion of such expenses as hereinafter provided from each insurance carrier, the state insurance fund and each self-insurer including group self-insurers". Assessments for self-insurers and the state insurance Fund are proportionate to the amount of the total compensation payments made by self-insurers and the State Insurance Fund in any year bore to the total amount of compensation paid by self-insurers, the State Insurance Fund and all insurance carriers.B.Special Disability Fund
Workers' Compensation Law § 15(8)(h) establishes a fund, the purpose of which is to
encourage employers to hire disabled individuals who would otherwise have difficulty securing
employment. The fund reimburses employers or their insurance carriers for a portion of the
payments made to a previously handicapped individual in the event of a subsequent
employment-related injury, disease or death. Section 15(8)(h)(4) directs as follows:
the chair of the board shall assess upon and collect from all self-insurers, except
group self-insurers, the state insurance fund, all insurance carriers and group self-insurers, (A) a
sum equal to one hundred fifty percentum of the total disbursements made from the special
disability fund during the preceding calendar year . . . and (B) a sum sufficient to cover debt
service, and associated costs (the "debt service assessment") to be paid during the calendar year
by the dormitory authority, as calculated in accordance with subparagraph five of this paragraph.
As with Workers' Compensation Law §151 the assessments "shall be allocated to (i) self-insurers except group self-insurers and the state insurance fund based upon the proportion that the total compensation payments made by all self-insurers except group self-insurers and the state insurance fund bore to the total compensation payments made by all self-insurers except group self-insurers, the state insurance fund, all insurance carriers and group self-insurers." Workers' Compensation Law § 15(8)(h).
C.Fund for Reopened Cases
This fund was established by Workers' Compensation Law § 25-a(3). Because the Workers' Compensation Board retains jurisdiction over cases, even when they are [*3]closed, the fund was established to provide for payment of claims made more than seven years after a compensable injury where the claim was disposed of without payment, or more than seven years after such injury for which compensation was paid, and more than three years after the last payment, or from death occurring more than seven years after a compensable injury and either more than three years from the last compensation payment or from a claim disposed of without an award. Minkowitz, Practice Commentaries, McKinney's Cons. Laws of New York, Book 64, Workers' Compensation Law § 25 - a, 2005, p. 62.
The Fund for Reopened Cases is supported by contributions from employers, or their
insurance carriers, by assessment of a specific amount for each injury causing death. The amount
depends upon the date of each such occurrence, and may be paid
either to the fund or the Uninsured Employers' Fund created by Workers'
Compensation Law § 26.
Workers' Compensation Law §25-a(3) specifically provides that "(s)uch assessments and payments made into said fund shall not constitute an element of loss for the purpose of establishing rates for workers' compensation insurance as provided for in the insurance law but shall for the purpose of recoupment be treated as separate costs by carriers. Carriers are to assess such costs to their policyholders in accordance with rules set forth by the New York workers' compensation rating board, as approved by the superintendent of insurance." As discussed herein, the Court finds that the various cited, applicable statutes all contain similar language to the effect that the proscribed assessments and payments do not constitute elements of loss.
The pending motion and cross-motion raise the issue as to whether the various policies of
excess Workers' Compensation insurance cover the assessments and payments which were
required under the foregoing statutes.
LEGAL STANDARDS
A.Summary judgment
Summary judgment is the procedural equivalent of a trial. Capelin Assoc., Inc. v. Globe Mfg. Corp., 34 NY2d 338, 341 (1974). The statutory standard for the supporting proof required on a motion for summary judgment is set forth in CPLR 3212(b). The motion requires an affidavit by a person with knowledge of the facts, together with a copy of the pleadings and other available proof. See, Zuckerman v. City of New York, 49 NY2d 557 (1980). The party seeking summary judgment must establish an entitlement as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986). Once the party seeking summary judgment makes a prima facie showing of entitlement as a matter of law, the party opposing the motion must come forward with proof in evidentiary form to establish the existence of triable issues of fact. Zuckerman v. City of New York, supra; and Davenport v. County of Nassau, 279 AD2d 497 (2nd Dept. 2001). It is not the role of the Court to determine credibility. Capelin Assoc., Inc. v. Globe Mfg. Corp., supra at 341. Rather, it must determine whether there is a genuine question of fact so as to preclude the grant of summary judgment. Id.
