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Motherly Love Home Care Serv. Inc. v Program Risk Mgt. 2009 NY Slip Op 32659(U) November 2, 2009 Supreme Court, Suffolk County Docket Number: 06-11981 Judge: Denise F. Molia Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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INDEX NO. 06- 1 1981 CAL. No. 09-00243-CO

SUPREME COURT - STATE OF NEW YORK I.A.S. PART 39 - SUFFOLK COUNTY

PRESENT:
Ilon. DENISE F. MOLIA Justice of the Supreme Court MOTION DATE 7- :i 0-09 ADJ. DATE 8-'7-09 Mot. Seq. # 001 - MG; CASEDISP

-.---------------------------------------------------..--------X WHITEMAN OSTERMIAN & HANNA, LLP : MOTHERLY LOVE HOME CARE SERVICE, Attorneys for Plaintiff IW(. . One Commerce Plaza Plaintiff, Albany, New York 122:60 - against DUNCAN, FISH & VOGEL, L.L.P. Attorneys for Defendant PROGRAM RISK MANAGEMENT, 3 17 Middle Country Road, Suite 5 Smithtown, New York 1 1787 Defendant,

C pon the following papers numbered 1 to 44 read on this motion for summary iudament ;Notice of Motion/ Order 1 - 33 ; Notice of Cross Motion and supporting papers -; Answering Affidavits and supporting papers 34 - 42 ; Replying Affidavits and supporting papers 43 - 44 ; Other memorandum of law ; (anda#kr
to Show Cause and supporting papers

9

-

it is,

ORDERED that the motion by defendant Program Risk Management is granted.
Defendant Program Risk Management ("PRM") moves for an order granting dismissal of claims asserted by plaintiff Motherly Love Home Care Service, Inc. ("Motherly Love"), and provides an affidavit by John Conroy, President and Program Manager of PRM, copies of the pleadings, a stipulation of discontinuance as to a third-party action, and pretrial depositions of various parties. Motherly Love has submitted an affirmation in opposition and provides pretrial depositions of the various parties. PRM has replied Both parties have submitted meinoranda of law.
[`he Health Care Providers Self-Insurance Trust (the "Trust") is a New York State workers' Lonipensation self-insurance trust which ope:-atesa workers' compensation group self-insurance plan for members o f the New York State Association of Heath Care Providers. PRM was the program administrator for the Trust's program. Mothlxly Love, a home health care agency owned by Robert Franzese and Elizabeth Franzese, is in the business of providing in-home nursing care for pediatric patients. In so doing it solicits nurses for patients who have retained its services for nursing care. In 1999 Motherly Love obtained workers' compensation insurance from the Trust for itis owners, employees and clerical staff. Pursuant to its sgreement with the Trust, Motherly Love obtained coverage

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Zlotherlj, [ m e I Program Risk
Index No. 06-1 1981 Page No 2

h ~ e upon its piiyroll at the start of each plan year. It was further agreed that adjustments to coverage d

