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

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

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

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

Attorneys for the Royal & Sun Alliance units--Royal Globe and Royal Insurance Company of America--had argued that the case should be dismissed because it did not receive timely notice of claim, and was not told of the lawsuit against St. Charles Hospital and three doctors until nine months after it was filed. The suit itself was brought within the permitted time frame--21 years after the 1975 birth.

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

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

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

In Judge Catterson's view, "the law far, from being well-settled, is, on the contrary, still evolving?" His opinion also mentioned a "public objective of compensating innocent tort victims and the concern that they do not become public charges."

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

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

John B. Berringer, with the Anderson Kill & Olick law firm in New York, who represented the hospital, said the decision provides policyholders "with long-needed relief from New York's draconian application of the ?no prejudice' exception."

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