Attorney fee limitations

City Care Acupuncture, P.C. v Allstate Prop. & Cas. Ins. Co., 2016 NY Slip Op 51793(U)(App. Term 2d Dept. 2016)

(1) “Appeal, on the ground of inadequacy, from a decision after inquest of the City Court of Yonkers, Westchester County (Thomas R. Daly, J.), dated January 13, 2015, and from a judgment of the same court entered April 21, 2015.”

(2) “In the present case, as the City Court awarded a default judgment in favor of plaintiffs for first-party no-fault benefits in the principal sum of $4,491.47, plaintiffs are entitled to the maximum statutory attorney’s fees of $850 (cf. 11 NYCRR 65-4.6 [d] [effective July 23, 2014, the maximum possible award of attorney’s fees in this type of action was increased to $1,360]).”

What I find interesting about this case is there is a controversy regarding whether the July 23, 2014 amendment to the attorney fee, increasing it is retroactive.  I always said “no”.  This appears to support my thought.

Article 75 attorneys fees are now limited

Matter of GEICO Ins. Co. v AAAMG Leasing Corp., 2016 NY Slip Op 03879 (2d Dept. 2016)

“In a proceeding for judicial review of an award by a master arbitrator, an attorney’s fee shall be fixed by the court adjudicating the matter (see Insurance Department Regulations [11 NYCRR] § 65-4.10[j][4]; Matter of Hempstead Gen. Hosp. v National Grange Mut. Ins. Co. , 179 AD2d 645).”

“The limitations of an attorney’s fee recoverable in an appeal from a master arbitration award are set forth in Insurance Department Regulations (11 NYCRR) § 65-4.10(j). Insurance Department Regulations (11 NYCRR) § 65-4.10(j)(5) states: “No attorney shall demand, request or receive from the insurer any payment or fee in excess of the fees permitted by this subdivision for services rendered with respect to a no-fault master arbitration dispute.”

The Court has construed the above provision (4.10[j][5]) to refer to Article 75 proceedings and appeals from the proceedings.  While the case does not refer to de novo actions, 4.10[j][4] refers to both types of proceedings.

I think the Court has probably gotten this wrong.  As a carrier, it is great knowing that my liability for counsel fees is limited to $650 when I commence a trial de novo.  But to be dragged through a de-novo action with a PC, CC and other attendants of a Supreme Court action when  the provider chose to file an arbitration and to have an attorney fee limited to $650?  This is nonsense.

I really do not think DFS meant for this interpretation of the regulation.  I just do not read 4.10(j)(5) as a limitation on 4.10(j)(4).  It is creative, I will say that.



Consolidated Attorney fee

EMA Acupuncture P.C. v Allstate Ins. Co., 2015 NY Slip Op 50348(U)(App. Term 1st Dept. 2015)

Good job James F. Sullivan and crew.

We sustain so much of the order under review as limited the amount of any recovery of attorneys’ fees to the sum of $850, the maximum allowable pursuant to Insurance Department Regulations [11 NYCRR] § 65-4.6(e). Since this provision provides that attorneys’ fees in a no-fault action are to be calculated based on the “aggregate of all bills for each insured” disputed in any action, up to a maximum of $850 (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217 [2009]), the $850 limit was properly applied to the claims at issue in this consolidated action, all of which involve the same parties and assignor, and arise from the same accident.”

So assume that you have a typical multisuit involving three providers and one assignor.  Can you now make the argument that the attorney fee should be on an aggregate basis?  Therefore, $60 minimum and $850 maximum regardless of the amount of Assignee medical providers?  With the new-new-new regs, I am unsure this will matter as the minimum has been removed and you need just north of $8100 in combined principle and interest to reach the attorney fee ceiling.  Maybe with consolidated NJ  surgery cases this can be relevant?


Attorney fees for cases filed on or after February 4, 2015

11 NYCRR 65-4.6

The following limitations shall apply to the payment by insurers of applicants’ attorney’s fees for services necessarily performed in the resolution of no-fault disputes:

(a) If an arbitration was initiated or a court action was commenced by an attorney on behalf of an applicant and the claim or portion thereof was not denied or overdue at the time the arbitration proceeding was initiated or the action was commenced, no attorney’s fees shall be granted.

(b) If the claim is resolved by the designated organization at any time prior to transmittal to an arbitrator and it was initially denied by the insurer or overdue, the payment of the applicant’s attorney’s fee by the insurer shall be limited to 20 percent of the total amount of first-party benefits and any additional first-party benefits, plus interest thereon, for each applicant with whom the respective parties have agreed and resolved disputes, subject to a maximum fee of $1,360.

(c) For disputes subject to arbitration or court proceedings, where one of the issues involves a policy issue as enumerated on the prescribed denial of claim form (NYS form NF-10), subject to this section, the attorney’s fee for the arbitration or litigation of all issues shall be limited to a fee of up to $70 per hour, subject to a maximum fee of $1,400. In addition, an attorney shall be entitled to receive a fee of up to $80 per hour for each personal appearance before the arbitration forum or court.

