# Petition — Aetna Life & Casualty Co. v. Gurnee > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0236%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1982 - **Citation:** 459 U.S. 837 ## Text 81-2348 3 Office - Supreme Court, U.S. Is THe JUN 23 1962 Supreme Court of the D Staten. stevas. CLERK Ooronnn Term, 1981 Aurxa Lire anp Casuautry Company, Petitioner, —against— Monnts C. Guanzez, Respondent. Srare-Wive Insurance Company, et al., Petitioners, —against— Mosue WEtnRzIcH, Respondent. SS_a_e——0o0—0—O@®?——— PETITION FOR A WRIT OF CERTIORARI TO THE COURT OF APPEALS OF THE STATE OF NEW YORK — ——— j j j——jꝙr—ĩi — Cuartzs Piatto 80 Pine Street New York, New York 10005 (212) 825-0100 Counsel for Petitioners Listed on the Inside Cover Of Counsel: Wausau E. Hecarry Susan Bucxizy Kevin J. Burke Canna Gorvon & RN DRI. Rates L. HAlrmx Raicuiz, Bax xINd, Weiss & Haren June 23, 1982 — — ſ——ä—ääb D — — ä — —— lq.äk ä 3fn—Nß3...333334.4..—.—lNK2Kkxkłk2k2 Petitioners: Aetna Casualty & Surety Company ; Aetna Insurance Company ; Aetna Life Insurance Company; Allstate Insurance Company; American Auto- mobile Insurance Company; American Mutual Liability Insurance Com- pany; Amica Mutual Insurance Company; Atlantic Mutual Liability In- surance Company; Banner Casualty Company; Boston Old Colony Insurance Company; Centennial Insurance Company; Century Indemnity Company; Colonial Penn Insurance Company; Commercial Insurance Company of Newark, N. J.; Commercial Union Insurance Company; Con- tinental Casualty Company; The Continental Insurance Company; Crite- rion Insurance Company; Eagle Insurance Company (sued as Lion Insurance Company); Employers Mutual Casualty Company; Federal Insurance Company ; Fidelity and Casualty Company of New York; Fire- man’s Fund Insurance Company; Firemen’s Insurance Company of Newark, N.J.; General Accident Insurance Company of America (sued as General Accident Fire & Life Assurance Corporation, Ltd.); Glens Falls Insurance Company; Globe Indemnity Company ; Government Employees Insurance Company; Graphic Arts Mutual Insurance Company; Great American Insurance Company; Hanover Insurance Company; Hartford Accident & Indemnity Company; Hartford Casualty Insurance Company; Home Indemnity Company; Home Insurance Company; Ideal Mutual In- surance Company; Insurance Company of North America; Liberty Mutual Insurance Company; The Lumbermen’s Mutual Insurance Company; Maryland Casualty Company; Merchants Mutual Insurance Company; Michigan Mutual Insurance Company (sued as Michigan Mutual Liability Company); National Grange Mutual Insurance Company; Nationwide Mutual Insurance Company; New Jersey Manufacturers Insurance Com- pany ; Newark Insurance Company ; The North River Insurance Company ; Prudential Property & Casualty Insurance Company; Reliance Insurance Company; Royal Insurance Company (sued as Royal-Globe Insurance Company); Royal Indemnity Company; Safeco Insurance Company of America; St. Paul Fire & Marine Insurance Company; Sentry Insurance Mutual Company; State Farm Mutual Automobile Insurance Company; State-Wide Insurance Company; Transamerica Insurance Company; Travelers Indemnity Company; Travelers Indemnity Company of Illinois; Travelers Insurance Company; Unigard Insurance Group; United States Fidelity & Guaranty Company; USAA Casualty Insurance Company; Utiea Mutual Insurance Company; Wausau Underwriters Insurance Com- pany (sued as Volkswagen Insurance Company); Western Employers Insurance Company (sued as Leatherby Insurance Company); Zurich Insurance Company. wT Question Presented Whether a state which for six years directed insurance carriers to provide maximum coverage of up to $800 per month to no-fault claimants and prohibited the carriers from charging premiums which would have provided greater coverage may, consistent with the Fifth and Four- teenth Amendments to the United States Constitution and Article I, Section 10 of the Constitution, require the car- riers to pay retroactively and without recoupment up to $200 per month in additional benefits for all claims made during the entire six year period? ii Parties Below The parties to these two actions which were consolidated for argument and decision below were: Gurnee v. Aetna Life and Casualty Company Appellant : Morris C. Gurnee, For Himself and All Persons En- titled to First Party Benefits Similarly Situated Respondent : Aetna Life and Casualty Company, Itself and All Other Insurance Companies Under New York State Law Owing First Party Benefits Similarly Situated Weinreich v. State-Wide Insurance Company Appellant : Moshe Weinreich, Suing Individually on His Own Be- half and Representatively On Behalf of a Class of Plaintiffs Similarly Situated Respondents : State-Wide Insurance Company, Allstate Insurance Company, Hartford Accident & Indemnity Company, Liberty Mutual Insurance Company, Government Em- ployees Insurance Company, individually and repre- sentatively on behalf of a class of defendants similarly situated, and The Aetna Casualty & Surety Company, Aetna Insurance Company, Aetna Life Insurance Company, American Automobile Insurance Company, Amica Mutua] Insurance Company, American Mutual Liability Insurance Company, Atlantic Mutual Liabil- ity Insurance Company, Banner Casualty Company, iii Buffalo Insurance Company, Boston Old Colony Insur- ance Company, Centennial Insurance Company, Cen- tury Indemnity Company, Colonial Penn Insurance Company, Commercial Insurance Company of Newark, N.J., Commercial Union Insurance Company, Conti- nental Casualty Company, Cosmopolitan Mutual In- surance Company, The Continental Insurance Com- pany, Country-Wide Insurance Company, Criterion Insurance Company, Employers Mutual Casualty Company, Federal Insurance Company, Fidelity & Casualty Company of New York, Fireman’s Fund In- surance Company, Firemen’s Insurance Company of Newark, New Jersey, General Accident Fire & Life Assurance Corporation, Ltd., Globe Indemnity Com- pany, Glens Falls Insurance Company, Graphic Arts Mutual Insurance Company, Great American Insur- ance Company, The Greater New York Mutual Insur- ance Company, Guardian Royal Exchange Assurance Company, Hanover Insurance Company, Hartford Casualty Insurance Company, The Home Insurance Company, The Home Indemnity Company, Ideal Mutual Insurance Company, Insurance Company of Greater New York, Insurance Company of North America, Leatherby Insurance Company, Liberty Mu- tual Insurance Company, Lion Insurance Company, The Lumbermen’s Mutual Insurance Company, Lum- bermen’s Mutual Casualty Company, Maryland Casu- alty Company, Merchants Mutual Insurance Company, Michigan Mutual Liability Company, Nassau Insurance Company, National Grange Mutual Insurance Com- pany, Nationwide Mutual Insurance Company, New Jersey Manufacturers Insurance Company, Newark Insurance Company, The North River Insurance Com- pany, Prudential Property & Casualty Company, Reli- ance Insurance Company, Royal-Globe Insurance iv Company, Royal Indemnity Company, Safeco Insur- ance Company of America, St. Paul Fire & Marine Insurance Company, Sentry Insurance Mutual Com- pany, State Farm Mutual Automobile Insurance Com- pany, Transamerica Insurance Company, Travelers Indemnity Company, Travelers Indemnity Company of Illinois, Travelers Insurance Company, Underwriters Insurance Company, Unigard Insurance Company, United States Fidelity & Guaranty Company, Utica Mutual Insurance Company, Worcester Mutual In- surance Company, Zurich Insurance Company, USAA Casualty Insurance Company and Volkswagen Insur- ance Company.“ TABLE OF CONTENTS PAGE — Question Presented Parties Below E: Table of Authoritl es Opinions Below Jurisdiction Constitutional, Statutory and Regulatory Provisions .... Statement of the Case The Statutory Scheme The Kurcsics Decision and the Instant Actions The Decision of the Court of Appeals Reasons for Granting the Writ Conciusion 4. — F S „ eo awe wo e | il | i Tanz or AuTHORITIES PAGE Cases: Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978) 15, 16 Atlantic Coast Line R. R. v. Florida, 295 U.S. 301 (1935) 11 Bouie v. City of Columbia, 378 U.S. 347 (1964) — 12, 14 Brinkerhoff-Faris Trust d Savings Co. v. Hill, 281 U.S. 673 (1930) 12, 15 Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) .............. 8 City of El Paso v. Simmons, 379 U.S. 497 (1965) 13 City of Los Angeles, Dep’t of Water d Power v. Man- hart, 435 U.S. 702 (1978) 11, 15, 16 Coz v. Louisiana, 379 U.S. 559 (1965) 14 Erie R.R. v. Tompkins, 304 U.S. 64 (1938) 17 Gelpcke v. City of Dubuque, 68 U.S. (1 Wall.) 175 (1863) 17 Government Employees Insurance Co. v. Sparrow, 66 A D.2d 782, 410 N.Y.8.2d 657 (2d Dep’t 1978) 0... 5 Great Northern Ry. v. Sunburst Oil & Refining Co., 287 U.S. 358 (1932) 12 Kurcsics v. Merchants Mutual Insurance Co., 49 N.Y.2d 451, 403 N. E. 2d 159, 426 N. V. S. 2d 454 (1980), rev’g 65 A.D.2d 192, 411 N.Y.8.2d 90 (4th Dep’t 1978) 2, 5-9 Lemon v. Kurteman, 411 U.S. 192 (1973) 12 Marks v. United States, 430 U.S. 188 (1977) — Oe Mullaney v. Wilbur, 421 U.S. 684 (1975) «ae Rabe v. Washington, 405 U.S. 313 (19727 14 vii PAGE Raley v. Ohio, 360 U.S. 423 (1959) 14 Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1842) 17 Tidal Oil Co. v. Flanagan, 263 U.S. 444 (1924) ....... 17 United States v. United States Coin and Currency, 401 US. 715 (1971) 17 Constitutional Provisions United States Constitution Art. I, §10 8, 10, 15, 16, 17 Amend. V 8 Amend. XIV passim Statutes: Judicial Code 28 U.S.C. § 1257 (3) (1976) 3 28 U.S.C. 5 1652 (1976) 16 N.Y. Insurance Law §5 (McKinney Supp. 1981-82) 45 510 (McKinney 1966) 3 2 (McKinney 1966) 4 § 40(6) (McKinney 1966) 5 $183 (McKinney 1966) 5 §§ 670-678 (McKinney Supp. 1981-82) 3 § 671 (McKinney Supp. 1981-82) 4,5 § 672 (McKinney Supp. 1981-82) 3 § 675 (McKinney Supp. 1981-82) 7n $677 (McKinney Supp. 1981-82) 5 N.Y. Vehicle & Traffic Law 9312 (McKinney Supp. 1981-82) 3 § 321 (McKinney Supp. 1981-82) 3 § 370 (McKinney 1970 & Supp. 1981-82) 3 onus, wo E Ix THE Supreme Court of the United States Ocroser Term, 1981 Aura Lave Ab Casvauty Company, Petitioner, —against— Morus C. Gunxxx, Respondent. Srate-Wiwe Insurance Company, et al., Petitioners, —against— Mosue Wetnreicsa, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE COURT OF APPEALS OF THE STATE OF NEW YORK Opinions Below The memorandum decision of the New York Supreme Court, County of Erie, dismissing the complaint in Gurnee v. Aetna Life and Casualty Co. (“Gurnee”) is reported at 104 Mise.2d 840, 428 N.Y.S.2d 992 and is set forth in the appendix at la-7a. The Court’s order of dismissal is un- reported and is set forth in the appendix at 8a-10a. The order of the Appellate Division, Fourth Judicial Depart- ment, unanimoasly affirming the order of the Supreme Court, County of Erie, is reported at 79 A.D.2d 960, 437 N.Y.S.2d 944 and is set forth in the appendix at 11a-12a. The memorandum decision and the order of the New York Supreme Court, County of New York, dismissing the complaint in Weinreich v. State-Wide Insurance Co. (“Weinreich”) are unreported and are set forth in the ap- pendix at 13a-20a and 21a-23a, respectively. The order of the Appellate Division, First Judicial Department, unani- mously affirming the order of the Supreme Court, County of New York, is reported at 80 A.D.2d 756, 437 N.Y.S.2d 994 and is set forth in the appendix at 24a-27a. The opinion of the New York Court of Appeals reversing the determinations of the Appellate Division, Fourth and First Judicial Departments, in Gurnee and Weinreich re- spectively, is reported at 55 N.Y.2d 184, 433 N.E.2d 128, 448 N. T. S. 2d 145 and is set forth in the appendix at 28a-34a. The order of the Court of Appeals denying reargument is reported at 56 N.Y.2d 567 and is set forth in the appendix at 35a. Also included in the appendix at 36a-49a are the majority and dissenting opinions of the Court of Appeals in Kurc- sics v. Merchants Mutual Insurance Co., 49 N.Y.2d 451, 403 N.E.2d 159, 426 N.Y.S.2d 454 (1980), a decision adopting a new interpretation of section 671 of the New York In- surance Law contrary to the prior regulations of the Super- intendent of Insurance which implemented the statute. In the instant actions, the Court of Appeals ruled that its decision in Kurcsics was to be applied retroactively to the period covered by the regulations. Jurisdiction The judgment of the Court of Appeals was er red on February 18, 1982. (A. 28a-34a)* Petitioners’ timely mo- tion for reargument was denied on March 25, 1982. (A. 35a) ~T Raforences to “A...” my to are to appropriate pages of the appendix Jurisdiction is conferred on this Court by 28 U.S.C. 51257 (3) (1976). Constitutional, Statutory and Regulatory Provisions Relevant portions of constitutional, statutory and regula- tory provisions involved herein appear in the appendix at the end of this petition at 1s-20s. Statement of the Case The Statutory Scheme On February 1, 1974 the New York Comprehensive Auto- mobile Insurance Reparations Act, Insurance Law, Article 18, §§ 670-78 (McKinney Supp. 1981-82), commonly re- ferred to as the “No-Fault Law,” went into effect. Similar No-Fault Laws are now in effect in more than half the States. The No-Fault Law, as suggested by its name, guar- antees a threshold level of reimbursement to persons in- jured in automobile accidents without regard to fault. Every carrier writing auto insurance in the State of New York is required to provide for No-Fault coverage in its policies. Every motor vehicle owner in the State of New York is required to carry No-Fault coverage, and to pay premiums for the coverage afforded. N.Y. Insurance Law § 672(1); N.Y. Vehicle and Traffic Law 66 312, 321 & 370 (McKinney 1970 & Supp. 1381-82). Under the New York Insurance Law, the Insurance De- partment, a part of the Executive branch headed by the Superintendent, is charged with the responsibility of super- vising the business of insurance in New York and the oper- ations and wractices of insurance carriers doing business in the State. N.Y. Insurance Law § 10 (McKinney 1966). The Superintendent of Insurance is also responsible for mandating terms and provisions of insurance policies and approving rates and premiums. The Superintendent is re- 4 quired by statute to promulgate regulations implementing the Insurance Law, including the No-Fault Law. See N.Y. Insurance Law § 21 (McKinney 1966) and 56 672-678 (Me- Kinney Supp. 1981-82). One of the key provisions of the No-Fault Law is section 671(2), which provides for the payment by insurers of “first party benefits” to reimburse claimants for their de- fined “basic economic loss” less certain offsets including a 20% reduction of lost earnings benefits (to reflect the tax- free nature of the recovery). “Basic economic loss,” against which offsets are to be deducted, is defined in section 671(1) to include lost earnings of up to $1,000 per month for up to three years. In accordance with his statutory mandate, on the same day the No-Fault Law went into effect, the Superintendent of Insurance promulgated a series of regulations designed to implement the Law. One of the regulations that became effective on February 1, 1974 was section 65.6(n)(2) (xi), 11 NYCRR § 65.6(n)(2)(xi) (A. 20s), which specif- ically implemented section 671 of the No-Fault Law. Under this regulation, carriers were required to limit lost earnings payments to a maximum of $800 per month as a result of applying the required 20% offset to the $1,000 “basic eco- nomic loss” maximum, rather than to lost earnings in excess of $1,000. This regulation or re-enactments thereof (11 NYCRR 5 65.15 n) (2) (xi) (A. 20s)) remained in effect for more than six years. During the period 1974-1980: Insurance carriers were bound to follow the regula- tions of the Superintendent of Insurance which limited payment to $800 per month. They would have been subject to civil and criminal sanctions if they did not. See Weinreich v. State-Wide Insurance Co. (Sup. Ct. N.Y. Co.) (A. 16a); see also N.Y. Insurance Law 65 (McKinney Supp. 1981-82) and §40(6) (McKinney 1966). Hates and premiums were required to be set in accord- ance with the regulations. The premiums paid were for coverage of up to $800 per month. Carriers were not entitled to collect premiums to provide higher cov- erage. N.Y. Insurance Law §183 (McKinney 1966) and § 677 (McKinney Supp. 1981-82). —The terms of each No-Fault insurance contract in the State were mandated by the Superintendent of Insur- ance. The carriers were not permitted to alter those terms if they so desired. 