B.Interpretation of Agreements of Insurance
As with all contracts, the most basic rule in construing insurance agreements, is that the policy language should be given its popular and ordinary meaning, unless it is [*4]apparent from a reading of the whole instrument that a different or special meaning was intended. 1 Insurance Claims and Disputes 4th § 6.2; and Hugo Boss Fashions, Inc. v. Federal Ins. Co., 252 F.3d 608, 617 618 (2nd Cir. 2001). If the language of the policy is unambiguous, there will be no resort to extraneous evidence. W.W.W. Assocs., Inc. v. Giancontieri, 77 NY2d 157, 162 (1990). Whether a document is ambiguous is a question of law for the court. Innophos, Inc. v. Rhodia, S.A., 10 NY3d 25, 29 (2008); Van Wagner Advertising Corp. v. S & M Enters, 67 NY2d 186, 191 (1986); and 9394 LLC v. Farris, 10 AD3d 708 (2nd Dept. 2004).
C.Section II - The Insuring Agreements
The Diocese subscribed to various policies during the covered periods. Among the coverages
afforded was Workers' Compensation, for which the scope of insurance
was set forth in the various policies. For the period beginning in 1976, it was stated
as follows:
AGREEMENT F - WORKMEN'S COMPENSATION: The Underwriters
hereby agree to indemnify the Assured for financial loss caused by personal injuries to his
employees (including occupational disease) when the Assured is legally liable therefor to said
employees (including death resulting therefrom) arising out of and in the course of employment
by the Assured, provided such injuries were sustained during the continuance of this Insurance.
For the policy period commencing on September 1, 1985 and terminating on September 1,
1988, the language setting forth the obligations of Lloyd's to the Diocese was as follows:
AGREEMENT F - WORKERS' COMPENSATION, EMPLOYER'S LIABILITY
AND OCCUPATIONAL DISEASE
Coverage A - Workers' Compensation - The Underwriters hereby agree to pay
promptly when due all compensation and other benefits required of the Assured by the workers'
compensation law as a result of injury (1) by accident occurring during the period of this
insurance, or (2) by disease caused or aggravated by exposure of which the last day of the last
exposure, in the employment of the Assured, to conditions causing the disease occurs during the
period of this Insurance.
Coverage B - Employer's Liability - The Underwriters hereby agree to pay on behalf
of the Assured all sums which the Assured shall become legally obligated to pay as damages
because of personal injury by accident or disease, including death at any time resulting therefrom,
(a)sustained in the United States of America, its territories or possessions, or Canada by any employee of the Assured arising out of and in the course of his/her [*5]employment by the Assured, or
(b)sustained while temporarily outside the United States of America, its territories or possessions, or Canada by any employee of the Assured who is a citizen or resident of the United States or Canada arising out of and in the course of his/her employment by the Assured; but this insurance does not apply to
any suit brought in or any judgment rendered by any court outside the United States of
America, its territories or possessions, or Canada or to an action on such judgment wherever
brought,
as a result of injury (1) by accident occurring during the period of this Insurance, or
(2) by disease caused or aggravated by exposure of which the last day of the last exposure, in the
employment of the Assured, to conditions causing the disease occurs during the period of this
Insurance.
For the covered periods, September 1, 1989 — September 1, 1994, the above language from the prior covered period was unchanged.
D.Self-Insurer Status
Immediately after the language addressing Workers' Compensation, the following appears:
SELF-INSURERS STATUS The Assured agrees to duly qualify as a self-insurer by
compliance with the provisions of the Workers [sic.] Compensation and/or Occupational
Disease Law respecting self-insurance in the State of New York and shall continue to maintain
that status throughout the period of this Insurance provided, however, Underwriters shall not be
relieved of their obligations hereunder because of a breach of this condition until (1) the Assured
becomes insured with respect to his Workers' Compensation and/or Occupational Disease
Liability or (2) the expiration of a period of thirty days after date of the notice served upon the
Assured by the Industrial Commission terminating his status as a self-insurer, whichever occurs
first.
E.Definition of Terms
The section which follows the self-insured status provides:
1. PERSONAL INJURIES - The term personal injuries' wherever used herein shall
mean:
(a)Bodily Injury, Mental Injury, Mental Anguish, Shock, Sickness Disease
[sic.] Disability, False Arrest, False Imprisonment, Wrongful Eviction, Detention,
Malicious Prosecution, Discrimination, Humiliation, Invasion of Rights of Privacy, Libel,
Slander or Defamation of Character; also Piracy and any Infringement of Copyright or of
Property; Erroneous Service of Civil Papers, Violation of Civil Rights, Assault and Battery, and
Disparagment [sic.] of Property.
