author: Levine, J.

text:
    [667 NE2d 320, 644 NYS2d 670]
    The People of the State of New York, Respondent, v Robert McDonald, Appellant. The People of the State of New York, Respondent, v Emilia Strogov, Appellant.
    Argued March 28, 1996;
    decided April 30, 1996

      POINTS OF COUNSEL

      T. Kevin Murtha & Associates, P. C., Roslyn (Joseph Madsen of counsel), for appellant in the first above-entitled action.
    I. Appellant was not charged with any crimes relating to treatment of patients nor was he charged with defrauding or misleading poor patients by distributing sneakers and radios to them. However, the trial court permitted such evidence on the direct case against appellant and denied the application to strike said evidence from the record. The Court below should have reversed appellant’s conviction. Appellant was denied his due process right to a fair trial. (People v Ventimiglia, 52 NY2d 350; People v Till, 201 AD2d 43; People v Celestino, 201 AD2d 91; People v Alvino, 71 NY2d 233; People v Fiore, 34 NY2d 81; People v Liller, 20 NY2d 727; People v McKinney, 24 NY2d 180; People v Heath, 175 AD2d 562; People v Ragusa, 62 AD2d 1004; People v Lizzarra, 70 AD2d 572.) II. Appellant was denied his constitutional right to a fair trial: although appellant was not charged with any offense relating to the quality of care, treatment of patients and usefulness of the prescribed foot appliances, the court constructively amended the indictment and permitted the jury to consider such evidence against appellant. (People v Rubin, 101 AD2d 71; People v Perez, 83 NY2d 269; People v Boyd, 59 AD2d 558; People v Grega, 72 NY2d 489; Russell v United States, 369 US 749.) III. The trial court erred in its jury charge relating to reasonable doubt, proof of each element of crime, specific intent, burden of proof and interested witness which was fundamentally defective. Charging that the jury’s job is to make a unanimous finding if possible as to the guilt or innocence of appellant warrants a reversal of the conviction. (People v Wade, 99 AD2d 474; People v Johnson, 46 AD2d 123, 39 NY2d 364; People v Delesline, 68 AD2d 815; People v Ingram, 49 AD2d 865; People v Allah, 47 AD2d 738.) IV. The Medicaid Provider Manual code 90473 does not state that a plaster cast is required to make and manufacture a custom device and bill $46. Codes 90473 and 90477 of the Medicaid Manual concerning the utilization of a plaster cast for measurement of a patient’s feet is unconstitutionally vague. Prosecuting appellant under codes 90473 and 90477 for not measuring a patient’s feet with a plaster cast is unconstitutional. The Court below should have reversed the convictions and dismissed the action since according to the laboratory witness presented by the prosecution against appellant, appellant provided a custom foot appliance to his patients manufactured by Lauren Laboratories. (People v Feldman, 204 AD2d 347; People v Donaldson, 181 AD2d 948; People v Rubin, 101 AD2d 71; People v Fischman, 191 AD2d 841, 81 NY2d 1013.) V. Appellant’s conviction should be reversed due to prosecutorial misconduct relating to evidence that appellant acted in concert and resulting in a constructive amendment of the indictment. (People v Perez, 83 NY2d 269.) VI. The Court below should have reversed appellant’s conviction for grand larceny in the second degree given the failure of the People to prove that appellant was paid in excess of $50,000 to which he was not entitled under count one of the indictment. (People v Rubin, 101 AD2d 71; People v Hunter, 34 NY2d 432; People v Gross, 51 AD2d 191.)

      Dennis C. Vacco, Attorney-General, New York City (Arthur G. Weinstein and Bonnie H. Stein of counsel), for respondent in the first above-entitled action.
    I. The evidence established that appellant knowingly submitted over $58,000 in fraudulent claims. (People v Two Wheel Corp., 71 NY2d 693; People v Nelson, 69 NY2d 302; People v Bright, 71 NY2d 376; People v Yonkers Contr. Co., 17 NY2d 322; People v Feldman, 204 AD2d 347; People v Donaldson, 181 AD2d 948; People v Fischman, 191 AD2d 841, 81 NY2d 1013; People v Gray, 86 NY2d 10.) II. The evidence properly showed the scheme, its execution and its consequences. (Pontius v People, 82 NY 339; People v Rivera, 84 NY2d 766; People v Guidice, 83 NY2d 630; People v Molineux, 168 NY 264; People v Ventimiglia, 52 NY2d 350; People v Allweiss, 48 NY2d 40; People v Knowlin, 162 AD2d 333, 76 NY2d 941; People v Till, 201 AD2d 43; People v Kocyla, 167 AD2d 938.) III. The jury instructions were correct. (Huffman v United States, 297 F2d 754; People v Powell, 22 AD2d 959.)

      Vivian Shevitz, Mt. Kisco, Carol E. Gette and Jane Simkin Smith for appellant in the second above-entitled action.
    I. The prosecution misled the lower courts into finding that Medicaid fee code 90473 unambiguously required the use of a plaster cast, which it previously conceded was not so, and that the code was so clear that its mere use provided evidence of criminal intent. There was insufficient evidence as a matter of law to prove that defendant knowingly and intentionally committed grand larceny simply by using that billing code when no plaster cast had been made. (People v Rubin, 101 AD2d 71; People v Feldman, 204 AD2d 347.) II. The prosecutor violated Rosario by refusing to turn over the prior testimony of Joseph Guy. (People v Rosario, 9 NY2d 286; People v Consolazio, 40 NY2d 446; People v Jackson, 78 NY2d 638; People v Banch, 80 NY2d 610; People v Ranghelle, 69 NY2d 56; People v Poole, 48 NY2d 144; People v Perez, 65 NY2d 154; People v Fridman, 162 AD2d 136.) III. There was a failure of proof that the charged conduct continued into the "limitations period”; the prosecution was time-barred. IV. Appellant is entitled to a new trial because of her counsel’s conflicted representation, in violation of her constitutional rights to the effective representation of counsel. (People v Flores, 84 NY2d 184; People v Alicea, 61 NY2d 23; United States v Arrington, 867 F2d 122; People v Cade, 73 NY2d 904; Ciak v United States, 59 F3d 296.) V. The prosecution’s false depiction of appellant as a Medicaid abuser, when his own records showed she had been cleared in a civil audit of those charges, deprived appellant of a fair trial.

      Dennis C. Vacco, Attorney-General, New York City (Arthur G. Weinstein, Donald H. Zuckerman and Michael R. Berlowitz of counsel), for respondent in the second above-entitled action.
    I. The evidence was legally sufficient; the credibility of a witness is not properly before this Court. (People v Santos, 86 NY2d 869; People v Gray, 86 NY2d 10; People v Rubin, 101 AD2d 71; People v Feldman, 204 AD2d 347; People v Donaldson, 181 AD2d 948; People v Fischman, 191 AD2d 841, 81 NY2d 1013.) II. The theft, which continued through March 1988, was prosecuted timely. (People v Eastern Ambulance Serv., 106 AD2d 867; People v Alamo, 34 NY2d 453.) III. Rosario does not require the People to "disclose” transcripts on file with appellate courts, especially where the testimony concerns a general area such as the Medicaid system rather than any persons or events at issue. (People v Rosario, 9 NY2d 286, 368 US 866; People v Ranghelle, 69 NY2d 56; People v Washington, 86 NY2d 189; People v Fishman, 72 NY2d 884; People v Baghai-Kermani, 84 NY2d 525; People v Rosich, 170 AD2d 703; People v Banch, 80 NY2d 610; Jencks v United States, 353 US 657.) IV. Defense counsel was neither conflicted nor ineffective. (People v Baldi, 54 NY2d 137; People v Schwartzman, 24 NY2d 241.) V. There was no prosecutorial misconduct.

      Feldman & Kieffer, LLP, Buffalo (Andrew Feldman of counsel), for New York State Podiatric Medicine Association, amicus curiae in the first and second above-entitled actions.
    I. The mere billing of $46 to Medicaid for custom-made orthotics fabricated from 2-D imprint techniques does not, without more, demonstrate the requisite intent to defraud. (People v Levan, 295 NY 26; People v Ward, 120 AD2d 758; People ex rel. Perkins v Moss, 187 NY 410; People v Laurence, 137 NY 517; McCourt v People, 64 NY 583; Wilson v People, 39 NY 459; Marcus v Fidelity & Deposit Co., 164 App Div 859; People v Shears, 158 App Div 577, 209 NY 610; People v Ghiggeri, 138 App Div 807; People v Kenney, 135 App Div 380.) II. Standard and accepted practice in podiatric medicine during the prosecution period included creating prescriptions by 2-D imprint techniques to fabricate custom-made orthotics. III. The Department of Social Services never clarified the meaning of the parenthetical expression "casting and fabrication” even when it became apparent that there was confusion among practitioners and other State departments administering the Medicaid program.
   OPINION OF THE COURT

Levine, J.

Following a jury trial, defendant McDonald, a podiatrist enrolled as a participating provider in the New York Medical Assistance Program, was convicted of one count of second degree grand larceny (Penal Law § 155.40) and six counts of offering a false instrument for filing in the first degree (Penal Law § 175.35). In an unrelated bench trial, defendant Strogov, also a participating podiatrist, was convicted of second degree grand larceny. The basis for these convictions was defendants’ submission of claims to the Medicaid program for custom-made orthotics "cast and fabricated” to the patients’ feet with the knowledge that they had not in fact provided such appliances to these patients. The Appellate Division affirmed each convictian, holding that the language of the applicable Medicaid billing code unambiguously provided notice that the creation of a three-dimensional cast of the patient’s feet was required to seek reimbursement under this code (People v McDonald, 215 AD2d 504; People v Strogov, 216 AD2d 424). We agree and, because none of the remaining assignments of error requires reversal, we now affirm.

The New York Medical Assistance Program provides eligible persons with financial assistance for medical care and treatment. Participating physicians submit claims for reimbursement of services provided to program recipients according to the fee schedule contained in the local Department of Social Services Medicaid Provider Manual. The local provider manual must be consistent with the medical services and reimbursement caps prescribed by the State Department of Social Services (see, 18 NYCRR 538.1). At issue in these appeals is the Kings County billing code 90473 (item P602 in the State podiatry fee schedule) which provides:

"Foot mold, balance inlay support (casting and fabrication) per pair, to include all necessary fittings and adjustments.”