11 NYCRR §§ 65.2, 65.12. Informational brochures bearing the picture and signa- ture of the Governor of New York State were prepared by the Insurance Department and set forth in simple terms the $800 limit. The carriers were required to distribute these brochures to policyholders along with their insurance contracts. 11 NYCRR 66 65.8(a) (1) (i), 65.12(e). A copy of the brochure appears in the appendix at 50a. —In the event of a claim, carriers were obligated to distribute mandatory claim form cover letters in the form prescribed by the Insurance Department which also specified the $800 limitation. 11 NYCRR § 65.15 (e)(3)(i). A copy of the letter appears in the appen- dix at 5la-53a. —Two of the four Appellate Divisions of New York’s Supreme Court were asked to rale on the extent of the coverage provided for by section 671 of the Insur- ance Law and both unanimously held that the maxi- mum coverage was limited to $800 per month. Govern- ment Employees Insurance Co. v. Sparrow, 66 A. D. 2d 782, 410 N.Y.S.2d 657 (2d Dep't 1978); Kurcsics v. Merchants Mutual Insurance Co., 65 A.D.2d 192, 411 N. V. S. 2d 90 (4th Dep’t 1978). It is undisputed that from the time the No-Fault Law went into effect, carriers necessarily complied with the reg- ulations limiting payments to $800 per month. Gurnee v. Aetna Life and Casualty Co., 104 Mise.2d 840, 844, 428 N.Y.S.2d 992, 995 (Sup. Ct. Erie Co. 1980) (A. 5a); Wein- reich v. State-Wide Insurance Co. (Sup.Ct. N.Y. Co. 1981) (A. 14a, 16a). The Superintendent of Insurance confirmed that if the carriers had not limited payments in this fashion they would have been subjected to sanctions for failing to comply with mandatory regulations of the Insurance De- partment and “for wasting insurance company assets.” Weinreich v. State- Mid. Insurance Co. (Sup. Ct. N.Y. Co. 1981) (A. 16a). See also WR 217.“ The Kurcsics Decision and the Instant Actions On February 20, 1980—more than six years after the effective dates of the No-Fault Law and the regulations implementing it—the New York Court of Appeals issued a declaratory judgment in Kurcsics v. Merchants Mutual In- surance Co., 49 N.Y.2d 451, 403 N.E.2d 159, 426 N. V. S. 2d 454 (1980), holding that section 671 required lost earnings payments of up to $1,000 per month, rather than $800 per month. In its decision the Court of Appeals acknowledged that the Superintendent of Insurance had for six years re- quired by regulation that lost earnings benefits under sec- tion 671 were to be limited to $800 per month. The Court did not find that the regulations were unconstitutional or that their promulgation was an act in excess of the Super- intendent’s delegated powers. The Court ruled, however, * References to “WR” are to the record on appeal in the Wein- reich action. References to “GR” are to the record on appeal in the Gurnee action. 7 that the regulations were of no consequence and directed that the individual plaintiff be paid an additional $200 per month for the period of his claim (up to 36 months) plus attorneys’ fees and statutory interest at the rate of 2% per month.“ In deciding Kurcsics, the Court of Appeals did not ad- dress the question of whether its decision was to be given retroactive effect to the thousands of claimants over a six- year period who had previously been paid maximum bene- fits of $800 per month, but had never sought or received additional payments, and had not paid premiums for cov- erage in excess of that amount. In the wake of the Kurcsics decision, numerous proposed class and individual actions were filed in courts throughout the State of New York seeking retroactive application of Kurcsics. The instant actions, Gurnee v. Aetna Life and Casualty Co. (Sup. Ct. Erie Co.) and Weinreich v. State- Wide Insurance Co. (Sup.Ct. N.Y. Co.), were brought as proposed, all-encompassing class actions on behalf of all prior wage loss benefit recipients ag inst every insurance carrier which issued No-Fault policies in the State seeking additional payments of up to $200 per month for up to thirty-six months plus statutory interest and attorneys’ fees. The carriers immediately moved to dismiss the com- plaints in the instant actions on the grounds that general retroactive application of the Kurcsics decision would vio- late the New York and United States Constitutions and would be impermissible as a matter of law and equity. In ae oot on Insurance Law provides for a penalty of 2% per month interest Se Senge he weep Sewanee carriers fail to make No-Fault payments in a timely fashion. accordance with state-mandated requirements would vio- late the Due Process Clause of the Fourteenth Amendment. Additionally, the carriers urged that to grant such relief under cireumstances where they were barred from recoup- ing an amount equivalent to the premiums which otherwise would have been assessed to provide for the additional coverage constituted a taking of property without just compensation in violation of the Fifth Amendment as made applicable to the States through the Fourteenth Amend- ment.“ Finally the carriers urged that to apply the Kurc- sics decision retroactively would violate Article I, Section 10 of the Constitution in that it would substantially impair the contractual obligations incorporated in all No-Fault policies issued, the scope and terms of which had been man- dated by the State. The Supreme Courts for Erie and New York Counties granted defendants’ motions to dismiss in Gurnee and Weinreich respectively, applying the equitable principles enunciated by this Court in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), without reaching the federal consitutional issues. Gurnee v. Aetna Life and Casualty Co., 104 Misc. 2d 840, 428 N.Y.S.2d 992 (Sup. Ct. Erie Co. 1980) (A. 1a-7a); Weinreich v. State-Wide Insurance Co. (Sup.Ct. N.Y. Co. 1981) (A. 13a-20a). The decisions were unanimously af- firmed by the Appellate Division for the Fourth and First Departments. Gurnee v. Aetna Life and Casualty Co., 79 A. D. ad 860, 437 N. V. S. 2d 944 (4th Dep’t 1981) (A. 11a-12a) ; Weinreich v. State-Wide Insurance Co., 80 A.D.2d 756, 437 N. V. S. 2d 994 (Ist Dep't 1981) (A. 24a-27a). The Court of tafe and Co, 15 1 0 004 840, 844-45, 428 N. V. S. 2d 992, 290 (Sup Co. 1980) A. 6a); Weinreich v. State-Wide var af 1981) (A. 17a); WR 105, 220, 22 14, OR N.Y. Insurance Law § 677(5) (McKin- 9 Appeals granted leave to appeal and the cases were argued and considered together. The Solicitor General of New York State appeared on behalf of the Superintendent of Insurance as amicus curiae and argued in support of the carriers that the decision in Xurcsics should not be retro- actively applied. The Decision of the Court of Appeals On February 18, 1982 the Court of Appeals reversed the unanimous determinations of the Appellate Divisions and held that the decision in Kurcsics should be retroactively applied to prior claims. Gurnee v. Aetna Life and Casualty Co., 55 N.Y.2d 184, 433 N. E. 2d 128, 448 N.Y.8.2d 145 (1982) (A. 28a-34a). The Court found that the equities favored the claimants on the ground that they were deprived of the additional benefits they were entitled to by statute even though they had never sought or paid for such benefits. The Court dismissed without comment the fact that the carriers were legally obligated to follow the regulations until the Kurcsics decision, on the ground that the Court had ultimately ruled in Kurcsics that the regulations were incorrect. The Court dismissed the federal constitutional issues as “unpersuasive” concluding rather that “equitable considerations” required that its Kurcstcs decision be ap- plied retroactively. Id. at 194, 433 N.E.2d at 131, 448 N.Y.8.2d at 148 (A. 33a). Reasons for Granting the Writ For six years under the force of law the State of New York regulated insurance carriers in their collection of premiums and payment of benefits under the No-Fault Law. Now, the State has reversed itself and is requiring the carriers to pay out massive additional retroactive benefits without compensation. As a result of the decision of the 10 New York Court of Appeals in the instant actions, the in- surt uce carriers of New York State now face the prospect of paying out tens of millions of dollars of retroactive benefits and penalties although they were previously pro- hibited from paying such benefits and from collecting the premiums which would have provided for the benefits and cannot now recoup the underlying premiums. Having com- plied for six years with the binding regulations of the Superintendent of Insurance, the carriers are now being penalized for doing so. The decision of the New York Court of Appeals is viola- tive of fundamental constitutional principles. The retro- active overruling of regulations which the carriers were required by law to follow and the penalizing of the car- riers for their prior compliance with those regulations violates the Due Process Clause of the Fovrteenth Amend- ment. The requirement of payment of benefits without the possibility of collecting premiums is an unconstitutional taking in violation of the Fifth Amendment as applied to the States through the Fourteenth Amendment. The New York Court of Appeals’ determination that insurance car- riers must provide benefits over and above those provided for in the rate structure of their insurance contracts is an impairment of contract in violation of Article I, Section 10 of the Constitution. This decision will affect the administration of the In- surance Law in New York and other States. Indeed, it will undoubtedly affect administrative regulation in all areas of the law and in all States. If this decision is allowed to stand, regulated entities in New York State, and other States, will never aguin be able to rely on the administra- tive regulations they are bound to follow. They will be placed in the position of challenging regulations and seek- 1¹ ing court review ab initio or operating for years under the regulations at their own peril. This will create chaos and make government unworkable. In Atlantic Coast Line R.R. v. Florida, 295 U.S. 301 (1935), this Court ruled, without reaching the constitutional issue, that a federal court could not, in effect, retroactively overrule the regulations of a federal agency so as to require additional payments by regulated entities that had com- plied with the regulations. Writing for the Court, Justice Cardozo recognized that: “The carrier was not at liberty to take the law into its own hands and refuse submission to the order [of the agency] without the sanction of a court. It would have exposed itself to suits and penalties, both criminal and civil, if it had followed such a path. . Obedience was owing while the order was in force.” 295 U.S. at 311 (citations omitted). The decision of the New York Court of Appeals ignores theae principles. The decision below also ignores this Court’s caution against retrosctive judicial rulings in the field of insurance: “The occurrence of major unforeseen contingencies, however, jeopardizes the insurer’s solvency and, ulti- mately, the insureds’ benefits. Drastic changes in the legal rules governing pension and insurance funds, like other unforeseen events, can have this effect. Conse- quently, the rules that apply to these funds should not be applied retroactively unless the legislature has plainly commanded that result.” City of Los Angeles, Dep’t of Water & Power v. Manhart, 435 U.S. 702, 721 (1978) (footnote omitted). 