New York State Court of Claims

New York State Court of Claims

FRONTIER INS. V. THE STATE OF NEW YORK, #2001-028-559, Claim No. 99110, Motion No. M-62191


Defendant's motion for a protective order is granted. There is no purpose in deposing witnesses about the intention of the parties in negotiating a collective bargaining agreement when an appellate court has already ruled on the effect of the provision in question, holding that it waived all rights, vested or otherwise, to the benefits of Public Officers Law §17.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
Cross-motion number(s):

Claimant's attorney:
Nixon Peabody, LLPBy: William S. Brandt, Esq., Of Counsel
Defendant's attorney:
Hon. Eliot Spitzer, NYS Attorney GeneralBy: Reuben Goldwaser, Esq., Assistant Attorney General, Of Counsel
Third-party defendant's attorney:

Signature date:
September 20, 2001

Official citation:

Appellate results:

See also (multicaptioned case)
2001-028-560a, 2001-028-561a, 2001-028-562a


The following papers were read on defendant's motion for a protective order vacating four notices and subpoenas served by Claimant.[1]

  1. Notice of Motion and Supporting Affirmation of Reuben Goldwaser ("Goldwaser affirmation")
  1. Affidavit in Opposition of William S. Brandt, with annexed Exhibits A-J and Memorandum of Law ("Brandt affidavit")
  1. Reply Affirmation of Reuben Goldwaser ("Goldwaser reply affirmation")

These claims, brought pursuant to Public Officers Law §17(3), seek indemnification from the State for judgment or settlement amounts paid out on behalf of the named physicians to resolve medical malpractice actions against them. At the time of the alleged acts of malpractice, the physicians were employed as faculty members at State University of New York (SUNY) medical schools and billed their patients through a clinic practice plan established pursuant to 8 NYCRR §340.4. These are only four of many similar claims, all brought by the subrogees of similarly-situated physicians.[2] The claims have been the subject of considerable litigation, and that background will be discussed only insofar as it is relevant to this motion.[3]

In each of the instant actions, claimant's counsel has served notices and subpoenas seeking to depose one Joseph Bress, formerly Director of the Governor's Office of Employee Relations, about his role in contract negotiations that resulted in a 1991-1995 collective bargaining agreement between the State and United University Professionals (UUP), the union then representing the SUNY faculty-physicians. Claimant asserts that Bress' testimony is needed to establish whether, in agreeing to the 1991-1995 collective bargaining agreement, UUP waived its members' rights to the benefits of Public Officers Law §17 and, if so, to what extent. The State has moved for a protective order prohibiting the deposition of Mr. Bress, arguing that the Third Department has already decided that such waiver occurred and that it pertained to all such rights, even vested rights, making testimony from Mr. Bress irrelevant to these claims.

The 1991-1995 collective bargaining agreement between the State and UUP, which became effective on July 1, 1991, contained the following provision, designated Article 29:
The State shall prepare, secure introduction and recommend passage of legislation to amend Section 17 of the Public Officers' [sic] Law to reflect the long standing agreement of the parties that the physicians who participate in the clinical practice plan * * * shall be responsible for their own malpractice insurance. It is the expressed understanding of the parties that Section 17 of the Public Officers' [sic] Law does not cover any malpractice claims that arise from the conduct of or participation in the clinical practice plan.
The legislation referred to in Article 29 was enacted in July 1992 (L 1992, ch 499, §16) and added a new subdivision, section 17(11), which expressly excluded medical school faculty-physicians from the benefits of the statute.[4]

One issue that was discussed in several of the earlier decisions (see footnote 3) was whether, and to what extent, the faculty-physicians voluntarily relinquished or waived their rights under Public Officers Law §17. The State consistently argued that such waiver occurred either in July 1991, when Article 29 was agreed to, or at some earlier time when the physicians or their union entered into the hypothesized "long standing agreement" mentioned in the provision.

In a series of decisions collectively referred to as "Scalea & Mann," the courts found no evidence to suggest that the faculty-physicians' statutory rights had been waived either before the 1991-1995 collective bargaining agreement or on the occasion that the agreement was reached (Frontier Insurance Co. [Scalea & Mann] v State of New York, 160 Misc 2d 437 [partial decision], modified 197 AD2d 177, amended 216 AD2d 975, affd 87 NY2d 864) (hereinafter "Scalea & Mann"). At the trial court level, former Judge Albert A. Blinder held that the union had not expressly waived its members' rights under the statute and, further, found no evidence of implied waiver in the parties' course of conduct (160 Misc 2d 437, at 453). On appeal, the Third Department also rejected the waiver argument, stating that the collective bargaining agreement "does not, in our view, exhibit a waiver, express or implied, of the physicians' protection under Public Officers Law §17" (197 AD2d 177, 184):
Although that provision indicates a long standing agreement that physicians were to secure their own malpractice insurance, it does not express any agreement that the physicians waived their statutory rights under the Public Officers Law.
(Id.) The Court of Appeals did not address the issue of waiver in its subsequent decision.

