SDV Insights

5 Questions about New York's Comprehensive Insurance Disclosure Act


The NY Senate Bill S7882A known as "CIDA," has been amended.

On the eve of the implementation of CIDA’s mandatory insurance disclosure deadlines in all pending civil actions in NY, the anticipated amendment was passed, relaxing the onerous disclosure requirements.

The key changes include:

  • Extending the timeframe for disclosing certain insurance information from 60 days after service of an answer to 90 days;
  • Allowing the Defendant to disclose a Declarations page as opposed to the entire policy if Plaintiff consents in writing;
  • Removing the requirement for identifying other lawsuits that may reduce or erode the available insurance limits, including any attorney’s fees;
  • Altering the requirement of a continuing obligation to update the insurance information as it changes to an obligation to update said information at certain events throughout the litigation;
  • Removing the requirement that insurance applications be disclosed; and
  • Clarifying that CIDA does not apply to actions brought to recover motor vehicle insurance personal injury protection benefits.

Previously published on Feb. 3, 2022:

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 through which a judgment could be satisfied, within sixty (60) days after serving an answer. The stated goal is to reduce delay tactics by compelling disclosures of all policies implicated by a claim as well as other claims, contracts, or agreements that may deplete available coverage or residual limits of policies that have already been eroded by other payments. The impact of CIDA’s disclosure requirements may be scaled back by proposed amendments currently pending before the New York state legislature.

1. What does CIDA Require?
CIDA requires the automatic disclosure of insurance information to plaintiffs. New York’s Civil Practice Law & Rules (“CPLR”) 3101(f) permits civil discovery of the contents of existing insurance agreements by which an insurer may be liable for all or part of a judgment. However, CIDA amends the CPLR to mandate that defendants must automatically disclose the following information in all pending cases starting March 1, 2022, or within sixty (60) days of filing an answer to a complaint going forward:

  • Complete copy of all insurance policies that are available to satisfy all or part of a potential judgment.
    • This includes Primary, Excess, and Umbrella policies.
  • The relevant applications for insurance.
  • Amounts available to satisfy a judgment under the policy/policies.
  • Contact information, such as telephone numbers, email address, and name, of the claims adjuster or third-party administrators managing the claim.
  • Any information about lawsuits that may have reduced available limits under the policy, including caption of the lawsuit, date filed, and full contact information of attorneys for the represented parties.
  • Amount of any payment of attorneys’ fees that may erode the amounts available under the policy, including the contact information for the attorney receiving payments.

CIDA also amends CPLR 3122-b to require defendants and their attorneys to certify that the information disclosed is accurate and complete. There is an ongoing duty to ensure the information provided is up to date, meaning defendants must continuously update this information within thirty (30) days of receiving notice that a change has occurred.

2. Are amendments to CIDA anticipated?
Yes, there are already multiple proposed amendments. When CIDA passed on December 31, 2021, there was extensive debate over the need for amendments to reduce the impact of the onerous requirements placed on defendants. Governor Huchol stated CIDA required amendments to better encapsulate the true intent of the Act which is to reduce discovery burdens on policyholders.

On January 26, 2022, the New York State Senate passed S7882 for that purpose. S7882 has been delivered to the Assembly as A8852 and awaits passage. Among the proposed amendments:

  • Changing the initial disclosure deadline from sixty (60) days to ninety (90) days after filing an Answer.
  • Removing the requirement to disclose insurance applications.
  • Limiting the disclosure to only those policies relating to the claim being litigated.
  • Allowing disclosure of declarations page only instead of the complete policy.
    • Accepting a declarations page does not waive Plaintiff'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 are required to be disclosed.
  • Disclosure of policy limits shall not constitute an admission that the alleged injury/damage is covered by the Policy.
  • Limiting application to cases beginning December 31, 2021, and not litigation pending prior to that date.
  • Exception for motor vehicle insurance benefits under Insurance Law Art. 51 or Insurance Reg. 68, making it inapplicable to Personal Injury Protection litigation.
  • Supplemental disclosures no longer required within thirty (30) days, updated disclosures would instead be required at filing of the note of issue, entering settlement negotiation, mediation, or when the case is called for trial.
  • Disclosure of attorneys fee no longer required.

3. How difficult will it be to comply with CIDA?
CIDA creates an ongoing disclosure requirement. Because of the requirement to disclose information about pending lawsuits that may reduce available limits, a defendant must continually update its analyses of all litigation. Liability and coverage issues in cases are not always clear, which makes this requirement difficult and burdensome. For example, a difference over the number of occurrences in another suit, or a judgment or settlement eroding completed operations aggregate limits, places the onus on defendants to increase overhead costs to assess and continually maintain this insurance information. For large businesses that oftentimes run into litigation problems, the burden of maintaining this information for past and ongoing cases will likely result in increased administrative costs.

4. Does CIDA create any privilege or confidentiality issues?
Potentially, yes. The requirement to disclose applications may raise concerns over confidential or privileged information. Insurance applications often include information about an Insured’s assets, revenue, employees, and knowledge of potential claims that may arise or are ongoing. Insurance and policyholders alike will also be concerned about any manuscript endorsements or unique language that might exist in certain policies. Absent a protocol for redaction of this information on proprietary, confidentiality, and relevancy grounds, a plaintiff may obtain damaging or prejudicial information about the insured and its business.

There is also a concern that the newfound ability to monitor defendants’ attorneys’ fees during litigation provides an advantage to plaintiffs, potentially revealing strategy and impacting settlement negotiations.


5. Does CIDA affect coverage?
CIDA itself does not affect coverage available for claims. It simply requires early and ongoing disclosure of relevant insurance information. However, the requirements imposed will force policyholders to have ongoing dialogues with their defense counsel who will be required to prepare updated disclosures on a regular basis. For policyholders in industries with frequent claims, there is a concern that this will drive up the cost of defense, and potentially the cost of premiums.

Policyholders are also concerned that disclosures made pursuant to CIDA, or the failure to disclose, could be used to establish certain claims, or elements thereof, an admission that a claim is either covered or not by the policy with respect to claims where the existence or scope of coverage is in dispute.

Conclusion
Defense counsel and other insurance industry stakeholders have been working tirelessly to understand the full scope of their disclosure obligations under CIDA. While many are hopeful Senate Bill 7882 will be passed and signed by Governor Hochul before the requirements of CIDA go into effect on March 1, 2022, policyholders should work with defense counsel and their insurers to ensure compliance with CIDA’s disclosure obligations by the March 1st deadline. SDV will continue to monitor the status of SB 7882 and other proposed amendments to CIDA.

For more information, contact Richard W. Brown at RBrown@sdvlaw.com or Michael V. Pepe at MPepe@sdvlaw.com.
 






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