The maximum reimbursable rate under this billing code is $46.

Defendants were prosecuted for larcenies emanating from the submission of claims under billing code 90473 for orthotics they dispensed without making a cast or mold of the patient’s feet. According to the trial evidence, the orthotics that defendants McDonald and Strogov billed under this code were ordered by sending either a tracing of the outline of the patient’s feet or a pressure imprint obtained by coating the feet with a solution that interacted with specialized paper to indicate the patient’s weight-bearing and pressure areas, with or without additional prescriptive information, to a laboratory that provided prefabricated stock orthotics.

Defendants do not refute that these two-dimensional measurement techniques were used. They argue instead that the billing code phrase "casting and fabrication” is ambiguous, that the code does not require the creation of a three-dimensional cast or mold, and that the use of a tracing or footprint, in conjunction with additional descriptive information about the patient, provides sufficient information to enable an orthotic manufacturer to create a custom-made orthotic. They thus contend that their use of alternative methods of measurement for orthotics billed under this code does not constitute the crime of larceny as a matter of law.

At both trials, however, expert evidence was presented that the term "casting” has a universally recognized meaning within the podiatric profession: creating a three-dimensional cast or mold which captures the true architecture of the patient’s foot and is then used to create a positive mold which forms the model for the custom-made orthotic. The experts explained that a two-dimensional outline or footprint does not constitute a cast that will conform to the actual shape of the patient’s foot, and thus, such measuring methods cannot be used to create a custom-made orthotic. Accordingly, contrary to defendants’ argument on appeal, the evidence established that code 90473 is not ambiguous and sufficiently conveyed to podiatrists the requirement to use a casting technique that will create a three-dimensional mold of the foot.

As the podiatry fee schedule is intended for use by members of the podiatric profession, the use of technical terms recognized by the profession to describe the scope of permissible work that can be billed under code 90473 provides an explicit and nonarbitrary standard for enforcement of proper Medicaid billing practices and imposing criminal responsibility for flagrant violations thereof. Moreover, because the professionally defined meaning of casting excludes the use of foot tracings or footprints, defendants’ limited rebuttal evidence was insufficient to demonstrate an ambiguity in the billing code or prove that their conduct constituted lawful and noncriminal billing practices.

Defendants alternatively argue that there was legally insufficient evidence that their submission of claims under code 90473 was done with larcenous intent. They contend that because the term casting is ambiguous, the mere act of submitting claims under code 90473 without the creation of a cast or mold does not provide circumstantial evidence of intent to defraud and that, as a consequence, the evidence of criminal intent was legally insufficient. Because we have already concluded that the terms "casting and fabrication” in code 90473 unambiguously require the creation of a cast or positive mold, we reject defendants’ argument that billing for an orthotic made from a tracing or footprint does not constitute circumstantial evidence of larcenous intent.

Moreover, in each of these cases there was additional evidence that defendants intentionally sought reimbursement for a medical service that they did not provide. Defendant McDonald’s former professional partner testified that he agreed with the experts’ definition of casting and that he and defendant purposefully billed Medicaid for custom-made orthotics, which are ordinarily made from casts, when in fact they had dispensed prefabricated devices ordered from mere tracings. This witness also testified that at the suggestion of defendant the partners began using a billing code with a lower reimbursement rate for some of the orthotics normally billed under code 90473 to avoid the appearance of an improper pattern of billing.

As to defendant Strogov, there was evidence that although she ordered prefabricated stock items from tracings and footprints, she instructed an intern to misrepresent the measuring techniques on each Medicaid patient chart as C-F-D, that is, cast, fabricate and dispense. Thus, in each case, the evidence was legally sufficient to support the fact finder’s conclusion that defendants’ improper billing was done with criminal intent.

We have considered defendants’ remaining contentions and conclude that they are either unpreserved or without merit.

Accordingly, in each case the order of the Appellate Division should be affirmed.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Ciparick concur.

In each case: Order affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    [667 NE2d 323, 644 NYS2d 673]
    The People of the State of New York, Respondent, v William Gonzalez, Appellant.
    Argued March 26, 1996;
    decided May 2, 1996

      POINTS OF COUNSEL

      Pamela Peters, New York City, and Daniel L. Greenberg for appellant.
    The warrantless search of the bedroom appellant shared with codefendant and of appellant’s bag found in that bedroom deprived appellant of his right to be free from unreasonable searches and seizures where the People failed to meet their burden of demonstrating the apparent authority of the third party who consented to the search. (Johnson v United States, 333 US 10; Schneckloth v Bustamonte, 412 US 218; United States v Matlock, 415 US 164; People v Cosme, 48 NY2d 286; Illinois v Rodriguez, 497 US 177; People v Adams, 53 NY2d 1; People v Petrie, 89 AD2d 910; United States v Whitfield, 939 F2d 1071; United States v Block, 590 F2d 535.)

      Robert T. Johnson, District Attorney of Bronx County, Bronx (Andrew J. Shipe, Joseph N. Ferdenzi and Allen H. Saperstein of counsel), for respondent.
    I. Even without reference to the contested evidence, appellant was proven guilty beyond a reasonable doubt by overwhelming proof. Therefore, any error in the admission of the evidence was harmless. (People v Almestica, 42 NY2d 222; People v Williams, 141 AD2d 783; People v Simmons, 75 NY2d 738.) II. The search of the apartment and seizure of the weapon were proper as justified by authorized consent. (People v Velasquez, 73 NY2d 815; People v King, 61 NY2d 969; People v Battaglia, 86 NY2d 755; People v Cosme, 48 NY2d 286; People v Minori, 51 NY2d 930; People v Clements, 37 NY2d 675; People v Rivera, 90 AD2d 778, 60 NY2d 910; People v Grimaldi, 52 NY2d 611; People v Harrison, 57 NY2d 470.)
   OPINION OF THE COURT

Levine, J.

Defendant was convicted following a jury trial of murder, second degree, manslaughter, first degree, and attempted robbery, first degree, arising out of his fatal shooting of a taxi driver during a bungled holdup in the Hunt’s Point area of the Bronx. This appeal concerns the validity of the seizure of the murder weapon, a 12-gouge shotgun, during the investigating detectives’ search of an apartment on Manida Street in the Bronx occupied by Sean DeJesus, defendant’s accomplice, and other members of the DeJesus family. Defendant and Sean DeJesus had been identified by eyewitnesses as the perpetrators, and defendant was already in custody when the police came to the DeJesus apartment looking for Sean.

Two of the officers who conducted the search of the DeJesus apartment, Detectives Spivey and Martino, testified at the suppression hearing. They stated that they were greeted at the door by a young woman who identified herself as Kim DeJesus, Sean’s sister. She and her young daughter were the only persons at home. The detectives informed her that they were looking for Sean in connection with a shooting. Kim told them that defendant also stayed at the apartment, sleeping in Sean’s bedroom "on and off” for a week at a time. One of the detectives asked her whether she had seen either defendant or Sean with a gun. She replied that one day Sean had shown her daughter a shotgun, and she "got upset” and had an argument with Sean about it. She told the police that "she thought he had gotten rid of [the gun]”.

The police then asked Kim if they could "look in Sean’s room”, and she agreed. She led them to a bedroom and pointed out which bed was defendant’s and which was Sean’s. One of the officers patted defendant’s bed and then lifted up the mattress. Under the mattress he discovered a blue canvass duffel bag, which was zipped closed. He unzipped it and found a shotgun, two shotgun shells and personal clothing. The detectives terminated the search and removed the bag and its contents. The next day they had Kim DeJesus sign a letter confirming that she had given the police permission to enter the apartment. At the suppression hearing, the prosecution stipulated that defendant had standing to challenge the entry of the police into the apartment and the ensuing search and seizure.

Supreme Court denied defendant’s motion to suppress. The court concluded that the seizure of the shotgun and other items was valid because Kim DeJesus "had apparent authority to grant permission to the officers to enter and search the apartment[,] * * * consent was properly obtained as a result of the apparent authority of Ms. DeJesus [and] the search was properly conducted pursuant thereto”. The shotgun and other evidence seized were introduced at defendant’s trial. The Appellate Division affirmed (210 AD2d 83), agreeing with Supreme Court that the police "properly relied on defendant’s accomplice’s sister’s apparent authority to consent to the search of the apartment * * * which resulted in recovery of the gun”. Defendant appeals pursuant to leave granted by an Associate Judge of this Court, and we now reverse.

In stipulating to defendant’s standing, the People conceded that, at the time of the police seizure, defendant had a legitimate expectation of privacy, cognizable under the Fourth Amendment, in the contents of the duffel bag ("a large cylindrical fabric bag for personal belongings” [Webster’s Ninth New Collegiate Dictionary 387 (1990)]). The record is devoid of any evidence that Kim Dejesus’s specific consent was sought or obtained for the search of defendant’s duffel bag.

The courts below érred in relying upon the apparent (if not actual) authority of Kim DeJesus to consent to the search of the apartment, which she jointly occupied, as furnishing apparent authority for a search of a closed and concealed receptacle owned by defendant which, by definition and common understanding, is ordinarily used for storing or transporting the personal effects of its owner.

Analysis begins with the holding of United States v Matlock (415 US 164), that law enforcement officials can establish a constitutionally valid search and seizure by "show[ing] that permission to search was obtained from a third party who possessed common authority over or other sufficient relationship to the premises or effects sought to be inspected” (id., at 171 [emphasis supplied]). The Court construed "common authority” not in any narrow property law sense, but "rather on mutual use of the property by persons generally having joint access or control for most purposes, so that it is reasonable to recognize that any of [such persons] has the right to permit the inspection in his own right and that the others have assumed the risk that one of their number might permit the common area to be searched” (id., at 171, n 7 [emphasis supplied]).

