Claimant Bayer Corporation seeks to recover approximately $400,000 from the
State Insurance Fund pursuant to a claim filed June 8, 2006 alleging breach of
contract, unjust enrichment, and bad faith/breach of duty. Defendant moves to
dismiss the claim as barred by the statute of limitations and for failing to
state a cause of action.
The damages represent
premiums paid for a workers’ compensation insurance policy defendant
issued on April l, 200l to Ruco Polymer Corporation to cover Ruco’s
Hicksville, Long Island facility. After the policy was issued, claimant
acquired all of Ruco’s shares, Ruco merged into Bayer on October l, 200l
and, according to claimant, “ceased to exist.” Claimant paid
premiums on the policy from the time it issued until defendant canceled the
policy on May 6, 2003.
Claims were filed against the policy arising from two incidents at the
Hicksville facility in 2002. Defendant assumed coverage under the policy issued
to Ruco and paid the employee benefits until May ll, 2004 and June, 2004. It
was then, however, that defendant informed the Workers’ Compensation Board
it disputed its obligation to provide coverage under the policy because Ruco had
no employees to insure after it merged with Bayer on October l, 200l. Defendant
maintained that claimant’s third-party insurer was the appropriate carrier
to assume coverage after the merger.
The dispute continued before the Workers’ Compensation Board until
defendant and claimant’s third-party insurer settled the matter. By
letter agreement dated December l3, 2005, the parties informed the Board they
had agreed to a finding of dual coverage with each insurer assuming fifty
percent of the liability, and they requested formal findings to reflect the
agreement. The Board issued decisions in both proceedings on January 25,
2006, finding equal liability.
Section 10 (4) of the Court of Claims Act requires a claim for breach of
contract to be filed within six months after the claim accrues unless the
attorney general is served with written notice of intention to file a claim, in
which case, the claim must be filed and served within two years. A claim
accrues in the Court of Claims when damages are “reasonably
ascertainable.” (Inter-Power of New York, Inc. v State of New
York, 230 AD2d 405, 408 [3d Dept l997].)
Claimant argues its claim accrued when the Board issued its decisions on
January 25, 2006 and, accordingly, that the June 8, 2006 filing is timely.
Defendant argues the claim accrued on October l, 200l, when Ruco “ceased
to exist” and its employees became covered under Bayer’s third-party
insurance, or on May 6, 2003, when defendant canceled the policy.
Defendant relies on Hudson Envelope Corp. v Klausner (
249 AD2d 31 [1st
Dept l998]), and similar authority for the proposition that a claim for the
return of premiums accrues at the time the premiums are paid. (e.g. St.
George Hotel Associates v Shurkin, 12 AD3d 359 [2nd Dept 2004].
cases concern claims where brokers and/or insurers are alleged to have breached
their duty by procuring or issuing insurance which differed from the coverage
requested or duplicated existing coverage. Defendant’s argument that
these cases apply is predicated on its characterization of the claim before the
court as one seeking the return of premiums paid on a “problematic
policy.” That is not what this claim is about, however. The claim here
alleges defendant refused to pay benefits, that is, defendant “failed to
provide full workers compensation insurance coverage
. . . despite the payment of
Defendant concedes that a claim for an insurer’s refusal to pay benefits
accrues when liability is denied (see Niagara Frontier Transportation
Authority v ENCON Underwriting Agency
, l85 AD2d 642 [4th Dept l992]). But
defendant argues that even if this claim is treated in this way, it must be
viewed as having accrued when defendant disputed its liability before the
Workers’ Compensation Board in May and June of 2004. The court is not
persuaded. Damages here did not become “reasonably
ascertainable” (Inter-Power of New York, Inc. v State of
New York, supra
) when defendant denied coverage in 2004 because
defendant subsequently rescinded its denial
and ultimately agreed to a finding of fifty percent liability. The extent of
claimant’s damages was determined when defendant fixed its liability under
its December l3, 2005 agreement with claimant’s third-party insurer.
Since the June 8, 2006 claim was filed within six months of December l3, 2005,
the contract claim is timely and the motion to dismiss is