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MANNING v. UTILITIES MUTUAL INSURANCE CO.

February 5, 2004.

ROBERT MANNING, Plaintiff -against- UTILITIES MUTUAL INSURANCE CO., NIAGRA MOHAWK POWER CO., JOHN DOE and RICHARD DOE, Defendants


The opinion of the court was delivered by: RICHARD CASEY, District Judge

MEMORANDUM OPINION AND ORDER

This case arises out of an alleged failure by Utilities Mutual Insurance Company ("UMI") and Niagra Mohawk Power Company ("Niagra Mohawk") (collectively, "Defendants") to pay disability benefits to Robert Manning ("Plaintiff), who was injured in a fall from a utility pole while working as a linesman for Niagra Mohawk in 1962

Manning's second amended complaint alleges (1) a claim under the Medicare Secondary Payer Act for Defendants' failure to pay for benefits that were provided by Medicare as a secondary payer, and (2) a claim for bad-faith failure to pay benefits under New York common law. Presently before the Court are the following motions Manning's motion for summary judgment and/or judgment on the pleadings dismissing UMI's counterclaim for indemnity, UMI's cross-motion for summary judgment on its counterclaim for indemnification, UMI's Page 2 motion for summary judgment on Count n of the second amended complaint; Manning's motion for summary judgment on Count I of the second amended complaint; and Niagra Mohawk's motion for summary judgment dismissing all claims against Niagra Mohawk.

 I. BACKGROUND

  In 1962, during the course of his employment with Niagra Mohawk, Manning fell from a utility pole, rendering him a quadriplegic. From 1962 to 1968, UMI, Niagra Mohawk's workers' compensation insurance carrier, paid Manning workers' compensation benefits. In 1968, Manning obtained a recovery in the amount of $388,000 from New York Telephone Co., which owned the utility pole from which Manning had fallen. In 1973, having exhausted that recovery, Manning requested that Defendants resume his benefits under New York State Workers' Compensation Law. When Defendants refused, Manning became financially unable to pay for his medical costs, and Medicare began to cover some of his medical expenses.

  In 1979, Manning initiated litigation before the New York State Workers' Compensation Board ("WCB"). Despite being ordered several times by the WCB to resume paying benefits to Manning, Defendants continued to litigate the case, appealing to the New York appellate courts on three occasions. See Manning v. Niagra Mohawk Power Corp., 501 N.Y.S.2d 218 (3d Dep't 1986); Manning v. Niagra Mohawk Power Corp., 603 N.Y.S.2d 214 (3d Dep't 1993); Manning v. Niagra Mohawk Power Corp., 650 N.Y.S. 2d 431 (3d Dep't 1996).

  The parties entered into a settlement in 1997 ("Stipulation"), which released Defendants from all claims within the exclusive jurisdiction of the WCB for $1.9 million. However, Manning expressly reserved claims under state or federal law which were not within the exclusive jurisdiction of the WCB Manning filed this action on July 7, 1998 Page 3

  This case has a long procedural history, which is set forth in two prior opinions of this Court, see Manning v. Utilities Mut Ins. Co., 1999 WL 782569 (S.D.N.Y. Sept. 30, 1999); Manning v. Utilities Mut Ins. Co., 2000 WL 1234591 (S.D.N.Y. Aug. 31, 2000), and a subsequent opinion issued by the Second Circuit, see Manning v. Utilities Mut. Ins. Co., 254 F.3d 387 (2d Cir. 2001). For the benefit of the reader, the Court will summarize the salient procedural facts.

  In August 2000, after motions for reconsideration, this Court granted Defendants summary judgment against Manning and dismissed the complaint. Manning's complaint included the following claims: (1) a claim under the Medicare Secondary Payer statute, 42 U.S.C. § 1395y(b)(3)(A), for damages of two times $876,321, the cost of Manning's medical care since 1992, which Manning alleged should have been paid by Defendants but instead was paid by Medicare ("MSP claim"); and (2) a claim for compensatory and punitive damages of at least $10 million for Defendants' fraudulent failure to pay his medical expenses in a timely manner ("fraud claim"). After motions for reconsideration, this Court granted Defendants summary judgment on both counts, ruling that the MSP claim was time-barred and that the complaint did not sufficiently state a claim based on fraud because Manning failed to plead reliance on a material misrepresentation by Defendants. Manning appealed, and the Second Circuit held that: (1) Manning's MSP claim was not time-barred, and (2) although Manning did not sufficiently plead a fraud claim, he should be permitted to amend his complaint to allege a claim of bad-faith refusal to pay.

  Following the Second Circuit's decision remanding the case to this Court, Manning filed a second amended complaint ("Complaint"), which sets forth two claims Count One of the Page 4 Complaint asserts the same MSP claim alleged in the original complaint; Count Two asserts a state law claim based on Defendants' bad-faith failure to pay. UMI filed a counter-claim for indemnification in the event that it is found liable on Manning's MSP claim. UMI now moves for summary judgment on Count Two, and Niagra Mohawk moves for summary judgment on both claims. Manning moves for summary judgment on his MSP claim and to dismiss UMI's indemnity claim. UMI cross-moves for summary judgment on its indemnity claim.

 II. DISCUSSION

 A. Bad Faith Failure to Pay Claim

  UMI argues that Count Two should be dismissed on the basis that a claim based on a bad-faith refusal to pay benefits is not a legally-cognizable claim under New York law. It further asserts that if such a claim does exist, it sounds in contract and not tort; Manning's settlement agreement with UMI therefore precludes him from asserting this claim here.*fn1 In response, Manning argues that such claim does in fact exist and that it sounds in tort, not contract; therefore, Manning is not precluded from bringing the claim.

  The Second Circuit provided Manning with an opportunity to amend his complaint to state a claim for bad-faith refusal to pay; however, it specifically noted "[t]his court does not decide whether a claim for bad faith failure to pay benefits can be maintained in this case or even whether New York law recognizes such a cause of action." Manning, 254 F.3d at 402. As the Second Circuit's opinion might suggest, New York case law is less than clear on the issue of whether a plaintiff can recover for a bad-faith failure to pay ...


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