The Brave New World of New York Insurance Disclosure

Written by: Joshua T. Reece, Esq.

Edited by: Nicole A. Callahan, Esq.

New York’s governor closed 2021 by signing into the law the Comprehensive Insurance Disclosure Act (CIDA), which placed onerous new insurance disclosure requirements on defendants. The most onerous provisions of CIDA were struck when the law was amended on February 24, 2022. Given this rapidly shifting landscape, we summarize and propose several strategies to successfully manage the brave new world of New York insurance disclosure.

Pre-CIDA New York Insurance Disclosure

Before the advent of CIDA, CPLR §3101(f) generally set forth New York’s insurance disclosure requirements:

A party may obtain discovery of the existence and contents of any insurance agreement under which any person carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.

“The purpose of this rule is ‘to accelerate settlement of claims by affording the plaintiff knowledge of the limits of defendant’s liability policies’ by enabling the litigants to enter into realistic settlement negotiations.” Weiner v. Lenox Hill Hosp., 164 Misc2d 759, 761 (Sup Ct, NY Cty 1995), aff’d, 224 AD2d 299 (1st Dept 1996) (quoting Russo v. Rochford, 123 Misc2d 55, 68 [Sup Ct, Queens Cty 1984]).

While CPLR Section 3101(f) expressly permitted discovery of the contents of liability insurance policies, courts were split on whether information about pending claims was discoverable. The First Department (comprising New York and Bronx Counties) held that this information was subject to discovery only when it was  relevant to the case itself. Weiner, 164 Misc2d at 763. Whereas, the Third Department permitted full disclosure of insurance policies “with only the amount of premium payments redacted.” Morris v. Clements, 228 AD2d 990, 990 (3d Dept 1996). Finding somewhat of a middle ground, the Fourth Department permitted discovery of “those matters bearing upon the existence and scope of coverage.” PCB Piezotronics, Inc. v. Change, 179 AD2d 1089, 1089 (4th Dept 1992), lv granted, question cert’d, 184 AD2d 1092 (4th Dept 1992), appeal withdrawn, 80 NY2d 972 (1992). One case included discovery of reinsurance policies. Anderson v. House of Good Samaritan Hosp., 1 AD3d 970, 970 (4th Dept 2003).[1]

The Second Department (comprising the balance of downstate New York counties below Columbia, Ulster, and Sullivan Counties) arguably went farther and required defendants to reveal the number of claims brought against it during the applicable period, the amount sought in each of these claims and the amount already paid under the policy. Brandes v. North Shore Univ. Hosp., 1 AD3d 549, 549 (2d Dept 2003). However, the Second Department did not permit discovery “of the names of the claimants, the court, if any, and the index number assigned to each and every claim made or action pending against the defendants during the applicable insurance policy period.” Greenwald v. Eiseman, 120 AD2d 564, 565 (2d Dept 1986).

The Comprehensive Insurance Disclosure Act

CIDA was introduced on May 26 and June 9, 2021 in the Senate and Assembly, respectively. According to the Sponsor Memo of the Senate version of the bill (S.B. 7052), more stringent insurance disclosure requirements were necessary to assuage allegedly endemic delayed disclosure of “complete and accurate information about the nature and extent of insurance coverage ….” This “delay” purportedly “clog[ged] our over-burdened courts [and] force[d] injured New Yorkers to wait for the justice they deserve.” CIDA sought to assuage this “delay” by amending CPLR § 3101(f) to require any defendant or third-party defendant to supply an enhanced insurance disclosure “within sixty days after serving an answer ….”

S.B. 7052’s requirements included disclosure of (1) notice and proof of “all primary, excess and umbrella policies, contracts or agreements” applicable to the litigation’s claims; (2) a complete copy of these policies; (3) the applications for insurance under these policies; (4) “the amounts available” under these policies to satisfy the claims; (5) the caption, identification of counsel, and date of filing for any lawsuit that has or may erode the policy limits; (6) the amount of attorneys’ fees, including the name and address of billing counsel, that have eroded the policy limits; and (7) the name, e-mail address, and telephone number of any assigned claims professional and third-party administrator assigned to the claim. Discoverable policies included ones 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 …, surplus line insurers and self-insurance programs sold or delivered within the state of New York.

Additionally, the bill sought to add new § 3122-b, which directed defense counsel to supply an affidavit or affirmation verifying the information, as well as provide updates as necessary. S.B. 7052’s requirements were retroactive and were to take place immediately. The bill ultimately passed both houses of the legislature with large margins and was signed into law.

