Meegan v. Progressive Insurance

OPINION OF THE COURT Peradotto, J. Sheila M. Meegan (plaintiff) was injured in a motor vehicle accident when the vehicle that she was driving was rear-ended by another vehicle. She thereafter settled with the driver of the other vehicle for $25,000, the maximum amount of coverage under his insurance policy. Plaintiffs then commenced this action seeking supplementary uninsured/underinsured motorist (SUM) coverage under the policy issued by defendant to plaintiff Michael T. Meegan, plaintiffs husband. The case proceeded to trial, and Supreme Court granted plaintiffs’ cross motion for a directed verdict on, inter alia, the issue whether plaintiff sustained a serious injury. The jury thereafter returned a verdict in plaintiffs’ favor, and defendant moved for, inter alia, an order reducing the verdict “to conform to the coverage for this claim” [184] or an order setting aside the verdict and granting a new trial on all issues. The court denied defendant’s posttrial motion, and judgment was entered for plaintiffs in the amount of $479,091.85. For the reasons that follow, we agree with defendant that a new trial should be granted on the issue whether plaintiff sustained a serious injury within the meaning of Insurance Law § 5102 (d) because the court erred in granting that part of plaintiffs’ cross motion for a directed verdict on that issue. That issue involved questions of fact for the jury, and the court therefore erred in concluding that plaintiff’s shoulder injury met the serious injury threshold as a matter of law. We address first the judgment in appeal No. 2. Plaintiffs contend that they were not required to establish that plaintiff sustained a serious injury in the context of this case. That contention is inconsistent with their position at trial and is raised for the first time on appeal. Nevertheless, we address plaintiffs’ contention in view of our conclusion that a new trial on the issue of serious injury should be granted. Plaintiffs’ contention involves an issue of first impression in this Department and, although the Second Department addressed the issue in Raffellini v State Farm Mut. Auto. Ins. Co. (36 AD3d 92 [2006]), we disagree with its resolution of the issue. The SUM endorsement to defendant’s policy provides in relevant part that defendant agrees to “pay all sums that the insured . . . shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, caused by an accident . . . subject to the Exclusions, Conditions, Limits and other provisions of [the] SUM endorsement.” Pursuant to an exclusion in the SUM endorsement, SUM coverage does not apply “for non-economic loss[ ] resulting from bodily injury . . . unless the insured has sustained serious injury as defined in section 5102 (d) of the New York Insurance Law.” Thus, under the terms of the policy, plaintiffs were required to establish that plaintiff sustained a serious injury. In Raffellini, the Second Department held that the provision in the insurance contract imposing a serious injury threshold requirement in the underinsurance context should not be given effect (see id. at 105). Pursuant to the reasoning of the Second Department, “the Legislature made a point of imposing the seri [185] ous injury threshold requirement in [Insurance Law § ] 3420 (f) (1), which governs mandatory, uninsured motorists coverage, . . . [but] omitted that threshold from the ensuing section, section 3420 (f) (2), which governs the optional coverage an insured may, for an additional premium, purchase from his or her insurer” (id. at 103). Thus, reasoned the Second Department, the omission of the serious injury threshold requirement in section 3420 (f) (2) renders “legally irrelevant” a defense of lack of serious injury (id. at 103), and the regulations imposing such a requirement “would appear unauthorized” (id. at 104). The Court in Raffellini went on to note that Insurance Law § 3420 (a) provides for certain mandatory policy provisions that are to be “equally or more favorable to the insured” and that a provision in a contract imposing a serious injury threshold requirement is less favorable to an insured than section 3420 (f) (2) and thus should not be enforced (see id. at 105). We disagree with the decision of the Second Department in Raffellini and conclude that plaintiffs were required to establish that plaintiff sustained a serious injury in order to recover under the policy. The language of the SUM endorsement in this case comes directly from the insurance regulations containing the requirements for SUM endorsements, which include the exclusion that SUM coverage does not apply to noneconomic damages unless the insured has sustained a “serious injury” as defined in Insurance Law § 5102 (d) (see 11 NYCRR 60-2.3 [f]). It is well established that “[responsibility for administering the Insurance Law rests with the Superintendent of Insurance . . . , who has ‘broad power to interpret, clarify, and implement the legislative policy’ ” (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 863-864 [2003]; see Insurance Law § 301). Pursuant to Insurance Law § 301, the Superintendent of Insurance has the power to promulgate regulations, and those regulations are valid as long as they are not inconsistent