National Convention Services, L.L.C. v. Applied Underwriters Captive Risk Assurance Co. (239 F. Supp. 3d 761, 2017)

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

This dispute arises out of a complicated insurance scheme executed by several affiliated insurance carriers, and their other affiliates, that was allegedly designed to circumvent the insurance laws of, among other states, New York. It involves three allegedly interconnected contracts that, according to the plaintiffs, should be treated as one interdependent transaction: First, a workers’ compensation insurance contract between a licensed insurer and an insured; second, a “reinsurance” contract between the licensed insurer and an affiliated “reinsurer”; and third, a “reinsurance and profit sharing” contract between the reinsurer and the insured. The plaintiffs allege that the “reinsurance and profit sharing” contract is not actually a separate contract for reinsurance and profit sharing, but instead is an illegal contract of insurance that modifies the material terms of the workers’ compensation insurance contract issued by the licensed insurer. The plaintiffs also claim that the “reinsurance and profit sharing” contract is materially misleading, and leads insureds unwittingly to buy back the very risk that they had yielded to the licensed insurer.

The defendants’ insurance scheme was so inventive and novel that it has been patented. In spite of the patent, the scheme has drawn the scrutiny of the insurance regulators of at least three states — California, Wisconsin, and Vermont — which have each found that the scheme did in fact violate the insurance laws of those states.

The defendants are Applied Underwriters Inc. (“Applied Underwriters”), Applied Underwriters Captive Risk Assurance Company, Inc. (“AUCRA”), Applied Risk Services Inc. (“ARS”), Applied Risk Services of New York Inc. (“ARSNY”), Continental Indemnity Company (“Continental Insurance”), and California Insurance Company (“California Insurance”). The plaintiffs, on behalf of a purported class, are National Convention Services, LLC, and Exserv, Inc. (the “NCS plaintiffs”); and Madjek Construction, Inc., R.D.D., Inc., and R.D.D. Management, Inc. (the “RDD plaintiffs”). The plaintiffs have brought claims against Continental Insurance and California Insurance for breach of contract (Count III); and against all of the defendants for rescission (Count II), violation of N.Y. Gen. Bus. L. § 349 (Count IV)) and unjust enrichment (Count V).

The NCS plaintiffs brought this action in the New York State Supreme Court, New York County. After the defendants removed the action to this Court pursuant to 28 U.S.C. §§ 1332 and 1441, the NCS plaintiffs filed an amended - class action complaint, in which the RDD plaintiffs joined. The RDD plaintiffs had previously filed their own action against the defendants in the New York State Supreme Court, New York County.

The defendants have moved to dismiss the Second Amended Complaint pursuant to Rule- 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, the defendants’ motion to dismiss is granted in part and denied in part.

I.

In deciding a motion to dismiss pursuant to Rule 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiffs favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). The Court’s function on a motion to dismiss is “not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). The Court should not dismiss the complaint if the plaintiff has stated “enough facts' to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

While the Court should construe the factual allegations in the light most favorable to the plaintiff, “the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions.” Id.; see also Springer v. U.S. Bank Nat’l Ass’n, No. 15-cv-1107 (JGK); 2015 WL 9462083, at *1 (S.D.N.Y. Dec. 23, 2015). When presented with a motion to dismiss pursuant to Rule 12(b)(6), the Court may consider documents that are referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiffs possession or that the plaintiff knew of when bringing suit, or matters of which judicial notice may be taken. Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002); see also Springer, 2015 WL 9462083, at *1.

II.

The allegations in the Second Amended Complaint are accepted as true for the purposes of this motion to dismiss.

A.

Workers’ compensation is a form of insurance that provides wage replacement and medical benefits to employees injured during the course of their employment. SAC ¶ 30. New York has enacted a comprehensive regulatory scheme for workers’ compensation that shifts the risk of on-the-job injuries from employees to employers. SAC ¶ 30. In turn, under the New York scheme, employers may purchase workers’ compensation insurance from insurance carriers that are licensed to market and sell insurance in New York. SAC ¶35.

Pursuant to the Workers’ Compensation Law (“WCL”) §§ 10 and 50, all employers must secure the payment' of workers’ compensation benefits for their employees, SAC ¶ 30. The WCL provides that employers may secure the payment of workers’ compensation for their employees by purchasing a workers’ compensation policy from any insurance carrier authorized to transact, such business in New York. SAC ¶31 (citing WCL § 50(2)). An insurance carrier must be licensed by the New York Department of Financial Services (the “DFS”) in order to issue workers’ compensation insurance in New York. SAC ¶¶ 9, 35.

The New York Insurance Law (“NYIL”) regulates the provision of workers’ compensation insurance. SAC ¶ 3. For example, under the NYIL, all workers’ compensation insurance policy forms, rates, rating plans, rating rules, and-rate manuals must be filed with and approved by the DFS. SAC ¶2. An insurance carrier may not vary an already approved rate or policy form without prior approval from the DFS. SAC ¶¶ 3-4, 33-34.

Insurance carriers offer two main types of workers’ compensation policies: guaranteed cost (“GC”) policies, and retrospective rating plan (“RRP”) policies. A GC policy essentially fixes insurance premiums at the outset, meaning that the actual cost of the claims against the policy will not cause premiums to fluctuate during the life of the policy. SAC ¶¶ 35-38, 40-41. Premiums under a GC policy may fluctuate depending upon certain other factors, such as the size of an employer’s workforce, and the injury risks associated with a particular field of business, but generally give an employer a degree of certainty as to the cost of the insurance policy. SAC ¶¶ 36-38. By contrast, a RRP policy is loss sensitive, meaning that premiums can fluctuate during the life of the policy depending on the actual cost of the claims (typically, the greater the actual cost of the claims, the greater the premiums owed). SAC ¶¶35, 39-40. As compared to large employers, small-to-medium size employers are alleged to prefer GC policies because such employers require accurate estimates of future costs and are materially harmed by increases in- costs, See SAC ¶ 94.

B.

The defendants are alleged to be members of the Berkshire Hathaway Group, and are also • alleged to be affiliated with each other. SAC ¶ 22; see also SAC, Ex; D (In re: Shasta Linen Supply Inc.) at 9-10 (discussing the complicated organizational structure of the defendants).

Continental Insurance is an Iowa insurance company, with its headquarters and principal place of business in Nebraska. SAC ¶20. California Insurance is a California insurance company, with its principal place of business in Nebraska. SAC ¶ 21. During the relevant period, the Second Amended Complaint alleges that both Continental Insurance and California Insurance were doing business in New York as licensed insurance carriers issuing insurance policies, including policies for workers’ compensation insurance. SAC ¶¶ 20-21.

