Newsletter - June 1999 Gregory Read, Esq. Fredric F. Azrak, Esq. The Millennium came early to Warren, Michigan - in 1995 to be exact. When customers at the Produce Place, a gourmet grocery store, started using credit cards with expiration dates ending in "00", the computer system went to Y2K hell... Time Magazine, April 19,1999. Can your customers sue you or your company if the Y2K problem affects your business? Do you have an adequate defense to protect your company? Can you successfully defend yourself by blaming your suppliers? Have you placed your company at risk of financial loss? What rights do you have as a consumer? As the Millennium approaches, the general public is becoming increasingly aware of the Y2K problem and its potential threat to business and financial markets. Unfortunately, the Y2K deadline is approaching for all of us -and there can be no extension of time. The Y2K countdown is not merely a computer consultant's millennium conspiracy dream for a higher income bracket in 1999. In his State of the Union message earlier this year, President Clinton reminded us that even at this late date, the "Millennium Bug" remains as a "big, big problem." And, as big as this problem might be, it may have its most disruptive impact not on the AT&T's and Merck's of this world, but on the smaller, often mutually dependent commercial and manufacturing firms which operate in complex networks of demand, distribution and supply. Ultimately you, the consumer, are affected. As we have now been informed by popular magazines and news shows, the Y2K problem took root over thirty years ago, when computer technology was less sophisticated, and disk storage space was costly. As earlier computer programmers worked to create an automated "digital" economy with main frame monsters and silicone circuits, they saved dollars by compressing calendar data entries from eight to six digits, and eliminating all reference to the current century. Thus, January 1, 1964 might be entered in software programming as 640101. As a result, today's experts fear that in a little over six months a vast number of data processing systems will go schizophrenic or, worse yet, catatonic when they "celebrate" their digital new year as January 1, 1900. (Picture the customer at the ATM machine who finds a zero balance in his account on Monday, January 4, 2000 as the program reflects his opening balance date as January 4, 1900.) The potential problem extends not only to computers, however, but to millions of labor saving devices which contain embedded microprocessors to trigger time and date based interval functions, including cellular phones, security devices and climate control units. Transportation, shipping and financial networks may be most at risk. Major efforts have been underway to predict, control and legally limit Y2K exposure and damage. It is not enough to have your own home or business comply, however, if you depend on others in various chains of product supplies and distribution. An "upstream" product supplier who is not "Y2K" compliant" can create ripple effects down the line. An important client or customer who is slated to be a Y2K victim may create other victims. As the New Year approaches, it is vital for each business to take stock of its Y2K risks and remedies and to develop its own Y2K plan. At minimum, it is important to take the following steps: Test and correct all internal computer processes and business machines. Review and analyze your business leases and contracts. It is essential to estimate the financial risks of contract non-performance. In addition, who will be legally responsible if Y2K failures occur? What legal remedies and defenses will exist for each party to a contract if Y2K disrupts timely performance. Seek written assurances from your vendors and suppliers as to Y2K compliance. Such assurances may be of help in the future if it is necessary to legally assign financial losses. Review your insurance policies. Will your current insurance policy or policies cover losses related to the "Millennium Bug"? Canvas and plan for the use of alternative suppliers and vendors. It is important to turn the Y2K problem into one of prevention rather than cure. At this late date, internal remediation and quality control are only half the battle. The task of reducing the risks of legal exposure and financial losses demands that each office or business engage in a thorough process of document review, complemented by a well-implemented plan for contacts and assurances from vendors, insurers, suppliers and clients. Azrak & Associates, L.L.C. can provide certifications for use with your suppliers in order to provide a first line of defense; in the event the Y2K issue affects your responsibilities to your customers and clients. As a second line of defense, a current review of your contracts, marketing documents invoices and purchase orders can be undertaken. This consultation should include evaluation of your potential liability under the Uniform Commercial Code and consideration of the use of liquidated damages and force majeure clauses within pertinent documentation. No one is aware of just how large a problem the Y2K Bug will become, but by proper planning of your legal documentation, you can avert potential disaster. Alfred V. Gellene, Esq. Fredric F. Azrak, Esq. Peter V. McArthur, Esq. Just when you thought it was safe to venture out on the streets and highways of our fair state, recent changes to the auto insurance laws have created a minefield for the unwary. As a result, you or a member of your family could be left without adequate protection for injuries