Hochul must veto burdensome insurance disclosure bill
In June the state Legislature passed a bill that mandates extreme—and likely unattainable—disclosure requirements for those defending themselves in civil litigation. The disclosures do not exist elsewhere and have no legitimate purpose. When the bill arrives at her desk, Gov. Kathy Hochul should veto it.
The Comprehensive Insurance Disclosure Act, passed at the behest of the trial bar, would inflate recoveries for plaintiffs, imposing significant costs on businesses, municipalities, hospitals, nonprofits and others—including individuals. Much of the information to be produced would require assistance from defendants’ insurers, imposing significant costs on them too.
Currently, plaintiff attorneys can obtain insurance policy information related to claims they are pursuing. The proposed act’s voluminous disclosures go much further and would force defendants and their insurers to consider settling cases to avoid extreme administrative costs, including in meritless cases.
Defendants would have to provide details about all lawsuits filed against them that involve the same policies as a plaintiff’s case, including the contact information for the counsel of all represented parties in each case. This is problematic given that some mass torts involve thousands of plaintiffs and scores of defendants.
A separate requirement would make defendants list the name and address of every attorney who received a fee paid out of an applicable policy. This information is irrelevant as to a defendant’s culpability and the amount of coverage available. Adjusters have privacy concerns about another requirement that could expose their personal information.
The measure also would impose a continuing obligation on defendants to supplement the disclosures throughout a case and for 60 days after it resolves—and to certify the accuracy of the disclosures. This would lead to costly discovery disputes. Plaintiff attorneys could focus on a document that was inadvertently withheld from the ongoing mass data dump and seize on that to demand sanctions.
As a result, future litigation could focus on defendants’ compliance with the frivolous disclosure requirements and less on the strengths of cases. Valuations of cases could factor in the cost of complying with the bill.
Defendants would struggle to satisfy other deadlines in the proposed act that are virtually impossible to meet. It seems the goal is to create unreasonable requirements that defendants cannot achieve, giving plaintiff lawyers a tool to hammer defendants over their inevitable noncompliance.
The bill reflects a gross misunderstanding of insurance. There might be legitimate disputes between policyholders and insurers as to whether coverage is available for a claim. A defendant who certifies that coverage “may” be available provides little value. Coverage issues are frequently contested and the focus of litigation.
The bill was rushed through the Legislature without public input or comment, and it shows. The proposal is wasteful and misguided. All New Yorkers would pay for its nightmarish red-tape requirements.
Gov. Andrew Cuomo once told Crain’s, “The trial lawyers are the single most powerful political force in Albany.” Nevertheless, he vetoed trial-bar bills when they were bad for New York. Governor Hochul should demonstrate leadership and independence by rejecting the disclosure act.
