Frontier Ins. Co. v. State

• Decision Date: 12 August 1993
• Docket Number: Nos. 84944,84945,s. 84944
• Citation: 609 N.Y.S.2d 748,160 Misc.2d 437
• Parties: , 90 Ed. Law Rep. 349 FRONTIER INSURANCE COMPANY as Subrogee of Thomas Scalea, M.D., Claimant, v. The STATE of New York, Defendant. FRONTIER INSURANCE COMPANY as Subrogee of William J. Mann, M.D., Claimant, v. The STATE of New York, Defendant.
• Court: New York Court of Claims

Page 748

609 N.Y.S.2d 748

160 Misc.2d 437, 90 Ed. Law Rep. 349

FRONTIER INSURANCE COMPANY as Subrogee of Thomas Scalea, M.D., Claimant, v. The STATE of New York, Defendant.

FRONTIER INSURANCE COMPANY as Subrogee of William J. Mann, M.D., Claimant, v. The STATE of New York, Defendant.

Claim Nos. 84944, 84945.

Court of Claims of New York.

Aug. 12, 1993.

Nixon, Hargrave, Devans & Doyle by William S. Brandt, Rochester, for claimants.

Robert Abrams, Atty. Gen. by Sedgwick, Detert, Moran & Arnold by Jeffrey M. Winn, New York City, for defendant.

ALBERT A. BLINDER, Judge.

These claims are, in all respects relevant here, identical to the claim in Frontier Insurance Co. [as Subrogee of Marieta G. Angtuaco] v. State of New York, 172 A.D.2d 13, 576 N.Y.S.2d 622, affg. 146 Misc.2d 237, 550 N.Y.S.2d 243. In each case, a physician employed as a full-time professor of medicine at a State University of New York (SUNY) medical school was sued in medical malpractice by a former patient. In each instance, the physician asked to be defended by the Attorney General pursuant to Public Officers Law § 17 (POL 17), and the Attorney General refused because the patient had been billed through the physicians' clinical practice plan.

Claimant, Frontier Insurance Co. (Frontier), issued to each of these doctors a malpractice insurance policy that, by its terms, excluded coverage for actions performed "within the scope of their State employment." The policies required, however, that if the State declined to defend and indemnify the doctor, Frontier would provide coverage. After the Attorney General so refused, claimant stepped in to provide a defense and, where relevant, indemnification up to the policy limit. Frontier then commenced these actions to recover the amounts expended in legal fees and for any amounts paid out for judgment or settlement in the malpractice actions. Frontier brings these claims as subrogee.

The initial Angtuaco decision rejected the State's argument that the benefits of POL 17 are unavailable in connection with any such lawsuit for which a patient was billed through the practice plan and held that the relevant inquiry was whether "the act for which the State employee is being sued by a third party one which was performed within the scope of his or her State employment" (146 Misc.2d at 248, 550 N.Y.S.2d 243); it listed six factors to be considered in determining whether the medical services on which the malpractice action is based were performed within the scope of the physician's State employment (id. at 245, 550 N.Y.S.2d 243). In affirming Angtuaco, the Third Department also rejected the argument that services provided to practice plan patients were, for that reason alone, outside the scope of the physician's State employment.

Less than eight months after the Appellate Division decision, the Legislature enacted an amendment to POL 17 which added a new subdivision (11):

The provisions of this section shall not apply to physicians who are subject to the provisions of the plan for the management of clinical practice income as set forth in [8 NYCRR] regarding any civil action or proceeding alleging some professional malpractice in any state or federal court arising out of the physician's involvement in clinical practice as defined in that plan.

The effect of this amendment, of course, is self-explanatory.

WHETHER PUBLIC OFFICERS LAW § 17(11)

APPLIES RETROACTIVELY AND THEREFORE BARS THESE CLAIMS

According to counsel for defendant, the amendment to POL 17 that added subdivision (11) is "completely dispositive" of the claims now before the court (as well as more than 50 other claims that have been filed by Frontier as subrogee of SUNY faculty physicians). It is undisputed that POL 17(11) applies to claims like these and places outside the protections of POL 17 all SUNY faculty physicians who participate in clinical practice plans and who are sued for malpractice by a practice plan patient. The critical question, however, is whether this new provision affects situations in which the State's duty to defend and indemnify arose prior to passage of the amendment.

