DOCTORS WIN BIG IN THE COURT OF APPEALS – COURT SETTLES DISPUTE OVER MLMIC SALE PROCEEDS

By Michael J. Spithogiannis, Esq. and Seth A. Nadel, Esq.
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The New York Court of Appeals, by a unanimous bench, decided a question that has been highly contested throughout New York State emanating from the sale and demutualization of Medical Liability Mutual Insurance Company (“MLMIC”), a mutual insurance company in the business of issuing medical malpractice policies to doctors and other medical professionals throughout the State.

The Court of Appeals decided the issue in favor of the policyholders – the medical professionals.  Among the cases decided was Columbia Memorial Hospital v. Hinds, where Weiss Zarett represented Dr. Marcel Hinds, and Seth A. Nadel, Esq. argued the case to the Court of Appeals on April 20, 2022.

When MLMIC was sold in 2018, the sale generated approximately $2.5 billion.  The question became: who was entitled to this money – the so-called cash consideration?  Employers – hospitals and medical practices – argued that they, not the policyholders, were entitled to the money, because they paid the premiums.  Their argument was simple:  they paid the premiums, they are entitled to the money.  Policyholders argued that under the governing provision of the Insurance Law, they were entitled to the money; employers merely paid the premiums because they had agreed to under their employment agreements.  Litigation ensued.  

The Court of Appeals determined that under New York’s Insurance Law the employee is the policyholder and an owner of the company, and that, absent contrary terms in an employment contract, insurance policy, or separate agreement, the employee – not the employer – is entitled to the sale proceeds.  

The Court of Appeals soundly rejected the employers’ primary argument that they are entitled to the proceeds simply because they paid the premiums.  The Court was clear:  insurance premiums were not paid by employers gratuitously, but because they were contractually obligated to do so under employment agreements.  Moreover, premiums were paid for the cost of coverage only, not for an ownership interest in MLMIC.  Under the Insurance Law, MLMIC was owned by the policyholders, and there was nothing unjust or inequitable about paying them the cash consideration.

Almost four years after MLMIC’s demutualization, and against a backdrop of conflicting decisions among New York courts, the Court of Appeals has conclusively settled the issue.

A copy of the decision from the Court of Appeals may be found here.

Weiss Zarett represents numerous physician-policyholders in MLMIC disputes, as well as a variety of other legal matters affecting physicians, medical practices, and health-related businesses. If you have any questions about the MLMIC demutualization, please reach out to David A. Zarett, Esq. at dzarett@weisszarett.com or 516-627-7000.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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New York Court Awards Attorney’s Fees To A Patient Sued By a Physician for Defamation Based on a Negative On-Line Review

By David A. Zarett, Esq.
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Given the ever-increasing prevalence of social media websites which “rate” physicians (such as Zocdoc and Yelp), it is not unusual for a disgruntled patient to post a negative review regarding a particular doctor. Understandably, any negative review creates consternation for physicians, who fear that the adverse publicity will interfere with their ability to retain and attract patients.  This Legal Alert considers the risks physicians might face if they elect to sue patients who publish a negative review given recent changes to the New York anti-SLAPP law.

Unfavorable patient reviews are, unfortunately, becoming a way of life for physicians. Many times, a physician will explore alternatives to neutralize a negative posting.  One alternative would be to review the social-media website’s internal policies, which typically contain a process for removing or at least challenging the adverse review under certain delineated circumstances. This alternative sometimes proves successful, but discussion here is beyond the scope of this Legal Alert.  A physician might also consider commencing a lawsuit against the web-based, social-media platform for “publishing” the allegedly false posting – which is typically unsuccessful given federal protections available under Section 230 of the United States Communications Decency Act. Discussion of that subject is also beyond the scope of this Legal Alert. 

In either case, the physician must take great care to assure patient confidentiality at all times.    

A third alternative, which is the subject of this Legal Alert, is for a physician to sue the disgruntled patient who posted the negative review, under a legal theory of defamation, libel, or something similar.  Such was the case in a recent lawsuit in the New York State Supreme Court, New York County, Great Wall Medical P.C., et al. v. Michelle Levine(Index No. 157517-2017). (Click here for a copy of the case).

The interesting lesson here is that the Court in Great Wall Medical not only dismissed the physician’s defamation claims, but awarded attorney’s fees to the defendant-patient based upon recent changes to New York’s anti-SLAPP law (Strategic Lawsuit Against Public Participation). Civil Rights Law Section 76-A.  Ruling in favor of the patient defendant, the court recognized that the anti-SLAPP law was designed to protect individuals from lawsuits when they engage in public petition or communicate in a forum open to the public. Finding that the defendant-patient’s statements – the negative social media postings – fell within the broad reach of the statute, which the Court applied retroactively, the Court dismissed the plaintiff-physician’s complaint. The Court found that the plaintiff-physician failed to demonstrate by clear and convincing evidence that the defendant-patient made the statements (i.e., the negative postings) knowing that they were false or with reckless disregard with respect to whether the statements were false. The Court also held that the actual malice standard must be determined subjectively, from the perspective of the patient making the statement. While each case in this area of law is fact-specific, the bottom line is that the Court applied a legal standard that was difficult for the physician to overcome.  