(b)Injury(ies) arising out of the rendering of or failure to render Professional medical
[*6]services to any person or persons (other than employees of
the Assured injured during the course of their employment) by any duly qualified medical
practitioner, or nurse tecnician employed by or acting on behalf of the Assured, provided such
liability is based solely upon error, negligence or mistake committed during the period of this
Insurance.
***
4.ULTIMATE NET LOSS - The term "ultimate net loss" shall mean the total sum
which the Assured becomes obligated to pay by reason of personal injury or property damage
claims, either through adjudication or compromise, after making proper deductions for all
recoveries and salvages, and shall also include hospital, medical and funeral charges and all sums
paid as salaries, wages, compensation, fees, charges and law costs, premiums on attachment or
appeal bonds, interest, expenses for doctors, lawyers, nurses and investigators and other persons
and for litigation, settlement, adjustment and investigation of claims and suits which are paid as a
consequence of any occurrence covered hereunder, excluding only the salaries of the Named
Assured's permanent employees. Fees, charges and expenses for Gallagher Bassett Insurance
Service are specifically excluded, and are to be paid by the Assured.
DISCUSSION
In this action, the Diocese seeks to recover from Lloyd's for certain surcharges and other expenses ("Surcharges"), which the Diocese has been required to pay into various funds pursuant to the New York State Workers' Compensation Law.
The question before the Court is whether the coverage provisions of the applicable policies require payment of these statutorily mandated assessments to the Diocese by Lloyd's. The Court finds that such payments are not included in the coverage afforded by the respective policies of insurance.
Courts must determine the rights and obligations of parties under an insurance contract based
on the policy's specific language. State
Farm Mut. Auto. Ins. Co. v. Glinbizzi, 9 AD3d 756, 757 (3rd Dept. 2004). In this case,
Lloyd's, in its initial policy, agreed to "indemnify the Assured for financial loss caused by
personal injuries to his employees (including occupational disease) when the Assured is legally
liable therefor to said employees (including death resulting therefrom) arising out of and in the
course of employment of the Assured . . .". For subsequent policies, the language of Agreement
F, Workers' Compensation, was modified, but it still provided to
pay "all compensation and other benefits required of the Assured by the workers'
compensation law as a result of injury . . . or disease . . . ". Simply stated, the assessments
imposed upon the Diocese as a self-insurer cannot reasonably fall within a fair reading of the
language of Agreement F.
The reliance by the Diocese upon the definition of "ultimate net loss" is misplaced. The plain meaning of that term is to itemize the payments by the Assured [*7]which are to be considered in determining whether the maximum self-insured threshold was met so as to trigger the obligation of Lloyd's under the excess Workers' Compensation policy. It cannot be read to expand or contract the type of expenses which Lloyd's is required to pay when the threshold is met.
To the contrary, the "self-insurance status" portion of the policy requires the Diocese to comply with the provisions of the Workers' Compensation and/or Occupational Disease Law of the State of New York. One aspect of that compliance is the payment of assessments imposed upon self-insurers by the State of New York.
The language of the policy is clear and unambiguous, it requires Lloyd's to reimburse the Diocese for financial loss caused by personal injuries, disease or death incurred by employees in the course of their employment. It does not require payment of the administrative costs of being a self-insurer. The fact that expended fees and charges are to be considered in calculating the total sum which the Diocese is obligated to pay before triggering the excess Workers' Compensation coverage afforded by Lloyd's is not relevant in determining the nature of its obligation.
Lloyd's has raised additional issues with respect to the motion. These include the inadequacy of the moving papers on behalf of the Diocese, laches and late notice. With the possible exception of the adequacy of the moving papers, the Court finds Lloyd's arguments persuasive. As a practical matter, the issue which the Court must decide is whether the language of the policies encompass an obligation to reimburse the Diocese for mandated assessments. Because it does not, the Court need not rule on the additional issues raised by the Lloyd's.
Accordingly, it is,
ORDERED,that Plaintiff's motion for summary judgment dismissing the seventh affirmative defense is denied and Defendant's cross-motion for summary judgment dismissing the complaint is granted. The complaint is hereby dismissed.
This constitutes the decision and Order of the Court.
Dated: Mineola, NY_____________________________
November 25, 2008Hon. Leonard B. Austin, J.S.C.
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