New York Insurance Coverage Law Update – June 2021 | Rivkin Radler LLP

First department determines outdoor work on two floors. The exclusion did not apply to accidents during work on the lower floors

Adelphi University hired a general contractor on a construction project to build a three story building from scratch. An employee of a subcontractor for steel and iron construction was injured when he fell while doing metalwork from the ground floor to the ground floor and sued the subcontractor. The subcontractor was insured as an additional insured under the subcontractor policy. The sub-contractor’s insurer declined coverage due to an exclusion from certain activities, including “[a]ny outdoor work over [two] Stories ”. The New York Appeals Department, First Department, ruled that the exclusion did not apply. The court found that although “the construction of the building comprised several floors, the injury at the time of the accident was not due to external work over two floors”. [Damon G. Douglas Co. v. Mt. Hawley Ins. Co., 2021 N.Y. App. Div. LEXIS 2608 (1st Dept April 27, 2021).]

Sexual misconduct claims against medical assistants and medical offices not covered

Certain patients in the Vitality Psychiatry Group sued Vitality and her nurse, alleging that the nurse made unwanted sexual advances on them. The United States District Court for the Southern District of New York ruled that Allstate was under no obligation to defend or indemnify the assistant under Vitality’s Business Owner Policy because: (i) the alleged sexual advances were not made in the course of the assistant’s employment and, therefore, he was not considered an “insured person”; (ii) the assistant intended the damage it allegedly caused to be legal and therefore there was no covered “incident” and the “expected or intended” injury exclusion was applied; and (iii) the claims of negligence and malpractice were excluded by the exclusion from professional services. The court also found that Allstate was under no obligation to defend or indemnify Vitality or its client since the exclusion from professional services precluded coverage of plaintiffs’ claims against Vitality and its client for alleged failure to meet required standard of medical care. In addition, the court found that the exclusion for “actual or threatened abuse or harassment by anyone in the custody of … an insured person” covered the claims of plaintiffs against Vitality and its client for negligent employment, investigation and oversight. [Allstate Ins. Co. v. Vitality Physicians Group Practice P.C., 2021 U.S. Dist. LEXIS 85292 (S.D.N.Y. May 4, 2021).]

Court considers assignment clause for transfers made to be unenforceable After the insured against loss

Nokia has been sued in thousands of asbestos personal injury cases resulting from the operation of certain legacy AT&T businesses. In that declaratory action, Nokia sought a partial summary judgment to determine whether Nokia (through its predecessor Lucent) had the right to seek coverage for asbestos liabilities inherited from AT&T through the assignment of AT&T. The Supreme Court, New York County, found that AT&T Lucent (and therefore Nokia) effectively assigned its rights under the liability policies issued to AT&T in a separation and distribution agreement. The court found that the terms of the agreement, taken together, reflected AT & T’s intention to give Lucent the right to use the insurance policies for liabilities assumed by AT&T. In response, the court found that the assignment clauses in the insurance policies did not raise any questionable factual questions since, in general, under New York law, “an insurance contract without a transfer is in effect with respect to transfers made”. before but not after the insured damage. ”The court argued that“ although insurers have a legitimate interest in protecting themselves against additional liabilities that the insurer has not taken out, once the insured damage has occurred, there is no problem that an insurer can must insure against additional risks ”. [Certain Underwriters at Lloyd’s v. AT&T Corp., 2021 N.Y. Misc. LEXIS 2736 (N.Y. Sup. Ct., N.Y. Cnty. May 19, 2021).]