More significantly, the Court held that the defendant-patient was entitled, under recent amendments to the statute, to an award of costs and attorneys’ fees for defending the lawsuit (which would not be available to a defendant in an ordinary defamation action).

This case reflects that courts may give a great deal of latitude to patients making complaints on social media, and that whenever a physician considers taking action resulting from a negative patient review, great care should be given to assess whether such action could survive a legal challenge, given the strict legal standard applicable under the recent antiSLAPP suit amendments. Failing to do so may not only result in prompt dismissal of the physician’s case, but may also open the physician up to potential liability for the patient-defendant’s attorneys’ fees. 


Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a New York law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, employment counseling and controversies, litigations, arbitrations and administrative proceeding representation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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AVOID LITIGATION DISASTER – KNOW THE LAW

By Michael J. Spithogiannis, Esq. & Floyd Grossman, Esq.
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Federal and state governments regularly pass laws to protect consumers.  It is up to private businesses to adapt. This requires a thorough, well-counseled understanding of legislative objectives. Two recent foreclosure cases illustrate how common sense and extra postage might have averted litigation disaster for the lender.

The Home Equity Theft Prevention Act was New York’s response to the subprime lending crisis and the resulting cascade of foreclosures threatening to dispossess millions from their homes. The Legislature found that between default and foreclosure sale, homeowners in financial distress, especially the poor, elderly and financially unsophisticated, were vulnerable to unscrupulous equity poachers who fraudulently induced homeowners to sell off or sign away their homes for a fraction of their value.  The law now requires lenders, before starting foreclosure proceedings, to give 90-days’ written notice to defaulting borrowers, by registered or certified mail and by first-class mail, advising them that they risked losing their homes and of available government-approved housing counselors and financial services.  The statute also requires that the notice be sent in an envelope separate from any other mailing or notice, and must include specific language from the statute.

These requirements appear straight-forward, and one might not think they could provoke years of litigation, but they have.

On September 29, 2021, the Appellate Division, Second Department, decided Wells Fargo Bank, N.A. v. Yapkowitz, 199 A.D.3d 126 (2d Dep’t 2021), where a foreclosure, commenced in 2013, was dismissed because the lender’s required pre-foreclosure notice did not comply with the statute.  The borrowers, married individuals, defaulted on a $532,000.00 mortgage loan.  In defense, the borrowers argued that their lender failed to provide the proper pre-foreclosure notice.  The lender had sent one notice addressed to both borrowers, rather than notice to each borrower separately.  To be sure, the envelope did name both borrowers, and was sent to the correct address by first-class mail and by certified mail signed for by one of the borrowers

The lender maintained that the statute’s use of the word “borrower” in the singular meant that only one notice was necessary even if there was more than one “borrower.”  The lender also argued that the court should presume the borrower who signed for the mailing, informed the other of the notice.  

The Second Department agreed with the borrowers, with one Justice dissenting.  The Court held that the statute required strict compliance and focused on the Legislature’s intent to provide greater protections to homeowners facing impending foreclosure.  Moreover, the statute’s legislative purpose would be subverted if it was left to the one borrower who happens to sign for the envelope to notify the others.  Therefore, a separate mailing to each borrower was required.  

On December 15, 2021, the Second Department decided Bank of America, N.A. v. Kessler, 2021 N.Y.Slip.Op. 06797, ___ A.D.3d ___ (2d Dep’t 2021).  In 2014 the lender brought an action to foreclose a $590,302.00 mortgage.  The Court considered the provision of the statute which states that the notice “shall be sent . . . in a separate envelope from any other mailing or notice.”  Id. at *5.  The lender had seen fit to add information to the form notice adopted by the Legislature.  A majority of the Court concluded that the lender failed to strictly comply with the statute, and affirmed dismissal of the foreclosure.  

In both cases, the Court’s majority and dissenting Justices provided reasoned and thorough legal analyses.  But the more vexing question is why the lender in Yapkowitz decided it was proper to send the notice to both borrowers in one envelope rather than sending separate notices, or why the lender in Kessler decided to deviate from the Legislature’s prescribed language for the notice.  Certainly both lenders and their respective loan servicers – presumably sophisticated, experienced and well-counseled business entities – knew the 90-day notice was a statutory pre-condition to foreclosure, and that the statute’s purpose was to protect homeowners in economic crisis.  So too, foreclosure has historically been an equitable remedy, and courts have in general required strict compliance with statutory prerequisites before dispossessing homeowners.  