Continental Insurance and California Insurance are wholly-owned subsidiaries of North American Casualty Company, which is not .named as a party in this action. SAC, Ex. D at 9-10. North American Casualty Company is a wholly owned subsidiary of Applied Underwriters, a Nebraska financial service corporation, with its principal place of business in Nebraska. SAC, Ex. D at 10. Applied Underwriters provides payroll processing services, and solicits and underwrites the sale of workers’ compensation insurance to small-to-medium size employers through its affiliated insurance companies. SAC ¶ 16.

Applied Underwriters is also the parent company of AUCRA and ARS. SAC, Ex. D at 9-10. AUCRA is an insurance company that, during the relevant period, was domiciled in the British Virgin Islands. SAC ¶ 17. AUCRA was not a licensed insurer in New York. SAC ¶ 9. AUCRA is currently organized under the laws of Iowa, with its principal place of business in Nebraska. SAC ¶ 17. ARS is a Nebraska corporation, with its principal place of business in Nebraska. SAC, Ex. D at 11; see also SAC ¶ 18. ARSNY is a New York corporation that does business in New York. SAC ¶ 19, 22.

The plaintiffs allege that the defendants are under common ownership and control, that they share common officers and directors, and that they use the same office space. SAC ¶ 22; see also SAC, Ex. D at 11 (finding of the California Insurance Commissioner that “[t]he Boards of Directors for [California Insurance], [Applied Underwriters], and AUCRA are identical in composition”).

C.

The plaintiffs claim that the defendants used their corporate structure to thwart the NYIL, and, in the process, willfully violated many of its sections. See, e.g., SAC ¶ 42. Each defendant allegedly played a role in effecting the scheme.

As the first step in the alleged scheme, Continental Insurance and California Insurance marketed and sold workers’ compensation GC policies that had been filed with, and approved by, the DFS (the “Approved GC policies”). SAC ¶¶8-9; see also SAC, Ex. B (Workers’ Compensation and Employer’s Liability Insurance Policy Issued by Continental Insurance to the RDD Plaintiffs). The plaintiffs allege that the Approved GC policies, as stand-alone policies, gave the appearance of compliance with the NYIL. SAC ¶¶8-9. The Approved GC Policies contained fixed-cost premiums rates, see SAC ¶ 13, and were effective for one-year periods, an allegedly standard term in a GC workers’ compensation policy, SAC ¶¶ 10, 60. The Approved GC Policies provided that:

This policy includes at its effective date the Information Page and all endorsements and schedules listed there. It is a contract of insurance between you (the employer named in Item 1 of the Information Page) and us (the insurer named on the Information Page). The only agreements relating to this insurance are stated in this policy. The terms of this policy may not he changed or waived except by endorsement issued by us to be part of this policy. SAC ¶ 47 (emphasis added).

The plaintiffs allege that the Approved GC Policies were a sham designed to conceal from the DFS the real terms of unapproved insurance policies that the defendants were marketing and selling, which were set forth in a separate document. SAC ¶¶ 42, 44. The plaintiffs allege that purchase of the Approved GC Policies offered by Continental Insurance and California Insurance was conditioned on an insured’s entrance into a “Profit Sharing Plan.” SAC ¶¶ 9, 48. The Profit Sharing Plans were known by a variety of names, including “SolutionOne” and “Equity-Comp.” SAC ¶ 48.

As part of the Profit Sharing Plan, the insured had to agree to a “Reinsurance Participation Agreement” (the “RPA”) issued by AUCRA (not Continental Insurance or California Insurance) that allegedly modified the material terms of the Approved GC Policy. SAC ¶9; see also Ex. C (The RPA Issued by AUCRA to the NCS plaintiffs). The RPA stated that AUCRA had entered into a “Reinsurance Treaty ... with California Insurance ... and, through its pooling arrangement with other affiliates of Applied Underwriters, Inc., [ijncluding, but not limited to Continental [Insurance],” and that the RPA’s purpose was to allow the insured party to “share [i]n the underwriting results of the Workers’ Compensation policies of Insurance Issued for the benefit of the [Insured] by the Issuing Insurers.” SAC, Ex. C at 1.

The RPA was not filed with, or approved by, the DFS; indeed, the plaintiffs claim that the DFS could not have approved the RPA (or an Approved GC Policy as modified by the RPA) because the RPA, on its face, violated numerous sections of the NYIL, and the regulations promulgated thereunder. SAC ¶¶ 5-8, GO-62. The plaintiffs claim that the RPA was not an endorsement to the Approved GC Policy, SAC ¶ 49, nor could it be an instrument of reinsurance because an instrument of reinsurance is by definition unconnected to the original insured, SAC ¶ 75.

The plaintiffs allege that the RPA superseded the fixed-cost premium rates in the Approved GC Policies with loss sensitive rates. SAC ¶ 43. The plaintiffs also allege that the RPA changed the effective period of an Approved GC Policy from one year to three years, and that the RPA imposed additional failure-to-renew costs that in-centivized insureds to renew the RPA beyond the three-year period. SAC ¶¶ 60-61. The plaintiffs allege that the RPA imposed onerous early cancellation penalties. SAC ¶ 62. The plaintiffs allege that cancellation of the RPA would result in cancelation of the Approved GC Policy. SAC ¶ 11.

The California Insurance Commissioner has reviewed an allegedly substantially identical insurance package issued by the defendants to a California-insured where the insured signed an approved (under California law) GC workers’ compensation insurance policy issued by California Insurance, and an RPA issued by AUCRA. See SAC, Ex. D; see also SAC ¶¶ 5, 97. After an adversarial hearing during which California Insurance had the opportunity to present evidence, including witness testimony, the California Insurance Commissioner found that “where the RPA and the guaranteed cost policy differ, the RPA terms supplant those of the guaranteed-cost policy.” SAC, Ex. D at 55.

The plaintiffs allege that, in marketing the Profit Sharing Plan to employers, the defendants mischaracterized the RPA as a “reinsurance” and a “profit sharing” instrument — when it was in reality an insurance contract that modified the terms of the Approved GC Policy — to escape regulatory scrutiny, and to mislead customers. SAC ¶¶ 5-6, 51-52, 55. The plaintiffs claim that the RPA obligates an insured to fund a “cell,” with the amount of funding dependent on a complex formula that takes into account “loss experience” (in other words, the cost of the insured’s claims filed against the Approved GC Policy). SAC ¶¶ 56-57. The plaintiffs allege that, although the defendants represented at the outset that they will return “excess premium and fees” at the conclusion of the Profit Sharing Plan, the Plan contains numerous caveats and delaying provisions, and no insured has received a distribution or return of premiums. See SAC ¶ 63-64; see also SAC, Ex. D at 35 (finding of the California Insurance Commissioner that, as of June 20, 2016, “AUCRA has not made any profit sharing distributions” to any insured party).

