Unfortunately 2022 started with some bad news 👎 for insureds and their liability insurers that are or will be facing lawsuits in New York state courts.
Heretofore in New York state court practice, discovery proceeded via demands and responses. No demand made? No response required. Today things are different in New York. As of today, parties facing claims that could result in money judgments that an insurance or self-insurance policy, contract or agreement might cover and satisfy are obligated affirmatively (i.e., without a demand) to disclose certain "information and documentation" relating to such policies/contracts/agreements within 60 days of answering such claims in new suits or within 60 days from yesterday in old suits.
Yesterday, December 31, 2021, New York Governor Kathy Hochul signed S7052/A8041, New York's Comprehensive Insurance Disclosure Act, into law effectively immediately.
The act transforms CPLR 3101(f) by now requiring that "[a]ny defendant, third-party defendant, or defendant on a cross-claim or counter-claim shall provide to the plaintiff, third-party plaintiff, plaintiff on counter-claim, and any other party in the action within [60] days after serving an answer pursuant to [CPLR] rule [320] or section [3011] or [3019] of this chapter notice and proof of the existence and contents of any insurance agreement under which any person or entity may be liable to satisfy part or all of a judgment that may be entered in the action or to indemnify or reimburse for payments made to satisfy the entry of final judgment."
Notice and proof of the existence and contents of any potentially applicable insurance agreements. That doesn't sound so bad, right?
Wrong. The "information and documentation" that must be disclosed under this new are (verbatim from the act):
- (i) all primary, excess and umbrella policies, contracts or agreements issued by private or publicly traded stock companies, mutual insurance companies, captive insurance entities, risk retention groups, reciprocal insurance exchanges, syndicates, including, but not limited to, Lloyd's Underwriters as defined in section [6116] of the insurance law, surplus line insurers and self-insurance programs sold or delivered within the state of New York;
- (ii) a complete copy of any [such] policy, contract or agreement referred to in subparagraph (i) of this paragraph, including, but not limited to, declarations, insuring agreements, conditions, exclusions, endorsements, and similar provisions [and the application for insurance for any such insurance agreement];
- (iii) the contact information, including telephone number and e-mail address, of any person or persons responsible for adjusting the claim made to or against the person or entity described in subparagraph (i) of this paragraph, including third-party administrators and persons within the insuring entity to whom the third-party administrator is required to report;
- (iv) the amounts available under any [such] policy, contract or agreement to satisfy a judgment described in this subdivision or to reimburse for payments made to satisfy the judgment;
- (v) any lawsuits that have reduced or eroded or may reduce or erode such amounts referred to in subparagraph (iv) of this paragraph, including the caption of any such lawsuit, the date the lawsuit was filed and the identity and contact information of the attorneys for all represented parties therein; and
- (vi) the amount, if any, 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.
I'm guessing that subparagraph (i) requires a list of policies, contracts or agreements, whereas subparagraph (ii) requires copies of those policies, contracts or agreements.
Wait...but defendants and their counsel don't typically possess or control the "information and documentation" required to be disclosed; their insurers/captives/RRGs/reciprocals/syndicates typically do. Imagine the phone calls and emails going forward. (Liability insurers--please do me and other defense counsel a solid and tell your 3rd-party attorney bill auditing vendors to allow for those time entries.)
And for HOW LONG does this "ongoing obligation" exist? To infinity and beyond? Not quite, but the ongoing disclosure "obligation shall exist during the entire pendency of the litigation and for [60] days after any settlement or entry of final judgment in the case inclusive of all appeals." Did you catch that? Even BEYOND the conclusion of the case.
What must accompany this new, comprehensive disclosure of "information and documentation", you ask? A simple cover letter? No, no. Two, new, sworn or affirmed certifications, of course:
one by by the party obligated to make the disclosure under the new (but not improved) CPLR 3101(f),
and the second by that party's attorney,
both certifications being required to aver "that the information is accurate and complete, and that reasonable efforts have been undertaken, and in accordance with paragraph two of subdivision (f) of section [3101] of this article will be undertaken, to ensure that this information remains accurate and complete."
Unfortunately, the new law makes no mention of or provision for redacting PII. As someone whose practice includes the defense of insureds in New York state court lawsuits, and until a court orders me otherwise, my attorneys and I are going to err on the side of caution (and existing privacy laws) and redact any PII that may be in the required insurance disclosure.
WHEN does this act take effect? IMMEDIATELY (signed December 31, 2021):
This act shall take effect immediately and apply to all pending actions. Any information required by this act that has not previously been provided in pending cases shall be provided within [60] days after such effective date.
Defense counsel better get crackin'. Terrible as this new law may be, they and their clients have until March 1, 2022 (60 days after the act became effective) to comply with it and provide the required "information and documentation" disclosures and certifications to parties currently litigating third-party liability claims, cross claims or counterclaims against them in New York state courts.
Any way you look at it, this is a horrible heffalump, herrible hoffalump, hellible horralump, hoffable hellerump piece of legislation.