Congratulations to Al Galatan for a victory in the Appellate Division on April 24, 2019, in State Farm Fire & Cas. Co. v. McLaurin, 171 A.D.3d 1191, 2019 WL 1782034 (Second Department). The court reversed Judge John Rouse from Suffolk County. The Appellate Division held that insureds breached the policy conditions by settling the tort claim without State Farm's consent and therefore they could not recover SUM benefits for damages caused by the hit-and-run driver. The court stated "Here, McLaurin and Corbin failed to establish that the release issued in the Martinez action did not operate to prejudice the subrogation rights of State Farm (see Matter of Metlife Auto & Home v. Zampino, 65 A.D.3d at 1153, 886 N.Y.S.2d 697). Accordingly, the Supreme Court should have, upon reargument, adhered to the determination in the order dated May 4, 2016, granting the petition to permanently stay arbitration of the claim for uninsured motorist benefits. Read the decision here.

Country-Wide Ins. Co. v Gotham Med., P.C. (2017 NY Slip Op 07538) was decided on October 26, 2017 by the Appellate Division, First Department. The issue in this case was whether a physicians' refusal to answer questions at an examination under oath about his compliance with a consent decree with the New York State Office of Professional Responsibility formed a sufficient basis to deny No Fault claims submitted by the physician's practice. The Defendant argued that questions about the physician's compliance with the OPMC order were improper because the order was confidential relying on Public Health Law § 230(17), which provides that where an investigation of suspected professional misconduct by a physician reveals evidence insufficient to constitute misconduct but reasonable cause exists to believe the physician is unable to practice medicine with reasonable skill and safety, the physician may be ordered to have his or her practice monitored by another physician approved by OPMC, and any such order shall be kept confidential.

The Appellate Division rejected this argument finding the physician entered into the consent agreement and order in which he did not contest the charge of fraudulent practice of medicine brought against him. The doctor agreed to a penalty of a 12-month suspension of his license to practice medicine, a stay of the suspension, and, pursuant to Public Health Law § 230-a, a 60-month term of probation, of which a monitor of his practice was only one condition.

In a unanimous opinion, the Appellate Division stated, "The consent agreement and order provides that any medical practice in violation of the term permitting Scheer to practice only when monitored "shall constitute the unauthorized practice of medicine." An unlicensed health care provider is ineligible to receive no-fault reimbursement (11 NYCRR 65-3.16[a][12]), and an insurer may make a good faith determination that a medical provider assignee seeking no-fault benefits is ineligible to receive such benefits (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 322 [2005]).

Congratulations to Tom Craven for an excellent result in Kings County on July 31, 2017, a high exposure case with $2.3 Million in coverage and 100% liability against the defendant. The case settled for $375,000 based on the strength of Tom's cross-examination.

Arthur Bogoraz was indicted in 2011 for No-Fault Fraud. Two days before he was set to surrender, he fled to the Ukraine. In September 2011 he piloted his own plane from St. Maarten to Puerto Rico where he was apprehended waiting to board a commercial flight to Texas.

New York Attorney General Eric Schneiderman in his announcement of the conviction stated: "In a detailed allocution in June of 2013 before Justice Danny Chun in Kings County Supreme Court, Bogoraz admitted that between July 2006 and December 2010, in Kings County and elsewhere, he defrauded no-fault insurance companies of millions of dollars through a complex scheme involving stolen identities from medical doctors. Bogoraz admitted that as part of his scheme he persuaded radiologists to work with him and promised payment for each MRI they reviewed, interpreted and reported to the insurance companies as a no-fault insurance claim.

Bogoraz admitted that once the doctors agreed to work with him, he exploited his access to their personal information and set up separate radiology corporations without their knowledge or consent. He forged the doctors' signatures on incorporation documents, leases, and bank documents. Using their stolen identities, Bogoraz opened and operated multiple radiology corporations, including Sharp Radiology, P.C., Vital Radiology, P.C., Essential Radiology, P.C., Aurora Radiology, P.C., and Oracle Radiology of NY, P.C. Bogoraz then filed no-fault insurance claims and collected the money in bank accounts he established using the doctors' names and personal information, diverting the money to himself. Bogoraz further admitted that in addition to managing the radiology corporations and accounts, he controlled a collections law firm, Greater NY Legal Services, so that he could launder insurance monies. Mr. Bogoraz admitted that through his scheme, over a five-year period, he stole more than $8 million from insurance companies. He then laundered the proceeds, cashing $1 million at check cashing stores and withdrawing more than $500,000 in cash directly from the corporations' bank accounts."