12 It has nevertheless been suggested by the respondents and by the Court of Appeals itself that the decision below does not raise any constitutional issues and thus is not subject to review by this Court. Upon parsing the objec- tions, it becomes apparent that fundamental constitutional issues do exist. Plaintiffs suggested below on the basis of this Court’s decision in Great Northern Ry. v. Sunburst Oil & Refining Co., 287 U.S. 358 (1932), that the retroactive application of a judicial decision does not raise a constitutional issue. In Sunburst, however, this Court also held that prospective relief may be constitutionally fashioned when a long- sanctioned rule of law is overturned. Furthermore, in more recent rulings the Court has made clear that the Sunburst decision does not dispose of independent constitutional questions that may be raised by the retroactive application of a judicial decision. See, e. g., Bowie v. City of Columbia, 378 U.S. 347 (1964); Lemon v. Kurteman, 411 U.S. 192, 200 n.2 (1973). Significant independent constitutional issues are indeed raised by the decision helow. The Due Process Issues Are Substantial In Brinkerhof'-Faris Trust & Savings Co. v. Hill, 281 U.S. 673 (1930) Justice Brandeis, writing for a unanimous Court, stated: “If the [retroactive] result above stated were attained by an exercise of the State’s legislative power, the transgression of the due process clause of the Four- teenth Amendment would be obvious. Eittor v. Ta- coma, 228 U.S. 148. The violation is nonetheless clear when the result is accomplished by the state judiciary in the course of construing an otherwise valid (First 13 National Bank of Greeley v. Weld County, 264 U.S. 450) state statute. The federal guaranty of due pro- cess extends to state action through its judicial as well as through its legislative, executive or administrative branch of government.” Id. at 679-80 (footnotes omitted). There is no more fundamental a guarantee protected by the Due Process Clause than the right to fair notice of what the law requires. As fundamenal is the proposition “that men should not have to act at their peril, fearing always that the State might change its mind and alter the legal consequences of their past acts so as to take away their lives, their liberty or their property.” City of El Paso v. Simmons, 379 U.S. 497, 522 (1965) (Black, J., dissenting). Yet the decision below is irreconcilable with such prin- ciples. The Court below found tha: there was no denial of due process or an unconstitutional taking on the theory that the carriers simply were being required now to pay out what the statute required. However, this begs the question. The carriers were told for more than six years by the authoritative state agency that the statute did not require that additional benefits be paid and, of course, that they could not collect premiums for such additional benefits. But now, the state, acting through its judiciary, is telling the carriers that the statute requires and always required the payment of additional benefits, which the carriers must now pay, even though they are forbidden from recouping the corresponding premiums. Further, the carriers are now threatened with a 2% per month punitive interest charge and attorneys’ fees for failing to make the pay- ments they were prohibited from making. The issue thus becomes whether a government based on laws can conduct itself in this fashion, changing obligations 14 in midstream without notice and without compensation, and in so doing penalizing the carriers for their prior law- ful conduct. In Raley v. Ohio, 360 U.S. 423 (1959) and Cox v. Louisi- ana, 379 U.S. 559 (1965) this Court ruled that the Due Pro- cess Clause requires that citizens not be punished for rely- ing on otherwise lawful directives of state agencies or officers even when they are subsequently determined to be erroneous. To hold otherwise, as this Court stated, “would be to sanction the most indefensible sort of entrapment by the State. Raley v. Ohio, supra, 360 US. at 438, quoted in Cox v. Louisiana, supra, 379 U.S. at 571. In Bowie v. City of Columbia, supra, this Court held that the retroactive imposition of criminal penalties as a result of an unforeseen judicial construction of a statute violates the Due Process Clause. Whey [an] unforeseeable state-court construction of a criminal statute is applied retroactively to subject a person to criminal liability for past conduct, the effect is to deprive him of due process of law in the sense of fair warning that his contemplated conduct constitutes a crime.” 378 U.S. at 354-55. Accord: Marks v. United States, 430 U.S. 188 (1977) ; Mul- laney v. Wilbur, 421 U.S. 684 (1975); Rabe v. Washington, 405 U.S. 313 (1972) (per curiam). Here, too, under the decision below, the carriers would be deprived of their property and be subjected to civil pen- alties without the warnings and other protections required by due process notwithstanding their reliance on the man- datory directives of a state agency. Whether the guaran- tees of notice afforded by the Fourteenth Amendment can be ignored in the civil context is an issue worthy of this 15 Court’s consideration. Cf., Brinkerhoff-Faris Frust & Sav- ings Co. v. Hill, supra. Further, there can be little question that the requirement that the carriers now make payments when they were pro- hibited from collecting the underlying premiums amounts to a taking by the State, and we urge the Court to consider whether such action is permissible under the Fifth Amend- ment. The Contract Clar len- Is Substantial Since February, 1974 not only were petitioners’ payment obligations mandated by regulations of the Department of Insurance, so too were the terms of the No-Fault insurance policies petitioners issued. The basic term, the premium paid as consideration for the policy, was required to be set on the basis of an $800 per month maximum liability. Yet, as a result of the Court’s decision below, the entire con- sideration structure has been altered: Policyholders are to receive a windfall for which no underlying compensation has been paid and petitioners’ obligations are dramatically reformed. In Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978), this Court held that a Minnesota statute which sought retroactively to expand employers’ contractual ob- ligations to provide pension benefits not provided for in the pension plan was an unconstitutional impairment of contract in violation of Article I, Section 10 of the United States Constitution. In terms strikingly applicable to this ease, and quoting at length from this Court’s earlier deci- sion in City of Los Angeles, Dep't of Water & Power v. Manhart, supra, the Court stated: “Not only did the state law thus retroactively mod- ify the compensation that the company had agreed to pay its employees from 1963 to 1974, but also it did so 16 by changing the company’s obligations in an area where the element of reliance was vital—the funding of a pension plan. As the Court has recently recog- nized : These [pension] plans, like other forms of insur- ance, depend on the accumulation of large sums to cover contingencies. The amounts set aside are determined by a painstaking assessment of the insurer’s likely liability. Risks that the in- surer foresees will be included in the calculation of liability, and the rates or contributions charged will reflect that calculation. The occurrence of major unforeseen contingencies, however, jeopar- dizes the insurer’s solvency and, ultimately, the insureds’ benefits. Drastic changes in the legal rules governing pension and insurance funds, like other unforeseen events, can have this effect.’ City of Los Angeles Dept. of Water d Power v. Manhart, 435 U.S. 702, 721.” Allied Structural Steel Co. v. Spannaus, supra, 438 US. at 246-47 (footnote omitted). The Court below dismissed the impairment of contract issue out of hand on the grounds that a judicial construc- tion could not constitute a law impairing the obligation of contracts within the meaning of Article I, Section 10 of the Constitution. Such a narrow view is of doubtful valid- ity today. Article I, Section 10 provides “No State shall . . pass any . . law impairing the obligation of contracts. The contemporaneous Rules of Decision Act, part of the Judi- ciary Act of 1789 and now 28 U.S.C. 6 1652 (1976), specifies that [t Ihe laws of the several States” shall be regarded as 17 rules of decision in civil actions in the federal courts. In Gelpcke v. City of Dubuque, 68 U.S. (1 Wall.) 175 (1863), and Douglass v. County of Pike, 101 U.S. 677 (1879), this Court held that a judicial construction of a statute may constitute an unconstitutional impairment. Later, in Tidal Oil Co. v. Flanagan, 263 U.S. 444 (1924), the Court held that only state legislation was comprehended by the “law” to which the vontract clause refers. The Court distin- guished Gelpcke and Douglass on the ground that those cases were diversity actions in which federal common law had been applied pursuant to Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1842), and that those decisions did not interpret the constitutional provision. It is clear, however, that Tidal Oil was decided under the pervasive influence of Swift v. Tyson, supra, and its progeny which had held, for many decades before Tidal Oil, that the State “laws” of the Rules of Decision Act also encompassed only legislation. That limited interpretation of “State law” has long since been abandoned in favor of the more realistic reading of Erie R.R. v. Tompkins, 304 U.S. 64 (1938), which brings judge- made law within the scope of the laws“ of the Rules of Decision Act. The propriety of a similar view of “law” as it appears in Article I, Section 10 should now be con- firmed by this Court. This Court has not yet had occasion to rule on the issue of judicial impairments of contracts in light of the redefinition of the concept of State “law” in Erie, although the Gelpcke case and its principles have been cited with approval by several members of the Court in recent years. See United States v. United States Coin and Currency, 401 U.S. 715, 730 (1971) (White, J. dissenting, joined by Burger, C. J., Stewart, J. and Blackmun, J.). 18 CONCLUSION The action of the State of New York in first requiring insurance carriers to comply for six years with binding regulations governing their premiums, policies and pay- ments and then reversing those regulations so as to in- validate past practices and impose new retroactive obli- gations on the carriers along with penalties and with no recoupment does indeed raise serious constitutional ques- tions that merit review by the Court. The petition for a writ of certiorari should be granted. Respectfully submitted, Cartes Piatto 80 Pine Street New York, New York 10005 (212) 825-0100 Counsel for Petitioners Of Counsel: Wu E. Heoarty Susan Buckle Kevin J. Burke Canna Gorpvon & RN. Rates L. Hrn Raich, Bax NN, Weiss & Hatrern June 23, 1982 CONTENTS PAGE Memorandum Decision of the Supreme Court, County of Erie, Granting Defendants’ Motion to Dismiss the Complaint in Gurnee v. Aetna Life and Casualty Company (“Gurnee”) la Order of the Supreme Court, County of Erie, Dismiss- ing the Complaint in Gurnee 8a Order of the Appellate Division, Fourth Judicial De- partment, Affirming the Order of the Supreme Court, County of Erie, Dismissing the Complaint in Gurnee lla Memorandum Decision of the Supreme Court, County of New York, Granting Defendants’ Motion to Dis- miss the Complaint in Weinreich v. State-Wide In- surance Company (“Weinreich”) 13a Order of the Supreme Court, County of New York, Dis- missing the Complaint in Weinreich 21a Order of the Appellate Division, First Judicial Depart- ment, Affirming the Order of the Supreme Court, County of New York, Dismissing the Complaint in Weimreich 24a Opinion and Order of the New York Court of Appeals, Reversing the Orders of the Fourth and First Judi- cial Departments of the Appellate Division in Gurnee and Weimreich 28a Order of the New York Court of Appeals Denying Defendants’ Motion for Reargument 35a PAGE Majority and Dissenting Opinions of the New York Court of Appeals in Kurcsics v. Merchants Mutual Insurance Company 36a Informational Brochure of the New York Department of Insurance (1977) 50a Mandatory Claim Form Cover Letter (19777) 51a la Memorandum Decision of the New York Supreme Court, County of Erie Mornis C. Gurwer, on Behalf of Himself and All Other Persons Similarly Situated, Plaintiff v. Aztwa Lire xp Casvatty Company, on Behalf of Itself and All Other Insurance Companies Similarly Situated, Defendant. Supreme Court, Erie County, June 17, 1980 Orion oF THE CouRT James B. Kanz, J. This action arises out of the February 20, 1980 decision of the Court of Appeals in Kurcsics v. Merchant Mut. Ins. Co. (49 NY2d 451) wherein it was held that a covered person who has sustained a loss of earnings in excess of $1,000 per month is entitled to recover as first-party benefits 80% of his actual lost earnings up to a maximum recovery of $1,000 per month and not the $800 per month as directed by the New York State Department of Insurance. Kuresics was awarded the $200 monthly difference plus 2% interest per month on the overdue amount and reasonable at- torneys’ fees. Plaintiff, in this action thereafter, on February 27, 1980 caused a summons and complaint to be served upon defen- dant seeking the same relief as awarded in Kurcsics on his own behalf and for all others similarly situated not only from Aetna but from all other insurance companies simi- larly situated. Subsequently, plaintiff by notice of motion advised defendant that plaintiff would be moving pursuant to CPLR 902 for certification of the plaintiff and defendant classes. Before the return date of the class action motion defendant, after failing to obtain plaintiff’s counsel’s con- sent, moved for an extension of time to answer or otherwise move in response to plaintiff’s complaint. This court in a 2a Memorandum Decision of the New York Supreme Court, County of Erie written decision gave defendant an extension until May 15, 1980. Defendant by notice of motion dated May 15, 1980 in- formed plaintiff that on May 29, 1980 defendant would move for an order pursuant to CPLR 2201 staying plain- tiff’s action pending the final determination of a motion to dismiss a similar action pending in the Supreme Court, New York County; or in the alternative for an order pur- suant to CPLR 3211 dismissing plaintiff’s complaint for failure to state a cause of action. Plaintiff thereon moved for reargument of the prior motion and to enjoin all other similar actions pending in New York State. Plaintiff contends the court should either move to certify the plaintiff and defendant classes or somehow consolidate all of the other pending similar actions before considering defendant’s motion to dismiss. Defendant contends that the court should first address defendant’s motion to dismiss in that if the court determined Kurcsics was not to be given retroactive application, there would be no basis for plain- tiff’s individual or class action claim. The court will initially address defendant’s motion to dis- miss in order to avoid the possibly unnecessary costs and disbursements associated with class notification, discovery and certification. Defendant asserts various reasons Kurcsics may not or should not be given retroactive effect. Defendant contends that a retroactive application of Kurcsics would be in violation of the New York and United States Constitutions in that it would be a taking of private property without just compensation due to the calculations used by defendant to establish the prior premium rate structure. Additionally, as to certain subgroups of plain- 3a Memorandum Decision of the New York Supreme Court, County of Erie tiff's proposed class defendant contends a retroactive ap- plication of Kurcsics would be an impairment of a private contract and, therefore, in violation of section 10 of article I of the United States Constitution. However, the court finds it unnecessary to address the constitutional issues since in the court’s opinion equity would prevent a retroactive application of Kurcsics in this situation even if such an application was found to be con- stitutional. In Chevron Oil Co. v. Huson (404 US 97, 106-107), the Supreme Court stated: “In our cases dealing with the non- retroactivity question, we have generally considered three separate factors. First, the decision to be applied nonretro- actively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied [citation omitted] or by deciding an issue of first impression whose resolution was not clearly foreshadowed {citation omitted] Second, it has been stressed that ‘we must * * * weigh the merits and demerits in each case by looking to the prior history of the rule in question, its pur- pose and effect, and whether retrospective operation will further or retard its operation.’ [Citation omitted.] Fin- ally, we have weighed the inequity imposed by retroactive application, for ‘[w]here a decision of this Court could produce substantial inequitable results if applied retro- actively, there is ample basis in our cases for avoiding the “injustice or hardship” by a holding of nonretroactivity.’ ” Upon a consideration of these factors it is the court’s opinion that Kurcsics should not be applied retroactively. The Court of Appeals in Kurcsics (49 NY2d 451, 454, supra) began its opinion by stating: “This appeal raises a question of first impression in this court concerning the con- 4a Memorandum Decision of the New York Supreme Court, County of Erie struction of the phrase ‘first party benefits’”. The Court of Appeals resolution of this “question of first impression” cannot be said to have been clearly foreshadowed. In fact the Court of Appeals decision overruled the unanimous de- termination of the Appellate Division, Fourth Department, in Kurcsics (65 AD2d 192), the unanimous determination of the Appellate Division, Second Department, in Matter of Government Employees Ins. Co. v. Sparrow 66 AD2d 782) and the clear language of the regulations promulgated by the New York State Department of Insurance, which defendant had been compelled to follow. The purpose of the no-fault legislation basically was to eliminate the vast majority of auto accident negligence suits from the judicial arena and to assure prompt compen- sation to accident victims of substantially all of their eco- nomic loss without regard to fault (Montgomery v. Daniels, 38 NY2d 41, 46, 55). Insurance basically involves a shar- ing of risks. The foreseeable risks and the limits of poten- tial exposure are included in the calculation of insurer’s liability and the premiums charged reflect this calculation. Defendant in submitting its premium rate schedule to the Insurance Department, as required by section 677 of the Insurance Law, based its calculations on a potential maxi- mum exposure of $800 per month and not $1,000 per month. A retroactive application of the Court of Appeals decision in Kurcsics, overruling the Insurance Department’s inter- pretive regulations” on maximum exposure, could possibly jeopardize some of the insurers’ solvency and ultimately the benefits of other insured individuals. For this reason it has been held that rules applying to insurance or pension funds should not be given retroactive effect unless the Leg- islature has plainly commanded that result (Los Angeles Dept. of Water d Power v. Manhari, 435 US 702). 5a Memorandum Decision of the New York Supreme Court, County of Erie Since the practical construction of the Insurance Law re- garding maximum first-party benefits for loss of earnings had been well known, 11 NYCRR 65.6 (n) (2) (xi) estab- lishing maximum payment of $800 per month has been followed since its effective date of February 1, 1974, the Legislature is charged with knowledge of this construction and its failure to interfere indicates its acquiescence (see RKO-Keith-Orpheum Theaters v. City of New York, 308 NY 493, 500; Engle v. Talarico, 33 NY2d 237, 242; Matter of Hellerstein v. Assessor of Town of Islip, 37 NY2d 1, 10). Retroactive application of Kurcsics could not be said to be commanded by the Legislature. Besides possibly jeopardizing the solvency of some of the insurers and thereby ultimately the benefits of other in- sured individuals a retroactive application of Kurcsics is not necessary to insure that future claims up to a maximum of $1,000 per month are promptly paid. Finally, a retroactive application of Kurcsics would pro- duce substantial inequitable results. There is no evidence of bad faith on the part of defen- dant. Defendant felt it was mandated to follow the regula- tions established by the Insurance Department in regards to the maximum recoverable first-party benefits and it did so. Defendant relied on these regulations in assessing its premium rate schedule pursuant to section 183 of the In- surance Law and in paying $800 maximum per month on the claims submitted to it. It is well established that re- liance interests weigh heavily in the shaping of an appro- priate equitable remedy (Lemon v. Kurieman, 411 US 192, 203). The Court of Appeals in New York Pub. Interest Research Group v. Steingut (40 NY2d 250, 261) after determining that certain legislative allowances were un- 6a Memorandum Decision of the New York Supreme Court, County of Erie constitutionally authorized held that “equitable interests of fairness and justice” mandate that no reimbursement be demanded from the recipients who, in good faith and sup- ported by long-continued practice, relied on the disburse- ments as authorized and proper. These “equitable interesis of fairness and justice” would seem to forbid a retroactive application of Kurcsics. In New York Pub. Interest Research Group v. Steingut (supra), the legislators actually received unauthorized funds while in the present situation defendant never charged, nor would have been able to justify charging in- creased premiums to cover the difference between a maxi- mum monthly exposure of $1,000 as opposed to $800. De- fendant has taken nothing from plaintiff that equity de- mands he should be compelled to return (see Atlantic Coast Line v. Florida, 295 US 301, 310). Additionally, defendant in a supporting affidavit by an actuary with Allstate alleges that Ilulnder commonly ac- cepted insurance ratemaking principles, ratemaking is pro- spective for losses which are anticipated to be incurred in connection with insurance policies to be issued on or after specified future date. Nonrecurring past losses, such as those which would directly flow from the retroactive appli- eation of the Kurcsics decision, would not be recovered in future ratemaking proceedings”. If there exists no methods for defendant to recoup or somehow recover the losses incurred by a retroactive application of Kuscsics such an application would clearly bring about an equitable result. Precedent exists for and equity demands a prospective application of a decision such as Kurcsics (New York Pub. Interest Research Group v. Stemgut, supra; Chevron Oil Co. v. Huson, 404 US 97, supra; Atlantic Coast Line v. Ta Memorandum Decision of the New York Supreme Court, County of Erie Florida, supra; Miranda v. Arizona, 384 US 436). The Court of Appeals in Hellerstein v. Assessor of Town of Islip (37 NY2d 1, supra), after determining that frac- tional assessment was in violation of the New York Con- stitution felt that equity demand that their determination be given prospective application not just from the date of the decision, June 5, 1975 but from December 31, 1976, approximately a year and one-half later. For the reasons stated above it is this court’s opinion that Kurcsics is not to be given retroactive application and for that reason defendant’s motion for an order pursuant to CPLR 3211 dismissing plaintiff's complaint for fe ‘lure to state a cause of action is granted. 8a Order of the New York Supreme Court, County of Erie At a Special Term of this Court held in and for the County of Erie at the Erie County Hall in the City of Buffalo, New York on the 28th day of May 1980. Present: How. James B. Kane, Justice Presiding. STATE OF NEW YORK Supreme Court—Covunrty or Er Index No. E-77549 Morris C. Gurnee, Plaintiff, vs. Arrxa Lave anv Casvatty Company, Defendant. Ono A motion having been made by the defendant Aetna Life and Casualty Company for an order staying this action pending the final determination of a motion to dismiss the action pending in the Supreme Court, County of New York, entitled “Moshe Weinreich vs. State-Wide Insurance Com- pany”, Index No. 05272/80 (the Weinreich action“); or, in the alternative, for an order dismissing the complaint in this action for failure to state a cause of action; and a motion having been made by the plaintiff for an order for 9a Order of the New York Supreme Court, County of Erie renewal and or reargument, vacatur and modification of the order granted herein on May 14, 1980 and for an order for injunctive relief staying the defendant from proceed- ing with motions to dismiss and for class certifications and other such motions and other same and similar actions until the motions in this action are heard and determined or until further order of this Court, Now, on reading the complaint, the notice of motion dated May 15, 1980, the affidavit of Ralph L. Halpern sworn to May 12, 1980, the exhibits annexed thereto, the order to show cause dated May 20, 1980, the affidavit of Willard M. Pottle, Jr. sworn to May 20, 1980, the order herein dated May 23, 1980, the affirmation of Ralph L. Halpern dated May 23, 1980, the affidavit of Willard M. Pottle, Jr. sworn to May 23, 1980 and the affidavit of Charles Platto sworn to May 26, 1980, and upon all the pleadings and proceed- ings heretofore had and taken herein and after hearing Raichle, Banning, Weiss & Halpern (Ralph L. Halpern of counse]) and Cahill Gordon & Reindel (William E. Hegarty, Charles Platto, Donald 8. Parker, Charles Gilman and Kenneth Vittor of counsel), both attorneys for the defen- dant, in support of defendant’s motion and in opposition to plaintiff's motion, Dobozin & Pottle (Willard M. Pottle, Jr. of counsel), attorneys for the plaintiff, in opposition to defendant’s motion and in support of plaintiff's motion, and due deliberation having been had and a memorandum decision dated June 17, 1980 having been filed, it is Onperep, that the motion for an order dismissing the complaint for failure to state a cause of action be and the same hereby is granted; and it is further Onbunnn, that the complaint be and the same hereby is dismissed ; and it is further 10a Order of the New York Supreme Court, County of Erie Onpenrzp, that, accordingly, all the other requested relief be and the same hereby is denied as moot and academic. /s/ James B. Kane JSC. GRANTED Jun 18 1980 court lun A. Dm«rno lla Order of the Appellate Division, Fourth Judicial Department SUPREME COURT OF THE STATE OF NEW YORK Appetiate Drviston—Fovrtsa Jupicia, DeparTMENT Present: Carpamone, J. P., Srmions, Hancock, CaAAAAHAx, Mou, JJ. Morris C. Gurnee, for Himself and All Persons Entitled to First Party Benefits Similarly Situated, Appellant, v. Aetna Life and Casualty Company, Itself and All Other Insurance Companies Under New York State Law Ow- ing First Party Benefits Similarly Situated, Respondent. The above named Morris C. Gurnee, for himself and all persons entitled to first party benefits similarly situated having appealed to this Court from an order of the Su- preme Court, entered in the Erie County Clerk’s office on June 19, 1980 and said appeal having been argued by Wil- lard Pottle of counsel for appellant, Charles Platto of counsel for respondent and submitted by Abraham Fuchs- berg, amicus curiae for Samuel Uretsky, et al. and due deliberation having been had thereon, It is hereby onperep, That the order so appealed from be and the same hereby is unanimously affirmed with costs 12a Order of the Appellate Division, Fourth Judicial Department on the opinion at Special Term, Kane, J. (428 NYS2d 992). The motion to strike the appendix from respondent’s brief is denied. Entered: Dec 12 1980 Many F. Zouzzr, Clerk SUPREME COURT Arrmarn Drvision Fourth Jupicur Department Clerk’s Office, Rochester, N. T. I, Many F. Zouzr, Clerk of the Appellate Division of the Supreme Court in the Fourth Judicial Department, do here- by certify that this is a true copy of the original order, now on file in this office. In Wrrwess Wueneor, I have hereunto set my hand and affixed the seal of said Court at the City of Rochester, New York, this Dec 12, 1980 /s/ Many F. Zoran Clerk. 13a Memorandum Decision of the New York Supreme Court, County of New York SUPREME COURT, NEW YORK COUNTY Seeciat Term, Part I Index No. 5272/80 Cal. No. 16 of 6/25/80 Mosne Wernreicn, suing individually on his own behalf and representatively on behalf of a class of plaintiffs similarly situated, Plaintiff, —against— Srate-Wive Insurance Company, Auistate Insurance Con- pany, Hartrorp Accipent & Iwpemniry Company, Laserty Murvat Insurance Company, GoverNMEXT Emp.ovees Insurance Company, individually and rep- resentatively on behalf of a class of defendants similarly situated, Defendants. Schwarz, J.: Motions no. 16, 31, 32, 33, 76 and 77 of June 25, 1980 are consolidated for disposition. The defendants State-Wide Insurance Company, Allstate Insurance Company, Hartford Accident & Indemnity Com- pany, Liberty Mutual Insurance Company, Government Employees Insurance Company, individually and repre- sentatively on behalf of a class of defendants similarly situated, move for an order dismissing the complaint for failure to state a cause of action. 14a Memorandum Decision of the New York Supreme Court, County of New York Plaintiff moves for an order determining that this action may be maintained as a class action. The Attorney General of the State of New York requested and was granted leave to appear herein for the Superin- tendent of Insurance of the State of New York, as amicus curiae on the question of the retroactive application of Kurcsics v. Merchants Mutual Insurance Company, 49 N.Y. 2d 451 (1980). Plaintiff's claim is for additional benefits for loss of earnings resulting from personal injuries allegedly sus- tained on July 1, 1975 in an accident involving a motor vehicle insured under a policy of insurance issued by de- fendant State-Wide Insurance Company (“State-Wide”) pursuant to the provisions of the New York Comprehensive Automobile Insurance Reparations Act, Insurance Law, Article 18 §§670-78 (McKinney Supp. 1979-80), commonly referred to as the “No-Fault Law.” For 35 montbs plaintiff received payments from State- Wide reimbursing him for loss of earnings of up to $800 per month. The $800 monthly payments were made in accordance with governing Insurance Department regula- tions providing that the maximum permissible payment under the No-Fault Law for loss of earnings was $300 per month for up to 36 months. Insurance Law §671(1) provides: “1. ‘Basic economic loss’ means, up to fifty thousand dollars per person. (b) loss of earnings from work which the injured person would have performed had he not been injured, and reason- able and necessary expenses incurred by such person in obtaining services in lieu of those that he would have per- formed for income, up to one thousand dollars per month for not more than three years from the date of the accident causing the injury... .” 