The Appellate Division, Second Department Affirms Jaspan Schlesinger Victory
Date: June 8th, 2016
Location:Brooklyn, New York
Jaspan Schlesinger, LLP partner Linda S. Agnew successfully defended the Supreme Court's grant of Summary Judgment upholding the validity of a large deductible worker's compensation policy of insurance in Alliance National Insurance Company v. Absolut Facilities Management, LLC (Docket number 2014-04132).
In 2011, the insured Absolut Facilities Management, LLC ("Absolut") requested and obtained from insurer Alliance National Insurance Company ("Alliance") a large deductible policy of worker's compensation insurance. In addition to the policy, the parties entered into a Deductible Reimbursement and Security Agreement which was an added benefit to Absolut in that it deferred Absolut's obligation to post the entire collateral required under the policy to pay for losses within the policy's deductible layer. This deferral allowed Absolut to post a percentage of the loss funding amount upfront to be replenished when certain benchmarks were met. Absolut obtained the benefit of its bargain and then refused to pay both the balance of its loss funding obligations as well as additional premium due and owing under the policy after audit.
The main argument advanced by Absolut in the Supreme Court and on appeal was that Alliance's large deductible worker's compensation insurance policy was illegal. The sole support for this argument was Absolut's conclusory claim that the insurance rates set forth in the policy were not in accordance with the New York Workers' Compensation and Employers Liability Manual which actually sets the rates for small deductible policies, not large ones. The Appellate Division unanimously affirmed the Supreme Court's decision which upheld the validity of policy at issue. Although Alliance was under no obligation to affirmatively establish the legality of the contract at issue because of the presumption of legality, Alliance did put forth the appropriate documentation that the policy at issue was indeed approved by New York State in accordance with the New York State Insurance Law.