Karine Gevorkyan, the spouse of Arthur Bogoraz, filed suit against Ira Judelson, the bail bondsman, in Federal Court for the return of the $121,000 bail bond premium. When the case reached the Second Circuit, the following question was certified to the Court of Appeals of the State of New York pursuant to 2d Cir. Local R. 27.2 and § 500.27(a) of the New York Rules of Court: "Whether an entity engaged in the "bail business," as defined in NYIL § 6801(a)(1), may retain its "premium or compensation," as described in NYIL § 6804(a), where a bond posted pursuant to NYCPL § 520.20 is denied at a bail-sufficiency hearing conducted pursuant to NYCPL § 520.30, and the criminal defendant that is the subject of the bond is never admitted to bail."

The Court of Appeals held Insurance Law § 6804(a) prohibits a bail bond surety from retaining a premium when the criminal defendant is not released on bail. "In our view, the risk associated with the bail bond is that the principal admitted on bail he will fail to appear and the bail bond will be forfeited (see CPL 540.10). If the posted collateral does not cover the bail bond, the surety may suffer a financial loss. The surety does not incur this risk when the principal is not released and so has no opportunity to jump bail (see Penal Law §§ 215.55, 215.56, 215.57). While the surety assumes a binding obligation to pay the bail upon posting the bail bond, no risk attaches from this obligation alone. Risk is triggered only when the court takes additional steps following the posting, approving the bail bond and issuing a certificate authorizing the principal's release (see CPL 510.40[3] ). When a hearing is ordered under CPL 520.30, the court approves or disapproves the bail bond after the hearing (see CPL 520.30[3] ). If the court disapproves the bail bond, the surety never runs the risk it contracted to insure. In light of the statutory language and legislative history described above, the principle that premium follows risk also supports our interpretation of Insurance Law article 68 as providing that, when a court holds a bail source hearing under CPL 520.30, the surety may retain a premium only when the principal is released on bail." See Gevorkyan v. Judelson, 29 N.Y.3d 452 (2017) attached.

Arthur Bogoraz has now set up shop in Canada, under a company selling corporate wellness called Vital Management.

A general manager at Glenn Falls Country Club walks into the Pro Shop and takes a swing at the locker room attendant, striking him in his groin. The locker room attendant doubles over in pain; the manager laughed and walked out. The defendant described the contact as accidental and minimal and stated that the plaintiff gave no indication he had been injured. The plaintiff was seriously injured and required surgical removal of his left testicle. Is a suit between fellow employees for pain and suffering barred by the Worker's Compensation Law?

No, says the Appellate Division Third Department in a March 2017 opinion in Montgomery v. Hackenburg, 148 A.D.3d 1329, 49 N.Y.S.3d 578 (N.Y. App. Div. 2017).

"There is no dispute that plaintiff and defendant were co-employees, that plaintiff was injured in the course of his employment and that he collected workers' compensation benefits for his injuries. Pursuant to Workers' Compensation Law § 29(6), these benefits are the exclusive remedy for an employee injured "by the negligence or wrong of another in the same employ." Having the same employer is not synonymous with being "in the same employ" and, to be shielded from liability, a defendant "must himself [or herself] have been acting within the scope of his [or her] employment and not have been engaged in a willful or intentional tort" (Maines v. Cronomer Val. Fire Dept., 50 N.Y.2d 535, 543, 429 N.Y.S.2d 622, 407 N.E.2d 466 [1980]; see Hanford v. Plaza Packaging Corp., 2 N.Y.3d 348, 350, 778 N.Y.S.2d 768, 811 N.E.2d 30 [2004] ). Here, there is no indication that plaintiff was involved in any horseplay (compare Briger v. Toys R Us, 236 A.D.2d 683, 683, 653 N.Y.S.2d 199 [1997] ). The differing versions of the event presented by the parties, as well as the two club employees who supported plaintiff's version, raise genuine questions of fact as to whether the defendant intended to strike plaintiff and did so in an excessive manner given the sensitive area of impact. Although defendant was not directly disciplined by the club and resigned to take a new position a few months after the incident, a question of fact also remains as to whether the club condoned defendant's actions. As such, we conclude that Supreme Court properly determined that questions of fact existed as to whether defendant acted in a "grossly negligent and/or reckless" manner when he swung the golf club shaft and struck plaintiff, as alleged in the complaint (see Shumway v. Kelley, 60 A.D.3d 1457, 1459, 876 N.Y.S.2d 299 [2009] )."