would be made if the actual payroll exceeded the amount determined in the initial contribution. PRM advised Motherly Love that it was required to provide workers' compensation coverage for its registered nurses unless it provided certificates of insurance establishing that each nurse had such coverage. Motherly L,ove did not provide the requested documentation for its nurses and, instead, provided -`independent contractor agreements" and "pi-ofessional services agreements" signed by its registered nurses acknowledging their obligation to secure workers' compensation insurance or1 their own or through another employer. Since PFW was not provided with the certifications of insurance, the policy issued by PRM to Motherly Love was not adjusted to reflect the exclusion of its registered nurses. Motherly L,ove also provided PRM with copy of an appellate court decision which held that nurses employed by it were independent contractors for purposes of unemployment insurance. PRh4 advised Motherly Love that it did not consider such determination binding on it. Motherly Love alleges that at cach subsequent annual premium period rencwal, it questioned the necessity of providing its nurses with workers' compeiisation insurance and, on each occasion, PRM reiterated its position that Motherly Love nould be charged a premium for coverage ofthe nurses in its employ. During the period from 1999 to 2005 Motherly 1,ove maintained its workers' compensation policy with the Trust. On October 14,2005, PRM cancelled Motherly Love's workers' compensation insurance policy effective October 3 1,2005 for nonpayment of its annual premium. Later P l W advised Motherly Love that it would be credited with an early termination refund, which it would apply to an outstanding premium. Upon application of said credit, Motherly Love is alleged by PRM to lowe a balance of $2,978.00 for the period July 3 1,2005 to October 3 1. 200 5 , together with an outstanding premium balance of $2,292, for a total arrearage of s5.270 hlotherlj Love commenced the underlying lawsuit against PRM in April 2006, claiming, among other things, unj ust enrichment and fraud, based upon allegations that the nurses who provide services to the patients retained by it are independent contractors and that it is the patient's treating physician bvho determines whether to retain or discharge the nurse and because it was caused to procure insurance for its owners. Motherly Love claims to obtained coverage under protest for what it describes as *'independentcontractor nurses." It claims to have been led to believe from the outset of its relationship with PRM that it was without choice as to whether to provide coverage for the nurses and that coverage would not be provided if the nurses were not included in the policy. By way of support Motherly Love f 258 points to an Appellate Division, Third Department decision rendered in Matter o Mufhoffand, AD2d 8 5 (1 990), wherein the court observed "[wle are persuaded by Motherly Love's contention that the record does not contain substantial evidence demonstrating that claimant and those similarly situated %ereits employees. This determination turns on Motherly Love's lack of control over claimants' work [L.itationsomitted]. While the nurses are indeed paid by Motherly Love, they are free to refuse an (jflered placement, may work at other agencies and can leave a family at any time. Moreover, the nurses are responsible for carrying their own malpractice insurance and for finding replacement coverage that meets with the approval of the child's parents. Significantly, nurses can independenrly solicit work from the families for whom they are providing care after placement by Motherly Love without any repercusiiions from the latter." The text of the decision continues to further amplify its holding that the nurses placed bq Motherly Love were indepmdent contractors. In addition, according to Motherly I o e, the New J'ork State Department of Labor, following a denial of certiorari by Court of Appeals in the MuNto//and matter, issued a ruling holding that the nurses placed by Motherly Love were

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vlorherlp Love v Program Risk index No. 06-1 l % l !'age XO. 3 independlent contractors. However, when presented with the holdings, the president of PRM indicated :hat it   o d d continue to require, as a condition precedent to coverage, inclusion of thle nurses in the plan and would rely only upon a determination by the New York Workers' Compensation Board as to their status Motherly Love argues that PRM's position was logically untenable inasmuch as since the nurses were independent contractors, no suck claim would ever be filed with the Board for Jetermination. hilotherly Love further claims PRM denied the request to exclude the nurses at each clnnual premium renewal and allegedly informed Motherly Love that other insurance companies would siinilarly require documentation as to the nurses' coverage. Ultimately, Motherly Love claims to have learned. upon inquiry of other companies, that the documentation required by PRM was unnecessary and that it was also unnecessary to obtain such coverage for the owners of the company. It is Mother Love's position fhat it was overcharged during the relevant period in excess of $70,000 by P'RM.
It is not disputed that the Franzeses contracted with PRM for workers' compensation insurance. 'Uor does the maimer in which the premium was computed appear to be contested. The dispute, for Motherly Love, is as to the allegedly unnecessary inclusion in that calculation of both its owners and the nurses it placed. Upon receipt of the MulholYand decision, PRM advised Motherly Love "it was free to leave the Trust" if it found a provider which would insure it without the documents PRM required. Motherlj Love did not elect, at that time, to obtain another insurer. Ultimately, PRM cancelled Motherlj Love's policy for nonpayment.
A s to Motherly Love's allegation of misrepresentation, PRM contends that no special

