National Health Care Accoc., Inc. v. Liberty Mut. Ins. Co., No. 650272/2018, 2020 N.Y. Misc. LEXIS 248 (N.Y. Cty. Jan. 6, 2020).
A healthcare management company and its 26 corporate nursing home affiliates sued (among others) several insurance companies and an insurance intermediary, alleging that the insurers engaged in a willful scheme to evade the insurance laws of New York, Connecticut, Vermont and New Jersey by “requiring plaintiffs to enter into unapproved agreements and letters of credit that substantially altered the rates in plaintiffs’ regulatory-approved insurance policies . . . [by using] a . . . captive reinsurance structure.” The complaint included nine separate causes of action, including fraudulent inducement, negligent representation, breach of contract and violations of state insurance laws. The insurers moved to dismiss.
In this complicated decision, the court dismissed as time-barred most of the healthcare company’s claims, including those for fraudulent inducement and negligent misrepresentation, as well as certain claims relating to the guaranteed cost and customer service agreements. The court determined that the claims for violations of New York’s insurance laws were not time-barred, however, because the statute of limitations was not triggered until additional premium payments were demanded. Relatedly, the court determined that whether it was proper to exercise jurisdiction over one of cedent’s offshore reinsurers was premature because the reinsurer could be a representative of cedent under New York insurance law.