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Policy Exhaustion and priority of paymentMarch 21, 2013

Mount Sinai Hosp. v Dust Tr., Inc., 2013 NY Slip Op 01811 (2d Dept. 2013)

“The plaintiff hospital, as assignee of Alison Cassani, commenced this action to recover no-fault medical benefits from the defendant, a self-insured taxi corporation. The plaintiff moved for summary judgment on the complaint. However, the Supreme Court denied that motion on the ground that the defendant had not yet received all requested verification. The plaintiff subsequently moved for leave to reargue its motion for summary judgment. The Supreme Court, in an order entered September 28, 2011, granted leave to reargue and, upon reargument, granted the plaintiff’s motion for summary judgment on the complaint, finding that the requested verification had been received. A judgment was entered on October 13, 2011, in favor of the plaintiff and against the defendant in the principal sum of $59,609.44, plus interest, costs, and an attorney’s fee.”

(So at this point, it is learned that Defendant did not have a defense to the no-fault claim)

“The defendant thereafter made a motion, denominated as one pursuant to CPLR 2221(a) to modify so much of the order entered September 28, 2011, as, upon reargument, granted the plaintiff’s [*2]motion for summary judgment on the complaint, and to vacate the judgment, asserting that the judgment, together with the total amount of $181,379.82 it previously paid medical providers on behalf of Cassani, exceeded its no-fault coverage of $200,000, which was the amount of coverage required by the Rules of the New York City Taxi & Limousine Commission (see TLC Rule [35 RCNY] § 58-13[a][1], [d][1][i]). The defendant asserted that the plaintiff may only recover the sum of $18,620.18, which was the available balance of its coverage. The Supreme Court granted the defendant’s motion, and, in effect, upon renewal, vacated the order entered September 28, 2011, and the judgment entered October 13, 2011, and, thereupon, granted the plaintiff’s motion for summary judgment only to the extent of permitting it to recover the sum of $18,620.18 from the defendant, inclusive of interest, costs, and an attorney’s fee.

(Motion to renew in actuality.  Defendant is seeking to limit its exposure now knowing that it is doomed on the merits)

“The issue of partial exhaustion of the defendant’s coverage was raised for the first time after the judgment was entered, even though the plaintiff had previously moved for summary judgment on the complaint, seeking a certain amount of benefits (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 82 AD3d 1085, 1086). No reasonable justification was provided for the failure to raise the issue of partial exhaustion earlier.”

(Court says this should have been part of an omnibus motion for summary judgment)

“The failure to present such reasonable justification by itself requires denial of the defendant’s motion, and, in any event, the evidence submitted in support of the motion, i.e., an affidavit of the defendant’s claims manager setting forth the policy limits and the amount of benefits allegedly paid to other medical providers, failed to establish the order in which the medical services were rendered, and the order in which the claims were received. Thus, on this record, it cannot be determined whether the defendant’s purported payments were made in compliance with 11 NYCRR 65-3.15.”

This is a very tough loss to take.

5 Responses

  1. An attorney says:

    Jason – this may be a very tough loss to take, however, the decision is absolutely correct.

  2. Captain America says:

    Haaaaaaaaaaaaaaaaaaah. The insurance company is going to have find some old poor widow with a 3rd grade education to rip off in order to make back this money.

  3. Kurt Lundgren says:

    What ever was that Court thinking of Captain America, requiring the insurance company to document its payment schedule?

    My sarcasm aside, this is an interesting decision. When I am confronted with the defense that the policy is exhausted I ask for the payment information. It is infrequent that the insurance company’s math is inaccurate, but it has happened several times. Often, the math is very accurate.

    But is this court creating coverage that does not exist? I don’t know. Can bad claims paperwork result in coverage above the policy? This Court says yes. Captain America says yes. The stars are a lined and all is right in the world of no-fault, for only a brief moment.

  4. Captain America says:

    “(So at this point, it is learned that Defendant did not have a defense to the no-fault claim)”

    If they had no defense against the no-fault claim and they denied anyway isn’t that a violation of the Insurance Law.

    But its up to the Superintendent and the Attorney General to take action. And even though it says they “Shall” take action they will not because they are bought and paid for.

    And the Courts will ignore Klosterman and say: “Cf” they don’t gotta do anything.

  5. Alan M. Elis says:

    It’s not a question of “creating coverage where none exists,” because coverage existed at the time the insurer received the claim. Exhaustion is only a defense to later received claims. When the regulations say that priority of payment is based on the order that a claim is received it MEANS that priority of payment is based on the order that a claim is received. An insurer disclaims coverage at its own risk.

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