Frontier Ins. Co. v. State, 87 N.Y.2d 864 (1995)
A challenge to the Attorney-General’s denial of a defense under Public Officers Law § 17(2)(a) must be brought as an Article 78 proceeding within the four-month statute of limitations, and cannot be circumvented by bringing a plenary action for indemnification with a longer statute of limitations.
Summary
Frontier Insurance, as the insurer for two state-employed physicians, sought reimbursement from the State for defending and indemnifying the physicians in malpractice suits after the State denied them a defense under Public Officers Law § 17. The Court of Appeals held that the State’s denial of a defense is an administrative decision reviewable under CPLR Article 78, and thus subject to a four-month statute of limitations. The physicians, by failing to timely challenge the denial via Article 78, could not later bring a plenary action for indemnification to circumvent this limitation. However, the court upheld the denial of summary judgment regarding indemnification, finding the state had not proven the doctors had waived their rights under Public Officers Law §17(3).
Facts
Two physicians, employed by the State as assistant professors at SUNY medical schools, were sued for medical malpractice. Pursuant to Public Officers Law § 17 (2) (a), they requested the State to defend them. The State denied the requests, arguing the alleged malpractice occurred outside the scope of their public employment. Frontier Insurance Company, the doctors’ insurer for private practice and cases where the state denied coverage, defended and indemnified the doctors in the malpractice suits. Frontier, as the doctors’ subrogee, then sued the State in the Court of Claims, alleging wrongful refusal to defend under Public Officers Law § 17.
Procedural History
Frontier commenced actions in the Court of Claims, which were consolidated. The Appellate Division order was appealed to the Court of Appeals. The specific rulings of the lower courts are not detailed in this Court of Appeals decision, which focuses on the statute of limitations issue.
Issue(s)
Whether a claim for defense under Public Officers Law § 17 (2) (a) is amenable to CPLR Article 78 review, and therefore barred by the four-month statute of limitations if not brought within that timeframe.
Holding
Yes, because the Attorney-General’s determination to grant or deny a defense under Public Officers Law § 17 (2) (a) is an administrative decision akin to decisions rendered by other administrative agencies regarding government benefits. Therefore, it is subject to Article 78 review and its associated statute of limitations.
Court’s Reasoning
The Court reasoned that the Attorney-General’s decision to grant or deny a defense is an administrative act. Analogizing it to a private insurer’s duty to defend, the Court stated that the State’s duty to defend is triggered when the complaint alleges acts occurring within the scope of public employment, mirroring the “alleged act or omission [in fact] occurred or is alleged in the complaint to have occurred while the employee was acting within the scope of his public employment or duties” (Public Officers Law § 17 [2] [a]). The court can review the facts upon which the Attorney-General relied when he denied the defense and may, if necessary, take proof to determine if there are circumstances which do not appear in the pleadings but in which the duty to defend the underlying litigation arises. Since the issue could have been resolved in an Article 78 proceeding, the claimant could not circumvent the four-month statute of limitations by bringing a plenary action. The court stated, “They could not escape that limitation by simply denominating the action a plenary action for indemnification of the costs of the defense, which is entitled to a longer Statute of Limitations.”