In subsequent applications of the Matlock standard for effective third-party consent to search, the courts have paid heed to Matlock’s reference in the disjunctive to the requisite common authority of the other, consenting person "over * * * the premises or effects sought to be inspected”, particularly when the target of the search was a closed container owned by a guest, located on the premises of the host who consented to the search. Thus, Justice O’Connor, concurring (with then-Justice Rehnquist) in United States v Karo (468 US 705, 725), admonished that, because the Matlock test focuses on the common authority over and mutual use or access and control of the particular place or thing intended to be searched, "[a] homeowner’s consent to a search of the home may not be effective consent to a search of a closed object inside the home”.

The foregoing distinction has been particularly recognized and honored when the guest’s closed container (or similar item) is an article customarily used to hold one’s most personal belongings. As one Federal court put it:

"Common experience of life, clearly a factor in assessing the existence and the reasonableness of privacy expectations, surely teaches all of us that the law’s 'enclosed spaces’ — mankind’s valises, suitcases, footlockers, strong boxes, etc. — are frequently the objects of [one’s] highest privacy expectations, and that the expectations may well be at their most intense when such effects are deposited temporarily or kept semi-permanently in public places or in places under the general control of another. Indeed, to the sojourner in our midst— all of us at one time or another — the suitcase or trunk may well constitute practically the sole repository of such expectations of privacy as are had” (United States v Block, 590 F2d 535, 541 [4th Cir]; see also, 3 LaFave, Search and Seizure § 8.5 [d], at 798 [3d ed]).

Overwhelmingly, the courts have thus rejected the sufficiency of a host’s general consent to search premises to validate the search of a guest’s overnight bag, purse, dresser drawers used exclusively for the guest’s personal effects, or similar objects.

It therefore follows that, in the absence of any proof whatsoever that Kim DeJesus shared "common authority” over defendant’s duffel bag, based upon mutual use or joint access and control (United States v Matlock, supra), the People failed to establish her actual authority to consent to the seizure of the duffel bag and its contents, as a matter of law. The evidence also failed to establish her apparent authority to consent to that seizure. Before the Supreme Court spoke definitively on the issue, we held in People v Adams (53 NY2d 1, 9, rearg denied 54 NY2d 832, cert denied 454 US 854), that "where the searching officers rely in good faith on the apparent capability of an individual to consent to a search and the circumstances reasonably indicate that that individual does, in fact, have the authority to consent, evidence obtained as the result of such a search should not be suppressed”. Then, in Illinois v Rodriguez (497 US 177, 179) the Supreme Court similarly held valid a warrantless seizure "upon the consent of a third party whom the police, at the time of the entry, reasonably believe to possess common authority over the premises, but who in fact does not do so” (emphasis supplied). In Rodriguez, the Supreme Court applied to third-party consent searches the general principle that "in order to satisfy the 'reasonableness’ requirement of the Fourth Amendment, what is generally demanded of the many factual determinations that must regularly be made by agents of the government * * * is not that they always be correct, but that they always be reasonable” (id., at 185 [emphasis supplied]).

The burden of establishing either actual or apparent authority "rests upon the State” (id., at 181). The People’s burden here was, thus, to prove by a preponderance of the evidence that the "facts available to [Detectives Spivey and Martino] at the moment * * * warrant a man of reasonable caution in the belief that the consenting party had authority over [defendant’s duffel bag]. If not, then warrantless entry without further inquiry is unlawful unless authority actually exists” (id., at 188-189 [emphasis supplied] [internal quotations and citation omitted]).

As these excerpts from Illinois v Rodriguez demonstrate, the apparent authority of a third party to consent to a search of a suspect’s personal effects must rest upon the police officer’s reasonably held factual interpretation of the circumstances; it cannot be based on a mistaken view of the law. This has been the consistent reading of Rodriguez by the Federal courts. As stated in United States v Welch (4 F3d 761), "the [apparent authority] doctrine is applicable only if the facts believed by the officers to be true would justify the search as a matter of law. * * * A mistaken belief as to the law, no matter how reasonable, is not sufficient” (id., at 764-765 [citations omitted]; see also, United States v Brown, 961 F2d 1039, 1041, supra; United States v Salinas-Cano, 959 F2d 861, 865-866, supra; United States v Whitfield, 939 F2d 1071, 1073-1074, supra).

The People have failed to sustain their burden here. There are simply no factual circumstances on this record that were presented to the detectives when Kim DeJesus consented to the search of the apartment, which would have supported a reasonable belief that she also had common authority, by way of mutual use, joint access or control, over defendant’s zipped closed duffel bag secreted under the mattress of his bed. Absent additional factual circumstances which could have led them reasonably to believe that Kim had such actual authority, their belief that she did could only have been based on her actual or apparent authority to consent to the general search of the apartment premises. But, as we have already demonstrated, this was a mistake of law, not of fact, and however reasonable, cannot validate a third-party consent to search (Illinois v Rodriguez, 497 US, at 185, supra; United States v Welch, 4 F3d, at 764-765, supra).

The People’s attempt to base apparent authority of Kim DeJesus to consent to the search of the duffel bag on the colloquy between her and the detectives concerning some prior display of a shotgun to her daughter by Sean is also unavailing. It is true that some courts have considered as one factor favoring a third party’s actual or apparent authority to consent that the search was "conducted 'upon the initiative of the host for reasons relating to the host’s interest in the safe and secure enjoyment of his premises’ ” (United States v Salinas-Cano, 959 F2d, at 864, supra [quoting 3 LaFave, Search and Seizure § 8.5 (d), at 306-307 (2d ed)]). Here, the extent of the discussion regarding the gun shows only that the subject of the gun was brought up by the police, not Kim DeJesus, and the colloquy negated rather than supported any inference that she might have requested the police to search for the gun out of apprehension for her safety or that of her child. As Detective Martino described her response to their inquiry, "she thought he had gotten rid of [it]”. Viewing the record on this issue in the light most favorable to the People, at most the situation was ambiguous concerning whether Kim was then fearful regarding the possibility that a gun remained on the premises, despite her prior protest. Faced with that ambiguity, the police were not free to proceed with a search and seizure of defendant’s duffel bag without further inquiry. "It is the government’s burden to establish that a third party had authority to consent to a search. * * * The burden cannot be met if agents, faced with an ambiguous situation, nevertheless proceed without making further inquiry” (United States v Whitfield, 939 F2d, at 1075, supra [citing Illinois v Rodriguez, 497 US 177, 181, 188-189, supra]). The fact that Kim had at one time objected to Sean’s display of a shotgun to her daughter, which she thought he had "gotten rid of’, would not support a reasonable belief on the part of the officers that she was presently requesting them to search for the gun out of fear for personal safety; hence, "warrantless entry [into the duffel bag] without further inquiry [was] unlawful” (Illinois v Rodriguez, 497 US, at 188-189, supra).

Our decision in People v Adams (53 NY2d 1, supra), is not to the contrary. In Adams the search of the defendant’s apartment took place upon the specific request and consent of his girlfriend, who expressed fear that he would use the arsenal of weapons kept there to kill her. The defendant’s girlfriend in Adams had a key to his apartment and pointed out the closet where the guns were stored. Most significantly, the girlfriend’s initiative came within minutes after the defendant escaped following a gun battle with the police, and the apartment she asked the police to search for him and his weapons was in the immediate vicinity of where he had fired four shots at a police officer (id., at 10-11). In Adams, we stressed that it was only these exigencies which excused the failure of the police to make further inquiry into the girlfriend’s authority to consent to the search of the closet in defendant’s apartment (id.).

For all the foregoing reasons, the duffel bag and its contents should have been suppressed. Despite the otherwise strong case submitted by the prosecution here, the erroneous introduction into evidence of the items seized pursuant to the invalid third-party consent, notably the purported murder weapon, cannot be considered to have been harmless error, i.e., "that there is no reasonable possibility that the error might have contributed to defendant’s conviction and that it was thus harmless beyond a reasonable doubt” (People v Crimmins, 36 NY2d 230, 237). Hence, reversal and a new trial are mandated.

Accordingly, the order of the Appellate Division should be reversed, defendant’s motion to suppress physical evidence granted, and a new trial ordered.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Ciparick concur.

Order reversed, etc.

      . Federal cases: United States v Whitfield, 939 F2d 1071 (DC Cir); United States v Johnson, 22 F3d 674 (6th Cir); United States v Rodriguez, 888 F2d 519 (7th Cir); Marvin v United States, 732 F2d 669 (8th Cir); United States v Wilson, 536 F2d 883 (9th Cir), cert denied 429 US 982; United States v Salinas-Cano, 959 F2d 861 (10th Cir); United States v Gilley, 608 F Supp 1065 (SD Ga); United States v Poole, 307 F Supp 1185 (ED La); see, United States v Brown, 961 F2d 1039 (2d Cir).
      Representative State cases: People v Cruz, 61 Cal 2d 861, 395 P2d 889; State v Edwards, 214 Conn 57, 570 A2d 193; State v Melbert, 649 So 2d 740 (La Ct App); Owens v State, 322 Md 616, 589 A2d 59, cert denied 502 US 973; State v Suazo, 133 NJ 315, 627 A2d 1074; State v Johnson, 85 NM 465, 513 P2d 399 (Ct App); State v Barndt, 68 Ore App 755, 683 P2d 166 (Ct App); State v Zachodni, 466 NW2d 624 (SD).