Knowing these factors should have made it clear to the lender in Yapkowitz that separatenotice to each borrower was necessary.  So too, had the statutory language been adopted, without deviation, the lender in Kessler would likely have been compliant.  If the lender did want to provide additional information to the borrower, it should have simply sent a separate mailing.  In both cases, the extra postage would have been well worth it.

These cases illustrate how ordinary business decisions made long before litigation ensues could result in years of unsuccessful litigation, and emphasize the importance of understanding the purpose of any statute, consequences of non-compliance, and need to implement well-counseledbusiness practices to avoid litigation disaster.


Michael J. Spithogiannis, Esq. and Floyd G. Grossman, Esq. each have over 35 years’ experience litigating commercial and real-property disputes in state and federal courts throughout New York.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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Weiss Zarett Wins Commercial Eviction

By Joshua D. Sussman, Esq., Michael D. Brofman, Esq.Michael J. Spithogiannis, Esq.

On January 26, 2022, the Supreme Court, County of Queens granted the Firm’s client a final judgment of possession and a warrant of eviction to evict a commercial holdover tenant that abused the eviction moratorium to overstay its welcome. The Firm’s victory, led by Joshua Sussman, is believed to be among the first for landlords since the commercial eviction moratorium ended on January 15, 2022.

Should you need the assistance of skilled and experienced counsel to assist you in litigation, do not hesitate to contact Joshua Sussman at jsussman@weisszarett.com, Michael Brofman at mbrofman@weisszarett.com, and Michael Spithogiannis at mspithogiannis@weisszarett.com.

Beware the Consequences of Worker Misclassification

By Mauro Viskovic, Esq.
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In violation of myriad applicable laws, many businesses will often hire workers as independent contractors, rather than employees.  The worker classification determination is often made without a thorough analysis of the applicable factors to be used for making the correct classification and without regard to the potential penalties and consequences for improperly classifying an employee as an independent contractor. 

As an initial matter, the fact that both the business and worker agree on an independent contractor relationship does not matter – even if the parties enter into a contract documenting such relationship.  There are various worker classification tests and factors under federal and state laws, of which a full explanation is beyond the scope of this article, but the primary focus areas are the degree of control that the business has over the worker and the degree to which the worker is economically dependent upon the business.  

A common reason that a business would wish to classify a worker as an independent contractor is to avoid the costs associated with hiring an employee.  A business is not required to withhold income tax, pay social security and Medicare taxes, pay unemployment compensation taxes or provide worker’s compensation insurance for independent contractors.  Independent contractors are not subject to minimum wage or overtime pay requirements.  Moreover, independent contractors are not eligible to participate in employer sponsored health plans and retirement plans.

Such cost savings, however, are miniscule and insignificant compared to the potential penalties and related consequences of misclassifying a worker as an independent contractor.  The Internal Revenue Service may pursue monetary penalties that include being subjected to as much as 41.5% of the worker’s wages going back 3 years.  If the IRS thinks you intentionally misclassified workers, they can seek a criminal conviction that may include jail time.  In addition to federal and state back taxes and penalties, the business will also owe state unemployment taxes and unpaid worker’s compensation premiums, and may owe unpaid overtime or minimum wages, medical expenses and unpaid vacation and sick pay.  

Government enforcement, however, is not the only risk. Large companies that use independent contractors to supplement their regular workforce or that operate on an independent contractor business model (such as Uber) are increasingly being targeted in class-action lawsuits brought on behalf of workers who are allegedly misclassified as independent contractors.  Certain corporate officers may be held personally liable for plaintiff awards in such lawsuits, as well as for the employment taxes and penalties described above.

In addition, recently terminated workers and workers injured on the job are likely to retain attorneys and sue for unpaid overtime or for payment of medical expenses on the ground that they should have been classified as employees, not independent contractors. Note that when an individual files a claim for Worker’s Compensation and the state board rejects the employer‘s defense that the worker was an independent contractor, if the employer does not have Worker’s Comp insurance, it will not only be hit with a penalty for failing to maintain insurance but will also be ultimately liable on the underlying Worker’s Compensation award to the individual.  

Federal and state authorities are actively and aggressively pursuing enforcement actions related to worker misclassification.  Accordingly, businesses should thoroughly review their independent contractor arrangements.  Should you have any questions or require assistance with the proper classifying – and the appropriate documenting of same – of your business’s workers, please contact Mauro Viskovic at 516-751-6537 or mviskovic@weisszarett.com.


Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

ATTORNEY ADVERTISING: PRIOR RESULTS DO NOT GUARANTEE FUTURE OUTCOMES.