The plaintiffs allege that, to explain the transaction to customers, the defendants provided customers with the Approved GC Policy along with marketing materials (consisting of a “Program Summary & Scenario,” a “Program Proposal,” and a “Request to Bind Coverages and Services”) describing the RPA, but not the RPA itself. SAC ¶¶ 81, 83; see also SAC, Ex. E (Request to Bind Coverages and Services provided to the RDD plaintiffs); SAC, Ex. F (Workers’ Compensation Program Summary & Scenario provided to the RDD plaintiffs); SAC, Ex. G (Workers’ Compensation Program Proposal & Rate Quotation provided to the RDD plaintiffs). As such, a customer of an Approved GC Policy could not review the final terms of the RPA (to which the customer had to agree in order to receive coverage under an Approved GC Policy) until after the customer had agreed in advance to enter into the Profit Sharing Plan by signing the Request to Bind Coverages and Services. SAC ¶¶ 53, 71, 81; see also SAC, Ex. E. The Program Proposal states that the “Profit Sharing Plan is a reinsurance transaction separate from the guaranteed cost policies,” and that the “Profit Sharing Plan is not a filed retrospective rating plan or dividend plan.” See SAC, Ex. G at 3. The plaintiffs claim that this statement was false and misleading because the RPA in reality altered the terms of the Approved GC Policy, which a customer would not understand based upon reviewing the marketing materials, or even the RPA itself. See SAC ¶¶ 50-51, 65, 79-80, 86; see also SAC, Ex. D at 28-29 (finding of the California Insurance Commissioner that an insured that signed a GC policy issued by California Insurance, and a Request to Bind Coverages and Services issued by Applied Underwriters, but later refused to sign an RPA issued by AUCRA, would lose insurance coverage under the GC policy).

, The plaintiffs allege that, even though the marketing materials disclosed cost estimates for the Profit Sharing Plan, a customer could not accurately determine the likely costs associated with the Profit Sharing Plan based upon those estimates. SAC ¶¶ 87-88. On this point, the California Insurance Commissioner found that:

[Applied Underwriters’] Sales department distributes a Program Summary & Scenario to brokers and their clients. The Scenarios demonstrate the minimum and maximum three-year program costs and estimate the final program costs based on ultimate claims costs. The Scenarios chart the single-year prorated amounts a participant could expect to pay— But this chart is misleading. EquityComp is sold as a three-year program and not three one-year programs. Accordingly, the single-year table does not represent the one-year cost of the program. In fact, it is the employer’s three-year loss history that ultimately guides the cost of the program. SAC, Ex. D. at 27.

The plaintiffs allege that the defendants’ scheme broadly and aggressively targeted small-to-medium size businesses because such businesses are less sophisticated than larger companies, and would be susceptible to agreeing to an Approved GC Policy, coupled with the RPA, without appreciating the ramifications of the decision. SAC ¶¶ 65, 77, 82; see also SAC, Ex. D at 22-23. Indeed, the Plan Proposal states that “Applied Underwriters and its affiliates” established Profit Sharing Plan cells that are “designed specifically for our small and midsized insureds.” SAC, Ex. G at 5. The plaintiffs allege that the defendants marketed the Profit Sharing Plan nationally with standardized documents on a take-it- or-leave-it basis. SAC ¶¶ 81-83.

The plaintiffs allege that the defendants operated the Profit Sharing Plan as a single business unit without regard to their corporate form, and that the distinction between the Approved GC Policy and the RPA as distinct contracts issued by distinct entities is a fiction. SAC ¶ 22. Applied Underwriters allegedly sent notices of cancellation to holders of Approved,GC Policies issued by Continental Insurance, or California Insurance, when the holder violated the terms of the RPA , issued by AUCRA, even when the holder had not violated the terms of the Approved GC Policy. SAC If 23. ARS prepared the Program Summary & Scenario and the Program Proposal on behalf of Applied Underwriters. See’ SAC, Exs. F-G. ARSNY allegedly served as the billing agént on behalf of AUCRA, Continental Insurance, and California Insurance. SAC ¶22. The Program Proposal provided that Applied Underwriters used an “integrated billing system” to assess charges under the Approved GC Policy and the RPA — accordingly, payments due on the Approved GC Policy and the RPA appeared in a single line item. SAC, Ex. G at 5; see also SAC, Ex. D at 30.

Applied Underwriters has patented the scheme at issue. See SAC, Ex. A (“Reinsurance Participation Plan”, Patent No. 7,908,157 Bl), The patent explains that:

One of the challenges of introducing a fundamentally new premium structure into the marketplace is that the structure must be approved by the respective insurance departments regulating the sale of insurance in the states in which the insureds operate. In the United States, each state has its own insurance department and each insurance, department must give its approval to sell insurance with a given premium plan in its respective jurisdiction.- Getting approval can be extremely time consuming and expensive, particularly with novel approaches that a department hasn’t had experience with before. Also, many states require insurance companies to only offer small sized and medium sized companies a Guaranteed Cost plan, without the option of a retrospective plan. In part, this is because of governmental rules and laws that regulate the insurance industry. Disclosed herein is a reinsurance based approach to providing non-linear retrospective premium plans to insureds that may not have the option of such a plan directly. SAC, Ex. A at 6.

The state insurance departments of California, Vermont, and Wisconsin have concluded that the defendants’ marketing and sale" of a guaranteed cost plan compliant with the laws of those respective states, coupled with the RPA, does not comply with the insurance laws of those respective states. See SAC, Ex. D at 53-63 (determination by the California Insurance Commissioner that the RPA is a collateral agreement that modifies the underlying guaranteed cost policy in violation of California law); SAC, Ex. I (Vermont Stipulation and Consent Order) at 5-11 (ordering Continental Insurance, Applied Underwriters, ARS, and AUCRA to cease marketing and selling the RPA, and to pay restitution to policyholders that entered into Profit Sharing Plans); SAC,' Ex. J (Wisconsin Office of the Commissioner of Insurance Orders) (ordering ARS and Continental Insurance to cease-and-desist marketing and selling the Profit Sharing Plans); see also SAC, Ex. H (California Insurance Commissioner Notice of Hearing for Cease & Desist Orders).

D.

The NCS plaintiffs are New York corporations, with their principal places of business in New York, that provide services in connection with exposition and trade shows throughout the United ■ States. SAC ¶ 14. The RDD plaintiffs are also New York corporations, with their principal places of business in New York. SAC ¶ 15.