Read the decision here.

More On Lost Wages Under No-Fault: Consider the July 27, 2017, decision of the Appellate Division, Third Department in Freligh v. Gov't Employees Ins. Co., 152 A.D.3d 1145 (N.Y. App. Div. 2017).

On December 23, 2012, plaintiff allegedly sustained various injuries when the vehicle that he was operating was rear-ended by another vehicle. At the time of the accident, plaintiff, who had worked in the automotive parts and repair industry for a number of years, had been unemployed for approximately seven months. In January 2013, plaintiff submitted an application for no-fault benefits to GEICO. With respect to the lost wages portion of the application, plaintiff indicated that he "was due to start [a] new job" but had been unable to work since December 23, 2012, as a result of the injuries that he had sustained in the accident. Plaintiff further indicated that details regarding his position, including his salary and the employer's name and address, would be provided. Plaintiff thereafter provided the defendant with a copy of his employment application dated December 15, 2012, which reflected that plaintiff had been offered a job at VW Parts, Inc. commencing on January 1, 2013, and at a salary of $2,000 per week, with benefits. The claim for lost earnings was subsequently denied for proof of verification.

The plaintiff submitted the testimony of William Hrazanek, who was the sole shareholder of the parts business and who allegedly offered plaintiff employment. The Appellate Division noted that the testimony must be accepted as true on a summary judgment motion despite the fact that William Hrazanek admitted, among other things, that (1) he had previously pleaded guilty to the crimes of insurance fraud and offering a false instrument, (2) he had made false sworn statements in regard to the bankruptcy proceeding of a corporation, (3) he had initiated that bankruptcy proceeding as a "ruse" to forestall creditors and (4) he had paid his wife a salary from the parts business while she was a student at Columbia University for her "learning purposes."

The uncontested proof, however, was the prospective employer, VW Parts, Inc., was in financial distress and the $2,000 projected salary was incredible as a matter of law. The Court stated, "Considering the foregoing, Hrazanek's and plaintiff's subjective beliefs about the financial health of the parts business and/or their subjective beliefs about plaintiff's skills are immaterial to the resolution of whether it is reasonable to project that the parts business would have employed plaintiff at a salary of $2,000 a week. In contrast, the uncontradicted evidence that the parts business was failing, that it had not made any efforts to acquire or open an automobile repair shop, and that, even if it had, plaintiff had a demonstrated history of being unable to run a profitable automobile repair shop all bear on the reasonableness of such a projection. That material evidence established as a matter of law that the projection that plaintiff would have received $2,000 a week from the parts business is unreasonable (see Sharpe v. Allstate Ins. Co., 14 AD3d at 775; see generally Bailey v. Jamaica Buses Co., 210 A.D.2d 192, 194 [1994] ). Accordingly, defendant's motion for summary judgment dismissing the complaint should have been granted. This determination renders academic defendant's alternative argument for dismissal, that plaintiff failed to provide proper verification of his claim."

In light of the strong dissent by Judge Egan, this case may be considered by the Court of Appeals.

Read the decision here.

Congratulations to Matt Peluso for a defense verdict on the issue of liability on July 14, 2017, in Rockland County in the case of Yolaine Toto v. Amanda and Salvatore Pugliese (Index No. 30485/15) before Judge Rolf Thorsen. We tried the case in a summary jury format with parameters of $0-$100,000 and focused on the damages aspect of the case. Matt won the case on liability and the jury never reached the issue of damages.