Later, in another decision, the Third Department affirmed dismissal of twelve Article 78 proceedings that had challenged the State's refusal to provide SUNY faculty-physicians' request for a defense under Public Officers Law. These proceedings had been dismissed in the trial courts, and that result was affirmed by the Appellate Division on the ground that the language of Article 29
"clearly and unambiguously waives all rights, vested or otherwise, afforded the physicians pursuant to Public Officers Law § 17" (Matter of Frontier Insurance Co. [Samel] v Koppell, 225 AD2d 93, lv denied 90 NY2d 806 [hereinafter "Samel"]). Unfortunately, this later decision made no reference to the earlier Scalea & Mann ruling and therefore did not explain the reasoning behind these apparently conflicting holdings.

Counsel for Claimant urges that the Samel decision should not be read literally because its holding directly contradicts the holding on the same issue in Scalea & Mann and because the collective bargaining agreement could not operate to remove rights that had already become vested. Counsel further argues that, even if the Samel decision is accepted as establishing the law in this area, Claimant is entitled to conduct its deposition to gather factual information that would permit it to distinguish the background of these claims from the situations ruled upon in Samel. Finally, Claimant presents a hypothetical designed to challenge and refine the scope of the holding in Samel: "If the legislature failed to implement the contemplated amendment to [Public Officers Law §17], would Article 29 alone constitute a clear and unambiguous agreement that the SUNY physicians had waived their vested rights under Section 17 such that there could be a finding of a waiver?"

This hypothetical challenge, so far as this Court is concerned, can be answered simply: yes, Article 29 would constitute such a waiver because the Third Department has already ruled that it did. The language in Samel is unambiguous and there is nothing to indicate that it depended in any respect on events that followed adoption of Article 29. Since a higher court has already ruled on the interpretation that is to be given this particular provision in the 1991-1995 collective bargaining agreement between UUP and the State, this is not a matter where a lower court can apply rules of contract interpretation to answer such a question.

As to the issue of vested rights, Claimant is correct that a State employee's right to the benefits of Public Officers Law §17 vests at the time of the alleged wrongdoing which gives rise to the lawsuit against the employee, the lawsuit for which the statute's benefits of defense and indemnification by the State are sought. In the trial court decision in Scalea & Mann, Judge Blinder concluded that such rights vest at the time that the underlying wrong occurs:
The central purpose of POL 17 is defeated if State employees cannot know whether they will be protected by the State until after they have been sued. The employee needs something beyond an "expectation" that the law will not be changed in the future; he needs assurance that the protection is available as he carries out the duties of his employment.
(160 Misc 2d at 449.) The Third Department apparently agreed, observing that "the protection of the statute, i.e., the right to indemnification, is earned at the time of the wrongful act or omission" (197 AD2d 177, 182). In Samel, the appellate court again acknowledged that the physicians' rights to the statutory benefits may have vested at the time of the alleged malpractice (225 AD2d 93, 95) but, as noted, held that all rights, "vested or otherwise," were waived by adoption of the collective bargaining agreement. Even vested rights may be relinquished by the party possessing those rights (Hadden v Consolidated Edison Co. of NY, 45 NY2d 466, 469).

The issue before us, therefore, comes down to whether the apparently contradictory holdings on the question of waiver can be reconciled and whether there is any information that Mr. Bress, or others, could provide that would allow Claimant to distinguish the instant claims from the matters that were decided in Samel. As noted above, the Third Department did not explain, in Samel, what made those cases so different from the ones involved in Scalea & Mann that Article 29 operated as a waiver of rights with respect to the former but did not have the same effect with respect to the latter. It appears, however, that the explanation must lie in the sequence and timing of events that gave rise to the two groups of cases.

In both Scalea and Mann, the physicians' alleged acts of malpractice occurred and the malpractice actions against the physicians were commenced prior to July 1991. In Samel, on the other hand, all of the underlying malpractice actions were commenced in 1993 or 1994, after adoption of Article 29 and after passage of the statutory amendment.[5] It is possible, therefore, to harmonize the two Third Department rulings with respect to the issue of waiver if they are read as establishing the following: that Article 29 of the collective bargaining agreement did not waive the faculty-physician's statutory rights of physicians against whom lawsuits were commenced before July 1991, the effective date of the agreement, but it did act as a waiver of such rights, whether the rights were vested, with respect to physicians against whom malpractice actions were commenced after that date.

In all of the claims to which this motion relates, the alleged malpractice occurred before July 1, 1991, so their rights to those benefits were vested. The malpractice actions against the physicians, however, were commenced after that date, i.e., after the effective date of Article 29.[6] Under this Court's interpretation of the Third Department rulings in Scalea & Mann and Samel, therefore, their vested rights in the statutory benefits were waived by the 1991-1995 collective bargaining agreement. Consequently, the testimony of Mr. Bress, or any other witness, as to whether such waiver was intended by some of the parties negotiating the agreement, becomes, of necessity, unnecessary and irrelevant to these claims (accord, Frontier Insurance Co. [Droesch] v State of New York, Claims No. 99110 and 99111, Motion No. M-60616, filed Dec. 23, 1999, King, J.). The only information that is needed – the dates on which the malpractice actions were commenced – is already known.