relationship existed between it and Motherly Love which would impose a duty on the former to provide correct information to the latter. Such relationship, PRM contends, is created only when an insurance agent is compensated as a consultant, with such payment separate from the policy premiums, and when the insured relied upon the advice of the consultant with regard to questions of coverage or that, due to an extended course of business with a client, a reasonable agent would be deemed to have notice that his or her advice was specially relied upon by the client. Further, as to the claims by Franzeses that col'erage for thein was unnecessary, PRM notes that, by his pretrial testimony, Robeirt Franzese admitted that the question of whether coverage was necessary for himself or his wife, as owners of the company, mas never broached until after the policy wa:; cancelled. PRM also points to Robert Franzese's tcstimony wherein he acknowledged that his prior insurers did not advise him that it was unnecessary for him or his wife to obtain insurance, underscoring its contention that it was not obliga.ted to advise him to the contrar? ,

PRM also argues that, even if Motherly Love was able to establish the existence of a special relations hip between the parties, Motherly Llwe cannot establish that it was provided incorrect infomation. It points to New York State Workers' Compensation Law 0 56, which holds a general cmtractor or its insurance carrier liable for compensation payments to an injured employee of a contractor. It claims that it is the function of'the Workers' Compensation Board to determine whether one who is alleged to be a subcontractor is an employee. PRM, in reliance upon the New York C'oinpensationand Employers Liability Manual, asserts that it properly requires "satiisfactory evidence that the subcontractor had workers compensation insurance coverage in force covering the work performed for the contractor." Pursuant to the rules of the Manual, in the event such satisfactory evidence is not supplied, PRM requires the contractor to pay an additional premium on the policy to

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Votherly Love v Program Risk 11dt.x NO. 06-1 1`181 ?age 30. 4
-wver the subcontractor. Noting the purpose of the policy articulated in the Manual is to protect both the

nsured and the entities providing workers' compensation insurance, PRM contends that it correctly Tntormed Motherly Love that, absent the requisite confirmation of coverage for its nurses, it was lbligated to charge for and include the nurses on Motherly Love's policy. Thus, it argues that Motherly I ove`s claim of negligent misrepresentation must fail.
A s to the position by Motherly Love that the determinations by the Third Department and the

1kpartmt:nt of L&or that its nurses were independent contractors, PRM counters that such ategorization is a factual issue which is witl-in the province of the Workers' Compensation Board. Further, it argues that the jurisdiction of the Department of Labor is as to unemployment matters. Most conipelliiig, according to PRM, is the content of its February 28,2002 missive to Robert Franzese Love informing him o f its position which also included the observation that "if you can find an insurance coverage provider to agree to your position, you are free to leave the Trust."
With respect to Motherly Love's claim of unjust enrichment, PRM notes, as a threshold matter, that there is a written contract between the parties. The existence of an express contract, PRM claims, is a bar to recovery on the basis of unjust enrichment. Since unjust enrichment is equitable in nature, PRM contends, it will not lie inasmuch as there is an adequate remedy at law. As to the breach of contract claim. PKM contends that Motherly Love has failed to allege the requisite elements to sustain such claim. Simply stated, PRM claims that, by the terms of its contract with Motherly Love, it was obligated to provide workers' compensation insurance for the contractual period and that there has been no showing that it did not do so.