      . In People v Adams, the defendant did not challenge the validity of the entry of the police into his apartment in order to arrest him.


text:
    [667 NE2d 328, 644 NYS2d 678]
    Marc Carrier, Plaintiff, and James Stuart et al., Appellants, v Salvation Army, Doing Business as Booth House II, Respondent.
    Argued May 1, 1996;
    decided June 6, 1996

      POINTS OF COUNSEL

      Ann Pegg Biddle, New York City, and Wayne G. Hawley for appellants.
    I. Basic rules of statutory construction require a finding that a private right of action exists in Social Services Law. (Price v Price, 69 NY2d 8; Matter of Asman v Ambach, 64 NY2d 989; Matter of Eastern Milk Producers Coop. Assn. v State of New York Dept. of Agric. & Mkts., 58 NY2d 1097; Snyder v Newcomb Oil Co., 194 AD2d 53.) II. A private right of action is properly implied from Social Services Law. (Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., 76 NY2d 207; Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Condec Corp. v Farley, 578 F Supp 85; Izzo v Manhattan Med. Group, 164 AD2d 13, 77 NY2d 989; Doe v Roe, 190 AD2d 463; County of Broome v State of New York, 119 AD2d 358; Terrigino v Zaleski, 144 Misc 2d 474; Buchwalter v Dayton Mgt. Corp., 139 Misc 2d 297; Daniels v Christofoletti, 143 Misc 2d 857.) III. The Court below’s ruling that mandamus to compel New York State Department of Social Services to bring enforcement proceedings is the appropriate remedy, is error of law requiring reversal by this Court. (Klostermann v Cuomo, 61 NY2d 525; Matter of Natural Resources Defense Council v New York City Dept. of Sanitation, 83 NY2d 215; Matter of New York Pub. Interest Research Group v Dinkins, 83 NY2d 377; Matter of Savastano v Prevost, 66 NY2d 47; Matter of Mullen v Axelrod, 74 NY2d 580; Gaynor v Rockefeller, 15 NY2d 120; Matter of Grzyb v Constantine, 182 AD2d 942; People v Bunge Corp., 25 NY2d 91; Matter of Perazzo v Lindsay, 30 AD2d 179, 23 NY2d 764.)

      Howard W. Burns, Jr., New York City, for respondent.
    I. Plaintiffs have no implied private right of action under Social Services Law § 460-d (5) for appointment of a receiver. (Andres v Mountainview Home for Adults, 92 Misc 2d 136; Henry v Isaac, 214 AD2d 188; People v Abbott Manor Nursing Home, 70 AD2d 434, 52 NY2d 766; Birnbaum v State of New York, 73 NY2d 638; Passenger Corp. v Passengers Assn., 414 US 453; Cort v Ash, 422 US 66; Securities Investor Protection v Barbour, 421 US 412; Botany Mills v United States, 278 US 282; Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist, 76 NY2d 207; Sheehy v Big Flats Community Day, 73 NY2d 629.) II. Plaintiffs may not raise on appeal new arguments not presented to the courts below. (Recovery Consultants v Shih-Hsieh, 141 AD2d 272; Douglas Elliman-Gibbons & Ives v Kellerman, 172 AD2d 307, 78 NY2d 856; Snyder v Newcomb Oil Co., 194 AD2d 53; Huston v County of Chenango, 253 App Div 56, 278 NY 646; Bankers Trust Co. v Martin, 51 AD2d 411; Mulligan v Lackey, 33 AD2d 991; Knolls Coop. Section No. 2 v Evans Dev. Corp., 169 AD2d 690; Chimarios v Duhl, 152 AD2d 508.) III. The Court below did not commit error with respect to the availability of mandamus relief against the Department of Social Services. (Stokes v Foote, 172 NY 327; Tober v Schenectady Sav. Bank, 54 AD2d 1049; Chiasson v New York City Dept. of Consumer Affairs, 138 Misc 2d 394; Matter of Buehler v Board of Supervisors, 260 NY 268; 343 E. 77th St. Corp. v Bloom, 45 Misc 2d 545; Klostermann v Cuomo, 61 NY2d 525.)

      Robinson Silverman Pearce Aronsohn & Berman LLP, New York City (Eric Rieder of counsel), for Friends and Relatives of the Institutionalized Aged, Inc., and another, amici curiae.

    I. An implied private right of action exists to enforce article 7 of the Social Services Law and 18 NYCRR parts 485-487. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Sheehy v Big Flats Community Day, 73 NY2d 629; Izzo v Manhattan Med. Group, 164 AD2d 13, 77 NY2d 989; Trautz v Weisman, 819 F Supp 282; Henry v Isaac, 214 AD2d 188; Condec Corp. v Farley, 578 F Supp 85; CPC Intl. v McKesson Corp., 70 NY2d 268; Buchwalter v Dayton Mgt. Corp., 139 Misc 2d 297.) II. Plaintiffs may seek appointment of a receiver pursuant to the court’s equitable powers. (People v Abbott Manor Nursing Home, 70 AD2d 434, 52 NY2d 766; 64 B Venture v American Realty Co., 194 AD2d 504; People ex rel. Doe v Beaudoin, 102 AD2d 359.)
   OPINION OF THE COURT

Levine, J.

The narrow issue presented by this appeal is whether Social Services Law § 460-d grants residents of an adult care facility subject to Department of Social Services supervision a private right of action to seek the appointment of a temporary receiver. Because we agree with the courts below that there is no such right under the statute, we now affirm.

Plaintiffs, residents of an adult care facility known as Booth House II, brought an action against the operator, defendant Salvation Army, for the appointment of a temporary receiver pursuant to Social Services Law § 460-d (5). Defendant had previously submitted a plan to the Department of Social Services to voluntarily surrender its operating certificate and close the facility (see, 18 NYCRR 485.5 [j]). The proposed plan for closure received Department approval and plaintiffs subsequently sought appointment of a receiver to operate the facility during the decertification period.

In pertinent part, the complaint and accompanying order to show cause papers alleged that defendant was failing to comply with its obligations in connection with the closing of the facility, specifically, the obligation to relocate residents to appropriate settings and to maintain the safety and health standards set forth in the Social Services Law. In the order to show cause plaintiffs moved for appointment of a temporary receiver and other injunctive relief; defendant cross-moved to dismiss the complaint for failure to state a cause of action. Supreme Court granted defendant’s motion and, as pertains to this appeal, held that Social Services Law § 460-d does not expressly or impliedly authorize facility residents to seek the remedy of a temporary receivership. The Appellate Division affirmed, agreeing with Supreme Court that an implied right of action for such relief would be "entirely inconsistent with the purposes, mechanism and the underlying legislative and statutory enforcement scheme” (217 AD2d 420).

At the time this action commenced, Social Services Law § 460-d (5) provided:

"The supreme court may grant equitable relief against violations or threatened violations of this article or of the regulations of the [Department of Social Services] by any facility subject to the inspection and supervision of the department. The attorney general may seek such equitable relief, in the name of the people, upon the request of the department. * * * The court, after a hearing, may make an order granting such equitable relief as it may deem necessary, including, but not limited to * * * appointment of a temporary or permanent receiver for the protection of the public health or the health, safety and welfare of any individual in such facility.”

Manifestly, the statute does not expressly confer on residents such as plaintiffs the right to seek appointment of a receiver, as only the Department of Social Services and the Attorney-General are mentioned (id. ["The attorney general may seek such equitable relief * * * upon the request of the department.”]). Thus, plaintiffs may seek such relief "only if a legislative intent to create such a right of action is 'fairly implied’ in the statutory provisions and,their legislative history” (Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., 76 NY2d 207, 211, citing Sheehy v Big Flats Community Day, 73 NY2d 629, 633). This inquiry involves three factors:

"(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme” (Sheehy v Big Flats Community Day, supra, 73 NY2d, at 633).

The third factor, which is generally the "most critical” (Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., supra, 76 NY2d, at 212), is determinative of this appeal since we conclude that permitting residents to seek appointment of a temporary receiver to operate the facility would be inconsistent with both the enforcement means chosen by the Legislature and the basic purposes underlying Social Services Law § 460-d (see, Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., supra, at 212).

Article 7 of the Social Services Law governs the operation of residential care programs for adults and children, including residences for adults such as Booth House II. The current extensive regulatory scheme was intended to give the Department of Social Services "comprehensive responsibility” for the administration and supervision of residential care facilities, which had previously been shared by a number of State agencies (see, Social Services Law § 460 [statement of purpose]; see also, Governor’s Mem approving L 1977, ch 669, 1977 NY Legis Ann, at 216). In addition to granting the Department considerable supervisory authority, section 460-d of article 7 endows the Commissioner of Social Services with broad enforcement powers to ensure proper care and treatment of residents, including the power to investigate facilities (with all the attendant powers available to court-appointed Referees); to issue orders directing the management of a facility to rectify health and safety violations; to revoke, suspend or limit a facility’s operating certificate; and to assess civil penalties for violations of Department regulations and orders (Social Services Law § 460-d [1], [2], [4], [7], [8], [9]; see also, 18 NYCRR 485.5 [j] [5] [facility that obtains Department approval to voluntarily surrender its operating certificate may be subject to civil penalties for failure to comply with the approved decertification plan]).

In addition to these specific statutory enforcement powers, subdivision (5) of section 460-d provides the Department access to court-ordered equitable remedies, including the appointment of a receiver (see also, Social Services Law § 461-f [3] [Department may seek receivership appointment when it revokes or suspends facility operator’s operating certificate]). Because the replacement of a certified operator with a court-appointed receiver violates the statutory requirement that adult care facilities be managed only by operators issued a valid operating certificate (see, Social Services Law §§ 460-b, 461-b [2]), the Department is given discretionary authority in such circumstances to authorize the continuing operation of the facility under the receivership (see, Social Services Law § 461-f).

Thus, in the heavily regulated arena of adult care facilities, statutory enforcement authority under section 460-d is expressly vested only in the Department, with additional equitable enforcement remedies available "upon the request of the [Department” through the Attorney-General (Social Services Law § 460-d [5]). It would be particularly inappropriate under these circumstances to imply a private cause of action to seek appointment of a temporary receiver to operate the facility, a remedy that affects the rights of other residents in addition to the plaintiffs seeking such relief.

"[T]he Legislature has both the right and the authority to select the methods to be used in effectuating its goals, as well as to choose the goals themselves. Thus, regardless of its consistency with the basic legislative goal, a private right of action should not be judicially sanctioned if it is incompatible with the enforcement mechanism chosen by the Legislature” (Sheehy v Big Flats Community Day, supra, 73 NY2d, at 634-635 [emphasis supplied]).

Recent amendments to this statutory scheme confirm this conclusion. Subdivision (5) of section 460-d was amended as part of a three-bill package in 1994 to add another equitable remedy — an order directing the facility operator to transfer its records to the Department — and prefatory language indicating that the court-ordered equitable relief available under subdivision (5) is ”[i]n addition to or as an alternative to any power which the [Department may exercise under this article” (L 1994, ch 733, § 3).