Around October 2012, the NCS plaintiffs began requesting quotes from workers’ compensation insurance carriers. SAC ¶101. The defendants proposed that the NCS plaintiffs enter into a Profit Sharing Plan, and provided the plaintiffs with Approved GC Policies issued by Continental Insurance, and California Insurance, along with marketing materials describing the Profit Sharing Plan. SAC ¶ 101-02; see also Coles Deck, Ex. 1 (Workers’ Compensation Program Proposal & Rate Quotation provided to the NCS plaintiffs); Coles Deck, Ex. 3 (Workers’ Compensation Program Summary & Scenario provided to the NCS plaintiffs). The NCS plaintiffs agreed to a Request to Bind Coverages and Services that bound them to accept the terms of the Profit Sharing Plan, and were allegedly only then provided with the actual RPA. SAC ¶ 102; see also SAC, Ex. B. The plaintiffs allege that their premiums under the Profit Sharing Plan far exceeded the premiums set forth in the Approved GC Plan. SAC ¶¶ 105-10. For example, while the annual estimated cost of coverage under the Approved GC Policy for the 2014-2015 term was $420,325, the premiums for January 2015 alone were $683,268. SAC ¶ 109. The NCS plaintiffs refused to pay their January 2015 premiums, and the defendants canceled their insurance coverage on March 22, 2015. SAC ¶¶ 111-12. The defendants have since demanded that the NCS plaintiffs pay $1.59 million in outstanding premiums, plus a cancellation fee of nearly $1 million. SAC ¶ 112.

The RDD plaintiffs’ experience with the defendants is alleged to be substantially similar to that of the NCS plaintiffs. In November 2009, the RDD plaintiffs’ insurance broker obtained quotations for workers’ compensation insurance, and presented the RDD plaintiffs with the defendants’ marketing materials describing the Profit Sharing Plan. SAC ¶ 115; see also SAC, Exs. E-G. The RDD plaintiffs agreed to participate in the Profit Sharing Plan on December 31, 2009. SAC ¶ 116; see also Coles Deck, Ex. 2 (The RPA Issued by AUCRA to the RDD plaintiffs). In April 2012, the defendants began charging the RDD plaintiffs substantially higher premiums, as compared to prior months. SAC ¶¶ 120-21. In early July 2012, the RDD plaintiffs notified Applied Underwriters that it had purchased insurance from another insurance carrier effective July 1, 2012. SAC ¶ 122. On July 18, 2012, Continental Insurance canceled the Approved GC Policy issued to the plaintiffs even though the RDD plaintiffs had allegedly paid the premiums due on that Approved GC Policy. SAC ¶ 122. As a consequence, the RDD plaintiffs allege that they may have no workers’ compensation coverage with respect to any employee claims that arise from events that took place between December 31, 2011, and August 2, 2012. SAC ¶ 123.

On December 27, 2013, Applied Underwriters demanded that the RDD plaintiffs pay an additional $95,368.54 incurred after the cancellation of the Profit Sharing Plan. SAC ¶ 124. The RDD plaintiffs allege that the defendants have not provided an explanation for the additional charge. SAC ¶ 126.

HI.

The parties agree that the Approved GC Policies, as contracts of insurance, must be governed by New York law. See NYIL § 3103(b). The RPAs provide that they are governed by Nebraska law. SAC, Ex. C ¶ 16. However, the parties agree that New York law should apply to all of the issues in this dispute, and New York law will be applied in accordance with their agreement. Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 (2d Cir. 1997) (“[W]here the parties have agreed to the application of the forum law, their consent concludes the choice of law inquiry.”); see also Rolon v. U.S. Amada, Ltd., No. 95 Civ. 6231 (LAP), 1997 WL 724798, at *2 (S.D.N.Y. Nov. 18, 1997). In any event, the parties agree that, for the common law claims, there is no conflict between Nebraska and New York law, and that the N.Y. Gen. Bus. L. § 349 claims must be governed by New York law. See 433 Main St. Realty, LLC v. Darwin Nat’l Assurance Co., No. 14-CV-587 (NGG), 2014 WL 1622103, at *2 n.2 (E.D.N.Y. Apr. 22, 2014).

This case implicates questions related to the proper interpretation of New York statutes and New York common law. A federal court sitting in diversity must look to the decisional law of the forum state and the state constitution and statutes. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Travelers Ins. Co. v. 633 Third Assoc., 14 F.3d 114, 119 (2d Cir. 1994). Where the substantive law of the forum is ambiguous or uncertain, the federal court must strive to predict how the highest court of the forum state would resolve the issue. Travelers, 14 F.3d at 119; In re Eastern and Southern Districts Asbestos Litig., 772 F.Supp. 1380, 1388-91 (E. & S.D.N.Y. 1991) (Weinstein, J.), rev’d on other grounds sub nom. In re Brooklyn Navy Yard Asbestos Litig., 971 F.2d 831 (2d Cir. 1992). Decisions of the Appellate Division “are entitled to persuasive, if not decisive consideration.” Sphere Drake Ins. Co. v. P.B.L. Entertainment, Inc., 30 F.3d 21, 23 (2d Cir. 1994), vacated on other grounds, 52 F.3d 22 (2d Cir. 1995) (citation omitted); see also Chase Manhattan Bank, N.A. v. T & N plc, 905 F.Supp. 107, 113-14 (S.D.N.Y. 1995).

A.

In Count II, the plaintiffs have brought claims against the defendants for rescission to reform the transactions at issue by voiding the terms of the RPAs such that the plaintiffs are only bound by the Approved GC Policies, and for rescissory damages in the amount of any premiums charged and paid over-and-above the premiums called for by the Approved GC Policies.

The plaintiffs argue that the RPAs are void as a matter of public policy. The defendants do not contest the alleged violations of the NYIL; rather, they argue that there is no private right of action to enforce the sections of the NYIL relating to workers’ compensation insurance.

The plaintiffs concede that the NYIL does not confer a general private right of action to enforce compliance with all of its sections, but they do contend that some sections expressly or impliedly provide for a private right of action as an enforcement mechanism. See, e.g., Harrison v. Metro. Life Ins. Co., 417 F.Supp.2d 424, 432 (S.D.N.Y. 2006); Soliman v. Daimler AG, No. CV 10-408 (SJF) (AKT), 2011 WL 766885, at *9 (E.D.N.Y. Feb. 9, 2011) (collecting cases), report and recommendation adopted, No. 10 CV 408 (SJF) (AKT), 2011 WL 765931 (E.D.N.Y. Feb. 24, 2011); see also Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 979 N.Y.S.2d 257, 2 N.E.3d 221, 226-27 (2013).

The defendants rely extensively on the decisions of the Court of Appeals for the Second Circuit and the New York Court of Appeals in the Schlessinger litigation. In Schlessinger v. Valspar Corp., 686 F.3d 81, 83, 85 (2d Cir. 2012) (Schlessinger I), the Court of Appeals for the Second Circuit considered whether private plaintiffs should be allowed to sue for rescission to excise a “store closure provision” from- a. contract because the provision allegedly violated N.Y. Gen. Bus. L. § 395-a, even though that provision vested the New York Attorney General with exclusive enforcement authority. The Court of Appeals observed that, “This issue lies at the intersection of two legal doctrines that lead to conflicting results: the doctrine that courts will not enforce illegal contracts and the doctrine that courts should follow clearly expressed legislative intent.” Id. at 85.