Summarl, judgment is, of course, a drastic remedy and is to be applied sparingly Wndre v Porneroj, 35 Nk72d361 [1947]). The court'!j focus in making such determination is upon issue finding not issue solving, and all competent evidence must be viewed in the light most favorable to the parties opposing the motion (Sillman v Twentieth Century Fox Corp. 3 NY2d 395 [1957]). To prevail on a motion for summary judgment, the movant niust proffer sufficient evidence to eliminate all material issues of fact (Winegard v New York University Medical Center, 64 NY2d 85 1 [ 19851). In the context of'the foregoing. PRM's various contentions are addressed herein, seriatim.
I n analyzing Motherly Love's first cause of action that PRM negligently misrepresented that it
a  required to pay coverage for independent contractor nurses, the holding in J.A.0. Acquisition Corp. v Stnvitsky, 8 NY3d 144, 148 (2000) is instructive. In making such claims, the Court of Appeals held, a plaintiff is required to demonstrate "(1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was
I

incorrect: and (3) reasonable reliance on the information." It is significant to note that in the commercial drena, "liability for negligent misrepresentation has been imposed only on those persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured part> such that rcliance on the negligent misrepresentation is justified" (Kimmel v Schaefer, 89 NY2d 25 7,263-264 [ 19961). Motherly Love has not provided proof, in any fashion, of suc h relationship. I here is nothing in the language of the pleadings or the evidence before the court which supports a tinding that a special or fiduciary relationship exited between the parties, a necessary element of the tort of negligent misrepresentation particularly in the commercial context (see Fab Industries, Inc. v BNY

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VotherIy Love v Program Risk Index No. 06-1 1081 Page KO.5 FYnnncirPI Corp. 252 AD2d 367 [1998]). It is unnecessary, therefore, to address PNvl's contention that the information i t provided was not erroneous. Motherly Love's claim as to negligent misrepresentation, therefore, IS dismissed.
1 o prevail on its second cause of action for unjust enrichment, Motherly Love must make the

requisite showing that PRM benefitted, at its expense, and that equity and good conscience require restitution (see Whitman Group Realty, Inc. v Gufuno,41 AD3d 590, 593 [2007]). Recovery for unjust mrichment is barred by a valid and enforceable contract governing a particular subject matter (see Goldmaun v Metropolitan Lve Insurance Co., 5 NY3d 561, 572 [2005]). Only in instances where there is a dispute either as to the existence of a contract or as to whether the contract addressed the issue raised may a plaintiff proceed with such cause of ac tion (see AHA Safes, Inc., v Creative Bath Products. , liw., 58 AD3d 6 [2008]). No such allegation is made here. Thus, Motherly Love's claim as to unjust enrichment must be dismissed. 'The elements of a cause of action for breach of contract are (1) formation of a contract between
the parties; (2) performance by plaintiff; (3) defendant's failure to perform; and (4) resultant damage (see Furia v Furia, 1 16 AD2d 694 [1986]). In pleading a breach of contract claim, plaintiff must allege that

the provisions ot'the contract upon which the claim is based and the pleadings must be of sufficient particularity to provide the court and the parties notice of the transactions or occurrerices intended to be proved as well a:; the material elements of each cause of action (Atkinson v Mobif Oil Corp.,205 AD2d 7 1c). 720 [1994]). Vague and conclusory al1r:gations will not suffice (Gordon v Din0 De Luurentiis Corp., 141 AD2d 435,436 [1988]). As noted by PRM, it provided the insurance to Motherly Love pursuant to its agreement. The pleadings fail to articulate the manner in which PRM is alleged to have failed to perform its contractual obligations and thus, Motherly Love's third cause of action for breach of contract must be dismissed.
As to Motherly Love's fourth cause of action, which appears to be for violation of public trust,

PKM notes the limited circumstances in which such claims may lie. Specifically that under New York
law there exists no such cause of action based upon an insurance claim. Such claims are termed
I iolations of the public trust specifically becmse they apply to instances in which the rights of the public are implicated (see e.g. West v Grant, 221 AD2d 798 [1995]). The facts asserted by plaintiff belie such claim and therefixe, it too is dismissed.

P,ccordicgly, based upon the foregoing, the motion by PRM for summary judgment dismissing
the complaint is granted.

I 1at ed

J.S.C.
X
FINAL DISPOSITION NON-FINAL DISPOSITION



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