15a Memorandum Decision of the New York Supreme Court, County of New York Insurance Law §671(2) provides: “2. ‘First party bene- fits’ means payments to reimburse a person for basic eco- nomic loss on account of personal injury arising out of the use or operation of a motor vehicle, less: (a) twenty per- cent of lost earnings pursuant to paragraph (b) of sub- division one of this section. Insurance Department Regulations 65.6(n)(2)(xi) and 65.15(n)(2)(xi) provided that the $1,000 per month lost earnings component, of basic economic loss defined in Sec- tion 671(1) of the Insurance Law, when reduced by a 20% offset as required by Section 671(2) of the Insurance Law, resulted in a maximum payment of $800 per month. On February 20, 1980, the Court of Appeals, in Kurcsics v. Merchants Mutual Insurance Co., 49 N.Y.2d 451, dealing with what it characterized on p. 454 as “a question of first impression”, issued a declaratory judgment holding that under the Insurance Law an injured person can recover up to $1,000 per month from the insurer for lost earnings. The instant complaint seeks general retroactive applica- tion of the holding in Kurcsics. Plaintiff claims that he and the class which he seeks to represent comprising all other persons who received $800 per month rather than $1,000 should recover the additional $200 per month for up to three years under Section 671 of the Insurance Law, with stat- utory interest at the rate of 2% per month and attorneys’ fees under Section 675 of the Insurance Law. Plaintiff estimates that there may be more than 300,000 such persons in this class. The Superintendent of Insurance of the State of New York (“Superintendent”), as amicus curiae, submits an affidavit opposing the retroactive application of the holding in Kurcsics. The Attorney General submits a memorandum of law arguing that the retroactive application of the 16a Memorandum Decision of the New Fork Supreme Court, County of New York Kurcsics decision would be inequitable to both consumers and the insurance industry. In February 1974, the New York Comprehensive Auto- mobile Insurance Reparations Act, (commonly known as the No-Fault Law) Insurance Law, Article 18 §§670-78 (McKinney Supp. 1979), went into effect. At the time of the enactment of the No-Fault Law and amendments there- to, a series of regulations were promulgated by the Super- intendents of Insurance. Among these regulations were 11 NYCRR 65.6(n)(2)(xi) and 65.15(n)(2)(xi) which pro- vided for maximum wage loss payments of up to $800 per month. Insurance carriers under the jurisdiction of the Insur- ance Department were obligated to abide by these regula- tions. Rates were to be set in accordance with these regula- tions, and premiums were to be collected in accordance with them. Policies of insurance issued pursuant to the No-Fault Law were in the form mandated by the Insurance Depart- ment regulations, and claim reserves were required to be established by insurers in accordance with these regulations. Insurers were required to provide their policyholders with informational brochures and cover letters setting forth, inter alia, the $800 per month ceiling. These regulations were enforced by the Insurance De- partment. The Superintendent states that if the insurance carriers had not complied with these regulations (e.g., if the insurance carriers had paid claimants $1,000 per month in lost earnings benefits or had established their claim reserves at that level) they would have been subjected to administrative sanctions by the Insurance Department for failing to comply with mandatory regulations of the In- surance Department and for wasting insurance company assets. 17a Memorandum Decision of the New York Supreme Court, County of New York The Superintendent emphasizes that he is not seeking to collatorally attack the Kurcsics decision. He states that he has ordered that insurers and self-insurers give full pro- spective implementation of Kurcsics. The Superintendent contends, nevertheless, that as a matter of sound law and policy, a retroactive application of Kurcsics would be harm- ful to the public and establish a harmful precedent. The Superintendent points out that if Kurcsics is applied retroactively, licenses of the Insurance Department and other agencies could no longer rely on governmental reg- ulations and would find it necessary to seek declaratory judgments on substantially all regulations, present and future, which have not yet been construed by this state’s highest court. The Insurance Department and other State agencies could not function effectively under such condi- tions. It is argued that retroactive application of Kurcsics would also restrict the availability of insurance in this state generally, since retroactive payments of many millions of dollars would reduce every insurer’s capacity to write business. Any retroactively-directed payments could not be recovered in future ratemaking proceedings and would have to come out of an insurer’s surplus. Thousands of arbitrations, resolved by settlement or award, could be subject to challenge. Self insurers, such as utilities, public authorities, and taxi fleets would all be potentially subject to substantial retroactive claims for which they are not covered and have not received any premiums. In Chevron Od Co. v. Huson, 404 U.S. 97 (1971) the United States Supreme Court stated at pp. 106-107: “In our cases dealing with the nonretroactivity ques- tion, we have generally considered three separate fac- 18a Memorandum Decision of the New York Supreme Court, County of New York tors. First, the decision to be applied nonretroactively must establish a new principle of law, either by over- ruling clear past precedent on which litigants may have relied, see e.g., Hanover Shoe v. United Shoe Machinery Corp., supra (392 U.S.], at 496, or by de- ciding an issue of first impression whose resolution was not clearly foreshadowed, see, e.g., Allen v. State Board of Elections, supra (393 U.S.], at 572. Second, it has been stressed that ‘we must . weigh the merits and demerits in each case by looking to the prior his- tory of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.’ Linkletter v. Walker, supra [381 U.S.], at 629. Finally, we have weighed the inequity imposed by retroactive application, for [where a decision of this Court could produce substantial inequitable re- sults if applied retroactively, there is ample basis in our cases for avoiding the “injustice of hardship” by a holding of nonretroactivity.’ Cipriano v. City of Houma, supra (395 U.S.], at 706.” Applying the standards as set forth in Chevron Oil Co. v. Huson to the case at bar, equitable considerations dictate against a retroactive application of the Kurcsics decision. In the first place, the Court of Appeals recognized that the issue in Kurcsics was one “of first impression in this Court concerning the construction of the phrase ‘first party benefits’ .. .” (49 N.Y.2d at p. 54). Indeed, the Court of Appeals decision in that case overruled the unanimous Appellate Division, Fourth Department decision in that ease, 65 A.D.2d 192, the unanimous decision of the Appel- late Division, Second Department in Government Employ- ees Insurance Department v. Sparrow, 66 A.D.2d 782, and 19a Memorandum Decision of the New York Supreme Court, County of New York was contrary to the interpretation of the statute promul- gated by the Insurance Department in its regulations which all insurers were required to follow. The interpretation of the statute by the Court of Appeals in Kurcsics can not be said to have been “clearly foreshadowed.” Applying the second factor of the Chevron Oil Co. v. Huson formula, the basic purpose of the “No Fault” legis- lation was designed to combat the spiraling cost of auto insurance by reducing the number of auto accident negli- gence suits and by passing along the resultant savings to the consumers in the form of lower automobile insurance premiums. (See Montgomery v. Daniels, 38 N.Y.2d 41, 46). A key element in reducing the cost of auto insurance was the adoption of the 20% offset provision which was based on recognition that since work-loss benefits were not tax- able, payment of the maximum work-loss benefits of $1,000 per month without a 20% offset would produce a windrall to the wage earner. The rates of the insurers that were approved by the Insurance Department were based upon the premises that loss earnings benefits were to be limited to a maximum of $800 per month. If the maximum benefits payable for wage loss had been $1,000 per month, the in- surers would necessarily have had to charge the public higher premiums to reflect their increased liability. As to the third factor, a retroactive application of Kurcsics would produce substantial inequitable results. The insurers whose rates had been based upon maximum liabil- ity for wage loss of $800 per month would be exposed to additional payments of up to $1,000 a month without the possibility of adjusting their rates to cover this loss. In addition, insurers would be liable to interest payments of 2% per month and attorneys fees to those parties who are now found to be retroactively entitled to $1,000 per month Memorandum Decision of the New York Supreme Court, County of New York despite the fact that the insurers had not been dilatory but had been following the Insurance Department’s regulations. It would be inequitable for insureds who paid premiums based on the maximum potential of receiving $800 per month for such earnings to now receive $1,000 a month and have the additional windfall of not being required to pay taxes on such payments. It is clear that the inequity imposed by retroactive ap- plication of the Kurcsics holding provides ample basis for avoiding the “injustice of hardship” by a holding of non- retroactivity. (Chevron Oil Co. v. Huson, supra; Cipriano v. City of Houma, 395 U.S. at page 706). In the recent case of Gurnie v. Aetna Life and Casualty Company (N.Y.L.J. 6/26/80, Sup. Ct. Erie County) the court held that the Kurcsics decision of the Court of Ap- peals should not be given retroactive effect, stating “. . in the court’s opinion equity would prevent a retroactive ap- plication of Kwrcsics in this situation even if such an ap- plication was found to be constitutional.” Accordingly, this court finds that the decision in Kurcsics v. Merchants Mutual Insurance Company, (supra) should not be given retroactive effect. The motions by defendants for an order dismissing the complaint is granted. Plaintiff's motion is denied. Settle order. Dated: August 5, 1980. /s/ H. G. S. J. S. C. Order of the New York Supreme Court, County of New York Impex No. 05272/80 How. Huna G. Scuwartz, Justice. At a Special Term of this Court in and for the County of New York, at the Courthouse, 60 Centre Street, New York, New York on the 9th day of September, 1980. Mosue Werwreics, Plaintiff, —against— Srare-Wwe Iwsvrance Compary, et al., Defendants. Ononn Motions having been made by the defendants hereto, for an order pursuant to CPLR § 3211 di«missing this action for failure to state a cause of action; and a motion having been made by plaintiff Moshe Weinreich for an order pur- suant to CPLR 5 902 certifying this action as a class action, And the Court having issued its memorandum decision dated August 5, 1980, Now, upon reading and filing the complaint, defendants’ notice of motion dated May 15, 1980, the affidavit of Wu- Order of the New York Supreme Court, County of New York uam E. Hnaanrr, Esq., sworn to May 14, 1980 and exhibits annexed thereto, defendants’ notice of motion dated May 16, 1980, the affidavit of Camus Piatto, Esq., sworn to May 16, 1980, the supplemental affidavit of Wuius E. Hnaanrr, Esq., sworn to June 19, 1980, the notice of motion dated May 15, 1980, the affidavit of Evozne A. Lantax, sworn to May 15, 1980, the notice of motion dated 16, 1980, the affidavit of Hexszrr Dicxsn, Esq., sworn 1980, the affidavit of Invixe Rosen, Esq., sworn 1980, the notice of motion dated June 2, 1980, the affirma- tion of Hanotp M. Fosrsn, affirmed June 3, 1980, the notice of cross-motion dated June 5, 1980, the affidavit of Inv Rossy, sworn to June 5, 1980, and the affidavit of Alu rence Mn senc, Esq., sworn to June 12, 1980, the opposition affidavit of Lawzexce Mun, Esq., sworn to June 24, 1980, and the response affidavit of Lawzences Mund, sq., sworn to June 24, 1980. Now, on motions of attorneys for defendants, it is or- dered that motions No. 16, 31, 32, 33, 76 and 77 are consoli- dated for disposition; and it is further Oxpzrep, that the motions for an order dismissing the complaint for failure to state a cause of action is granted; and it is further Order of the New York Supreme Court, County of New York Orpzrep, that the complaint is dismissed and the clerk is directed to enter judgment accordingly; and it is further Oxpenrep, that the motion for class certification is denied. /s/ H. G. 8. JSC. FILED Ser 11 1980 New Ton 24a Order of the Appellate Division, First Judicial Department At a term of the Appellate Division of the Su- preme Court held in and for the First Ju- dicial Department in the County of New York, on February 19, 1981. Present: How. Txueopore R. Kuprerman, Justice Presiding. Hunt Bins, Leonarp H. Sanpuer, Samvet J. Su.vermay, Arnot L. Fem, Justices. 