Under the doctrine related to illegal contracts,

As a general rule, New York courts will not enforce illegal contracts. The general rule is modified, however, where the illegality concerns the -violation of a regulatory statute:

“[T]he violation of a statute that is merely malum prohibitum will not necessarily render a contract illegal and unenforceable. If the statute does not provide expressly that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy the right to recover will not be denied,”

Under [the] rule [discussed in Benjamin v. Koeppel, 85 N.Y.2d 549, 626 N.Y.S.2d 982, 650 N.E.2d 829, 830 (1995)], a court may enforce an .illegal contract if three requirements are satisfied: (1) the statutory violation is malum prohibitum; (2) the statute that renders the contract illegal does not specifically require that all contrary contracts be rendered null, and void; and (3) the penalty imposed by voiding the contract is “wholly out of proportion to the requirements of public policy,” Schlessinger, 686 F.3d at 85 (citations omitted).

, .The Court of Appeals noted that this doctrine had generally been applied to licensing cases in which the contract at issue would have been “perfectly legal” had the regulated party simply been licensed; in other words, where the violation of the statutory scheme was purely procedural. Id. at 85-86. By contrast, the plaintiffs in Schlessinger I were not seeking to avoid the entire contract, but instead to reform the contract by excising a particular provision that, the plaintiffs claimed, violated the substantive requirements imposed by state law. Id. at 86.

The Court of Appeals reasoned that permitting this sort of remedy was in tension with the doctrine on the “implied right of action.” Id, at 87.' According to the Court of Appeals, “If this issue were to be analyzed as one of implied right of action, the proper conclusion could be that the legislature did riot evince the requisite intent to void provisions that were contrary to § 395-a.” Id.

The Court of Appeals accordingly certified the following- question to the New York Court of Appeals: “May parties seek to have contractual provisions that run contrary to General Business Law § 395-a declared void as against public policy?” Id. at 89,

The New York Court of Appeals in Schlessinger v. Valspar Corp., 21 N.Y.3d 166, 969 N.Y.S.2d 416, 991 N.E.2d 190, 192 (2013)- (Schlessinger II), answered the question iñ the negative. Schlessinger II analyzed the case in terms of whether N.Y. Gen. Bus. L. § 395-a conferred an express or implied right of action on private plaintiffs, reasoning that “the legislature chose to assign enforcement exclusively to government officials” and that “the legislature did not include in section 395-a specific language invalidating inconsistent contract provisions, as it did elsewhere in the General Business Law.” Id. Schlessinger II concluded that permitting a private of action for rescission would “subvert the legislature’s choice to leave such enforcement mechanisms out of General Business Law § 395-a.” Id., 969 N.Y.S.2d 416, 991 N.E.2d at 192.

In reaching its conclusion, the Court of Appeals relied upon Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. P’ship, 12 N.Y.3d 236, 879 N.Y.S.2d 17, 906 N.E.2d 1049, 1054 (2009):

In our view, this case is much like Keru-sa, which involved a common-law tort claim. In Kerusa, we held that the purchaser of a condominium could not sue the building’s sponsor for common-law fraud where the purported fraud was predicated solely on alleged material omissions from the offering plan amendments mandated by the Martin Act (General Business Law art. 23-A) and the. Attorney General’s implementing regulations. As in this case, then, the purported claim would not have existed absent provisions in a statute-in Kerusa, the Martin Act; here, General Business Law § 395-a. We concluded that “to accept Kerusa’s pleading as valid would invite a backdoor private cause of action to enforce the Martin Act in contradiction to our holding ... that no private right to enforce that statute exists.” Schlessinger, 969 N.Y.S.2d 416, 991 N.E.2d at 192-93 (citations omitted); see also Schlessinger v. Valspar Corp., 723 F.3d 396, 398 (2d Cir. 2013) (Schles-singer III).

The plaintiffs argue that the doctrine on illegal contracts should apply to this case and that the reasoning in Schlessinger II should be limited to the N.Y. Gen. Bus. L. § 395-a context. However, Schlessinger IPs reasoning and its reliance on Kerusa — which dealt with the Martin Act — indicate that Schlessinger II’s lessons foreclose claims that would otherwise circumvent the enforcement remedies contemplated by a statutory scheme like the NYIL. See Agerbrink v. Model Serv. LLC, No. 14-CV-7841 (JPO), 2015 WL 3750674, at *3 (S.D.N.Y. June 16, 2015) (“While Plaintiff insists, that she may seek a declaratory judgment even though the relevant statutes. [N.Y. Gen. Bus. art. 11] do not provide a private right of action, the New York Court of Appeals has rejected this precise argument.”); Sigall v. Zipcar, Inc., No. 13 CIV. 4552 (JPO), 2014 WL. 700331, at, *3-4 (S.D.N.Y. Feb. 24, 2014), aff'd, 582 Fed.Appx. 18 (2d Cir. 2014) (summary order); see also Treiber v. Aspen Dental Mgrnt., Inc., 635 Fed.Appx. 1, 3 (2d Cir. 2016) (summary order) (“Insofar as the crux.of plaintiffs’ complaint is defendants’ proscribed corporate practice of medicine, New York law leaves enforcement to the Attorney General, affording no enforcement rights to consumers.” (citing Schlessinger, 969 N.Y.S.2d 416, 991 N,E.2d at 193)). '

The claims for rescission as a matter of public policy are based on alleged violations of the NYIL. But a rescission remedy based exclusively on public policy would be inconsistent with the framework expressly provided for by the NYIL. The NYIL enforcement regime is comprehensive. As a general matter, the NYIL “establishes the procedures for enforcement of [its] various provisions ... by the Superintendent of Insurance.” Harrison, 417 F.Supp.2d at 432 (citation omitted); see also, e.g., Gonzales v. Nat’l Union Fire Ins. of Pittsburgh, Pa., No. 15 CIV. 2259 (PGG), 2016 WL 5107033, at *11 (S.D.N.Y. Sept. 19, 2016); Quanta Specialty Lines Ins. Co. v. Inv’rs Capital Corp., No. 06 CIV. 4624 (PEL), 2008 WL 1910503, at *6 & nn.3, 5 (S.D.N.Y. Apr. 30, 2008); 3405 Putnam Realty Corp. v. Chubb Custom Ins. Co., 14 A.D.3d 310, 788 N.Y.S.2d 64, 66 (2005). Certain sections of the NYIL provide for additional section-specific penalties for their violation, while others expressly confer a private right of action on aggrieved parties. See, e.g., NYIL § 4226.

