N.Y. Judge To Insurer Time Limit Defense Won't Work

NU Online News Service, May 10, 2:06 p.m. EDT?ANew York judge ruling in a $4.3 million hospital malpractice casehas rejected an insurer's argument that the claim was automaticallybarred by longstanding time limit requirements.[@@]

The insurer, Royal & Sun Alliance, said last week it hadmade no decision on whether to appeal the April 28 ruling by thenSuffolk County Supreme Court Justice James M. Catterson, inRiverhead, N.Y. who declared that the insurer had failed "torecognize the turning of the tide" in legal opinion.

Attorneys for the Royal & Sun Alliance units--Royal Globeand Royal Insurance Company of America--had argued that the caseshould be dismissed because it did not receive timely notice ofclaim, and was not told of the lawsuit against St. Charles Hospitaland three doctors until nine months after it was filed. The suititself was brought within the permitted time frame--21 years afterthe 1975 birth.

But the judge ruled in favor of the hospital's argument that theinsurer must first show its defense was prejudiced by thedelay.

Judge Catterson, who at the time of his decision presided in acounty level court, was promoted May 4 to the Appellate Division.He found that Royal had to show first that "it was prejudiced byreceiving the notice of claim and legal action 21 years and ninemonths after the occurrence as opposed to having received it 21years after the occurrence."

The judge, in his opinion, commented that the insurer had noteven attempted to argue it was prejudiced by late notice, statingthat under well-settled New York law, insurers need not showprejudice where an insured ignores its obligations to tender notice"as soon as practicable."

In Judge Catterson's view, "the law far, from beingwell-settled, is, on the contrary, still evolving?" His opinionalso mentioned a "public objective of compensating innocent tortvictims and the concern that they do not become publiccharges."

He wrote that the insurer had shown "intransigence" duringconferences over the case and ordered it to pay a $4.3 millionsettlement that the hospital agreed to on March 26.

The action was brought by Joseph and Sarah Mulholland, thegrandparents of Tara Mulholland, who was born brain-damaged andunable to speak or walk.

John B. Berringer, with the Anderson Kill & Olick law firmin New York, who represented the hospital, said the decisionprovides policyholders "with long-needed relief from New York'sdraconian application of the ?no prejudice' exception."

Insurers, he said, should not be allowed to "evade" obligationsdue to a technicality where they are not prejudiced.