As part of the same bill package, the Legislature expressly authorized residents and their representatives to bring private actions for breach of a statutory warranty of habitability as well as violations of the written admission agreements (L 1994, ch 734, § 1 [enacting a new subdivision (2-a) of Social Services Law § 461-c]). The creation of this specific civil remedy, an action personal to each resident, provides further evidence that a private right of action for appointment of a receiver under section 460-d (5) was not intended (see, CPC Intl. v McKesson Corp., 70 NY2d 268, 282; accord, Varela v Investors Ins. Holding Corp., 81 NY2d 958, 961 [absence of private right of action in particular statute is indicative of legislative intent not to create implied private right of action where such action is expressly provided in an analogous enforcement statute], rearg denied 82 NY2d 706). Thus, we reject plaintiffs’ argument that the 1994 amendment to subdivision (5) of section 460-d was intended to give others (such as residents) in addition to the Department the right to maintain a private right of action for the statutory equitable remedy sought here.

In sum, because it would be inconsistent with the statutory enforcement scheme to imply a private right of action in favor of plaintiff residents for appointment of a temporary receiver under Social Services Law § 460-d, the cause of action seeking such relief was properly dismissed. Henry v Isaac (214 AD2d 188), upon which plaintiffs place heavy reliance, provides no support for their position as it does not address the remedy sought here. Moreover, the Court’s conclusion in that case that the Legislature intended a general statutory private right of action is undercut by the recent amendment which provides for specific and more narrowly drawn private actions.

The issue of the existence of any alternative remedy available to plaintiffs in the absence of remedial action sought by the Department is not properly before us. Plaintiffs’ remaining contentions are unpreserved or without merit.

Accordingly, the order of the Appellate Division insofar as appealed from should be affirmed, without costs.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Ciparick concur.

Order, insofar as appealed from, affirmed, without costs.

      . Supreme Court also dismissed plaintiffs’ second cause of action seeking a declaration that one of the plaintiffs was entitled to the protection of the rent stabilization law. The dismissal of that claim is not before us.

      . A residence for adults is an adult care facility that provides long-term residential care to adults who are unable to live independently (18 NYCRR 485.2 [d]). Other types of adult care facilities include family-type homes and shelters for adults (18 NYCRR 485.2 [a]).

      . With respect to certain residential care facilities for children, these enforcement powers are vested in other State agencies, such as the Division for Youth and the Department of Mental Hygiene (see, Social Services Law § 462-b).


author: Ciparick, J.

text:
    [668 NE2d 384, 645 NYS2d 413]
    United Services Automobile Association, Respondent, v Salvatore Curiale, as Superintendent of the State of New York Insurance Department, Appellant.
    Argued March 21, 1996;
    decided April 30, 1996

      POINTS OF COUNSEL

      Dennis C. Vacco, Attorney-General, New York City (Thomas Donald Hughes, Barbara Gott Billet and Kevin C. Reilly of counsel), for appellant.
    The statutory denial of the Metropolitan Commuter Transportation District tax surcharge credit to plaintiff serves a legitimate governmental purpose and thus comports with the Equal Protection Clause of the United States Constitution. (Western & S. Life Ins. Co. v Board of Equalization, 451 US 648.)

      Stroock & Stroock & Lavan, New York City (Alan Z. Yudkowsky, Elizabeth A. Mullins and Adam S. Grace of counsel), for respondent.
    I. The court below properly held that Tax Law § 1505-a (c) serves no legitimate governmental purpose, and therefore violates the Equal Protection Clause of the United States Constitution as applied to plaintiff. (Western & S. Life Ins. Co. v Board of Equalization, 451 US 648; Lehnhausen v Lake Shore Auto Parts Co., 410 US 356, 411 US 910; Allied Stores of Ohio v Bowers, 358 US 522; Cleburne v Cleburne Living Ctr., 473 US 432; Royster Guano Co. v Virginia, 253 US 412; Berman v Parker, 348 US 26; Minnesota v Clover Leaf Creamery Co., 449 US 456, 450 US 1027; Vance v Bradley, 440 US 93; Metropolitan Life Ins. Co. v Ward, 470 US 869, 471 US 1120; WHYY v Glassboro, 393 US 117.) II. Even if this Court were to find that section 1505-a (c) served a legitimate purpose, the burden imposed by section 1505-a (c) is not rationally related to any such purpose. (Metropolitan Life Ins. Co. v Ward, 470 US 869, 471 US 1120; Colgate v Harvey, 296 US 404; Royster Guano Co. v Virginia, 253 US 412; Weinberger v Wiesenfeld, 420 US 636; Cleburne v Cleburne Living Ctr., 473 US 432.)
   OPINION OF THE COURT

Ciparick, J.

The case on appeal presents an equal protection challenge to one component of New York’s system of retaliatory taxation against foreign insurance companies. We conclude that the statutory provision at issue, Tax Law § 1505-a (d) (8), insofar as it denies a credit to foreign insurers for the payment of the Metropolitan Commuter Transportation District (MCTD) tax surcharge against retaliatory taxes, is unsupported by a legitimate governmental purpose and results in unconstitutional discrimination.

I.

Under article 33 of the New York Tax Law, all insurance companies conducting business in New York State are potentially subject to four franchise taxes (see, Tax Law §§ 1501 [tax on income or capital], 1505-a [MCTD tax surcharge], 1510 [tax on premiums], 1520 [general tax surcharge]). One of these franchise taxes, the MCTD tax surcharge, is imposed on all insurers, domestic and foreign, carrying on business within the MCTD (see, Tax Law § 1505-a [a]). The purpose of the MCTD tax surcharge is to provide additional funds for the support of mass transportation in the MCTD.

In addition to the four franchise taxes of article 33, foreign insurers doing business in New York are also potentially subject to a "retaliatory” tax, so named because it is designed to retaliate, albeit indirectly, against foreign States with more onerous tax laws than New York (see, Insurance Law § 1112). To determine whether a retaliatory tax is owed by a foreign insurer, two calculations are performed. The first calculation is the total amount of taxes, aside from any potential retaliatory tax, that New York imposes on the foreign insurer for the privilege of conducting an insurance business within its borders. The second calculation is the total amount of taxes that the foreign insurer’s State of domicile would impose on a comparable New York insurer for the privilege of doing business in the foreign State. If the foreign State’s hypothetical tax bill is higher than New York’s actual tax bill, New York adopts the foreign State’s greater tax burden as its own and imposes it on the foreign insurer.

The Superintendent of the New York State Insurance Department is the public official responsible for assessing and collecting retaliatory taxes imposed on foreign insurers. In assessing the amount of retaliatory tax owed, the foreign insurer is generally entitled to a credit for the amount of article 33 franchise taxes it pays to New York (see, Tax Law § 1511 [b] ["In assessing taxes under the reciprocal provisions of (Insurance Law § 1112), credit shall be allowed for any taxes paid under this article”]). This credit operates to equalize the total taxes paid by the foreign insurer to New York — the article 33 franchise taxes plus the retaliatory tax — with the total amount of taxes that would be imposed on a comparable New York insurer doing business in the foreign State.

However, contrary to the general allowance for credit provided by Tax Law § 1511 (b), no credit against retaliatory taxes is allowed for the MCTD tax surcharge (see, Tax Law § 1505-a [d] [8] ["No credit against reciprocal taxes imposed by this state * * * shall be allowed for any taxes paid under this section”]). The issue on appeal is whether the disallowance of this credit results in constitutionally impermissible discrimination against foreign insurers.

II.

The pertinent facts of this case are undisputed. Plaintiff United Services Automobile Association (USAA), a reciprocal insurer organized under the laws of Texas, is authorized to do business in New York State and maintains an office in New York County. Because Texas has a retaliatory tax statute, USAA is subject to New York’s retaliatory tax (see, Insurance Law § 1112 [d]), and because USAA conducts business within the MCTD, it is subject to the MCTD tax surcharge (see, Tax Law § 1505-a [a]).

For tax year 1987, USAA calculated its combined article 33 franchise taxes to be $1,072,313.52, which included $76,389 in MCTD tax surcharge, and remitted that amount to the State of New York. Thereafter, in determining whether USAA owed any retaliatory taxes for tax year 1987, the Superintendent calculated that a New York insurer doing business in Texas comparable to USAA’s business in New York would have owed Texas a total of $1,073,877.40 in taxes. The Superintendent then sent USAA its 1987 Statement of Taxes and Fees under Insurance Law § 1112; instead of demanding the $1,563.88 difference between what USAA already paid in franchise taxes to New York and the amount of taxes Texas would have imposed on a comparable New York insurer, the Superintendent demanded 1987 retaliatory taxes of $77,952.88, the balance of $1,563.88 plus the amount of the MCTD tax surcharge ($76,389), which the Superintendent did not credit in the retaliatory tax computation (see, Tax Law § 1505-a [d] [8]).

USAA remitted the adjusted amount of $1,436.88 to the Superintendent, claiming that it was entitled to a credit for the $76,389 balance representing the MCTD tax surcharge, which it had already paid to New York. The Superintendent thereafter sent USAA a revised statement, noting that the MCTD tax surcharge is not an allowable credit and demanding payment of $76,389. USAA paid the $76,389 under protest. Thus, for tax year 1987, USAA paid New York a total of $1,150,266.40, which, the parties agree, is $76,389 more than the amount a comparable New York insurer would have paid to Texas.

USAA commenced this declaratory judgment action challenging the denial of a credit for the MCTD tax surcharge and moved for summary judgment on the ground that denial of the credit constituted an equal protection violation. The Superintendent cross-moved for summary judgment, seeking a determination of the constitutionality of disallowing the credit.

Supreme Court granted USAA’s motion and denied the Superintendent’s cross motion, holding that Tax Law § 1505-a, insofar as it denied a credit to foreign insurers for the amount of MCTD tax surcharge, violated USAA’s equal protection rights. The court concluded that "[t]he promotion of a domestic interest such as revenue protection, at the expense of foreign insurers who pay retaliatory taxes, is not a legitimate purpose under the equal protection clause.” The Appellate Division affirmed, similarly holding that "[a]n intent to increase or protect revenues at the expense of foreign insurers does not constitute a legitimate governmental purpose sufficient to withstand an equal protection challenge.” (216 AD2d 163.) The Superintendent appeals to this Court as of right (see, CPLR 5601 [b] [1]) and we now affirm.

m.

