A New York court stopped a self-insurance trust’s last-minute attempt to widen its lawsuit against Arthur J. Gallagher & Co. over workers’ comp claims.
On August 6, 2025, the Appellate Division, Second Department, sided with Gallagher and its affiliates – Gallagher Bassett Services and Risk Management Planning Group – in a dispute that’s been ongoing since 2017. New York Bus Operators Compensation Trust (NYBOCT) accused these insurance professionals of mishandling a workers’ compensation claim, which NYBOCT said led its excess insurer, American Home Assurance Co., to deny coverage and left the trust facing significant costs.
If you work in insurance, you know how critical claims management is. NYBOCT’s lawsuit started with broad allegations: breach of contract, breach of fiduciary duty, and fraud. Early in the case, the court dismissed everything except the breach of contract claim, setting the stage for a narrower but still contentious fight.
Discovery was thorough, with twelve depositions and a mountain of documents exchanged. By August 2019, discovery had wrapped up. But NYBOCT wasn’t finished. The trust tried to amend its complaint, aiming to add several individuals as new defendants and introduce new claims for damages under the faithless agent doctrine – a legal concept holding agents liable if they act against their client’s interests.
The trial judge wasn’t convinced. In a decision dated July 21, 2021, the court said NYBOCT waited too long and didn’t offer a good reason for the delay. Allowing the trust to change its legal strategy at this late stage, the judge said, would be unfair to the defendants, who had already spent years preparing for the original claims.
NYBOCT appealed, but the appellate court agreed with the trial judge. The panel made it clear that while courts generally allow changes to complaints, they’re much less likely to do so after discovery is complete – especially if the party seeking changes can’t explain the delay. The judges also found that NYBOCT’s new claims lacked merit.
Notably, the decision didn’t get into the weeds of insurance policy language. Instead, it focused on the process and whether both sides were treated fairly. For insurance professionals, the lesson is straightforward: handle claims with care, keep records tight, and don’t expect to shift your legal approach late in the game.
This ruling isn’t final yet and could still be revised before it’s published in the official reports. But for now, it’s a timely reminder for the industry: stay proactive, keep your processes clean, and remember that courts value efficiency and fairness above last-minute surprises.