10108 Mosue Wannen suing individually on his own behalf and representatively on behalf of a class of plaintiffs sim- ilarly situated, Plaintiff-Appellant, —against— Srarn- Wm Insurance Company, Auistate Ixsurance Com- pany, Harrrorp Accwsent & Inpemnrry Company, Laszerty Murua Insurance Company, GovernMENT EurLornns Insurance Company, individually and repre- sentatively on behalf of a class of defendunts similarly situated, Defendants-Respondents, and Aut Crry Insurance Company and Empme Murua Casuatty Insurance Company, Defendants, and Tun Agrwa Casvatty & Sunery Company, Aztys Insun- ance Compary, Azrwa Lars Insuzance Company, Au- 25a Order of the Appellate Division, First Judicial Department can AvtomosiLe Insurance Co., Amica Mutua Ixsun- ance Company, American Mutua Liasmity Insurance Company, Atitantic Mutua. Liasmary Insurance Com- pany, Banner CASUAL Company, BurraLo Insurance Company, Boston OD Colon Insurance Company, CentrenniaL Insurance Company, Century INDEMNITY Company, Cotontua, Penn Insurance Company, Com- MERCIAL InsuRaNcE Company or Newark, N. J., Couunn- cra. Unton Insurance Company, ContinentaL Casualty Company, Cosmopouitan Murua, Insurance Company, Tue ContinentaL Insurance Company, Country-Wme Insurance Company, Crrrenton Insurance Company, Emptovers Murvat Casual Company, New Jersey Manvuracturers Insurance Company, Newark Ixsun- ance Company, Tun Norra River Insurance Co., Prv- DENTIAL Property & Casuauty Company, Feperau Insur- ANCE Company, Fmskrry & Casvauty Company or New York, Frremen’s Funp Insurance Company, Frremen’s Insurance Company or Newark, New Jersey, Generan Accwenrt Fire & Lire Assurance Corporation, Leb., Glonn Inpemnrry Company, Guews Fals Insurance Company, Grapuic Aurs Murua Insurance Company, Great American Insurance Company, THe Greater New York Murvat Insurance Company, Guarpian Royat Excnance Assurance Company, Hanover Insur- ance Co., Hartrorp Casuaury Insurance Company, THE Home Insurance Company, Tue Home Invemntry Com- pany, Home Inpemwyrry Co., Inga, Mutvan Insurance Company, Insurance Compasy or Greater New Yor, Insurance Company or Nortn America, Leatuersy Ix- suRANCE Company, Liserty Murvat Insurance Com- pany, Lion Insurance Company, Tun Lu=1permen’s Mourvat Insurance Company, Lumpenmen’s Morus. 26a Order of the Appellate Division, First Judicial Department Cas, Co., Maryann Casuatty Compayy, Mercnants Mu- TuaL Insurance Company, Micuican Mutua Liasinity Company, Nassau Insurance Company, National GRANGE Murvat Insurance Company, Nationwmwe Murtvat Ix- surance Company, Rewance Insurance ComPary, Royat-Guiose Insurance Company, Royat InpeMNITY Compaxy, Sareco Insurance Company or Amenica, Sr. Paul, Fre & Manx Insurance Co., Sentry Insurance Murvat Company, Strate Farm Mutua, AvtTomosiLe Insurance Co., TransamMerntca Insurance ComPaNy, Traveters Inpemniry Company, TraveLers [NDEMNITY Company or Iuurvouw, Traverers Insurance Compayy, Unperwarrers Insurance Company, Unicarp Insurance Company, Unrrep Srates Froeurry & Guaranty Con- pany, Utica Mutua Insurance Company, WorcEsTER Murvat Insurance Company, Zunicu Insurance Con- pany, USAA Casvatty Insurance Company and Votxs- wacen Insurance ComMPaNy, Defendants-Respondents. An appeal having been taken to this Court by the plain- tiff-appellant from an order of Supreme Court, New York County (H. Schwartz, J.), entered on September 11, 1980, which dismissed the complaint of plaintiff on the ground of failure to state a cause of action and denied his motion for class certification, And said appeal having been argued by Mr. Jerome M. Congress of counsel for the plaintiff-appellant, by Mr. William E. Hegarty of counsel for defendants-respondents, except Maryland Casualty Company, by Mr. Hugene A. Leiman of counsel for defendant-respondent Maryland Casualty Company, and an amicus curiae brief having been 27a Order of the Appellate Division, First Judicial Department submitted by Mr. Robert S. Hammer, of counsel for the Superintendent of Insurance, in support of affirmance; and due deliberation having been had thereon, It is unanimously ordered that the order so appealed from be and the same is hereby affirmed, without costs and without disbursements. ENTER: /8/ Josern J. Luo Clerk. FILED Fes 19 1981 28a Opinion of the Court of Appeals of the State of New York Morais C. Guawez, Appellant, v Aerwa Lire anp Casvauty Company, Respondent. Mosue Wenvreice, Appellant, v Srare-Wive Insurance Company et al., Respondents, et al., Defendants. Argued January 12, 1982; decided February 18, 1982. Oprion or THE CourRT Chief Judge Cooks. These cases present the question whether the holding of Kurcsics v. Merchants Mut. Ins. Co. (49 NY2d 451) should be given retroactive effect. For the outlined reasons, this court holds that Kurcsics should be applied to all claims not barred by the Statute of Limitations. In Kurcsics, the court construed the phrase “first party benefits”, contained in section 671 of the Insurance Law, as it related to no-fault insurance protection. The court held that under section 671, a covered person injured in a motor vehicle accident who sustained lost earnings of more than $1,000 per month can recover as first-party benefits 80% of his or her actual lost earnings up to a maximum of $1,000 per month. The court rejected the Superintendent of Insur- ance’s interpretation of section 671 as limiting recovery for lost earnings to a maximum of 80% of $1,000, or $800. Morris Gurnee, plaintiff in one of the instant actions, was injured in November, 1977 while driving a car owned by an insured of Aetna Life and Casualty Company. He claimed lost wages of more than $3,200 per month. Aetna paid him $800 per month, in accordance with State Insur- ance Department regulations. After this court decided 29a Opinion of the Court of Appeals of the State of New York Kurcsics in February, 1980, Gurnee sued Aetna, claiming he was entitled to the maximum $1,000 per month for lost earnings. Supreme Court granted defendant’s motion to dismiss the complaint for failure to state a cause of action, holding that Kurcsics should not be applied retroactively. That court also denied as academic plaintiff's motion to maintain the lawsuit as a class action. The Appellate Division affirmed. Moshe Weinreich was injured in an accident in July, 1975 involving a vehicle insured by State-Wide Insurance Company. In the wake of Kurcsics, he sued State-Wide, alleging that it refused to pay him more than $800 per month in lost wages even though he was entitled to $1,000. Weinreich also moved for an order determining that the suit could be brought as a class action. Supreme Court granted defendant’s motion to d miss for failure to state a cause of action, holding that Kurcsics was not retroactive, and denied the motion for class certification. Appellate Division affirmance followed. In determining whether the holding of Kurcsics is appli- cable to other claims that arose before the decision was handed down, it is questionable whether retroactivity anal- ysis is relevant with respect to the application of the first decision of the State’s highest court interpreting a new statute. Such analysis is traditionally used where there has been an abrupt shift in controlling decisional law. In Kurcsics, this court merely construed, at its first opportunity to do so, the language of a statute that had been in effect since 1974. Even under what might be described as the traditional retroactivity analysis, however, it is clear that Kurcsics should be accorded full retroactive effect. Several prin- 30a Opinion of the Court of Appeals of the State of New York ciples provide guidance for such examination. First, it is well established that, “consonant with the common law’s policy-laden assumptions, a change in decisional law usu- ally will be applied retrospectively to all cases still in the normal litigating process” (Gager v. White, 53 NY2d 475, 483; see People v. Pepper, 53 NY2d 213, 219-220; People v. Morales, 37 NY2d 262, 267-269; Kelly v. Long Is. Light. Co., 31 NY2d 25, 29, n 3; Knapp v. Fasbender, 1 NY2d 212, 243). As an exception to this general rule, however, “where there has been such a sharp break in the continuity of law that its impact will ‘wreak more havoc in society than society’s interest in stability will tolerate’” a court may direct that the new pronouncement operate prospectively alone (Gager v. White, supra, at pp. 483-484, quoting Fairchild Limita- tion of New Judge-Made Law to Prospective Effect Only: “Prospective Overruling” or “Sunbursting”, 51 Marq L Rev 254). In Chevron Oil Co. v. Huson (404 US 97, 106-107), the Supreme Court outlined three factors to consider in deter- mining if a ruling should be prospective only. “First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past prece- dent on which litigants may have relied * * * or by decid- ing an issue of first impression whose resolution was not clearly foreshadowed” (404 US, at p 106). Second, the prior history of the rule at issue and the impact of retroactive application upon its purpose and effect should be consid- ered. Finally, the court should take into account any in- equity that would be created by retroactive application (id.). Turning to the instant cases, defendants argue that Kurcsics should not be applied retroactively because its 31a Opinion of the Court of Appeals of the State of New York result was not clearly foreshadowed. In this regard it is important to emphasize that Kurcsics did not “establish a new principle of law.” It merely construed a statute that had been in effect for a number of years. It is true that the Insurance Department had promulgated regulations based on a construction of section 671 contrary to that subse- quently articulated by this court. A judicial decision con- struing the words of a statute, however, does not constitute the creation of a new legal principle. Additionally, the definitional language of section 671 itself foreshadowed the conclusion this court first had the opportunity to ex- press in Kurcsics. With respect to the second factor set forth in Chevron, defendants argue that the purposes of the legislation would not be furthered because retroactive application of Kurc- sics would reduce neither insurance premium rates nor the number of law suits stemming from automobile accidents, both admittedly salutary goals of the no-fault scheme. In Montgomery v. Daniels (38 NY2d 41, 55), however, this court stated that a crucial facet of the Legislature’s plan in enacting article 18 of the Insurance Law consisted of “gnaranteeing prompt and full compensation of economic losses up to $50,000 without the necessity of recourse to the courts” (emphasis added). It is this right of an injured party to prompt and full compensation that offsets the no- fault law’s elimination of the ability to recover for pain and suffering for relatively minor injuries (see NY Legis Ann, 1973, p 298; 2 McKinney’s Session Laws of NY, 1973, p 2335). An important aspect of the no-fault scheme, then, was the provision of first-party benefits. “Full compensa- tion” under the scheme includes the amount of lost earn- ings allowed by section 671. To argue that application of 32a Opinion of the Court of Appeals of the State of New York the correct interpretation of section 671 will not further the purposes of the no-fault legislation is to ignore these crucial benefits. Indeed, to deny Kurcsics application to these cases would directly contradict the legislative design. The third factor cited in Chevron entails weighing rela- tive burdens that would be imposed upon either party if Kurcsics were given retroactive effect. Defendants main- tain that they based their premium rates upon the assump- tion that their liability for lost carnings would be limited to $800 per month. They assert that a determination that their maximum liability was $1,000 per month would create severe financial hardships. Whatever hardships may be suffered by insurers who erroneously believed that their maximum exposure was $800 per month for lost earnings, however, is more than outweighed by the hardship suf- fered by those injured individuals who received only $800 per month for lost earnings although entitled to a maximum of $1,000 per month. As this court observed in Montgomery v. Daniels (38 NY2d 41, 55, supra), the no- fault legislation foreclosed recovery for pain and suffering by persons who had suffered relatively minor injuries in automobile accidents, but balanced this by providing a means of obtaining prompt and full recovery for certain economic losses. Plaintiffs were denied the ability to sue for pain and suffering, yet they were also denied the full recovery to which they were entitled under that scheme. The unfairness to such injured persons outweighs what- ever financial burden may be imposed on insurers. With respect to this burden, it should be noted that the applica- ble six-year Statute of Limitations has already extin- guished a portion of the insurers’ potential liability (sea CPLR 213). Opinion of the Court of Appeals of the State of New York When all of the applicable criteria are considered, retro- active application of Kurcsics is mandated. In sum, that case established no new principle of law; it merely con- strued the language of a statute that was already in existence. Also, the purposes of the no-fault insurance legislation would be furthered by retroactive application of Kurcsics. And, finally, a balancing of the equities dictates that the injured parties not be made to bear the burden of foregoing part of the recovery to which they were statuto- rily entitled. Defendants also raise constitutional challenges to retro- active application of Kurcsics. These arguments, however, are unpersuasive. Kurcsics merely construed the language of a statute governing certain provisions required of auto- mobile insurance contracts. Such a judicial construction cannot, by its very nature, constitute a Law impairing the Obligation of Contracts” (US Const, art I, 6 10, par 1). Likewise, retroactive application of Kurcsics effects no un- constitutional taking of property without due process. Re- quiring defendants to pay covered persons according to the command of a statute governing their insurance poli- cies and in effect when those policies were written simply is not a “taking”. There is thus no persuasive reason why this court’s construction of section 671 should not be held applicable to all claims that are not time-barred. To the contrary, equitable considerations and the nature of this court’s decision in Kurcsics require that Kurcsics be ap- plied retroactively. Plaintiff's complaints therefore should not have been dismissed for failure to state a cause of action. With respect to plaintiffs’ motions for orders determin- ing that they could bring their suits as class actions, this 34a Opinion of the Court of Appeals of the State of New York court has no occasion at this point to address the merits. The motions were denied as academic, in one case explic- itly and in the other implicitly, in light of the dismissals of plaintiffs’ complaints for failure to state a cause of action. Given the inherently factual and discretionary nature of such determinations (see Ray v. Marine Midland Grace Trust Co., 35 NY2d 147, 155; Siegel, New York Practice, 6147), the merits of the motions should first be explored and considered by the trial courts (see CPLR 901-909). Accordingly, the orders of the Appellate Divisions should be reversed, with costs, and defendants’ motions to dis- miss the complaints should be denied. Judges Janz, Gan, Jones, Wacutizr and Merer concur; Judge Fucussere taking no part. In Gurnee v. Aetna Life & Cas. Co.: Order reversed, with costs, and defendants’ motions to dismiss the complaint denied. In Weinreich v. State-Wide Ins. Co.: Order reversed, with costs, and defendants’ motions to dismiss the complaint denied. Order of the Court of Appeals Denying Reargument Mo. No. 260 Morais C. Gurwen, for Himself &. Appellant, vs. Agrwa Lire ayp Casual Company, &. Respondent. Appellant, Mosue WII, &c., vs. Srarn- Ws Insurance Compary, et al., Respondents. Deciston Cover or Arpzats, Mane 25, 1982 Motion for reargument denied with twenty dollars costs and necessary reproduction disbursements. Motion for a stay pending application to the United States Supreme Court for a writ of certiorari dismissed. Motion for a stay referred to Chief Judge Cooke for de- termination pursuant to 28 U.S.C. sec. 2101 (f). Judge Fuchsberg took no part. Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. Orro Kuncszos, Appellant v. Mercnants Mutua. Ixsun- ances Company, Respondent. Argued January 2, 1980; decided February 20, 1980 Orixiox or THe Court Jagan, J. This appeal raises a question of first impression in this court concerning the construction of the phrase “first party benefits” as used in article 18 of the Insurance Law (§§ 670- 678), New York’s Comprehensive Automobile Insurance Reparations Act, which provides no-fault insurance protec- tion to “covered persons”. Specifically, we are asked to décide whether a covered person who has sustained lost earnings in excess of $1,000 per month is entitled to recover as first-party benefits 80% of actual lost earnings with a maximum limitation of $1,000 per month, or, whether, such person’s recovery is limited to only $800 per month as first- party benefits, such figure representing 80% of actual earn- ings “up to one thousand dollars per month.” The facts are undisputed and may be simply stated. On April 1, 1977, plaintiff Otto Kuresies, while riding a motorcycle, was struck and injured by an automobile driven by one James Gantzer. A policy of automobile liability in- surance issued to Gantzer by Merchants Mutual Insurance Co., defendant herein, complied with the requirements of section 672 of the Insurance Law and thus provided for the payment of first-party benefits to various classes of per- 37a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. As a result of the accident and injury suffered, plaintiff submitted claims to defendant for payment of both medical expenses and lost wages.’ Although plaintiff produced proper documentation of the fact that he had sustained a loss of $1,400 per month in wages since the time of the acci- dent, defendant has paid him only $800 per month, con- tending that this amount is the maximum to which plaintiff is entitled. In contrast, plaintiff maintains that the statute specifically allows “up to one thousand dollars per month” for lost wages and not the sum of $800 as interpreted by the defendant. This disagreement as to the amount of loss of earnings plaintiff is entitled to recover as first-party benefits spawned this litigation. By this action, plaintiff seeks a declaratory judgment construing section 671 of the Insur- 38a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. an injured person will be allowed to receive up to a maxi- mum of $1,000 per month from the carrier for lost wages.” (93 Misc. 2d, at p. 283.) Special Term, however, denied plaintiff's request for interest and attorney’s fees. On appeal, a unanimous Appellate Division modified the judgment of Special Term by deleting therefrom “the provisions interpreting section 671 of the Insurance Law as requiring defendant to increase its monthly payments to plaintiff to the sum of $1,000 retroactive to April 1, 1977 and directing defendant to make such payments.” (65 A.D. 2d, at p. 197.) The order of the Appellate Division should be reversed, and the case remitted to Special Term for the award of reasonable attorney’s fees and interest. The controversy in this case centers upon an ambiguity which is perceived to exist in section 671 of the Insurance Law. The term “basic economic loss” is defined to include as one of its components “loss of earnings from work which the injured person would have performed had he not been injured, and reasonable and necessary expenses incurred by such person in obtaining services in lieu of those that he would have performed for income, up to one thousand dol- lars per month for not more than three years from the date of the accident causing the injury.” (Insurance Law, § 671, subd. 1, par [b].) In contrast, the phrase “first party bene- fits“, as far as is applicable to this appeal, “means payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less: (a) twenty percent of lost earnings pursuant to paragraph (b) of subdivision one of this section.” Defendant takes the position that inasmuch as its duty to compensate is couched in “first party benefit” terms (see Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. Insurance Law, § 672), its obligation for lost earnings can- not exceed the figure of $800 per month. Defendant arrives at this sum by reasoning that since first-party benefits are defined as basic economic loss less 20% of lost earnings as defined in section 671 (subd 1, par [b]) of the Insurance Law and, further, since loss of earnings as defined in such section have an outer limit of $1,000 per month, the 20% reduction works to limit recovery as first-party benefits for lost earnings to $800 per month. Plaintiff, on the other hand, contends that since the Leg- islature has authorized expressly the recovery “up to one thousand dollars per month” for loss of earnings, the 20% reduction should not be interpreted as limiting this figure to read “up to $800” instead of $1,000 as clearly stated in the statute. Rather, plaintiff forwards as the reasonable and correct interpretation of these statutory provisions that the 20% deduction was intended to be computed against the gross amount of lost earnings claimed. Thus, an individual is entitled to actual lost earnings claimed less 20%, unless such reduced figure exceeds $1,000 per month, in which case such person would be entitled to a maximum of $1,000 due to the outer net limit imposed by section 671 (subd. 1, par [bl) of the Insurance Law. We agree with this contention. There can be little doubt that the 20% deduction was included in the statutory scheme by the Legislature to pre- vent both windfall recovery to injured persons and financial hardship to insurance carriers. As has been stated: [T Ihe 20% credit or deduction was designed to give the insurance carrier a monetary benefit based upon the fact that the lost earnings compensated under this law, are not includable in income for the purposes of federal income taxation and accordingly, since the claimant derives a benefit in that respect, the insurance carrier should share in said benefits 40a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. through the 20% deduction.” (N.Y. No-Fault Arbitration Reports, NF-1, vol. 1, No. 1, Jan., 1977; see, also, Strain v. Kechbaum, 83 Misc.2d 1066, 1067; Comment, New York Adopts No-Fault: A Summary and Analysis, 37 Albany L. Rev. 662, 689-690; Report of Joint Legis. Committee on Ins. Rates, Regulation and Recodification of Insurance Law, N.Y. Legis. Doc., 1973, No. 18, p. 10.) Thus, by limiting first-party benefits to 80% of lost earnings, the Legislature has attempted to compensate the accident victim for the earnings he or she would have, in fact, realized, while, at the same time, ensuring that an unjustified financial burden is not thrust upon the insurance companies which would eventually be reflected in higher insurance premiums. In addition, the possible motivation for recovered accident vic- tims to refrain from returning to work, if windfall recovery would be permitted, is minimized, if not entirely eliminated. While the legislative purpose behind the enactment of the 20% deduction embodied in section 671 (subd. 1, par [b]) of the Insurance Law is readily identifiable, the issue to be resolved on this appeal remains whether the 20% deduction was intended to operate so as to limit recovery for loss of earnings to $800 per month, or whether it was meant to reduce only actual lost earnings claimed, thereby allowing a maximum recovery of $1,000 per month as first-party benefits. We believe that the statutory provisions support the latter interpretation. Section 671 (subd. 1, par. [b]) of the Insurance Law pro- vides that one of the components of “basic economic loss” is loss of earnings from work and further states, in un- equivocal terms, that this amount shall not exceed “one thousand dollars per month for not more than three years from the date of the accident causing the injury.” Thus, it is abundantly clear that this provision contemplates re- 4la Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. covery for loss of earnings up to $1,000 per month, and we would be remiss in reading the 20% deduction embodied in section 671 (subd. 2, par. [a]) of the Insurance Law as re- writing paragraph (b) of subdivision 1 to limit the maxi- mum recovery to $800 per month for loss of earnings. If the Legislature had so intended, section 671 (subd. 1, par. [b]) would limit recovery to $800 per month and not au- thorize, as it presently does, recovery “up to one thousand dollars per month” for loss of earnings. The 20% deduction should not be treated as taking away what benefits section 671 (subd. 1, par. [b]) bestows for “[i]t remains a basic principle of statutory construction that a court will ‘not by implication read into a clause of a rule or statute a limi- tation for which * * * no sound reason [can be found] and which would render the clause futile’ ” (Matter of Indus- trial Comr. of State of N.Y. v. Five Corners Tavern, 47 N.Y.2d 639, 646-647, quoting Lederer v. Wise Shoe Co., 276 N.Y. 459, 465.) In our opinion, the language of section 671 (subd. 2, par. [a]) which reads “lost earnings pursuant to paragraph (b) of subdivision one of this section” refers only to so much of paragraph (b) of subdivision 1 which defines lost earnings, to wit: “loss of earnings from work which the injured per- son would have performed had he not been injured, and reasonable and necessary expenses incurred by such per- son in obtaining services in Lieu of those that he would have performed for income”. The $1,000 per month limitation embodied in section 671 (subd. 1, par. [b]) is not part and parcel of the definition of lost earnings, but, merely, repre- sents the outer limit of recovery set down by the Legisla- ture in the no-fault automobile insurance scheme. Thus, we hold today that an injured person can recover up to 42a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. $1,000 per month from the insurance carrier for lost earn- ings. The statutory scheme envisions nothing less.“ We recognize that the Superintendent of Insurance has interpreted the applicable provisions of section 671 of the Insurance Law as limiting recovery for lost earnings to $800 per month. (11 NYCRR 65.6 [In] [2] [xi].) Where the interpretation of a statute or its application involves knowl- edge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom, the courts regularly defer to the govern- mental agency charged with the responsibility for admin- istration of the statute. If its interpretation is not irra- tional or unreasonable, it will be upheld. (Matter of Howard v. Wyman, 28 N.Y.2d 434; ef. Ostrer v. Schenck, 41 N.Y.2d 782, 786.) Where, however, the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency and its interpretive regulations are therefore to be accorded much less weight. And, of course, if the regulation runs counter to the clear wording of a sta- tutory provision, it should not be accorded any weight. (See Matter of Adams [Government Employees Ins. Co.], ee * b * Ate He 1114 5 i ö i ;| | 4 43a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. One final point requires comment. Plaintiff argues that he is entitled not only to the $200 per month which has been improperly withheld from him, but, in addition, should recover 2% interest per month on the overdue amount and the reasonable cost of attorney’s fees in collecting the defi- ciency. We agree. Subdivision 1 of section 675 of the Insurance Law ex- pressly provides tuat “[a]ll overdue payments shall bear interest at the rate of two percent per month. If a valid claim or portion thereof was overdue and such claim was not paid before an attorney was retained with respect to the overdue claim, the claimant shall also be entitled to recover his attorney’s reasonable fee.” In accordance with this statutory mandate, plaintiff is entitled to the interest claimed and reasonable attorney’s fees. Accordingly, the order of the Appellate Division should be reversed, with costs, and the case remitted to Supreme Court, Special Term, Erie County, to award reasonable attorney’s fees and interest claimed. Gasrre.i, J. (dissenting). With respect, I must dissent. The majority first embraces a rather strained interpreta- tion of the statutory definition of first-party no-faalt bene- fits and then proceeds to conclude that the contrary inter- pretation, which was adopted by the Superintendent of Insurance, is not entitled to the usual deference because it “runs counter to the clear wording of [the] statutory pro- visions”. Since I am far from convinced that the language of the statute unambiguously supports the majority’s read- ing of it, I would vote to uphold the interpretation of the pretation, we would note that at the time the under- tak the revision of the Noault Automobile Tnourane Lew, the with question presented here—that this interpretation conflicts legislative intent—had not been raised to alert the Legislature. 