At the close of 2021, Governor Hochul signed into law the New York 2022 Comprehensive Insurance Disclosure Act which amended Section 3101(f) of the Civil Practice Law and Rules (C.P.L.R.) and, imposed expansive insurance disclosure obligations on the part of defendants to civil litigation. Given the amendment’s breadth, it drew sharp and substantial criticism from those directly impacted by its provisions. In response, the New York State Senate and Assembly introduced bills (S7882A / A8852A) to further amend C.P.L.R. § 3101(f) and reign in some of the original amendment’s provisions.
On February 24, 2022, the newly amended Comprehensive Insurance Disclosure Act was delivered to the Governor and thereafter signed into law. Although the amended Comprehensive Insurance Disclosure Act continues to impose a significant insurance disclosure obligation on the part of defendants to civil litigation, it alleviates some of the original problems of the predecessor bill. For instance, a defendant providing insurance disclosures under C.P.L.R. § 3101(f), although still under a compulsory obligation to disclose insurance information, now must do so within ninety days of the service of their answer as opposed to the original sixty days. Also, whereas the original version of the bill required production of the actual policy, the declarations page of a policy is now considered acceptable for disclosure purposes so long as agreed to by the plaintiff or party receiving the disclosure.
In reviewing the newly amended C.P.L.R. § 3101(f), two key categories of disclosure obligations can be identified: (1) mandatory initial disclosures; and (2) ongoing disclosure obligations. The following bullet points detail the key operative points that litigants, attorneys, insurers, claim administrators, and claim professionals should now be mindful of when seeking to comply with the obligations of C.P.L.R § 3101(f):
Mandatory Initial Disclosures and Attendant Considerations:
- Within ninety days of the service of an answer, the answering defendant must disclose proof of the existence and contents of any insurance agreements in place at the time of the loss;
- Although the disclosing party may provide a copy of the declarations page to satisfy their obligation under C.P.L.R. § 3101(f), they must still disclose the entire policy if the recipient of the disclosure does not agree to only accept the declarations;
- A party that accepted the declarations as proof of insurance, does not waive their right to any of the other information required to be disclosed under C.P.L.R. § 3101(f);
- A party that accepted the declarations as proof of insurance, may withdraw their agreement to accept the declarations at any time at which time the disclosing party must then provide a full copy of the insurance policy in place at the time of the loss;
- The disclosing party is still obligated to disclose primary, excess, and umbrella policies, contracts, or agreements;
- If the insurance policies in place are provided, then a complete copy of the policy must be provided;
- In providing a complete copy of the relevant insurance policies, the disclosing party must provide the declarations, insuring agreements, conditions, exclusions, endorsements, and any “similar provisions”;
- The disclosing party must also provide contact information, including the name and email address, of “an assigned individual responsible for adjusting the claim at issue”; and
- When disclosing policy limits, the disclosing party must provide the “total limits” available, which is defined to mean “the actual funds, after taking into account erosion and any other offsets, that can be used”;
Ongoing Obligations:
- Although the disclosing party continues to remain under an obligation to assure that the information disclosed remains accurate and complete, they must only make “reasonable efforts”;
- The disclosing party is obligated to provide updated information at the filing of the note of issue, when entering settlement negotiations, at a voluntary mediation, when the case is called for trial, and for sixty days after any settlement or entry of final judgment in the case inclusive of appeals;
Notably, the certification requirements under C.P.L.R. 3122-b were not repealed or otherwise amended. Accordingly, both defense counsel and insurer remain obligated to certify the accuracy of the information disclosed. The obligations under newly amended C.P.L.R. § 3101(f) are effective immediately.
In addition to the foregoing, newly amended C.P.L.R. § 3101(f) includes miscellaneous provisions that are noteworthy. Whereas the original amendment required the production of the insurance application for the relevant insurance policy, that obligation has been stricken and, pursuant to subsection (3), “an application for insurance shall not be treated as part of an insurance agreement. Subsection (3) also provides that “[d]isclosure of policy limits under this section shall not constitute an admission that an alleged injury or damage is covered by the policy.” Finally, subsection (5) specifically exempts actions brought to recover motor vehicle PIP benefits under Article 51 of the Insurance Law or Regulation 68 of title eleven of the New York Codes, Rules, and Regulations.
Consistent with our prior advisory, defense counsel, insurers, and claim administrators should proceed with caution when providing disclosures under C.P.L.R. § 3101(f). When assuring compliance with C.P.L.R. § 3101(f), the following considerations should be taken into account:
Insurer Considerations:
- Identify all applicable policies at first notice of the claim, procure complete copies of all policies, and provide them to defense counsel.
- Insurers should assess whether the new requirements have been satisfied as to pending claims and supplement with any missing information.
- Remain abreast of new or changing information concerning the policies and immediately inform defense counsel of any updates or changes relating to the total limits available.
- Be mindful of the key case milestones (e.g. note of issue filing, trial, etc.) and the obligation for defense counsel to provide updated disclosures as those milestones come up.
Defense Counsel Considerations:
- Defense attorneys must assess if any of their pending cases have missing information that needs to be updated or disclosed under the new law.
- Defense attorneys must obtain two certifications to comply with the law when any disclosures are made: one from the insured and one from the attorney.
- Attorneys remain obligated to ensure that all information is updated and must keep in mind key case milestones for providing updated disclosures and for sixty days following settlement or entry of final judgment.
Although newly revised C.P.L.R. § 3101(f) has improved the prior amendment, it still represents a significant change in the disclosure obligations for defendants. As the sponsor’s memo indicates, this amendment is the result of negotiations and, as such, it is unclear whether any further legislation will be put forward to further revise C.P.L.R. § 3101(f).
Please do not hesitate to reach out to a member of our team should you have questions or concerns about how to implement these new measures into your business.