Excuses, Excuses

This morning brings us the Appellate Division's decision in Westchester Med. Ctr. v. Hartford Cas. Ins. Co., 2009 NY Slip Op 00528 (App. Div., 2d Dep't, 2009).

There is nothing groundbreaking here, although it does potentially add to the insurance carriers' roster of what counts as a "reasonable excuse" for the purposes of vacating a default. Here, Hartford's "employee reasonably believed that the action had been discontinued after she advised the plaintiff's counsel's office that no-fault benefits had been exhausted, thereby demonstrating a reasonable excuse for the short period of time in which they failed either to appear or to answer the complaint." Id.

I'm not exactly sure how one could reasonably believe an action was discontinued based upon merely communicating a defense to plaintiff's counsel, especially where there does not seem to have been a stipulation of discontinuance ever executed, or even an overt communication by plaintiff's counsel that one would be forthcoming. This seems to me to fall somewhere short of being "reasonable." In any event, the vacatur of the default might still be proper, given the apparent "short" delay and, perhaps more importantly, the issue of policy exhaustion.

Footnote: after having vacated the default, the Supreme Court ordered that the matter be transferred to the District Court ("325(d)-ing" the case, in the parlance), as the damages failed to meet the minimum required for Supreme Court jurisdiction.

Fraud in the Procurement

Today, we turn to a fundamental aspect of New York's insurance laws. The basic question is: can an insurance carrier cancel a New York automobile insurance policy retroactively? The basic answer is: no. As we'll see, the legal acrobatics involved in getting to that answer have an important impact on no-fault litigation.

Vehicle and Traffic Law ("VTL") § 313(1)(a) provides that "[n]o contract of insurance…shall be terminated by cancellation by the insurer until at least twenty days after mailing to the named insured at the address shown on the policy a notice of termination..."

Thus, "[i]t has long been recognized that this provision supplants an insurance carrier's common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively." Liberty Mut. Ins. Co. v. McClellan, 127 A.D.2d 767, 769 (2d Dep’t, 1987). See also A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12 Misc.3d 8 (App. Term, 2d Dep’t, 2006).

Even where there is an allegation that fraud was committed in the procurement of the insurance policy, "Vehicle and Traffic Law § 313 places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured’s negligence." Insurance Co. of North America v. Kaplun, 274 A.D.2d 293, 298 (2d Dep’t, 2000). Thus, where a carrier has failed to properly cancel an insurance policy in accordance with VTL § 313 prior to an accident, the carrier "is responsible to any innocent third parties injured in the accident, despite the proof adduced...that [the insured] obtained the policy by misrepresentations." Id.

Nevertheless, "[w]hen the insured brings an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured's misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured." Id. at 298-299.

In no-fault matters, medical providers who treat patients through an assignment of benefits do not qualify as "innocent third parties" for this purpose. See A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., supra.

However, in order to assert such a defense in a no-fault matter, the carrier must present "evidence that plaintiffs' assignors participated in the fraudulent scheme." D.A.V. Chiropractic, P.C. v. GEICO Indem. Co., 21 Misc.3d 138(A) (App. Term, 2d Dep’t, 2008). Where the carrier fails to demonstrate that the assignor was a party to the fraudulent procurement, the carrier fails to even create a triable issue of fact sufficient to defeat a provider’s motion for summary judgment, no less satisfy the burden for the carrier’s own motion for summary judgment. Id.

For the purposes of typical no-fault litigation, either on a motion or at trial, the core issue of this defense will be whether the carrier has submitted sufficient admissible evidence to demonstrate that the assignor was a party to a scheme to fraudulently procure an insurance policy. The procurement is fraudulent where there are material misrepresentations and, had the carrier had known the truth, the policy would not have otherwise been issued.

The Train Has Left The Station

Is it the crappy economy, or is the evaporation of document review work the result of outsourcing? If outsourcing is the answer, don't expect these jobs to come back anytime soon.

