Tolling of interestSeptember 16, 2016

Kew Gardens Med & Rehab, P.C. v Country-Wide Ins. Co., 2016 NY Slip Op 51240(U)(App. Term 2d Dept. 2016)

(1) “On appeal from the judgment, defendant limits its arguments to the award of statutory interest, contending that, due to plaintiff’s inaction, it should not have been awarded statutory interest or, in the alternative, that statutory interest should not begin to accrue until August 30, 2013, when plaintiff served a motion to compel discovery.”

(2) “Where a provider does not commence a no-fault action within 30 days of receipt of the insurer’s denial of claim form, the Insurance Department Regulations provide that statutory prejudgment interest (see Insurance Law § 5106 [a]) does not begin to accumulate until an action is commenced (11 NYCRR 65—3.9 [c]). If an action has been commenced, statutory interest accumulates “unless the applicant unreasonably delays the … court proceeding” (11 NYCRR 65—3.9 [d]). In this case, plaintiff took no meaningful action to prosecute the case until it served a motion to compel discovery on August 30, 2013. Plaintiff should not be rewarded for its years of inaction by receiving a windfall of interest”

(3) “Accordingly, the judgment, insofar as appealed from, is modified by deleting the provisions thereof computing statutory interest from April 30, 2002 and awarding interest in the sum of $15,457.93, and by providing that interest be computed from August 30, 2013.”

The argument that Plaintiff makes in this situation is that defendant never complied with discovery demands and should not be penalized through the loss of interest due to defendant’s neglectful behavior.  The corollary is wake up and do something.  The corollary always wins.

Consider the following situations:

(1) A decision is rendered, judgment is not entered, 10 years goes by and now the amount is owed is well beyond what anyone thought.

(2) A decision is rendered, judgment is entered (never served upon defendant with NOE), 10 years goes by and now the amount is owed is well beyond what anyone thought.

My feeling is that in this situation, a defendant who does not attempt to pay what is owed will be left holding the bag for 2% interest (compounded on the older cases) until the amount due and owing (whether or not reduced to a judgment) is paid.

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