Moreover, NYIL § 3103 already provides a statutory mechanism for voiding contractual provisions that are inconsistent with the NYIL. NYIL § 3103 provides that:

Except as otherwise specifically provided in this chapter, any policy of insurance or contract of annuity delivered or issued for delivery in this state in violation of any of the provisions of this chapter shall be valid and binding upon the insurer issuing the same, but in all respects in which its provisions are in violation of the requirements or prohibitions of this chapter it shall be enforceable as if it conformed with such requirements or prohibitions.

See also T.P.K. Constr. Corp. v. S. Am Ins. Co., 752 F.Supp. 105, 111 n.8 (S.D.N.Y. 1990) (“If plaintiffs argument is based on the broadness of the hold harmless and non-guarantee provisions of the Agreement as being unconscionable, under New York law those provisions do not void the Agreement but are enforceable against the insurer under § 3103(a) of the New York Insurance Law.”). Therefore, the viability of the plaintiffs’ claims for rescission depends on whether the plaintiffs have a private right of action to enforce any relevant sections of the NYIL. See Schlessinger, 969 N.Y.S.2d 416, 991 N.E.2d at 192.

The plaintiffs do not contend that any of the allegedly violated provisions confer an express private right of action.

“In the absence of an express private right of action, plaintiffs can seek civil relief in a plenary action based on a violation of the statute ‘only if a legislative intent to create such a right of action is fairly implied in the statutory provisions and their legislative history.’ ” Cruz, 979 N.Y.S.2d 257, 2 N.E.3d at 226 .(citation omitted). “This determination is predicated on three factors,” of which the third is the most important: “ ‘(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.’ ” Id. (quoting Sheehy v. Big Flats Cmty. Day, Inc., 73 N.Y.2d 629, 543 N.Y.S.2d 18, 541 N.E.2d 18, 20 (1989)). Because the NYIL contemplates administrative enforcement of the statute, “The question then becomes whether, in addition to administrative enforcement, an implied private right of action would be consistent with the legislative scheme.” Uhr ex rel. Uhr v. E. Greenbush Cent. Sch. Dist. 94 N.Y.2d 32, 698 N.Y.S.2d 609, 720 N.E.2d 886, 890 (1999).

The defendants argue that no section of the NYIL confers an implied right of action because the Superintendent of Insurance can enforce any violation of any section of the NYIL, but that is not an accurate statement of the law. The court in Maimonides Med. Ctr. v. First United Am. Life Ins. Co., 116 A.D.3d 207, 981 N.Y.S.2d 739, 743 (2014), recently rejected this precise argument in concluding that NYIL § 3224-a, the “Prompt Pay Law,” confers an implied right of action. See also Mbody Minimally Invasive Surgery, P.C. v. United Healthcare Ins. Co., No. 14 CIV. 2495 (ER), 2016 WL 4382709, at *13 (S.D.N.Y. Aug. 16, 2016).

The court in Maimonides concluded that an implied right of action was consistent with the NYIL’s administrative enforcement scheme. The court focused on the mandatory “shall” language of NYIL § 3224-a(a), reasoning that — unlike NYIL sections that did not confer a private right of action — “the determination of a violation and the calculation of resulting damages do not require any special agency expertise” because “[t]he Prompt Pay Law provides an easily determinable standard for violations.” Maimonides Med. Ctr., 981 N.Y.S.2d at 743, 748.

Moreover, the court noted that NYIL § 3224-a was not simply “remedial in nature,” but imposed “an affirmative duty upon insurers to timely pay or dispute claims. In the event of a violation, health care providers and patients are given the right to full payment of the claim plus interest, and insurers are obligated to make such payment.” Id. at 746. The court contrasted NYIL § 2601, which “provides that no insurer shall engage in unfair settlement practices” and thus “concerns business general practices, and is enforceable only by the Superintendent,” with NYIL § 3224-a, which is not “primarily designed to provide a mechanism for preventing harm to the public in general.” Id. at 746-48. Rather, the ability to pursue statutory damages for a violation of NYIL § 3224-a was limited to a subset of insureds (patients and health care providers) in contractual privity with the insurers, “regardless of whether a breach of contract cause of action would be otherwise successful.” Id. at 746.

(i)

The plaintiffs have not attempted to explain how the individual sections of the NYIL listed in the Second Amended Complaint provide for a private right of action.- Indeed, the vast majority of the sections allegedly violated cannot reasonably provide an implied right of action. Most of the alleged violations relate to licensing requirements and other discretionary determinations over matters entrusted to the Superintendent of Insurance. See, e.g., NYIL §§ 1102, 1204, 2117, 2305, 2307, 7003. The recognition of a private, right of action to enforce compliance with these sections would neither promote the legislative purpose nor be consistent with the legislative scheme of the NYIL. These sections are entirely remedial in nature, and serve to prevent harm to the public in general. As courts consistently recognize, the NYIL’s licensing scheme reflects the legislature’s judgment that New York’s administrative apparatus, and not courts, should be charged with making licensing determinations, and meting out punishments for licensing violations. See First Mercury Ins. Co. v. 613 N.Y. Inc., 609 Fed.Appx. 664, 668 (2d Cir. 2016) (summary order) (“[T]he weight of authority, in New York holds that an insurance company’s failure to comply with the licensing scheme of this State does not invalidate the insurance contract, but rather subjects the insurer to the available statutory penalties and sanctions that may be imposed by the Superintendent of Insurance.” (quoting 3406 Putnam Realty Corp., 788 N.Y.S.2d at 67) (no private right of action under NYIL § 1102)); Quanta Specialty Lines, 2008 WL 1910603, at *4-5 & nn.3, 6 (holding that “to allow [the plaintiff] a private cause of action would be incompatible with the clearly defined procedural mechanism provided by the legislature” and rejecting claim for rescission on the theory that the policies were “unlawful group insurance policies”); Clayton’s Auto Glass, Inc. v. First Data Corp., No. 12-CV-5018 (JS), 2013 WL 5460872, at *4 (E.D.N.Y. Sept. 30, 2013) (“[PJlaintiffs’ claim fails because there is no private right of action for alleged violations of New York Insurance Law’s licensing requirements.”); Polly Esther’s S., Inc. v. Setnor Byer Bogdanoff, 10 Misc.3d 375, 807 N.Y.S.2d 799, 812 (Sup. Ct. 2005) (no private right of action under NYIL § 2117); N.Y. General Counsel Opinion 7-7-2005 (#2), 2005 WL 3980860 (“An authorized insurer’s use of an unapproved policy form, where the Insurance Law requires the Superintendent’s prior approval of the policy form, does not invalidate the policy.”).

Similarly, NYIL § 2324 — which broadly prohibits offering inducements to enter into insurance contracts — cannot be said to confer a private right of action. See In re Hamm, 498 B.R. 405, 408 & 409 n.1 (Bankr. W.D.N.Y. 2013) (concluding that NYIL § 6504, an analogous section that prohibits mortgage insurers from offering inducements, does not confer a private right of action). ‘ The section ' prescribes statutory penalties payable to the State for violations. See NYIL § 2324. The section is designed to curb a general harm to the public, and its enforcement by private plaintiffs would be inconsistent with the legislative scheme..