(d) For all other disputes subject to arbitration or court proceedings, subject to the provisions of subdivision (a) of this section, the attorney’s fee shall be limited as follows: 20 percent of the total amount of first-party benefits and any additional first-party benefits, plus interest thereon, for each applicant per arbitration or court proceeding, subject to a maximum fee of $1,360. If the nature of the dispute results in an attorney’s fee that could be computed in accordance with the limitations prescribed in both subdivision (c) and this subdivision, the higher attorney’s fee shall be payable.

(e) Notwithstanding the limitations specified in this section, if the arbitrator or a court determines that the issues in dispute were of such a novel or unique nature as to require extraordinary skills or services, the arbitrator or court may award an attorney’s fee in excess of the limitations set forth in this section. An excess fee award shall detail the specific novel or unique nature of the dispute that justifies the award. An excess award of an attorney’s fee by an arbitrator shall be appealable to a master arbitrator.

(f) If a dispute involving an overdue or denied claim is resolved by the parties after it has been forwarded to the conciliation center of the appropriate arbitration forum or after a court action has been commenced, the attorney for the applicant shall be entitled to a fee, which shall be computed in accordance with the limitations set forth in this section.

(g) No attorney shall demand, request or receive from the insurer any payment of fees not permitted by this section. [FN1]

(h) Notwithstanding any other provision of this section and with respect to billings on and after the effective date of this regulation, if the charges by a health care provider, who is an applicant for benefits, exceed the limitations contained in the schedules established pursuant to section 5108 of the Insurance Law, no attorney’s fee shall be payable by the insurer. This provision shall not be applicable to charges that involve interpretation of such schedules or inadvertent miscalculation or error.

filed Jan. 20, 2015 eff. Feb. 4, 2015.

[FN1] Attorneys should be aware of the Appellate Division Rules prohibiting fees in connection with the collection of first-party no-fault benefits (22 NYCRR sections 603.7(e)(7), 691.20(e)(7), 806.13(f) and 1022.31(f)).

Interest and attorney fee

Optimal Well-Being Chiropractic, P.C. v MVAIC, 2014 NY Slip Op 51861(U)(App. Term 2d Dept. 2014)

“The judgment that was subsequently entered pursuant to the order entered April 20, 2012 awarded plaintiff, among other things, interest and attorneys’ fees. The interest awarded was calculated at the rate of two percent per month from July 6, 2010 through the date of entry of the judgment, July 16, 2012. However, these dates do not comport with the dates to be used for the calculation of interest as set forth in LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co. (12 NY3d 217 [2009]) and East Acupuncture, P.C. v Allstate Ins. Co. (61 AD3d 202[2009]). Consequently, the amount of interest awarded is excessive. Moreover, in this case, as the amount of attorneys’ fees is dependent upon the accrued interest awarded (11 NYCRR 65-4.6 [e]), the amount of attorneys’ fees awarded is likewise excessive.”


The interest toll and the concomitant attorney fee issue.

Judiciary Law 475

Gutierrez, Compas etc, Rybak.  What happened here?

$5.00 rule

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?


Cornell Med., P.C. v Mercury Cas. Co.
2009 NY Slip Op 29228 (App. Term 2d Dept. 2009)

This case is extremely complicated. There are two points of law that came from this case. The first point of law that came from this case, and it is significant, is that a prima facie demonstration of failure to bill in accordance with the fee schedule raises an inference that a plaintiff attorney is not entitled to an attorney fee. The plaintiff attorney must then prove the two exceptions that are set forth in 65-4.6(i). Secondly, a counterclaim for monies paid in excess of the fee schedule is untenable.

LMK will never go away

LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co.
2009 NY Slip Op 02481 (2009)

Everybody now knows the LMK decision. Many people have posted and blogged about it. I could discuss it here at length, but it would be fruitless. I will share a few observations. First, the decision was poorly written. When I say poorly written, I mean this in the sense that modern no-fault jurisprudence is nuanced. Does anybody remember the entire line of cases which construed interest tolling based upon a definition of the word “Applicant”?

The Court of Appeals, in a cavalier fashion, used the words: “insured”, “claimant”, and “cause of action” all throughout their opinion. These phrases have created hundreds of court decisions from the lower courts up through the Appeals Courts. I will highlight the examples of the internally inconsistent language that the Court of Appeals used in this decision:

1) “the Superintendent stated

“[that provision] makes it clear that the amount of attorneys’ fees awarded will be based upon 20% of the total amount of first party benefits awarded. That total amount is derived from the total amount of individual bills disputed in either a court action or arbitration, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured.”

2) “For purposes of calculating attorneys’ fees, the Superintendent has interpreted a claim to be the total medical expenses claimed in a cause of action pertaining to a single insured, and not — as the courts below held — each separate medical bill submitted by the provider.”

3) “Thus, this Court accepts the Insurance Department’s interpretation of its own regulation and, upon remittitur, directs Supreme Court to calculate attorneys’ fees based on the aggregate of all bills for each insured

So now, we have different interpretations of this rule. Does the LMK rule involve each “cause of action” no matter how pleaded? Does this rule involve the “aggregate of all bills” for the insured? Or, does LMK stands for what it means: “Because this interpretation is neither irrational, unreasonable, nor runs counter to the clear wording of the statute, it is entitled to deference.”

I will take option #3. The Appellate Terms will inevitably clean this mess up, and hold that option #3 is the most logical path to follow. But LMK at all levels just goes to show how careful things need to be expressed, or else unintended consequences will be abound.