Although claims of State discrimination against foreign business interests are typically raised as Commerce Clause challenges (US Const, art I, § 8, cl [3]), the retaliatory tax statute at issue in this case applies to the business of insurance. Under the McCarran-Ferguson Act (15 USC §§ 1011-1015), State regulation of the business of insurance is exempt from the strictures of the Commerce Clause (see, Western & S. Life Ins. Co. v Board of Equalization, 451 US 648, 654). Moreover, the protection of the Privileges and Immunities Clause of article IV (US Const, art IV, § 2, cl [1]), which prohibits State discrimination against nonresident United States "citizens,” does not extend to corporations (see, Western & S., supra, at 656). As a result, USAA’s constitutional challenge is predicated solely on the Equal Protection Clause.

The Equal Protection Clause of the Federal Constitution provides: "No State shall * * * deny to any person within its jurisdiction the equal protection of the laws” (US Const, 14th Amend, § 1; accord, Santa Clara County v Southern Pac. R. R. Co., 118 US 394, 396 [corporations are "persons” under 14th Amend]). A State tax statute will withstand an equal protection challenge if the classification at issue (i) has a legitimate purpose, and (ii) is rationally related to achievement of that purpose (see, Western & S., 451 US, at 668, supra).

The necessary backdrop for analysis of the issue on appeal is the case of Western & Southern, in which the United States Supreme Court upheld, against an equal protection challenge, California’s system of retaliatory taxation (see, id., at 674). The California statute discriminated against foreign insurers by imposing, in addition to the taxes imposed on all insurance companies doing business within the State, a retaliatory tax on foreign insurers representing the difference between the total tax bill under California law and the total amount of taxes the foreign insurer’s State would have imposed on a hypothetical California insurer doing a comparable level of business in the foreign State (see, id., at 651).

The Supreme Court affirmed the constitutionality of this retaliatory tax statute, concluding that its legitimate purpose is "to promote the interstate business of domestic insurers by deterring other States from enacting discriminatory or excessive taxes” (id., at 668), a purpose that was served by matching the tax burden of foreign insurers within its borders with that of domestic insurers in the foreign State. However, the Supreme Court was careful to note that the purpose of California’s retaliatory tax statute "is not to generate revenue at the expense of out-of-State insurers, but to apply pressure on other States to maintain low taxes on California insurers” (id., at 669-670).

The Supreme Court’s intimation in Western & Southern that generating tax revenue at the sole expense of foreign insurers would not constitute a legitimate purpose was subsequently confirmed in Metropolitan Life Ins. Co. v Ward (470 US 869). Ward involved a challenge to Alabama’s domestic preference tax statute, which imposed a higher gross premiums tax rate on foreign insurers than on domestic insurers. The Supreme Court contrasted the legitimate purpose in Western & Southern with the raw preference for domestic over foreign insurers manifested in the Alabama statute: "Alabama’s aim to promote domestic industry is purely and completely discriminatory, designed only to favor domestic industry within the State, no matter what the cost to foreign corporations also seeking to do business there. Alabama’s purpose, contrary to California’s, constitutes the very sort of parochial discrimination that the Equal Protection Clause was intended to prevent” (470 US, at 878). The Supreme Court concluded that "a State may not constitutionally favor its own residents by taxing foreign corporations at a higher rate solely because of their residence” (id.).

While it is true that legitimacy of purpose and rationality, not strict equality, are the benchmarks of equal protection in the tax realm, Western & Southern and Ward together teach us that retaliatory taxation is legitimate precisely because it aims to equalize domestic and foreign taxation. The rule derived from these cases is that a system of retaliatory taxation, which by definition discriminates between domestic and foreign insurance companies, is constitutionally sound insofar as it aims to equalize the tax burden of domestic and foreign insurers, but the imposition of retaliatory tax beyond the point of equalization solely to generate revenue at the expense of foreign insurers lacks legitimacy. In other words, absent a legitimate purpose apart from simple revenue creation, a State may only retaliate to the extent of the difference between its actual and the foreign State’s hypothetical tax bill.

IV.

The parties agree that the retaliation in this case extended beyond the point of equalization. For tax year 1987, US A A paid to New York a total of $1,150,266.40 in taxes for the privilege of conducting an insurance business in New York, which is $76,389 more than a comparable New York insurer would have been taxed by Texas. Therefore, we must evaluate whether the denial of a credit for the MCTD tax surcharge against retaliatory taxes serves a legitimate purpose.

The first stated purpose is to protect the MCTD fund. In this connection, the Superintendent argues that were USAA granted a credit for the MCTD tax surcharge, it would effectively avoid paying the surcharge altogether. This is not so. USAA has already paid the MCTD tax surcharge and is not seeking a refund of those moneys. The credit sought by USAA, rather than depleting the MCTD fund, would serve only to reduce, by the amount of MCTD tax surcharge already paid, the amount of retaliatory taxes imposed on USAA.

The Superintendent alternatively contends that the purpose of denying the credit is to protect New York’s general tax fund. The Superintendent argues that if USAA were granted the credit, its payment of the MCTD tax surcharge, which is earmarked for the MCTD fund, would have the effect of reducing by a corresponding amount the amount of retaliatory taxes paid by USAA into the general fund. This is undeniably correct; the higher the amount of the credit against the retaliatory tax, the lower the retaliatory tax will be. However, the claimed purpose of protecting the general fund is not legitimate because it is purely an effort to raise revenue at the sole expense of foreign insurers. The Superintendent’s argument is based on the erroneous presupposition that the State has a fixed, independent right to retaliatory taxes divorced from the amount of taxes the State actually collects from the foreign insurer. To the contrary, the validating purpose of retaliatory taxation — to equalize the tax burden of domestic and foreign insurers — requires that the retaliatory tax assessment take into account the amount of taxes already paid to the State by the foreign insurer. The only purpose served by disallowing the credit is revenue generation, but since this redounds to the exclusive detriment of foreign insurers, it is illegitimate and will not support the State’s retaliation beyond the point of equalization.

Moreover, the fact that New York has created more than one fund into which the article 33 franchise taxes are deposited does not detract from the economic reality that USAA pays and the State collects these various franchise taxes for the privilege of doing business in New York. It is this economic reality that the retaliatory tax computation must reflect. What New York thereafter chooses to do with the moneys, or into which particular funds they flow, is unrelated to the residence-based discrimination against foreign insurers and cannot legitimatize the unconstitutional purpose of generating tax revenue at the exclusive expense of foreign insurers.

, Based on the foregoing, we conclude that denial of the credit is unsupported by a legitimate purpose and therefore violates the Equal Protection Clause. Our holding in this case is consistent with Matter of Industrial Indent. Co. v Cooper (81 NY2d 50), in which we held that no credit need be given under the retaliatory tax statute for a commercial rent tax assessed pursuant to Administrative Code of the City of New York § 11-702. Unlike the MCTD tax surcharge, which is one of the four article 33 franchise taxes and is imposed on all insurance companies within the MCTD for the privilege of conducting an insurance business in New York, the commercial rent tax in that case was held not to be a tax imposed "for the privilege of doing business” within the meaning of Insurance Law § 1112, but was a quasi-property tax calculated as a percentage of the company’s annual lease payments and therefore fell beyond the scope of the retaliatory tax scheme (see, id., at 54).

In summary, the constitutional problem identified in this case is neither the imposition of retaliatory taxes under Insurance Law § 1112 nor the imposition of the MCTD tax surcharge under Tax Law § 1505-a. Rather, our holding of unconstitutionality is based on and limited to the discrimination that results from the interplay of the two statutes — where the foreign insurer is denied a credit against retaliatory taxes for the amount of MCTD tax surcharge — producing retaliation beyond the point of equalization.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur.

Order affirmed, with costs.

      . Generally, the MCTD tax surcharge is a surcharge of 17% on the taxes imposed on the insurer pursuant to Tax Law §§ 1501 and 1510 allocable to business activity conducted in the MCTD (see, Tax Law § 1505-a [a]). The MCTD is the region encompassing the Counties of New York, Bronx, Kings, Queens, Richmond, Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester (see, Public Authorities Law § 1262).

      . Insurance Law § 1112 (a) (1) provides: "If, by the laws, or the action of any public official, of any other state, any insurer organized or domiciled in this state, or its duly authorized agents, shall be, required to deposit securities in such other state to protect policyholders or for any other purpose, or shall be required to pay taxes, fines, penalties, fees for licenses or certificates of authority or any other sum for the privilege of doing business in such other state, or shall be subjected to any restrictions, obligations, conditions or penalties, imposed for such privilege, and such requirements are greater than those required of similar insurers organized or domiciled in such other state by the laws of this state for the privilege of doing business herein, then all similar insurers organized or domiciled in such other state and their duly authorized agents in this state shall make like deposits for like purposes with the superintendent, and pay him for taxes, fines, penalties, fees for licenses or certificates of authority or for any other requirement for the privilege of doing business in this state, an amount determined in the manner prescribed by such other state, and shall be subjected to such greater requirements imposed by such other state upon similar insurers of this state and their duly authorized agents.”

      . Although the parties refer interchangeably to sections 1505-a (c) and 1505-a (d) (8), subdivision (c) denies credit against the MCTD tax surcharge, not against the retaliatory tax (see, Tax Law § 1505-a [c] ["The credits set forth in section fifteen hundred eleven of this article shall not be allowed against the tax surcharge imposed by this section”]).

      . While the statute denies this credit to foreign insurers against retaliatory taxes owed to New York, the statute grants to domestic insurers a credit against the MCTD tax surcharge in the amount of 90% of retaliatory taxes paid by the domestic insurer to a foreign State directly attributable to New York’s imposition of the MCTD tax surcharge (see, Tax Law § 1505-a [d] [2]). United Services Automobile Association does not seek this 90% credit, which, by definition, is available only to domestic insurers, and does not base its equal protection argument on its ineligibility for this credit.