Accordingly, the claims based on these sections of the NYIL are dismissed.

(ii)

The plaintiffs claim that they are entitled to rescissory damages for any amounts charged and paid over-and-above the premiums called for by the Approved GC Policies (in other words, any payments due under the terms set forth in the RPAs) based on violations of NYIL §§ 2314 and 2339.

NYIL § 2305 delineates between insurance policies that do not require “prior approval of rates, rating plans, rating rules and rate manuals by the superintendent,” see NYIL § 2305(a), and those types of insurance that do require prior approval, such as “workers’ compensation insurance,” and “title insurance.” See NYIL § 2305(b). Pursuant to NYIL § 2305(b), an insurance carrier must file' rates with the Superintendent in order to obtain approval. NYIL § 2314 provides that, “No authorized insurer shall, and no licensed insurance agent, no title insurance agent, no employee or other representative of an authorized insurer, and no licensed insurance broker shall knowingly, charge or demand a rate or receive a premium that departs from the rates, rating plans, classifications, schedules, rules and standards in effect on behalf of the insurer, or shall issue or make any policy or contract involving a violation thereof.” NYIL § 2339 provides that, “No member of or subscriber to a rate service organization, and no insurer which makes and files its own rates, shall charge or receive any rate which deviates from the rates, rating plans, classifications, schedules, rules and standards made and filed by such rate service organization.” While an insurer may apply to the Superintendent for permission to deviate from a filed rate under NYIL § 2339(b), the Superintendent must approve any such deviation. Neither NYIL §§ 2314 nor 2339 contains section-specific penalties.

The history and structure of NYIL §§ 2314 and 2339 show that the.legislature intended that private enforcement would “augment” any administrative remedies for these sections. Maimonides Med. Ctr., 981 N.Y.S.2d at 746 (citation omitted). Indeed, courts considering NYIL §§ 2314 and 2339 — and their predecessor sections, .Insurance Law. Sections 141 and 185. — have permitted private parties to recover premiums charged and paid that deviated from the rates filed with the Superintendent based on a theory of rescission or unjust enrichment.

In Stephen Peabody, Jr., & Co. v. Travelers’ Ins. Co., 240 N.Y. 511, 148 N.E. 661, 662 (1925), the New York Court of Appeals addressed the state of the law before the enactment of Insurance Law Section 141, At the time the dispute arose, the NYIL required rates for workers’ compensation insurance to ,be filed with the Superintendent of Insurance, but did not prohibit insurers from contracting around those rates. Id. at 662-63. The Court of Appeals nonetheless reasoned that, “A contract to disregard an increase in such rates or basis rate, and to ignore the disapproval of the rating association, and therefore of the superintendent of insurance was against public policy and void.” Id. at 663.

Subsequent to the dispute at issue in Stephen Peabody, Jr„ the legislature codified the prohibition against deviation from filed rates. In its first 1922 incarnation, the Section in relevant part provided that, “No insurance agent, broker, corporation or association, shall charge a rate or receive a premium which, deviates from the rate fixed or filed for and the rules applicable to such risk —” 1922 N.Y. Laws ch. 660 § 141. Insurance Law Section 141 also provided for monetary penalties for its violation.

Under this section, courts entertained disputes between insureds and insurers involving alleged overcharges 'and undercharges pursuant to Insurance Law Section 141. See, e.g., Metro. Cas. Ins. Co. of N.Y. v. Rochester Fruit & Vegetable Co., 232 A.D. 321, 249 N.Y.S. 572, 577 (1931); Employer’s Liab. Assurance Corp., Ltd., of London v. Success-Uncle Sam Cone Co., 124 Misc. 614, 208 N.Y.S. 510, 512-13 (City Ct. 1925).

As part of later amendments to the NYIL, the Superintendent of Insurance gained substantial new enforcement powers, including the ability to return any overcharges to an insured after notice and a hearing. See 1939 N.Y. Laws ch. 618 § 187. Despite the expansion of administrative enforcement power, courts continued to view the prohibition against deviations from filed rates ás a matter to be addressed by courts. See, e,g., Am. Motorists Ins. Co. v. N.Y. Seven-Up Bottling Co., 18 A.D.2d 36, 238 N.Y.S.2d 80, 82 (1963), aff'd, 13 N.Y.2d 1157, 247 N.Y.S.2d 386, 196 N.E.2d 735 (1964); Pub. Serv. Mut. Ins. Co. v. Rosebon Realty Corp., 39 Misc.2d 663, 241 N.Y.S.2d 555, 557 (Civ. Ct. 1963); Am. Mut. Liab. Ins. Co. v. Davis, 178 Misc. 709, 36 N.Y.S.2d 211, 212 (City Ct. 1942).

Following intervening legislative changes, Section 141 eventually became NYIL §§ 2314 and 2339. New York courts — including, recently, the Supreme Court of the State of New York, Appellate Division, Second Department — have continued to entertain private' suits to recover premium overcharges in disputes over rates that required prior approval. See Good v. Am. Pioneer Title Ins. Co., 12 A.D.3d 401, 783 N.Y.S.2d 841, 842 (2004) (“[T]he complaint alleged, in relevant part, that the defendant charged a title insurance premium in excess of the applicable rate published by the Title Insurance Rate Service Association in its Rate Manual. The proper interpretation of the Rate Manual, and the defendant’s alleged violation thereof, 'presented questions of law cognizable by the court.” (emphasis added)); Partell v. Fid. Nat’l Title Ins. Servs., No. 12-CV-376S, 2012 WL 5288754, at *1, *5, *7 (WD.N.Y. Oct. 24, 2012) (denying a motion to dismiss claims for “money ‘had and received’ and unjust enrichment” to recover overcharges, and noting that “this case is not so ‘nuanced’ that a specialized tribunal is necessary”); Transp. Ins. Co. v. Star Indus., Inc., No. CV 01-1341 (ARL), 2005 WL 1801671, at *7 & n.6 (E.D.N.Y. July 28, 2005) (“While there ai-e few reported cases interpreting these sections, courts have recognized under the predecessor statute to Section 2314, that ‘insurers are forbidden to charge or receive rates which deviate from those filed with the Superintendent.’” (citation and internal quotation marks omitted)).

The plaintiffs, as employers purchasing workers’ compensation insurance, are plainly members of a class designed to benefit from these sections of the NYIL. As the court explained in Employer’s Liab. Assurance Corp., Ltd., of London, 208 N.Y.S. at 512, Insurance Law Section 141 was enacted specifically with workers’ compensation in mind, and for the benefit of employers because, among other reasons, employers must provide workers’ compensation insurance to their employees. As the court recognized, ensuring compliance with filed rates was essential to the proper functioning of New York’s workers’ compensation insurance system because it ensured that employers, who have no option but to provide workers’ compensation insurance, would be able to do so at reasonable rates. Id. at 512-13.

