By JODI SOKOLOWSKI
Buffalo Law Journal

A recent New York State Court of Appeals ruling will force plaintiffs to prove twice that they have a serious injury when fighting for claims in underinsured cases.

"The issue in this case is whether a ‘serious injury' exclusion in a supplementary uninsured/underinsured motorist endorsement to an automobile liability policy is enforceable. We conclude that it is," Hon. Victoria Graffeo wrote in the Nov. 15 decision.

In Nicholas Raffellini v. State Farm Mutual Automobile Insurance Co., the state's highest court ruled in favor of the insurance carrier, requiring policy holders to prove "serious injury" when requesting supplemental uninsured motorist (SUM) coverage benefits in underinsured claims, even if they already did so when seeking funds from the defendants' insurance carrier.

"The bottom line is, it's another burden that can adversely affect an injured person's potential for recovering," said Terry Higgins, a personal-injury lawyer with Higgins Kane Law Group.

However defense lawyer Dan Kohane of Hurwitz & Fine PC said the decision "restores reason to the system and makes it consistent with insured and uninsured losses."

The court reviewed the history of the New York statute that created no-fault coverage, now set out in Insurance Law § 3420(f)(2), in 1974.

When the Insurance Law was revised in 1984, two paragraphs were separated into two subsections, "resulting in the placement of the serious-injury exclusion in Insurance Law § 3420(f)(1) and not in Insurance Law § 3420(f)(2)." The Appeals justices determined that the "serious injury exclusion" was not intentional.

"In my opinion, I think it's wrong to conclude on one's own that it was omitted," Higgins said. "There's no indication there was an oversight."

Kohane said the court's belief that the "serious injury" burden should be met in underinsured claims, as is required in insured and uninsured claims, brings a consistency to the insurance statute.

"It's consistent with the way personal-injury lawsuits have been handled with automobile cases since 1974, when no-fault came into effect," Kohane said.

No-fault coverage was designed to compensate injured parties for medical expenses, wages, household expenses, and pain and suffering without tying up the courts. However, in order for the injured person to sue for "non-economic loss," he or she must demonstrate having suffered a "serious" injury.

"Since the purpose of supplementary coverage is to extend to the insured the same level of coverage provided to an injured third party under the policy, the insured must also meet the serious-injury requirement before entitlement to supplementary benefits," the court wrote. "If this were not the case, the insured would receive coverage more comprehensive than that available to a third party injured by the insured."

Higgins said he "respectfully" disagrees with the judges' decision, saying that even if an injured person has a $100,000 SUM policy, he or she can only receive $75,000 if the defendant's policy paid out $25,000.

"You inherently have a serious injury, or else you wouldn't have recovered that ($25,000)," Higgins said.

Higgins said the court has obviously given preference to insurance carriers.

"They're allowing the insurers to put a hurdle in underinsured claims that the Legislature did not intend," he said. "(The decision) will make more cases go to trial, and it's going to be more costly because it's adding more difficulty to the burdens that plaintiffs already have."

 

 

Case history

The Raffellini case stems from a 1998 accident in which the plaintiff suffered back injuries when his car was struck by a driver who went through a red light. Raffellini's medical expenses were paid through the defendant's no-fault insurance. The defendant's insurance carrier paid $25,000, the limit of the policy, and Raffellini sought to obtain $75,000 more from his State Farm insurance policy under the SUM (supplemental uninsured motorist) provision.

State Farm objected to Raffellini's SUM request. After a state Supreme Court justice ruled against Raffellini, the case went to the ppellate Division, 2nd Department, which reversed that decision last year. The New York State Court of Appeals last month sided with State Farm, ruling the policy exclusion enforceable.