      . Thus, although it has been stated that "in taxation, even more than in other fields, legislatures possess the greatest freedom in classification” (Madden v Kentucky, 309 US 83, 88), this has proven less true when discrimination is targeted at nonresidents, who are unrepresented in the State Legislature and peculiarly vulnerable to local bias (see, Ward, 470 US, at 878, supra; Williams v Vermont, 472 US 14, 23 [invalidating Vermont vehicle use tax statute; "A State may not treat those within its borders unequally solely on the basis of their different residences or States of incorporation”]; cf., Austin v New Hampshire, 420 US 656, 662).

      . This view accords with the prevailing conception of retaliatory tax statutes (see, 1 Couch, Insurance § 3:36, at 3-55 [Russ & Segalla — 3d ed] ["the primary object of retaliatory acts against foreign corporations is not to raise revenue, but to secure for the insurance companies of the enacting state even-handed treatment by the legislatures of other states”]; 19B Appleman, Insurance Law and Practice § 10929, at 24 ["Retaliatory taxation is designed to keep other states from discriminating against companies domestic to the forum, so as to demand an equalization of tax burdens as to such companies operating within a foreign state”] [footnotes omitted]; 44 CJS, Insurance, § 76 ["While they are called 'retaliatory’ statutes, their true object is one of comity and they are designed to create substantial equality of burdens in respect of foreign and domestic insurance companies”]).

      . We also note that the MCTD credit granted by New York to domestic insurers (see, Tax Law § 1505-a [d] [2]) magnifies the disparate tax treatment of domestic and foreign insurers. However, this credit, which by definition is available only to domestic insurers, is unnecessary to the holding of unconstitutionality in this case. Thus, the Superintendent’s vigorous defense in support of denying this credit to foreign insurers is misdirected. In addition, the Superintendent’s reliance on the purpose underlying the grant of this domestic credit, to "protect New York-based insurers from unintended burdens arising from the imposition of the [MCTD] surcharge” (Mem of Div of Budget, Bill Jacket, L 1984, ch 999), is misplaced. The goal of protecting New York insurers from unintended tax increases has no bearing whatsoever on the issue presented in this case of whether the State has a legitimate purpose to deny to foreign insurers a credit against retaliatory taxes for the amount of MCTD tax surcharge already paid to the State.


author: Per Curiam.

text:
    [668 NE2d 390, 645 NYS2d 419]
    In the Matter of Lester C. Hamel, a Justice of the Champlain Town Court, Petitioner. State Commission on Judicial Conduct, Respondent.
    Argued April 25, 1996;
    decided June 5, 1996
    POINTS OF COUNSEL

      Niles & Cardany, Plattsburgh (John F. Niles of counsel), for petitioner.
    Any conduct committed by petitioner was limited and. unintentional thereby warranting a sanction "of nothing more than an admonishment or censure. (Matter of Sims, 61 NY2d 349; Matter of Edwards, 67 NY2d 153; Matter of Steinberg, 51 NY2d 74.)

      Gerald Stern, New York City, and Cathleen S. Cenci for respondent.
    Petitioner has engaged in serious misconduct which demonstrates his unfitness for judicial office. (Matter of Lenney, 71 NY2d 456; Matter of VonderHeide, 72 NY2d 658; Matter of McGee v State Commn. on Judicial Conduct, 59 NY2d 870; Matter of Esworthy, 77 NY2d 280; Matter of Rater, 69 NY2d 208.)
   OPINION OF THE COURT

Per Curiam.

Following an investigation and hearing, the State Commission on Judicial Conduct has determined that petitioner should be removed from the office of Justice of the Champlain Town Court in Clinton County. The disciplinary charges against him arose principally out of two incidents in which petitioner improperly jailed individuals for their purported failure to pay fines and restitution obligations that he had imposed. Because petitioner’s conduct in connection with these two incidents reflects a complete disregard for both his administrative duties and the most elementary principles governing criminal proceedings, we conclude that removal is the appropriate sanction.

The first of the charges against him concerns petitioner’s handling of a case involving unauthorized use of a motor vehicle. The defendant in the case appeared on September 11,1989, entered a guilty plea and was fined. Additionally, petitioner required him to pay restitution to the vehicle’s owner for the damage he caused. However, petitioner neither gave the defendant a written record of the restitution obligation nor prepared a court record as required by UJCA 2019 and the Recordkeeping Requirements for Town and Village Courts (22 NYCRR 200.23). Further, although the defendant’s monetary obligations were satisfied through a series of installment payments, petitioner made no record of such payments and did not deposit the funds in his court account. Instead, he gave the restitution money directly to the vehicle owner and gave handwritten receipts to evidence the payments.

When he was erroneously told in a 1993 out-of-court conversation that the vehicle owner had still not been paid, petitioner issued a warrant for the defendant’s arrest, citing his failure to appear for a previous fictitious court date. When the defendant appeared on the warrant, petitioner summarily sentenced him to jail for contempt, refusing to give him an opportunity to retain an attorney. Petitioner rejected efforts by the defendant’s family to demonstrate through receipts that the fine and restitution obligation had been paid, and he refused to release the defendant from jail when the defendant’s sister offered to pay the restitution a second time. Petitioner also ignored a subsequent letter from the defendant’s attorney demanding an evidentiary hearing. The defendant’s contempt conviction was ultimately vacated by a County Court Judge.

The second incident involved a similar pattern of misconduct. An individual whom petitioner fined for speeding asserted that she was unable to pay, but petitioner neither offered her a hearing under CPL 420.10 (5) nor advised her of her right to apply for resentencing. Instead, he insisted that she pay. When the same individual appeared before petitioner on a charge of issuing a check with insufficient funds, petitioner directed her to pay restitution without ever taking a plea and thus, in fact, imposed sentence without defendant ever having been convicted. Additionally, he noted on his docket that the defendant was obliged to pay a $50 fine, but he never advised her of that penalty. Once again, despite the defendant’s assertions that she was unable to pay the required restitution, petitioner did not conduct a hearing on her ability to pay and did not suggest the alternative of applying for resentencing. In response to this defendant’s subsequent request for an attorney, petitioner told her that she had "waived” her right to counsel.

As in the first incident, petitioner issued a bench warrant for this defendant’s arrest when he was told in an out-of-court conversation that she had regularly been drinking in bars. Once again, the bench warrant was predicated on the defendant’s purported failure to appear for a fictitious court date. Although the defendant appeared on the warrant and promised to make the required payment by the end of the week, petitioner jailed her and declined an offer of payment by her friends because it was "too late.” Thereafter, the defendant periodically made small payments until petitioner told her that she had paid everything that she owed. Although receipts for these payments were issued, there was nothing to indicate to which charge the money had been applied and no court records were made of any payments that were applied toward the defendant’s restitution obligation.

More than a year and a half after her last payment had been made, the defendant received a letter from petitioner asserting that her speeding fine had still not been paid. When the defendant told petitioner that she was unable to pay any more, he suspended her license.

Petitioner’s conduct in connection with the foregoing matters reflects a pervasive lack of regard for the most elementary procedural rules and the rights of the individuals who appeared before him. That petitioner repeatedly violated the recordkeeping and bookkeeping obligation of Judges is only one of the many egregious forms of misconduct that the evidence before the Commission proved. Significantly, petitioner’s careless approach to recording and collecting the defendants’ monetary obligations had serious practical consequences, for example, the unjust jailing of an individual for nonpayment of fines and restitution amounts that had, in fact, been paid.

Moreover, petitioner conducted the two described cases with complete disregard for fundamental principles. He sentenced the defendants to jail for purported nonpayment of court-imposed penalties without considering their ability to pay (see, Bearden v Georgia, 461 US 660, 672-673); he wrongly used his power of summary contempt (see, Judiciary Law § 751 [1]), thwarted the defendants’ attempts to exercise their right to counsel, sentenced an individual without a conviction ever having been obtained or recorded, and arbitrarily issued arrest warrants on the basis of casual ex parte, out-of-court discussions.

Having sat on the Bench for 30 years and having been twice censured for inadequate recordkeeping practices, petitioner cannot now credibly plead ignorance of the impropriety of his conduct. Petitioner’s conduct indicates that he is not fit for judicial office and should be removed (see, Rules of Judicial Conduct [22 NYCRR] § 100.2 [a]; Code of Judicial Conduct Canon 2 [A]).

Accordingly, the determined sanction of removal should be accepted, without costs, and petitioner removed from the office of Justice of the Champlain Town Court, Clinton County.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur in Per Curiam opinion; Judge Ciparick taking no part.

Determined sanction accepted, etc.


author: Titone, J.

text:
    [668 NE2d 392, 645 NYS2d 421]
    In the Matter of Sandell Mostow, Respondent, et al., Petitioner, v State Farm Insurance Companies, Appellant.
    Argued April 30, 1996;
    decided June 5, 1996

      POINTS OF COUNSEL

      Rivkin, Radler & Kremer, Uniondale (Evan H. Krinick and Michael P. Versichelli of counsel), for appellant.
    State Farm’s policy clearly and unequivocally limits its liability to any one person to $100,000, regardless of how many persons were injured in the same accident, and any contrary construction would extend coverage beyond the fair intent and meaning of the contract. (Matter of Valente v Prudential Prop. & Cas. Ins. Co., 77 NY2d 894; Moshiko, Inc. v Seiger & Smith, 137 AD2d 170, 72 NY2d 945; Cone v Nationwide Mut. Fire Ins. Co., 75 NY2d 747; Breed v Insurance Co., 46 NY2d 351; Morlee Sales Corp. v Manufacturers Trust Co., 9 NY2d 16; Sanabria v American Home Assur. Co., 68 NY2d 866; United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229; Government Empls. Ins. Co. v Kligler, 42 NY2d 863; State Farm Mut. Auto. Ins. Co. v Westlake, 35 NY2d 587; Meyers & Sons Corp. v Zurich Am. Ins. Group, 74 NY2d 298.)