44a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. superintendent, who is, after all, charged with the respon- sibility of administering the complex provisions of the In- surance Law (Ostrer v. Schenck, 41 N.Y.2d 782, 786). Indeed, a plain reading of the statutory provisions sug- gests that the superintendent’s interpretation, which is em- bodied in Insurance Department regulations (11 NYCRR 65.6 [n] [2] [xi]), is the correct one. Under subdivision 1 of section 672 of the Insurance Law, the insurer is obligated to pay an injured claimant “first party benefits” if certain statutorily defined conditions are met. First-party benefits consist of the injured claimant’s “basic economic loss” (see Insurance Law, § 671, subd. 2), which, in turn, includes “loss of earnings from work which the injured person would have performed had he not been injured * up to one thousand dollars per month” (Insurance Law, § 671, subd. 1, par. [b]; emphasis supplied). In order to compute the correct figure for monthly “first party benefits” under the statute, however, it is necessary to reduce the amount at- tributable to “lost earnings” by 20%. This deduction, as noted by the majority, was included in the statutory scheme as a means of making the “lost earnings” component of first-party benefits, which are not subject to income tax, roughly equivalent to the after-tax income that the claim- ant would have enjoyed had he not been injured (Report of the Joint Legis. Committee on Ins. Rates, Regulation and Recodification of the Insurance Law, N.Y. Legis. Doc., 1973, No. 18, p. 10). In describing the manner in which the deduction is to be calculated, the Legislature clearly stated that the claim- ant’s “basic economic loss” must be reduced by “twenty per- cent of lost earnings pursuant to paragraph (b) of subdivi- sion one of this section [§671]” (Insurance Law, § 671, 45a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. subd. 2, par. [a]; emphasis supplied). I find the reference to section 671 (subd. 1, par. [bl) particularly significant because it suggests that the Legislature intended that the term “lost earnings” be construed as a statutory term of art whose meaning is to be ascertained by reference to that subdivision. In other words, it was the Legislature’s inten- tion to incorporate the entire statutory definition of “lost earnings” into section 671 (subd. 2, par. [a]) and then to apply the 20% reduction to the resulting figure. Since the statutory definition of “lost earnings” is circumscribed by a $1,000 per month maximum, it would seem that the figure against which the 20% reduction is to be applied can never exceed $1,000 per month. Accordingly, as the Superinten- dent of Insurance has concluded, the amount of first-party benefits that are attributable to “lost earnings” as a com- ponent of “basic economic loss” could never exceed $800 per month of $1,000 per month less 20%. Having found the superintendent’s interpretation of the statute to be an eminently reasonable one, I would carry the inquiry no further. The Legislature has vested in the super- intendent the responsibility of overseeing the highly com- plex, interrelated provisions known collectively as the No- Fault Automobile Insurance Law (Insurance Law, art 18), and, hence, under existing legal principles, the superinten- dent’s reading of the no-fault provisions is entitled to be accorded great weight (Ostrer v. Schenck, 41 N. V. ad 782, 786, supra; see, also, Breen v. Cunard Lines 8.8. Co., 33 N.Y.2d 508, 511; ef. Matter of Howard v. Wyman, 28 N.Y.2d 434, 438). Moreover, the fact that the Legislature has not found it necessary to correct the superintendent’s long- standing interpretation of section 671 (subd. 2, par. [a]) lends further support to the contention that this interpreta- 46a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. tion does not conflict with legislative intent. The Legisla- ture is presumed to have been aware of the superinten- dent’s interpretation, which was promulgated in the form of an Insurance Department regulation as early as 1974. Surely, if the Legislature had disapproved of the superin- tendent’s interpretation of the statute, it would have acted to clarify the provision in 1977, when it undertook a major revision of the State’s No-Fault Automobile Insurance Law (L 1977, ch. 892). I find this especially persuasive. In an apparent recognition of the fact that the superin- tendent’s construction of the statute is at least as reason- able as its own, the majority has found it necessary to announce a new rule for reviewing an administrative agency’s interpretation of its governing statutes. Hereto- fore, it has been the unquestioned rule that the role of a reviewing court is limited to determining whether an agency regulation “is so lacking in reason for its promulga- tion that it is essentially arbitrary” (Matter of Marburg v. Cole, 286 N.Y. 202, 212). As we have previously observed, “‘(t]}he judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body’” (Ostrer v. Schenck, supra, at p. 786, quoting Mississippi Val. Barge Co. v. United States, 292 U.S. 282, 286-287; see Matter of Dumbleton v. Reed, 40 N.Y.2d 586, 590 [Jowzs, J., dissenting]; Matter of Howard v. Wyman, 28 N.Y.2d 434, 438, supra). Yet, despite the well-established practice of this court to refrain from sub- stituting its judgment for that of the administrative agency charged with enforcing a statute, the majority has blandly asserted without further analysis that “there is little basis to rely on any special competence or expertise of the ad- ministrative agency”. With this I cannot agree. Our prior 47a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. decisions in this area have been premised upon our convic- tion that the various administrative agencies, which are part of the executive branch of government, are entitled to have a significant role in the interpretation of legislative enactments. This is particularly so where, as here, the Legislature has delegated to the administrative agency the task of implementing complex and highly technical rules | respective functions of the judicial ten an $800 per month maximum into the definition of “lost earnings” if it intended the recovery attributable to “lost 48a Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. earnings” to be limited to that amount. An analysis of the entire legislative design, however, belies this assumption. In addition to being used in subdivision 2 of section 671 as a touchstone for measuring “first party benefits”, the term “basic economic loss”, which includes “lost earnings”, is also used in subdivision 1 of section 673 to define the thresh- old amount of damages which must be sustained in order for an injured claimant to be permitted to maintain a common-law tort action (see Montgomery v. Daniels, 38 N. T. ad 41, 47). This alternate use of “basic economic loss” in the no-fault article, in my view, provides adequate ex- planation for the Legislature’s decision not to incorporate the $800 per month limitation on recoverable lost earnings directly into the statutory definition of that term. Indeed, contrary to the majority’» assertions, it seems perfectly reasonable to conclude that the Legislature intended the term “lost earnings” to be circumscribed by a $1,000 per month maximum for purposes of section 673 and, at the same time, intended that the $1,000 per month maximum be reduced by 20% for purposes of computing recoverable first-party benefits attributable to lost earnings. In summary, I would stress that my disagreement with the majority stems not so much from our differing views concerning the proper interpretation of the statute as from the majority’s apparent refusal to acknowledge that the statute is reasonably susceptible of more than one inter- pretation. In order to overcome the principle that the views of an administrative agency are entitled ta great deference in matters of statutory interpretation, the majority has had to drastically curtail the application of that well-settled principle and, in the process, has overridden the superin- tendent’s highly sensible reading of the statute. Yet, as the Opinion of the Court of Appeals of the State of New York in Kurcsics v. Merchants Mutual Insurance Co. foregoing discussion illustrates, the interpretation prof- fered by the Superintendent of Insurance is amply sup- ported by both the language of the statute and the legislative design. Under such circumstances, our prior case law would seem to require that the court refrain from substituting its views for those of the administrative agency charged with implementing the statute (see Matter of Marburg v. Cole, 286 N.Y. 202, 212, supra). For the foregoing reasons, I would affirm the order of the Appellate Division and uphold the existing Insurance De- partment regulations. Chief Judge Cooxe and Judges Jonzs, Wacutizr, Fucus- unnd and Meyver concur with Judge Jasew ; Judge Gasrre.ii dissents and votes to affirm in a separate opinion. Order reversed, with costs, and the case remitted to Su- preme Court, Erie County, for further proceedings in ac- cordance wtih the opinion herein. Informational Brochure of the Department of Insurance : : i 1 fi : 5 if a3 - 3 2 : J 2 : 80 f g — 8 23 33 z 2 i 2 traditional liability insurance, or both. Your New York policy automatically provides that you have the basic insurance required by other states. Your New York no-fault benefits and additional coverages, if you have them, will protect you and rela- tives living in your household for out-of-state accidents. How Can | Lower My Insurance Costs? It pays to comparison shop for insurance and this is as true for no-fault as for other types of insurance. You can reduce your insurance costs by: increasing amount; or, if you have a car with low market value, eliminating one or both physical damage coverages en- tirely. Remember, you can never collect more than the market value of your car in a physical damage claim. Where You Can Get More information And Help You should call on your insurance agent or broker, or contact your insurance company directly for infor- mation and assistance. If you need more information or help, phone or arrange to visit your New York State Insurance Department during normal business hours by calling: New York City... . 2... 6... c ee. (212) 775-1011 All other (toll free) (800) 522-4370 New York, New York 10047 New York State Insurance Department Box 7312 Albany, New York 12224 STATE OF NEW YORK EXECUTIVE CHAMBER ALBANY 12224 HUGH L. CAREY Governor To the Insurance Buying Public: No- fault automobile insurance has served our State well by providing faster payment for losses and more insurance coverage for the average New Yorke:. However, costs must be contained, so your State government revised the no-fault law to eliminate !aw- suits involving non-serious injuries, control medical costs, and stop some duplicate payments. In addition. the ew law closed certain gaps in coverage and in. creased the number of people covered. This brocture is designed to give you an over view of the benefits available under the no fault law. For the specific terms of your no-fault coverage, in cluding exclusions, you should read your policy care y. Your State Insurance Department has written this general brochure to tell you .. . WHAT YOU SHOULD KNOW ABOUT THE REVISED NO-FAULT AUTOMOBILE INSURANCE LAW igh ay KEEP THIS WITH YOUR POLICY What Are The Changes From the Old Law? This brochure contains important information about your auto insurance. Please read it carefully and keep it with your policy for future reference. The revised no-fault automobile insurance law be- came effective December 1, 1977. Generally, the law covers all occupants of motor vehicles who are involved in accidents within New York State, except for motor- cycle drivers and their passengers. Pedestrians injured in the State by motor vehicles and motorcycles are also covered. In addition, you and relatives living in your household may also be covered for out-of-state accidents. The prompt payment feature of no-fault remains the same. You receive payment from your insurer in- stead of having to pay bills and expenses out of your own funds while waiting for the results of a lawsuit. This means that if you are invovied in an accident, your insurance company pays you, your passengers or any pedestrian injured by your car for economic losses (wage loss, medical and other related expenses as they occur) regardless of who actually caused the accident. The other driver's insurance company pays the wage losses and medical bills of the driver, passenger or any pedestrian injured by the other car. Economic losses of up to $50,000 per person are covered under no-fault, but higher coverages are avail- able at your option for an additional charge. In summary, the important advantages of no-fault insurance continue to be: 1) prompt and sure payment for losses; 2) elimination of lawsuits for non-serious injuries; 3) rehabilitation of accident victims; and 4) the existence of standard minimum coverages. The revised no-fault a contains several new pro- visions which are now a standard part of your basic no-fault insurance coverage: 1) Your right to sue for pain and suffering is now deter- mined only by the seriousness of your injuries instead of the dollar amount of your medical bills. 2) You and your relatives living with you may be covered for out-of-state accidents. 3) A $2,000 auto accident death benefit has been added to the basic coverage. 4) Pedestrians injured by motorcycles are eligible for no-fault benefits from the motorcycie’s insurer; however, drivers and passengers of motorcycles are no longer covered by no-fault when invoived in an accident with an automobile. 5) No- fault benefits duplicating Medicare benefits are mostly eliminated as are some other duplicate bene- fits. Your insurer will pay the Medicare co-insur- ance and deductible amounts. As a result, if you are eligible, your no-fault premiums may be reduced. 6) Charges for health service costs are limited by fee schedules established or adopted by the Superinten- dent of Insurance. 7) New York State Disability Benefits are restored to automobile accident victims and such benefits will be deducted from the $50,000 no-fault package. 8) Occupants of a bus or schoo! bus will generally look to their own insurer for no-fault benefits. 9) New arbitration procedures have been established and the filing fee for arbitration of a denied or over- due claim has been reduced from $25 to $15. 10) Victims of accidents involving uninsured motor vehicles in New York State who are not covered under any no-fault policy can now obtain no-fault benefits from the Motor Vehicle Accident Indemni- fication Corporation (MVAIC). Where Do | File A Claim? Generally, you are required to file your no-fault claim with the insurer of the car you were in when the accident occurred. If you are a pedestrian, you file with the insurer of the automobile that struck you. If you are injured in or by an uninsured vehicle, you should file your no-fault claim with your own automobile insurer, or if you do not own an automo- bile, you should file your claim with the insurer of any automobile in your family’s household. If you are not covered by any auto insurance of your own or your family’s and you are injured by an uninsured vehicle, you should immediately report your accident to the police and within 90 days of the accident file a no- fault and liability claim with the Motor Vehicle Acci- dent Indemnification Corporation (MVAIC), 116 John Street, New York, New York 10038. Do | Have The Right To Sue? Your right to sue a negligent driver for property damage is not affected by no-fault, but your right to sue for personal injuries is limited to cases involvi [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0236%3A1. Public record. Not legal advice.