suffered in an automobile accident. You or your family could be left without a means to recover a damage award for an injury, or, nearly as bad, you could be led through an overgrown forest of health care regulations which might limit medical coverage for treatment you need. Most people are now familiar in a general way with the 'no fault" auto reforms of the eighties which required that all drivers of automobiles carry personal injury insurance, otherwise known as PIP, to cover injuries suffered in car accidents. This law was revolutionary because it meant that victims of injuries would no longer have to wait for the judicial resolution of fault issues for medical bills to be paid. Those bills were paid regardless of fault by the victim's own insurance policy, or with some exceptions, if the victim had no policy, the policy of either another person involved in the accident or a family member who shared a residence with the victim. Although gaps in coverage existed (pedestrians run over by commercial vehicles or where no one had insurance), the goal of near universal medical coverage for injuries in automobile accidents was largely met. The purpose of the "no fault" coverage was meant to reduce auto insurance rates through the reduction of litigation. At the same time, limitations on the right to sue for damages were introduced for the same reasons. The logic was "clear the court system of minor cases and insurance costs will go down". These reforms were disappointing. The law was amended more than once to increase the "tort (lawsuit) threshold" limitations which were based on the monetary amount of treatment received by the victim of auto negligence. Finally, within the last several years a new type of tort threshold limitation was introduced, the so called "verbal" threshold". This new limitation prohibited suits for pain and suffering (non-economic losses) experienced in accidents unless the victim was seriously injured. "Seriously" was defined in a very limited way to include such things as fractures, disfiguring scars, death or substantial serious limitation, permanent or temporary, of the use of any bodily system. The temporary limitations were required to exist for a period of 90 days before the right to sue would arise. These limitations were to be placed in everyone's insurance policies unless they chose to "opt out" by selecting a "no threshold" policy. The bottom line was that many people injured in accidents sadly discovered that they could not recover for those injuries. People were often told that they would have to endure a lifetime of suffering without compensation unless they could show that the pain was so severe that it "substantially" interfered with their life. Effective March 22, 1999, new changes in the law make these restrictions even more harsh. The category of temporary limitations due to an accident was eliminated entirely, regardless of the intensity of the pain suffered. Fractures must be "displaced" in order to overcome the threshold. Injuries are considered permanent only when a physician certifies under oath and under penalty of perjury that the injury has not healed to function "normally" and will not heal to function normally with further medical treatment. Evidence of permanent injury will only be considered when confirmed by "valid" tests selected or approved by the Commissioner of Insurance. To add insult to injury, the person who has just rear-ended your car and caused you or your loved ones to be carted off to the hospital, or worse, may not have liability insurance at all. A new provision of the insurance law allows persons to buy what is called a "basic" policy. Until now, every driver was required to carry a minimum policy of $15,000. This limited policy requirement could be small consolation to anyone suffering a very serious injury, but at least it was something. Now, an owner of the "basic" policy need have no liability insurance at all. A $10,000 policy is offered as an "option". If a person has no insurance and owns no property, any damage award against them is essentially uncollectable! As an additional tap for the unwary, a "basic" policy will carry only $15,000 of PIP coverage per person. $250,000 of coverage is reserved for medical treatment of extremely serious injuries, but only at the point of initial treatment. Transfer to another facility reduces the coverage back to the maximum of $15,000. As if this was not enough, anyone injured in an auto accident and covered by PIP benefits will be subject to new stringent regulations about what treatments may be given, for how long and by what providers. If you thought your HMO was tough, wait until you are subject to the rulings of an auto insurance company clerk with little or no medical education barring you from the medical treatment you want and probably need. Needless to say, this jungle of new laws requires a careful consideration of your auto insurance options. There is hope for those with enough information and the wisdom to choose the proper coverage that is available. Elimination of the verbal threshold in your policy and review of your uninsured and underinsured coverage levels are two of them. The legislature has given new meaning to the phrase "let the buyer beware" in the area of auto insurance. Don't let yourself get caught short. Review your policy with your insurance agent as soon as possible or call Azrak & Associates, L.L.C. for a consultation. Please See Our Disclaimer As Contained Within This Website 627 Newark Pompton Plains Turnpike Pompton Plains, NJ 07444 Office: (973) 839-9062 || Fax: (973) 839-2743 Email: Lawyers@AzrakLaw.com