      Forchelli, Schwartz, Mineo & Carlino, LLP, Mineola (Donald Jay Schwartz of counsel), for respondent.
    I. The disputed provisions of State Farm’s policy are ambiguous. (Wilson Sullivan Co. v International Paper Makers Realty Corp., 307 NY 20.) II. Under New York law, the ambiguity found in the instant policy must be strictly construed against State Farm. (Handelsman v Sea Ins. Co., 85 NY2d 96; Lavanant v General Acc. Ins. Co., 79 NY2d 623; Ambassador Assocs. v Corcoran, 79 NY2d 871; Matter of United Community Ins. Co. v Mucatel, 127 Misc 2d 1045, 119 AD2d 1017, 69 NY2d 777; Miller v Continental Ins. Co., 40 NY2d 675; Cantanucci v Reliance Ins. Co., 43 AD2d 622, 35 NY2d 890; Bronx Sav. Bank v Weigandt, 1 NY2d 545; American Home Assur. Co. v Hartford Ins. Co., 74 AD2d 224; Little v Blue Cross, 72 AD2d 200; United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229.) III. Numerous insurance companies, including State Farm, have eliminated ambiguity by making their per accident limits subject to their per person limits. (Matter of Valente v Prudential Prop. & Cas. Ins. Co., 77 NY2d 894; Federal Ins. Co. v Atlantic Natl. Ins. Co., 25 NY2d 71; Mosca v Ford Motor Credit Co., 150 AD2d 656; Matter of Automobile Ins. Co. v Stillway, 165 AD2d 572; State Farm Mut. Auto. Ins. Co. v Wolff, 926 F2d 755; GEICO v Fetisoff, 958 F2d 1137.) IV. State Farm’s reliance upon the New York Insurance Department’s sum endorsement is misplaced. (Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681; Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins., 72 NY2d 753.) V. The issues raised by State Farm for the first time, unsupported by the record, should not be considered and are, in any event, unpersuasive. (Slater v Gallman, 38 NY2d 1; Flagg v Nichols, 307 NY 96.)

      Kriss, Kriss & Brignola, Albany (Mark C. Kriss of counsel), for New York State Insurance Association and others, amici curiae.

    State Farm’s policy limits its liability to any one person to $100,000 regardless of how many persons were injured in the same accident. (Breed v Insurance Co., 46 NY2d 351; Yankelevitz v Royal Globe Ins. Co., 59 NY2d 928; American Motorists Ins. Co. v Salvatore, 102 AD2d 342; (Matter of Allstate Ins. Co. v Hager, 151 Misc 2d 322; Matter of Automobile Ins. Co. v Stillway, 165 AD2d 572; Freeman v Kiamesha Concord, 76 Misc 2d 915; Blaine Personnel v Lee Org., 76 Misc 2d 110; Ambassador Assocs. v Corcoran, 79 NY2d 871.)
   OPINION OF THE COURT

Titone, J.

The question presented is whether the terms of a policy of insurance providing that the $100,000 per person policy limit "is the amount of coverage for all damages due to bodily injury to one person” and that the $300,000 limits of liability for " 'Each Accident’ is the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident” are ambiguous. Because the policy may be reasonably construed as both limiting recovery to $100,000 per person or alternatively as permitting the full $300,000 policy limits to be apportioned among persons without reference to the per person limit where two or more persons are injured, we conclude that the policy is ambiguous and that its provisions should be construed in favor of the insured.

Petitioners Sandell Mostow and Alan Mostow were involved in an automobile accident in January 1992. After receiving the $10,000 policy limit from the carrier of the other vehicle, petitioners served respondent State Farm with a demand for arbitration under the underinsured motorist endorsement of their policy. The policy provided in a declarations page that where the insured seeks damages for bodily injury caused by an underinsured motorist, the limits of liability are "$100,000 each person, $300,000 each accident.” Policy provisions pertaining to the amount of coverage shown on the declarations page explain that:

"[ujnder 'Each Person’ is the amount of coverage for all damages due to bodily injury to one person. Under 'Each Accident’ is the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident”.

After arbitration, petitioner Sandell Mostow was awarded $190,000, and Alan Mostow was awarded $100,000. The arbitrators concluded that the policy "affords coverage for an under-insured vehicle in the amount of $300,000 in an accident involving bodily injuries to 'two’ people or more and therefore where two or more suffer bodily injury, the limit of $100,000 per person no longer applies.”

Petitioners brought this action to confirm the award pursuant to CPLR 7510. State Farm cross-petitioned pursuant to CPLR 7511 to vacate or modify the award by reducing Sandell Mostow’s recovery to $100,000 on the grounds that the arbitrators had determined a coverage issue in violation of the policy provisions and the rules of the American Arbitration Association and exceeded their authority by awarding $90,000 more than the policy limit.

Supreme Court granted the cross petition and modified the award pursuant to CPLR 7511 (c) (2) by reducing it as requested. As a threshold matter, the court concluded that the arbitrators exceeded the scope of the arbitration agreement by interpreting the policy limit provisions. Turning to a construction of the policy’s terms, the court held that "the insurer’s liability to any one person is limited to $100,000 regardless of how many persons were injured in one accident.”

The Appellate Division reversed and reinstated the deleted portion of the arbitrators’ decision and confirmed the award. The Court determined that the policy provisions "are ambiguous, as they, on the one hand, appear to limit recovery for bodily injury to $100,000 per person, but, on the other hand, also appear to allow a greater per person recovery where, as here, two or more people are injured in the accident.” (216 AD2d 300, 301.) Accordingly, the Court determined that the ambiguity should be construed in favor of the insured and that petitioner Sandell Mostow was entitled to the $190,000 sum awarded by the arbitrators. We granted respondent’s motion for leave to appeal to this Court, and now affirm.

Insurance Law § 3420 states that all automobile policies insuring against personal injury or property damage must, at the insured’s option, provide for Supplementary Uninsured Motorist (SUM) insurance coverage in terms that are "equally or more favorable to the insured” (subd [a]) than the statutory language, which provides:

"Any such policy shall, at the option of the insured, * * * provide supplementary uninsured motorists insurance for bodily injury * * * subject to a maximum of one hundred thousand dollars because of bodily injury to or death of one person in any one accident and, subject to such limit for one person, up to three hundred thousand dollars because of bodily injury to or death of two or more persons in any one accident” (Insurance Law § 3420 [f] [2] [A] [emphasis added]).

By rendering the $300,000 per accident maximum "subject to” the per-person limit of $100,000, the Insurance Law makes clear that no injured person may recover greater than $100,000 under the provision.

The policy at issue here does not contain any language deeming the $300,000 per accident limit "subject to” the per-person limit. The absence of such language, coupled with the policy provision stating that the $300,000 limit for " 'Each Accident’ is the total amount of coverage for all damages due to bodily injury to two or more persons in the same accident” renders the policy language susceptible of two reasonable interpretatians. First, the policy may be reasonably construed by an insured to limit any injured person to a recovery of $100,000, regardless of the number of injured claimants. Alternatively, the policy may be construed to provide that $100,000 is available where bodily injury damages are owed only to "one person,” but that when two or more persons are injured in an automobile accident, the full $300,000 per accident policy limit is available.

The Insurance Law does not bar the latter construction which would permit, as here, an injured claimant to recover over $100,000 where more than one person makes a claim under this endorsement because it would merely provide coverage that is "more favorable to the insured” than the statutory provisions (see, Insurance Law § 3420 [f] [2] [A]). Thus, both constructions of the policy are reasonable and not contrary to law. Because the policy may be reasonably interpreted in two conflicting manners, its terms are ambiguous.

We are not alone in concluding that this policy language is ambiguous. The courts of at least four other jurisdictions have reached the same conclusion in construing essentially similar policy language that lacked any terms indicating that the available per accident coverage was subject to the stated per-person limits (see, Nichols v State Farm Fire & Cas. Co., 175 Ariz 354, 857 P2d 406 [1993]; Farm Bur. Mut. Ins. Co. v Winters, 248 Kan 295, 806 P2d 993 [1991]; Andrews v Nationwide Mut. Ins. Co., 124 NH 148, 467 A2d 254 [1983]; Haney v State Farm Ins. Co., 52 Wash App 395, 760 P2d 950 [1988]).

Given that our precedent establishes that ambiguities in an insurance policy should be construed in favor of the insured and against the insurer, the drafter of the policy language (Matter of United Community Ins. Co. v Mucatel, 69 NY2d 777, 779, affg on opn reported at 127 Misc 2d 1045; Hartol Prods. Corp. v Prudential Ins. Co., 290 NY 44, 49), the construction favoring petitioner in this case, afforded by a fair interpretation of the policy, prevails (United States Fid. & Guar. Co. v Annunziata, 67 NY2d 229, 232). Thus, the Appellate Division properly declined to reduce the award of $190,000 to petitioner Sandell Mostow to $100,000 as respondent requested.

Although the common understanding of the insurance industry and the legal profession may well be that the total per accident coverage is subject to the per-person limits — i.e.— classic "split limit” coverage — the test to determine whether an insurance contract is ambiguous focuses on the reasonable expectations of the average insured upon reading the policy (Buckner v Motor Vehicle Acc. Indent. Corp., 66 NY2d 211, 213-214) and employing common speech (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390, 398).

Additionally, while the Superintendent of Insurance has recently promulgated a regulation mandating that all policies issued or renewed after October 1, 1993 include a SUM endorsement that employs language identical to that contained in policy provisions at issue here (see, 11 NYCRR 60-2.3 [e]), that regulation does not purport to provide guidance on the construction of this policy or otherwise demonstrate that the policy at issue is free from ambiguity (see, City of Albany v Standard Acc. Ins. Co., 7 NY2d 422, 430). Indeed, this dilemma could have been avoided had the insurer simply drafted the policy to include the "subject to” language employed in Insurance Law § 3420 (f) (2) (A).

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith, Levine and Ciparick concur.

Order affirmed, with costs.

      . The parties did not dispute at the Appellate Division, and do not raise here, Supreme Court’s determination that the arbitrators exceeded the scope of the arbitration agreement by construing the limits of liability under the policy. Given that the parties have charted their own course by waiving that claim, the sole question presented for our review is one of pure contract interpretation.

      . The mandatory SUM endorsement is not applicable to this accident because the policy was not issued or renewed after October 1993.