GVK Petitions Govenor Hochul to Veto Comprehensive Insurance Disclosure Act

In furtherance of our clients’ collective interest in the fair and economical pendency of insurance-related litigation, Gallo Vitucci Klar LLP this week joined other stakeholders in asking Governor Hochul to veto the Comprehensive Insurance Disclosure Act (the “Act”). The Act, which was presented to Governor Hochul for signature on December 20th, significantly expands defendants and their insurers’ required insurance-related disclosures, thereby increasing the time and cost of discovery.

Specifically, the Act amends CPLR §3101(f) to require a host of disclosures and related investigation. In so amending CPLR §3101(f), the Act adds 63 lines (from 8 to 71) of text describing newly-required disclosures. In conjunction with a newly created CPLR §3122(b), the Act also requires that defendants, their insurers and attorneys certify that all such required disclosures are accurate and that they will take reasonable efforts to ensure that they remain accurate, until 60 days after resolution of the litigation, including appeal. The Act requires that such initial disclosures be made within 60 days of answering a complaint, that all stakeholders certify their compliance with CPLR §3101(f) and that they disclose any changes they become aware of to the disclosures within 30 days of receipt of such information. The new disclosure requirements include providing certain information about each lawsuit and the related claim adjusters, TPAs and claims adjusters the TPAs report to, attorneys/law firms and the amount of their attorneys’ fees that may erode the limits of any applicable primary or excess policy. The Act also requires the disclosure of policy applications, which was expressly exempted from disclosure under the present CPLR §3101(f), and which may contain private or otherwise business-sensitive insured information. Of particular concern, the Act will go into effect immediately and require such disclosures in all pending lawsuits within 60 days of the enactment date. The Governor’s deadline for deciding whether to sign the Act is this Friday, December 31st.

In asking Governor Hochul to veto the Act, we argued that passage would impose significant and unreasonable obligations on litigants that we represent of every type, profession and field. It will increase litigation and therefore insurance costs which will disproportionally affect lower income individual and business owner litigants. We also noted that it is a particularly inopportune time to pass legislation which would only serve to significantly and unnecessarily increase the burden on State Court dockets—via related motion practice—which are already overburdened by pandemic-related restrictions.

Our letter was drafted by William Parra, a partner in our litigation defense and insurance coverage practice groups. Mr. Parra, on behalf of the firm, joined the New York Insurance Association, American Property and Casualty Insurance Association, the National Association of Mutual Insurance Companies and other law firms in requesting that Governor Hochul refrain from signing the Act into law.