"Boston-based Forrester Research estimates the current value of legal work shipped overseas at $80 million; that amount is expected to grow to $4 billion in India alone by 2015."

http://www.marketwatch.com/news/story/tusker-group-grows-increased-legal/story.aspx?guid=%7B08BEA988-5D8E-45E7-8356-14DA270ABA93%7D&dist=msr_1

Fight the Trolls

Tom, here is the link from the ABA article asking about this topic. They need our perspective. too many comments about how "buyer beware" or "if you can't get a job your and idiot and don't deserve one" lets give them our POV. I hate the ABA.

http://www.abajournal.com/news/are_you_a_victim_of_an_education_hoax/#comments

The Law Professor Gravy Train May Be Coming To An End

Keep spreading the truth! From a blog commentor:

'Do you know that LSAT registrations are flat to down this year. That students' applications to law school are flat to down in a substantial number of law schools. That's never happened in a downturn in the economy before. They're catching on. Maybe this thing they are doing is not so valuable. Maybe the chance at being in the top 10% is not a good enough lottery shot in order to effectively spend $120,000 and see it blow up at the end of three years of law school.'

- Dean Richard Matasar

FINALLY, kids are starting to get the message that law school is just a scam for 90% of the class. No wonder we have the BLS and other law school trolls on all of the message boards."

http://taxprof.typepad.com/taxprof_blog/2009/01/is-the-law-professor.html

Warning! Higher Education, A Hoax On The Middle Class

Interesting cover story this month in Forbes magazine. I am relieved that the mainstream media is finally getting it. Hopefully, some kids will take this article to heart and avoid becoming indentured servants to Sallie Mae the loan shark and those awful cockroach infested paper plantations.

“The two disillusioned attorneys were victims of an unfolding education hoax on the middle class that’s just as insidious, and nearly as sweeping, as the housing debacle. The ingredients are strikingly similar, too: Misguided easy-money policies that are encouraging the masses to go into debt; a self serving establishment trading in half-truths that exaggerate the value of its product; plus a Wall Street money machine dabbling in outright fraud as it foists unaffordable debt on the most vulnerable marks.”

http://www.forbes.com/forbes/2009/0202/060.html

$30,000 A Year Fake Shitlaw Position Flooded With 100 Resumes

A fake Craigslist entry-level attorney job listing has been floating around this week. I never posted it, because I knew it was obviously a flame.


"Associate Attorney (Midtown West)
Reply to: job-991754136@craigslist.org [?]
Date: 2009-01-13, 5:41PM EST

Fast-paced 20-attorney law firm looking for an eager associate to join our growing practice. We understand that you may be a newly-admitted attorney looking for their first job. We also know that the economy is harsh right now. However, we are willing to give you a chance. Here are the details of this spectacular opportunity:

* Your salary will be $30,000 per year. We understand that this may be on the low end(since you probably are six figures in debt), but we will be able to give you unlimited opportunities for experience and you'll be making six-figures soon enough. On the other hand, we will bill our clients $300 for every hour of your work; at least you will know your work is valued by us in several ways.

* There is no health insurance, but we have an on-site 2nd year medical student who will abide by the upmost professional standards take care of any illnesses or injuries that occur, both on-site and off-site.

* You will be expected to work 12 hour days, six (6) days of week. You will be afforded 1 week of vacation time, and three (3) sick days. Your vacation time is limited to the months of January and February, as we will need you to be in the office while the partners are taking their time off in the summer. The good news is that you will earn vacation and sick pay as soon as you start. The only holidays that the Firm observes are Christmas and Thanksgiving, but you must work a half-day, as we are a busy and important firm who adheres to our clients' needs.

* Your bonus, if earned (by billing 2100 hours per year), will consist of a one-year membership to a "food-of-the-mouth" club of your choice. In 2008, every associate took advantage of this valuable program and has benefited greatly for their hard work and dedication.

Please email resume, cover letter, salary history, law school and college transcripts to the address above. We will also need you to take a drug test. All resumes and credentials will be held in strictest confidence."


Apparently, the prankster came forward today and confessed to Above the Law that he was the one behind the fake ad. What's striking is that the prankster says that he has been overwhelmingly flooded with resumes for the position.

"He received over 100 e-mails in response, some wanting to confirm it was a joke; others saying, "I think this is a joke, but just in case..." and attaching their resumes; as well as 10-15 straight applications, with cover letters and resumes. One resume included a J.D. from UPenn, claims the lister. (He says he deleted e-mails immediately, and did not retain personal information or salary histories.)

Times are bad, my friends. Two of the e-mails came from recruiting agencies: Strategic Legal Solutions (a serious agency) and Park Placements (we've never heard of them, and their website is under construction)."


http://abovethelaw.com/2009/01/funny_craigslist_job_listing_m.php#more