The 2022 Amendments

On January 18, 2022, S.B. 7882 and A.B. 8852 were introduced into the Senate and Assembly, respectively. These essentially identical bills did away with some of CIDA’s original and more onerous requirements, including: (a) producing an entire policy so long as the plaintiff agrees to accept the declaration page instead; (b) disclosing the assigned claims professional’s or third-party administrator’s telephone number; (c) identifying all lawsuits that have reduced or may erode the policy limits; (d) disclosing attorneys’ fees that have eroded the policy limits; and (e) producing the application(s) for applicable policies. Notably, plaintiffs can revoke their agreement to accept the declaration page in lieu of the policy documents at any time. Additionally, the new bills extended a defendant’s time to provide the insurance disclosure to ninety (90) days after the answer is served and, importantly, applied CIDA’s dictates only to litigation commenced on or after the December 31, 2021 effective date of the legislation. These bills also stated that “disclosure of policy limits … shall not constitute an admission that an alleged injury or damage is covered by the policy.”  The legislation also clarified that defense counsel must certify policy limits at the filing of the note of issue, when attending settlement conferences (or otherwise entering into “settlement negotiations conducted or supervised by the court”), at a voluntary mediation, and “when the case is called for trial ….” Notably, the language did not specify whether the disclosure will be made when the case is simply calendared and called at a jury coordinating or trial assignment part, or when it is sent out for jury selection.

The amendments were signed into law on February 24, 2022.[2]

Points to Consider and Recommendations

As the landscape currently stands, the now-amended CIDA requires defendants in litigations commenced on or after December 31, 2021 to disclose the following within ninety days of serving an answer:

1. 1. 1. Production of declaration sheets of all available and applicable primary, excess, and umbrella insurance (including self-insurance and captive insurance companies), OR, if the plaintiff refuses to accept disclosure of only the declaration sheets, then the complete policies/agreements/contracts (BUT NOT the applications for the policies);
      2. A statement of the “the amounts available” under these policies to satisfy all or part of a judgment or settlement amount;
      3. The name(s) and e-mail address(es) of the assigned claims professional(s) and/or third-party administrator(s);
      4. An affidavit or attorney affirmation certifying the accuracy of the above information.

Given the above, defendants, their counsel, and their insurers should consider serving along with the answer and initial discovery demands, a proposed stipulation providing for disclosure of declaration sheets in lieu of the complete policy documents. Should the plaintiff refuse to sign the stipulation, then defendants should consider asking the plaintiff to sign a confidentiality agreement[3]. Should the adversary refuse, the defense team may consider a potential motion for an order setting a confidentiality protocol for the policy documents in advance of CIDA’s 90-day deadline. See Bolton v. Weil, Gotshal & Manges LLP, No. 602341/2003, 2005 WL 5118189, at *4 (Sup Ct, NY Cty 2005) (citing McLaughlin v. G.D. Searle, Inc., 38 AD2d 810 [1st Dept 1972]) (although a party may be “entitled to discovery of relevant and necessary information[,]” such information – where confidential – “should be accorded judicial safeguards where possible[,]” including a confidentiality order).[4]

Regardless of whether a policy or declaration sheet is produced, premium information should be redacted. Similarly, defendants should consider opposing production of re-insurance policies, as these would not satisfy a potential judgment or settlement (i.e., the plaintiff is not a claimant under these agreements). While plaintiffs may cite Anderson in support of their requests, defendants may rightly point out that the decision is an outlier.

We recommend the affirmation/affidavit requirement be satisfied by the insuring entity drafting a written response that contains the CIDA required information (“amounts available”, et al.) accompanied by an affirmation[5]/affidavit from a representative of the insuring entity confirming the accuracy of said information.

The “reasonable” updates requirement is not clearly defined.  We recommend an internal reminder system for periodic updates (yearly).  There should also be updates when a significant reduction has occurred in the “amounts available” due to erosion caused by settlements, legal fees, et al.

Hall Booth Smith, P.C. continues to monitor the probable litigation of CIDA and its requirements. We will supply updates as they become available.

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[1] Only four decisions have cited Anderson – none for the proposition that a plaintiff is entitled to reinsurance policy documents in a negligence action. See Clarendon Nat. Ins. Co. v. Atlantic Risk Mgmt., Inc., 59 AD3d 284 (1st Dept 2009); Radoncic v. Velcek, No. 104403/2006, 2008 WL 4149751 (Sup Ct, NY Cty 2008); Ramos v. Lopez, No. 60284/2016, 2018 WL 7150003 (Sup Ct, Westchester Cty 2018); Thomas v. EONY LLC, No. 158961/2013, 2019 WL 2452755 (Sup Ct, NY Cty 2019).

[2] Personal injury protection (PIP) and automobile No Fault policies are excused from CIDA’s disclosure requirements.

[3] In instances where the carrier determines confidentiality is warranted.

[4] Defense counsel will need to be educated on why the policy at issue requires confidentiality (i.e. the policy is part of a unique captive insurance program, etc.).

[5] Affirmations are acceptable if the executing individual is an attorney licensed to practice in the State of New York.