In addition to its argument based on the apparent inconsistency between the holdings in Scalea & Mann and Samel, which is addressed above, claimant also urges this Court to ignore the ruling on that issue in Samel because, although the issue of waiver was central to the outcome in that case, it was not fully and fairly litigated in the earlier proceedings and relevant information, such as that which could be supplied by Mr. Bress, was not before the courts. As stated by Claimant's counsel, its goal "is to develop, for the first time, the evidence needed to refute the Article 29 [waiver] defense" (Claimant's memorandum of law, p 14). This is not a situation of collateral estoppel, however. It is a matter of stare decisis, and this Court is bound by the ruling of the Third Department, no matter what the basis of that ruling may have been. Although the same conclusion was reached by former Judge James King in a similar motion (Frontier Insurance Co. [Droesch] v State of New York, Claims No. 99110 and 99111, Motion No. M-60616, filed Dec. 23, 1999, King, J., supra), the importance of the issue and the impressive efforts of counsel have warranted an entirely separate and independent consideration of the relevant law. That consideration has led to the same conclusion: that the issue of whether the 1991-1995 collective bargaining agreement waived the Public Officers Law §17 rights of faculty-physicians who were sued for malpractice after the adoption of that agreement has been fully decided by a higher court. Under the doctrine of stare decisis, this Court must accept and follow the higher court's ruling (Battle v State of New York, 257 AD2d 745), and it is the higher court or the Court of Appeals, not this one, that must determine if the earlier decision should be reconsidered (see, Carnesi v State of New York, 140 AD2d 912).

Defendant's motion is granted.

September 20, 2001
Albany, New York

Judge of the Court of Claims

[1] Originally, this motion also sought sanctions, pursuant to Part 130 of the Rules of the Chief Administrator, but this request was withdrawn by letter dated August 14, 2000.
[2] The subrogees in these claims are insurance companies that issued special, lower-cost policies to SUNY faculty-physicians. The policies excluded coverage for conduct performed within the scope of the physician's State employment but further provided that if the State declined to defend and/or indemnify its employee, the insurer would provide coverage and become subrogated to the physician's rights against the State if that denial had been improper (Frontier Insurance Co. [Scalea & Mann] v State of New York, 160 Misc 2d 437, 439,
modified 197 AD2d 177, amended 216 AD2d 975, affd 87 NY2d 864

[3] The principal decisions are as follows:
Frontier Insurance Co. (Angtuaco) v State of New York, 146 Misc 2d 237; affd 172 AD2d 13; Frontier Insurance Co. (Scalea & Mann) v State of New York, 160 Misc 2d 437 [partial decision], modified 197 AD2d 177, amended 216 AD2d 975, affd 87 NY2d 864; Frontier Insurance Co. (Goldstein) v State of New York, Claim No. 82162, Motion Nos. M-48909, CM-48508, filed Dec. 13, 1993, Blinder, J.; Frontier Insurance Co. (Mann) v State of New York, Claim No. 84945, Motion No. M-48509, filed Dec. 13, 1993, Blinder, J.
; Frontier Insurance Co. (Mann) v State of New York, Motion No. M-56334, M-56396, M-53749, filed Jan. 22, 1997, King J., affd 239 AD2d 92, lv denied 92 NY2d 807; Frontier Insurance Co. (Droesch) v State of New York, Claims No. 99110 and 99111, Motion No. M-60616, filed Dec. 23, 1999, King, J. (see also, Matter of Munabi v Abrams, 199 AD2d 1037; Matter of Frontier Insurance Co. v Koppell (Samel), 225 AD2d 93, lv denied 90 N.Y.2d 806; Physicians' Reciprocal Insurers v State of New York, Claim No. 86222, Motion No. M-57243, Jan. 29, 1999, Read, P.J.).
[4] The new subdivision reads, in full, as follows: "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 the policies of the board of trustees, title 8, New York codes rules and regulations, 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 clinical practice plan to which reference is made is described in detail in
Frontier Insurance Co. (Angtuaco) v State of New York (146 Misc 2d 237, 243).
In the Scalea & Mann decisions (see footnote 3) it was held that the amendment was not to apply retroactively.
That decision does not recite the dates on which the physicians' alleged acts of malpractice occurred or, in other words, when the rights became vested.
In at least one of the cases, that event occurred in June 1991, just prior to adoption of the collective bargaining agreement (
Matter of Frontier Insurance Co. [Samel] v Koppell
, Sup Ct., Albany County, Index No. 3027-94, March 31, 1995, Ceresia, J., [Brandt affidavit, Exh. J])
[6] In the Droesch claims, the alleged malpractice on which both actions were based occurred in September 1990, and the malpractice action was commenced in August 1991. In Kramer, the alleged malpractice occurred in the spring of 1990, and the lawsuit against Dr. Kramer was commenced in November 1991. The claim in Pitzele alleges that the course of treatment on which the malpractice claim was based began in May 1999 (Pitzele claim, ¶7). This is clearly in error, for the lawsuit based on that alleged malpractice was commenced in October 1991. The Court can only assume that the 1999 date in Pitzele is simply an error and that the underlying malpractice took place prior to July 1991, most likely in May 1989.