On December 31, 2021, New York enacted the Comprehensive Insurance Disclosure Act (“CIDA”), requiring defendants to provide plaintiffs with “complete” information for any insurance policy by which a judgment might be satisfied, within sixty ( 60) days after service. answer. The stated goal is to reduce delay tactics by requiring disclosure of all policies involved in a claim as well as other claims, contracts or agreements that may exhaust available coverage or residual limits of policies that have already been eroded by other payments. The impact of CIDA’s disclosure requirements could be reduced by proposed amendments currently pending before the New York State Legislature.
1. What are CIDA’s requirements?
CIDA requires automatic disclosure of insurance information to applicants. New York Civil Law and Practice Rules (“CPLR”) 3101(f) permits civil discovery of the contents of existing insurance contracts whereby an insurer may be liable for all or part of a judgment. However, CIDA amends the CPLR to require that defendants automatically disclose the following information in all pending matters commencing March 1, 2022or within sixty (60) days of filing a response to a complaint:
- Complete copy of all insurance policies available to satisfy all or part of a possible judgment.
- This includes main, excess and umbrella policies.
- Relevant insurance claims.
- Amounts available to satisfy a judgment under the policy(ies).
- Contact information, such as phone numbers, email address, and name, of the claims adjuster or third-party administrators handling the claim.
- Any information about lawsuits that may have reduced the limits available under the policy, including the caption of the lawsuit, date filed, and full contact information for attorneys for represented parties.
- Amount of any attorney fee payments that may erode the amounts available under the policy, including contact details of the attorney receiving the payments.
CIDA is also amending CPLR 3122-b to require defendants and their attorneys to certify that the information disclosed is accurate and complete. There is an ongoing obligation to ensure that the information provided is up-to-date, which means that defendants must continually update this information within thirty (30) days of receiving notice of a change. is produced.
2. Are changes to CIDA planned?
Yes, there are already several changes proposed. When CIDA passed December 31, 2021, there was extensive debate about the need for changes to reduce the impact of onerous demands placed on defendants. Governor Huchol said CIDA needs amendments to better encapsulate the true purpose of the law, which is to reduce the burden of discovery on policyholders.
On January 26, 2022, the New York State Senate passed S7882 for this purpose. S7882 has been delivered to the Assembly as A8852 and is awaiting passage. Among the proposed changes:
- Changed the initial disclosure period from sixty (60) days to ninety (90) days after a response is filed.
- Removal of the requirement to disclose insurance claims.
- Limit disclosure only to policies relating to the claim in dispute.
- Allow disclosure of the statements page only instead of the full policy.
- Acceptance of a declarations page does not waive the claimant’s ability to request the full policy in the future.
- Only the name and email address of the adjuster or third-party administrator are required.
- Only the total limits available under the policy should be disclosed.
- Disclosure of policy boundaries does not constitute an admission that the alleged injury/damage is covered by the policy.
- Limitation of application to cases beginning on December 31, 2021 and not to litigation in progress before that date.
- Exception for car insurance benefits under Art. 51 or Reg. 68, rendering it inapplicable to disputes relating to protection against personal injury.
- Additional disclosures are no longer required within thirty (30) days, instead updated disclosures would be required upon filing of the problem memorandum, entering into settlement negotiations, mediation, or when the matter is called to be judged.
- Disclosure of attorney fees is no longer required.
3. How difficult will it be to comply with CIDA?
CIDA creates a continuous disclosure requirement. Due to the requirement to disclose information about pending lawsuits which may reduce available limits, a defendant must continually update its analyzes of all litigation. Liability and coverage issues in business are not always clear, making this requirement difficult and cumbersome. For example, a discrepancy in the number of occurrences in another lawsuit, or a judgment or settlement eroding the aggregate limits of completed transactions, requires defendants to increase the overhead to continuously assess and maintain this assurance information. For larger companies that often encounter litigation issues, the burden of maintaining this information for past and current cases will likely result in increased administrative costs.
4. Does CIDA create issues of privilege or confidentiality?
Potentially, yes. The requirement to disclose applications may raise concerns about confidential or privileged information. Insurance applications often include information about an insured’s assets, income, employees, and knowledge of potential claims that may arise or are pending. Insurers and policyholders will also be concerned about handwritten endorsements or unique language that may exist in some policies. In the absence of a protocol for redacting this information for reasons of ownership, confidentiality and relevance, a claimant may obtain damaging or harmful information about the insured and their business.
There are also concerns that the new ability to monitor defendant attorneys’ fees during litigation will provide an advantage to plaintiffs, potentially revealing strategy and impacting settlement negotiations.
5. Does CIDA affect coverage?
CIDA itself does not affect the coverage available for claims. It simply requires early and ongoing disclosure of relevant insurance information. However, the requirements imposed will require policyholders to have ongoing dialogues with their defense attorney who will be required to prepare updated disclosures on a regular basis. For policyholders in industries where claims are frequent, there are concerns that this will increase the cost of defense and potentially the cost of premiums.
Policyholders are also concerned that disclosures made under CIDA, or failure to disclose, could be used to establish certain claims, or elements thereof, an admission that a claim is or is not covered by the policy with respect to claims whose existence or extent of coverage is disputed.
Conclusion
Defense attorneys and others in the insurance industry have worked tirelessly to understand the full scope of their disclosure obligations under CIDA. While many hope that Senate Bill 7882 will be passed and signed into law by Governor Hochul before CIDA’s requirements take effect March 1, 2022, policyholders should work with defense counsel and their insurers to ensure compliance with CIDA’s disclosure obligations by the March 1 deadline. . SDV will continue to monitor the status of SB 7882 and other proposed changes at CIDA.