Moreover, the implied right of action undoubtedly promotes the legislative purpose of the NYIL to ensure that parties adhere to filed rates.

The implied right of action is also fully consonant with the legislative scheme. Like the Prompt Pay Law, NYIL §§ 2314 and 2339 both contain mandatory language: insurers “shall” not charge or receive a premium that deviates from a filed rate, and “shall” not issue any insurance contract that contravenes the filed rate. See also Maimonides Med. Ctr., 981 N.Y.S.2d at 743. Unlike issues that involve discretionary determinations, the determination of whether a premium-collected deviates from the filed rate does “not involve ... intricate and technical matters,” Good, 783 N.Y.S.2d at 842, and “the determination of a violation and the calculation of resulting damages do not require any special agency expertise.” Maimonides Med. Ctr., 981 N.Y.S.2d at 748; see also Partell, 2012 WL 5288754, at *5 (“[T]he principle issue is uncomplicated: did [the defendant] charge the full rate when it should have charged the discounted rate?”).

Again similar to the Prompt Pay Law, NYIL §§ 2314 and 2339 are not aimed at rectifying a general public harm, or inhibiting a general business practice. Instead, these sections impose affirmative duties on parties to insurance contracts to adhere to filed rates. Only parties in privity to the subset of insurance contracts that require rate filing, see NYIL 2305(b), may sue to vindicate their statutory rights under NYIL §§ 2314 and 2339.

Accordingly, the plaintiffs have an implied right of action to seek rescissory damages under NYIL §§ 2314 and 2339. The plaintiffs have pleaded plausibly that any payments due in their “integrated statements” — which reflected charges for the RPAs and Approved GC Policies in a single line-item — were all in consideration for workers’ compensation insurance. Thus, the plaintiffs have plausibly alleged that they are entitled to seek rescissory damages to the extent that the payments charged and paid exceeded the rates filed with the Superintendent.

The motion to dismiss the claims for rescissory damages under NYIL §§ 2314 and 2339 is denied.

B.

(i)

In Count III, the NCS plaintiffs have brought a claim for breach of contract against Continental Insurance and California Insurance, while the RDD plaintiffs have brought a. claim for breach of contract against only Continental Insurance.

“Contracts of insurance, like other contracts, are to be .construed. according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous the terms-are to be taken and understood in their plain, ordinary and proper sense,” In re Estates of Covert, 97 N.Y.2d 68, 735 N.Y.S.2d 879, 761 N.E.2d 571, 576-77 (2001) (quoting Hartol Prods. Corp. v. Prudential Ins. Co. of Am., 290 N.Y. 44, 47 N.E.2d 687, 689 (1943)). “ ‘[W]hen the language of a contract is ambiguous, its con struction presents a question of fact,’ which .., precludes summary dismissal.” Crowley v. VisionMaker, LLC, 512 F.Supp.2d 144, 152 (S.D.N.Y. 2007) (quoting Jackson Heights Med. Grp., P.C. v. Complex Corp., 222 A.D.2d 409, 634 N.Y.S.2d 721, 722 (1995)). “Contract language is ambiguous if it is ‘capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.’ ” Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir. 1993) (citations omitted).

The thrust of the plaintiffs’ breach of contract claims is that Continental Insurance and California Insurance treated the RPAs as though they modified the Approved GC Policies in breach of the following provision in the Approved GC Policies:

This policy includes at its effective date the Information Page and all endorsements and schedules listed there. It is a contract of insurance between you (the employer named in Item 1 of the Information Page) and us (the insurer-named on the Information Page). The only agreements relating to this insurance are stated in this policy. The terms of this policy may not be changed or waived except by endorsement issued by us to be part of this policy. SAC ¶ 47.

Although the plaintiffs argue that any modification of an Approved GC Policy would be sufficient to state a claim for breach of contract, the plaintiffs claim that the RPAs — which allegedly, are not endorsements — modified the Approved GC Policies, in material ways, including their effective periods, premium rates, and cancellation fees. The plaintiffs claim that, to the extent that Continental Insurance and California Insurance relied on the provisions of the RPAs to alter-the terms of the Approved GC Policies, Continental Insurance and California Insurance breached the terms of the Approved GC Policies without the agreement of the plaintiffs.

The plaintiffs also argue that the RPAs violated other related terms of the Approved GC Policies. For example, the Approved GC Policies provided that, “All premiums for this policy will be determined by our manuals of rules, rates, rating plans and classifications.” SAC, Ex. B at “Part Five - Premium, Section A”; see also SAC ¶ 13. The plaintiffs claim that Continental Insurance and- California Insurance breached this provision to the extent that the fees paid on the RPAs were in consideration for workers’ compensation insurance, and over-and-above the amounts called for by the rates to be determined by the filed manuals of rules, rates, ratings and classifications.. See Employers Mut. Liab. Ins. Co. of Wis. v. Bromley, 4 Misc.2d 702, 158 N.Y.S.2d 669, 670 (Sup. Ct. 1957) (holding that a similar contractual provision incorporated the filed manual into the workers’ compensation policy).

The defendants do not contend that the complained-of provisions have unambiguous interpretations that could foreclose the breach of contract claims. Instead, the defendants’ primary response is that the RPAs were executed with AUCRA — not Continental Insurance or California Insurance — and that, because AUCRA was not a party to the Approved GC Policies, any agreement with AUCRA could not have modified the terms of the Approved GC Policies. Similarly, the defendants selectively point to a number of provisions in the RPA and statements in the marketing materials for the Profit Sharing Plan that disclaimed that the RPAs and Approved GC Policies were related. See, e.g., SAC, Ex. C at 7 (“Fees for services charged by any affiliate of [AUCRA] are not considered premium under the [Approved GC] Policies.”). The defendants contend that these statements are conclusive proof that the contracts bore no relationship to each other. The defendants argue that the plaintiffs are in effect' trying to combine unrelated contracts in an effort to manufacture breach of contract claims. The defendants also argue that, to the extent that the RPAs modified the terms of the Approved GC Policies, the plaintiffs agreed to the modifications, which read the allegedly breached provisions out of the Approved GC Policies.

Under New York law, “Whether the parties intended to treat both agreements as mutually dependent contracts, the breach of one undoing the obligations under the other, is a question of fact. In determining whether contracts.are separable or entire, the primary standard is. the intent manifested, viewed in the surrounding circumstances.” Rudman v. Cowles Gommc’ns, Inc., 30 N.Y.2d 1, 330 N.Y.S.2d 33, 280 N.E.2d 867, 873 (1972). The Court of Appeals for the Second Circuit identified in Arciniaga v. Gen. Motors C