A. The Effective Date of POL 17(11)

The bill that added subdivision (11) to POL 17 (N.Y. Assembly Bill A. 12339, enacted as L.1992, ch. 499) became law on July 17, 1992. It carried the following title:

AN ACT in relation to providing for the adjustment of salaries of certain incumbents in the professional service in the state university; to implement agreements between the state and an employee organization; and to amend the public officers law, in relation to indemnification of certain physicians and making an appropriation therefor

The central purpose of the bill was to change the salary structure for some SUNY employees and to enact other portions of a collective bargaining agreement between the State and United University Professions (UUP). The provisions take up approximately seven and one-half pages in McKinney's 1992 Session Laws of New York. Within those pages, only eight lines are devoted to section 16, the provision that amends POL 17, which is the only part of the bill referring to SUNY faculty physicians and the only part enacting a statute or amending one. Except for the provision amending POL 17, the bill is a typical "paybill", ratifying a collective bargaining agreement previously reached by the State and the employee organization and authorizing payment of monies to effectuate it.

The final section, 18, states that the act "shall take effect immediately and shall be deemed to have been in full force and effect on and after July 1, 1991." Other materials submitted to the court show that the preceding collective bargaining agreement had expired on June 30, 1991. It is therefore reasonable that the "paybill" enacting the new agreement should have the same effective date.

It is difficult to see how or why the July 1, 1991 date could or should apply to the amendment of POL 17. In fact, neither party contends that the July 1991 date is in any way related to POL 17(11). Counsel for defendant urges that the amendment should be applied to all actions and proceedings that were pending on July 17, 1992; this, of course, would result in retroactive application to events occurring considerably earlier. Counsel for claimant argues that section 17(11) can apply only prospectively.

B. Retroactive Application of Remedial Statutes

As a general rule, a statute is given only prospective application unless its language "either expressly or by necessary implication" requires it to be given retroactive effect (Statutes § 51[b] & [c], McKinney's Consol.Laws of N.Y., Book 1). A retroactive statute is defined as one which "looks backward affecting acts occurring or rights accruing before it came into force" (McKinney's Consol.Laws of N.Y., Book 1, Statutes § 51[a]. Retroactive application is improper "where it would deprive one of a substantial right, or affect antecedent rights" (McKinney's Consol.Laws of N.Y., Book 1, § 53).

Remedial statutes are a recognized exception to the general rule, but they too will be applied retroactively "only to the extent that they do not impair vested rights" (McKinney's Consol.Laws of N.Y., Book 1, § 54[a]. Because remedial statutes or amendments "are to be liberally construed to spread their beneficial results as widely as possible", it is not necessary that the Legislature expressly authorize retroactive application (Statutes § 54, McKinney's Consol.Laws of N.Y., Book 1, p. 108-109).

Defendant's central argument is that the Legislature amended POL 17 in order to overcome and reverse the ruling of Angtuaco--repeatedly described by counsel as "surprising," "unexpected" and/or "controversial"--that, defendant asserts, improperly overturned a "long-standing agreement" between the State and UUP officials that faculty physicians were not to receive the benefits of POL 17 in lawsuits arising from their treatment of practice plan patients. The 1992 amendment re-establishing this long-standing agreement was therefore remedial, and as such, should be applied retroactively. A logical first step in assessing this argument is to consider the effect that has been accorded other legislation that was enacted in response to "unexpected" court decisions or other outside events.

In some instances, such statutes have been given retroactive effect (see, Fruhling v. Amalgamated Housing Corp., 9 N.Y.2d 541, 546-547, 215 N.Y.S.2d 493, 175 N.E.2d 156; Matter of Consolidated Edison Co. v. State Bd. of Equalization & Assessment, 103 A.D.2d 453, 480 N.Y.S.2d 789, affd. on opn. below 67 N.Y.2d 783, 501 N.Y.S.2d 22, 492 N.E.2d 130; Cook v. City of Binghamton, 67 A.D.2d 469, 416 N.Y.S.2d 349, affd. on other grounds 48 N.Y.2d 323, 422 N.Y.S.2d 919, 398 N.E.2d 525; Matter of Mixter, 83 Misc.2d 290, 295, 372 N.Y.S.2d 296; Adelman v. Adelman, 58 Misc.2d 803, 296 N.Y.S.2d 999). In other situations, however, retroactive application is not permitted, even though the legislation was clearly intended to overcome "unexpected" judicial interpretation or to stop harmful activity. This occurs when courts determine that applying the statutes and amendments retroactively would infringe on existing, recognized rights (see, Charbonneau v. State of New York, 148 Misc.2d 891, 561 N.Y.S.2d 876, affd.178 A.D.2d 815, 577 N.Y.S.2d 534, affd. sub nom. Dreger v. New York State Thruway Authority, 81 N.Y.2d 721, 593 N.Y.S.2d 758, 609 N.E.2d 111; Matter of McDonnell, 47 Misc.2d 967, 263 N.Y.S.2d 653).

It is not enough, therefore, for a statute to be enacted to reverse an "unanticipated" court decision or to address an existing wrong to make its application retroactive. Even a statute passed in response to a court decision or to "correct" a perceived ill is to be applied retroactively only (1) if the Legislature intended retroactive application, or at least intended the statute to be remedial and (2) if such application does not infringe on vested rights. Thus, when...