First Department Affirms Groundbreaking Decision Finding A Private Right Of Action Under New York Insurance Law

In a win for Kasowitz Benson Torres clients National Health Care Associates, a health care company, and 26 nursing home affiliates (collectively, “NHCA”), the Supreme Court of New York, Appellate Division, First Department yesterday issued a unanimous and groundbreaking decision affirming the trial court’s holding that private parties, and not just, as the defendant insurance companies argued, the New York Department of Financial Services (“DFS”), may enforce Insurance Law §§ 2314 and 2339 providing that “[n]o authorized insurer” shall “knowingly … receive a premium that departs from the [DFS-approved] rates.”

In the complaint, NHCA alleged that the defendants, Liberty Mutual Insurance Company, Arch Insurance Company, Prism Consultants (and its principals), and various reinsurers sold NHCA unapproved workers’ compensation insurance policies masquerading as approved guaranteed cost policies, had drawn down NHCA’s letters of credit in violation of Sections 2314 and 2339, and thus had damaged NHCA in an amount no less than $10 million dollars.  By affirming the decision of Justice Andrea Masley of New York Supreme Court that there is a private right of action under those sections, the Appellate Division allows NHCA’s Insurance Law claims, as well as its New Jersey consumer fraud and breach of contract claims, to proceed to discovery and trial. 

The Kasowitz team representing NHCA includes partner Christian T. Becker.