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February 10, 2022

New York Insurance Disclosure Act May Cause Significant Changes In New York State Court Lawsuits

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Key Takeaways

  • On December 31, 2021, New York Governor Kathy Hochul signed into law the Comprehensive Insurance Disclosure Act (the “Act”).

On December 31, 2021, New York Governor Kathy Hochul signed into law the Comprehensive Insurance Disclosure Act (the "Act"). The Act, which took effect immediately, significantly increases the scope of parties' obligations to disclose relevant insurance-related information in all pending and newly filed lawsuits in the New York State Court system. Even while signing the Act, Governor Hochul appeared to recognize that some amendments to the law would be necessary. Those amendments are presently working their way through the Legislature.

Current Provisions of the Comprehensive Insurance Disclosure Act

The Act as currently enacted significantly increases parties' insurance disclosure obligations by amending the previously existing insurance disclosure rule in the New York CPLR, Section 3101(f), in various ways, including: 

  • The Act contains specific categories of insurance information that must be disclosed: 
    • a "complete copy" of all "primary, excess and umbrella policies, contracts or agreements" - including captive insurance and self-insurance - provided they are "sold or delivered within the state of New York";
    • the contact information (including telephone number and e-mail address), of "any person or persons responsible for adjusting" a claim made against any such insurance policy, including third-party claims administrators;
    • the amounts available under any such policy to satisfy a potential judgment;
    • any lawsuits "that have reduced or eroded or may reduce or erode" the amounts available to satisfy a potential judgment, "including the caption of such lawsuit, the date the lawsuit was filed, and the identity and contact information of the attorneys for all represented parties" in any such lawsuit; and
    • the amount of any payment of attorney's fees that have eroded or reduced the face value of the policy, along with the name and address of any attorney who received such payments. 
  • The Act explicitly provides that an application for insurance is deemed to be "part of an insurance agreement" and is required to be disclosed.
  • A party required to make such disclosures has "an ongoing obligation to make reasonable efforts to ensure that the information remains accurate and complete" and must "provide updated information" "within 30 days of receiving information rendering the prior disclosure inaccurate or incomplete in whole or in part." 
  • The disclosures must be made within 60 days of a party serving its answer. For actions already pending prior to the Act's effective date of December 31, 2021, the disclosures must be made within 60 days of the Act's effective date - i.e., by March 1, 2022.  

The Act also creates a new CPLR provision, Section 3122-b, which requires that any insurance information disclosed must be accompanied by a certification of completeness and accuracy by the disclosing party, as well as a certification by any attorney appearing in the action for such party, in the form of a sworn affidavit or affirmation, where appropriate.

The Proposed Amendments to the Act May Alleviate Some of the Disclosure Burdens Under CPLR 3101(f)

If enacted and signed by Governor Hochul, the amendments to the Act presently working their way through the Legislature would modify the newly enacted law in the following ways:

  • The enhanced disclosure requirements would only apply to lawsuits commenced on or after December 31, 2021. For actions filed after December 31, 2021, the enhanced disclosures would be required within 90 days of an answer, rather than 60 days.
  • The obligation to disclose insurance information would only apply if the information at issue "relates to the claim being litigated."
  • The obligation to disclose contact information for "any person responsible for adjusting" the claim at issue, including third-party claim administrators, would only require disclosure of a single "assigned individual responsible for adjusting the claim at issue."
  • The onerous requirement to disclose "any lawsuits that have eroded or may reduce or erode" the available policy limits would be eliminated. Likewise, the obligation to disclose the amount of any payment of attorney's fees that have eroded or reduced the face value of the policy would also be eliminated.
  • The "ongoing" obligation to provide updated information concerning policy erosion would be eliminated, and would only be required at the time of (1) the filing of the note of issue; (2) entering into any formal settlement negotiations conducted or supervised by the court; (3) a voluntary mediation; and (4) when the case is called for trial.
  • The requirement to disclose the insurance application would also be eliminated.

The Act as enacted on December 31, 2021 is currently the controlling law. Having passed the Senate, it remains to be seen if the amendments will pass the Assembly, and the bill will be signed by Governor Hochul. 

 

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