with a specific statutory provision (see Medical Socy. of State of N.Y., 100 NY2d at 864; see also State Farm Mut. Auto Ins. Cos. v Brooks, 78 AD2d 456, 458 [1981], appeal dismissed 54 NY2d 753 [1981]). In our view, the regulations requiring a person to establish that he or she sustained a serious injury in order to be entitled to SUM coverage are not inconsistent with section 3420 (f) (2) or any other provision of the Insurance Law. In the construe [186] tion of a statute, the primary consideration for the court is to ascertain and give effect to the intent of the Legislature (see McKinney’s Cons Laws of NY, Book 1, Statutes § 92 [a]; Matter of Allstate Ins. Co. v Libow, 106 AD2d 110, 114 [1984], affd for reasons stated 65 NY2d 807 [1985]). Statutes are to “be given a reasonable construction, it being presumed that a reasonable result was intended by the Legislature” (Statutes § 143). Insurance Law § 3420 (f) (2) does not explicitly dispense with the serious injury threshold requirement and, because “the statute is silent [on the issue], the regulations [implementing the statute and imposing that requirement] in no way conflict with the statute” (Medical Socy. of State of N.Y., 100 NY2d at 871). We further conclude that the regulations do not impose a requirement that is less favorable to the insured than section 3420 (f) (2). The regulations simply impose the same legal requirement that an injured plaintiff would have against an adequately insured driver and an uninsured driver {see § 3420 [f] [1]; § 5104). The regulations were not promulgated “on a blank slate without any legislative guidance, nor did [they] effectuate a profound change in . . . policy” (Medical Socy. of State of NY., 100 NY2d at 865). The obvious purpose of section 3420 (f) (2) and its corresponding regulations is to permit drivers to protect themselves under the same terms as they protect others injured as a result of their negligence. It was not the intent of the Legislature to provide a person injured by an underinsured driver with greater rights or a lesser burden of proof than an injured person otherwise would have against an adequately insured driver, when both actions arise from the same incident. To so conclude would be unreasonable and contrary to the purpose and intent of the No-Fault Law. We further note that SUM coverage is optional, and that an insured elects to obtain such coverage upon the specified terms and conditions of the coverage. In sum, we conclude that, because the conditional and exclusionary language of the policy is not explicitly prohibited by the statute, and because the regulations implementing such policy provisions are authorized and not inconsistent with the language or purpose of Insurance Law § 3420 (f) (2) or any other provision of the Insurance Law, the policy provision containing the serious injury threshold requirement exclusion is valid and enforceable. We further conclude that defendant is entitled to a new trial on damages. Contrary to the contentions of plaintiffs, absent [187] evidence that defendant acted in bad faith, their underinsurance claim is limited to the amount of coverage provided in the policy, which is $250,000, less an offset of $25,000 for the payment made on behalf of the other driver (see Mendoza v Allstate Ins. Co., 13 AD3d 594, 595 [2004]). We also add that plaintiffs recovery of past and future medical expenses and lost wages may be limited by exclusions, conditions, limits, or other provisions of the policy. Defendant’s remaining contentions with respect to the judgment in appeal No. 2 are moot in light of our determination. We conclude with respect to the order in appeal No. 1 that the court abused its discretion in granting plaintiffs’ motion in limine in part by precluding an expert for defendant from testifying with respect to an entry in the medical records of one of plaintiffs physicians. In support of their motion, plaintiffs submitted an affidavit of that physician’s office manager in which she stated that plaintiff did not become a patient of the physician until approximately one month after the date of the entry. In her affidavit, however, the office manager did not establish that she had personal knowledge of the entry, nor did she establish that she was responsible for making such entries. Even if she had made such a showing, the certified medical records were admissible in evidence pursuant to CPLR 4518 (c) and constituted prima facie evidence of the facts contained therein (see generally LaDuke v State Farm Ins. Co., 158 AD2d 137 [1990]). Plaintiffs’ contention with respect to the accuracy of the entry in those medical records goes to the weight to be given to the medical records, not their admissibility (see generally National Fuel Gas Supply Corp. v Goodremote, 13 AD3d 1134, 1135 [2004]). Accordingly, we conclude that the judgment in appeal No. 2 should be reversed, plaintiffs’ cross motion for a directed verdict denied in part, defendant’s posttrial motion granted in part, the verdict set aside and a new trial granted on the issues of serious injury and damages. We further conclude that the order in appeal No. 1 should be reversed insofar as appealed from and plaintiffs’ motion in limine denied in its entirety.