Blog

$5.00 ruleMay 14, 2013

Medalliance Med. Health Servs. v Allstate Ins. Co., 2013 NY Slip Op 23156 (Civ. Ct. Queens Co. 2013)

A prompt letter reminding the carrier that it owes interest in an amount less than $5.00 moots the argument that collection of interest in an amount that is less than $5.00 is categorically prohibited.

The arguments raised in this case are questionable, but somebody had to raise them.  In the end, Civil Court came to the inescapable conclusion that the provider was entitled to its interest and its attorney fee.

“On this motion and cross motion, as well as other motions that are pending, the issue is whether the plaintiff is entitled to recover overdue interest when it does not exceed the sum of five dollars indicated in 11 NYCRR 65-3.9 (a). The defendant contends that the regulation limits overdue interest to an amount exceeding five dollars that is to be paid, without demand, upon payment of the overdue claim. The plaintiff claims that the regulation does not preclude the applicant from demanding overdue interest below five dollars. There are prior orders in Civil Court, Queens County that have decided this issue in cases involving different parties. These orders, some of which are signed by this Court, have held that collection of overdue interest of less than five dollars is not precluded by regulation 11 NYCRR 65-3.9 (a).”

“The interest which accrues on overdue no-fault benefits at a rate of two percent per month is a statutory penalty designed to encourage prompt adjustments of claims and inflict a punitive economic sanction on those insurers who do not comply (citations omitted)” (East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d at 210). The construction of 11 NYCRR 65-3.9 (a), that is advocated by the defendant, would preclude overdue interest of less than five dollars. This would conflict with the statutory language of Insurance Law §5106(a) which imposes interest on “all overdue payments.” The change would also tend to increase the delay in compensating low cost medical benefits that accumulate minimal overdue interest. Such a construction of the statute [*5]conflicts with its primary aims and violates the legislative intent.

The legislature was entitled to enact a limitation on the overdue interest in Insurance Law §5601(a), as it did by expressly eliminating interest of “less then two dollars” in Insurance Law §3224-a (c) (1). However, the legislature did not exempt the overdue interest of less than five dollars, that is sought by the defendant. The Superintendent of Insurance also did not preclude the collection of overdue interest that is less than five dollars, if it is demanded. This Court will not now prevent the collection of such interest.

Accordingly, the plaintiff’s motion for summary judgment is granted and the plaintiff is awarded judgment, pursuant to Insurance Law §5106 (a), for the overdue interest and attorney fees alleged in the complaint. The defendant’s cross motion to dismiss the action is denied.”

By the way, as and for the attorney fee, is 65-4.6(b)(3) applicable?  For disputes involving interest only, the attorney fee shall equal the amount of interest up to $60?

3 Responses

  1. caveman says:

    I remember years ago some firms would serve complaints with hundreds of causes of action for pennies from overdue interest, with a corresponding cause of action for attorney fees. Recently, I came across a term that I believes describes this behavior:

    (From Wikipidia)

    Barratry (pron.: /ˈbærətri/ ba-rə-tree) is a legal term with several meanings. In common law, barratry is the offense committed by people who are “overly officious in instigating or encouraging prosecution of groundless litigation” or who bring “repeated or persistent acts of litigation” for the purposes of profit or harassment.[1] It is a crime in some jurisdictions. Litigation for the purpose of profit is referred to as “Ambulance chasing”: If for the purpose of harassment, for example to silence critics, it is known as a strategic lawsuit against public participation (SLAPP). Jurisdictions that otherwise have no barratry laws may have SLAPP laws.

  2. Captain America says:

    Let us see. Five dollars times all of the claimants a big insurance company like GEICO can steal it from adds up to a nice chunk of change.

    I thought the owner of GEICO was a multi Billionaire.

    What do you call Billionaires who cheat widows out of a few dollars — creeps.

    What do you call a lawyer who wants to deprive another lawyer of his fee — a loser that inhabits a small cubicle amongst thousands of cubicles in a brightly lit massive chamber.

  3. Kurt Lundgren says:

    Captain, as usual you hit the nail on the head – e.g. Shady Grove v Allstate. Of course, Scalia eventually rewarded Allstate for ripping off consumers of millions of dollars. That Class Action suit was over the interest not paid to New York State claimants, a penny at a time.

    I don’t recall the word barratry being used in that lawsuit. Then again, ripping off consumers is so easy even a caveman can do it. Scalia seemed to agree.

Leave a Reply