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Elite Contractors Trust of NY Assessments: What To Tell Your Insureds

Former members of the Elite Contractors Trust of New York, a group self-insured trust for workers’ compensation, have received bills totaling $37 million to close the trust’s deficit. Trust administrator FCS Administrators began issuing assessment notices to affected employers on June 30. FCS assumed management of the trust last year after the original administrator, Compensation Risk Managers, LLC, forfeited its license under pressure from the New York Workers’ Compensation Board. IIABNY members have reported that their clients have received bills for assessments ranging from a few thousand dollars up to six figures.

Many IIABNY members have asked how they should respond to inquiries from their affected clients. After consulting with the attorneys at Keidel, Weldon & Cunningham, we recommend that members do the following:

• Tell clients to respond quickly to the notices; ignoring them will not make them go away.

• Suggest that clients ask FCS for payment plans in addition to those described in the assessment notices. The notices offered plans for up to 36 months, even for those employers that owe hundreds of thousands of dollars.

• Clients who have questions about their legal options should consult a qualified contract law attorney. Such an attorney can analyze the trust agreement that the employer signed and will be able to advise the employer on any recourse available.

IIABNY members with additional questions should contact Tim Dodge, Jamie Deapo or Jim Keidel.

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Insurance Dept. Opinions: Late Notice of Claims, No-Fault Insurance

The New York Insurance Department’s Office of General Counsel issued the following advisory legal opinions in May and June:

• When an injured insured is unable to return to work due to injuries arising from an automobile accident; the insured’s employer hires another person to fill the insured’s vacant position during the insured’s period of disability; and the insured cannot immediately resume her employment when she is medically cleared to return to work, the insured may recover lost wages for the period after she is medically cleared but before she actually resumes work.
• An entity need not obtain an independent adjuster’s license in New York if it only issues checks to providers on behalf of an insurer when the insurer funds the checking account and makes all decisions on the underlying claims.
• The changes to New York law with regard to late notice of claims apply to policies issued in New York but delivered outside the state and to claims-made policies. The law applies only to liability insurance policies, but insurers may include the prejudice rules in other types of policies. 
• An employee of an insurer that is adjusting a claimant’s first-party no-fault claim may not share non-public personal health information about that claimant with an employee of an affiliate insurer that is adjusting the claimant’s third-party BI claim.
• New York Insurance Law and regulations do not permit an insurer to require a corporate assignee of no-fault benefits to designate an individual of the insurer’s choice to submit to an examination under oath.

The OGC issued two other opinions pertaining to the legality of a proposed annuity contract and the applicability of a specific regulation to health care providers and accident and health insurers. All opinions issued since 2000 are available for download from the department’s Web site.

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Homeowners Insurance and an ATV: Is There Medical Payments Coverage?

Question from an IIABNY member: Approximately two weeks ago, my client’s 14 year-old granddaughter and friend were on our insured’s ATV with Grandma behind them, delivering invites to a July 4th party to their neighbor. They crossed their property line by approximately 100 feet, at which point the ATV tipped over and the friend was sent to the hospital. He was checked out and is fine, although he had some cuts and initially they feared a broken bone.

The policy language is quite specific as to what is and isn’t covered, but leaves a few loose ends with medical payments adding the words ("immediately adjoining")  that seem to offer to extend the insured’s premises a wee bit.

Under liability the policy does extend coverage for some motor vehicles while on the insured’s property or if being used to service the insured’s property. Delivering invites is a stretch but I am curious what your thoughts are?

Answer: The wording in your client's policy is pretty similar to what’s in the ISO Homeowners policy. With regard to Medical Payments To Others Coverage, the ISO policy says:

As to others, this coverage applies only:

1. To a person on the "insured location" with the permission of an "insured"; or

2. To a person off the "insured location", if the "bodily injury":

a. Arises out of a condition on the "insured location" or the ways immediately adjoining;

b. Is caused by the activities of an "insured";

Based on this, I’d say you have a better case for coverage under the “caused by the activities of an insured” language. The ISO definition of “insured” states:

5. "Insured" means:...

c.     Under Section II:...

(2)     With respect to a “motor vehicle” to which this policy applies:…

(b)     Other persons using the vehicle on an “insured location” with your consent.

Since they had ventured off the insured’s premises, the insurer might argue that the granddaughter was not using the vehicle on an insured location. On the other hand, it sounds like the trip started there, so you could argue the other way, too. This is key, because if the granddaughter was not considered to be on an insured location, then she is not an insured and therefore the medical payments coverage does not apply.

If the accident occurred on the street adjacent to your client’s home ("ways immediately adjoining") and she can show that the accident occurred because of some condition in the street (a pothole or something in the road that the granddaughter had to swerve to avoid,) then she can make an argument for coverage under the first paragraph.

It’ll be interesting to see how the insurer decides this one. It’s not at all clear-cut one way or the other.

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