Interest through payment

B.Z. Chiropractic, P.C. v Allstate Ins. Co., 2019 NY Slip Op 50241(U)(Sup. Ct. Queens Co. 2019)

The Appellate Term “suggested” that interest runs at 9% per year after a judgment is entered. Supreme Court Queens County recognized that the Appellate Term’s statement was advisory at best. The Court has now held, probably properly, that 2% interest runs until the judgment is paid. While Allstate may appeal this decision, it is likely to be affirmed.

” The portion of Petitioner’s Petition seeking a declaratory judgment on the proper interest rate which accrues on first party no-fault benefits after the entry of judgment is decided as follows…At the time that the underlying claims were filed, said interest accrued at a compound rate. It is well settled that “with respect to interest on first party benefits due under the no-fault statute,…the Insurance Law supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004 (Gov’t Emp. Ins. Co. v. Lombino, 57 AD2d 957, 959, 394 N.Y.S.2d 898 [1977]) The policies of encouraging prompt payment of claims and reducing litigation outweigh limits on interest found elsewhere, SeeMatter of McKenna v County of Nassau, Off. of County Attorney, 97 AD2d 440 (2d Dept 1983). The interest rate on No-Fault actions is intentionally punitive, with severe penalties in order to encourage prompt adjustment of claims. As such, the rate of interest is not reduced simply because the claim has been reduced to a judgment. While such claims remain overdue, they accrue interest at two percent per month. As such, plaintiff is entitled to a declaratory judgment recognizing same. “

Post judgment interest at 9%?

Craniofacial Pain Mgt. v Allstate Ins. Co., 2018 NY Slip Op 51825(U)(App. Term 2d Dept. 2018)

“The amount of a partial satisfaction, if any, should be calculated by determining the total payments received as of a certain date, and deducting from that sum the marshal’s fee, the interest accrued to that date, and the poundage fee due to the marshal upon the collection of such sum (see Ifudu v Ross, 60 Misc 3d 140[A], 2018 NY Slip Op 51199[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]). In this regard, we note that plaintiff is entitled to receive only simple interest at the statutory rate of nine percent per year from the date of the entry of the judgment through the date of the payment of the judgment (see CPLR 5004; B.Z. Chiropractic, P.C. v Allstate Ins. Co., 56 Misc 3d 139[A], 2017 NY Slip Op 51091[U]), and that the marshal’s notice of levy and sale served upon defendant inexplicably stated interest in the amount of $376,324.80. We further note that defendant demonstrated, by showing the submission to a New York City marshal of a check which the marshal endorsed, that defendant had paid the amount of $9,988.32 (see CPLR 5021 [a]).”

But See McMillan v. Unionamerica Resinsurance Co.,  70 AD2d 659 (2d Dept. 1979)(“Furthermore, the judgment properly provided that interest on the award continue to accrue at the rate of 2% per month “pursuant to statute,” rather than at the legal rate of 6% per annum specified in CPLR 5004. CPLR 5004 expressly provides for the application of interest rates other than the legal rate of 6% per annum “where otherwise provided by statute”. In the instant case, the interest rate of 2% per month applied by Special Term is prescribed by subdivision 1 of section 675 of the Insurance Law”)

Interest was not tolled

Eagle Surgical Supply, Inc. v Country-Wide Ins. Co., 2018 NY Slip Op 50157(U)(App. Term 2d Dept, 2018)

“The Civil Court denied defendant’s requests, and a judgment was entered on May 21, 2015 awarding plaintiff the principal sum of $1,131.68 and, among other things, no-fault statutory prejudgment interest from January 8, 2007. As limited by its brief, defendant appeals from so much of the judgment as awarded plaintiff no-fault statutory prejudgment interest from January 8, 2007.

No-fault statutory prejudgment interest (see Insurance Law § 5106 [a]) begins to accrue when the action is commenced (see 11 NYCRR 65-3.9 [c]), “unless the applicant unreasonably delays the . . . court proceeding” (11 NYCRR 65-3.9 [d]). While a significant amount of time elapsed between the commencement of this action and the trial, defendant did not adequately demonstrate to the Civil Court, and there was nothing in the record to indicate, the reason for the protracted delay or that it was plaintiff which had “unreasonably delay[ed]” the action”

Tolling of interest due to failure to prosecute

Delta Diagnostic Radiology, P.C. v Country-Wide Ins. Co., 2018 NY Slip Op 50118(U)(App. Term 2d Dept. 2018)

No-fault statutory prejudgment interest accrues upon overdue first-party no-fault benefits at the rate of two percent per month “unless the applicant unreasonably delays the . . . court proceeding” (11 NYCRR 65-3.9 [a], [d]). While the court found that plaintiff was not entitled to the interest which had accrued between the commencement of the action on March 30, 2006 and the date plaintiff filed the notice of trial, May 30, 2013, plaintiff’s argument that the toll upon the accrual of interest should not begin until January 28, 2008, as plaintiff had not unreasonably delayed prosecution of the action prior to that date, is correct. Motions were made and discovery demands were served during the period between the commencement of the action and December 27, 2007, the date plaintiff served its second demand for interrogatories. Consequently, a motion by plaintiff to compel defendant to respond to the demand for interrogatories would have been premature prior to January 28, 2008 (see CPLR 2103 [a]; 3133 [a]; General Construction Law § 25-a). As a result, plaintiff is entitled to no-fault statutory prejudgment interest from the commencement of the action on March 30, 2006 through January 27, 2008.

that extra 40% interest on a $2,000 radiology bill will go a long way to paying fro Mr. Delta’s upkeep and expenses…

Giant Oops from the Appellate Term

B.Z. Chiropractic, P.C., As Assignee of Tony Dance v Allstate Ins. Co., 2017 NY Slip Op 96378(U)(App. Term 2d Dept. 2017)

“Motion by appellant for the clarification of a decision and order of this court dated August 18, 2017, which determined appeals from orders of the Civil Court of the City of New York, Queens County, entered November 19, 2015 and July 7, 2016, respectively, or, in the alternative, for leave to appeal to the Appellate Division from the decision and order of this court.

Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is

ORDERED that the branch of the motion seeking clarification is granted to the extent of clarifying that it was this court’s intention to note that interest be awarded at the rate of nine percent per year as set forth in CPLR 5004; and it is further,

ORDERED that the branch of the motion seeking leave to appeal to the Appellate Division is denied without prejudice to appellant’s other remedies, if any, as the portion of this court’s decision and order which appellant seeks to appeal is advisory and is not appealable as of right or by permission (see IndyMac Bank F.S.B. v Thompson, 99 AD3d 669 [2012]).”

Two things: CPLR 5004 as noted in McMillan v. UnionAmerica 70 AD2d 659 specifically holds that CPLR 5004 expressly allows for an interest rate other than (now 9%) when another statute says otherwise.  5106 and the regulations set forth 2% per month.  I am unsure why the Justices at the Appellate Term just could not admit they were wrong.

Also, I think this is totally appealable.  I think the Appellate Division would accept leave if it were sought.


Is post-judgment interest in a no-fault case 24% per annum or 9% per annum?

B.Z. Chiropractic, P.C. v Allstate Ins. Co., 2017 NY Slip Op 51091(U)(App. Term 2d Dept. 2017)

“A money judgment bears interest from the date of its entry (see CPLR 5003), and, generally, the interest accrues until the judgment is paid (see Matter of Matra Bldg. Corp. v [*2]Kucker, 19 AD3d 496 [2005]; Martin v Tafflock, 166 AD2d 635 [1990]). “Postjudgment interest is awarded as a penalty for the delayed payment of a judgment” (ERHAL Holding Corp. v Rusin, 252 AD2d 473, 474 [1998]). Contrary to defendant’s assertion, there is no evidence of actions or conduct by plaintiff which prevented defendant from paying the judgment (see ERHAL Holding Corp., 252 AD2d at 474; cf. Danielowich v PBL Dev., 292 AD2d 414 [2002]). Since plaintiff, as the prevailing party, was not required to make a demand for the money (see e.g. Feldman v Brodsky, 12 AD2d 347, 351 [1961]; Weinstein-Korn-Miller, NY Civ Prac ¶ 5003.01 [2d ed 2009]) and did not cause the delay in paying the judgment, the Civil Court erred in tolling the accrual of interest on the judgment. However, defendant demonstrated, through the submission of checks to plaintiff, which plaintiff had endorsed “without prejudice,” that defendant had partially paid the judgment and is, therefore, entitled to the entry of a partial satisfaction of judgment in the amount of $22,999.70 (see CPLR 5021 [a]). We note that, contrary to plaintiff’s position, postjudgment interest should be calculated pursuant to CPLR 5004 and not at the two percent per month rate provided for in 11 NYCRR 65-3.9 (a)

This case appears to conflict with:  Corona Hgts. Med., P.C. v Liberty Mut. Ins. Co., 32 Misc. 3d 8, 10 (App. Term 2d Dept. 2011)(“It is noted that plaintiff is not entitled to interest pursuant to the Civil Practice Law and Rules, since Insurance Law § 5106 (a) and the regulations promulgated thereunder supersede the provisions for interest contained in the CPLR”

Also, this case clashed with an older Second Department case (FYI: someone brought this one to my attention):  Matter of McMillan v. UnionAmerican Reinsurance Company, 70 AD2d 659 (2d Dept. 1979)(“Furthermore, the judgment properly provided that interest on the award continue to accrue at the rate of 2% per month “pursuant to statute”, rather than the legal rate of 6% Per annum specified in CPLR 5004.  CPLR 5004 expressly provides for the application of interest rates other than the legal rate of 6% per annum where otherwise provided by statute.  In the instance case, the interest rate of 2% per month applied by Special Term is prescribed by subdivision 1 of section 675 of the Insurance Law (see, also, 11 NYCRR 65.6[g][1]))”

I can understand the frustration that the court had about allowing old judgments to collect a large interest percentage (then compounded).  Clearly, the judgment clerk’s office should not be giving a better rate of return than what is obtained through the best investor out there.  Yet, the statute seems pretty clear and the Appellate Division, I think, hit this one on the head 38 years ago.

Interest when liability is stipulated

Mahoney v Brockbank, 2016 NY Slip Op 05630 (2d Dept. 2016)

“In short, we conclude that a stipulation as to liability does not trigger the accrual of prejudgment interest under CPLR 5002. Moreover, because the parties did not provide for prejudgment interest in their stipulation, the Supreme Court properly determined that prejudgment interest was to be computed from the date of the jury verdict on the issue of damages.”

When I read this case, all I thought is a rear-end collision  with serious injuries and a defendant stipulating to liability; the case takes 6 years to get to trial; and now, the plaintiff lost 54% interest on a case worth between $400,000-$800,000.  Is that stipulating away to malpractice?

Tolling of interest

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.

Windfall interest

V.S. Med. Servs., P.C. v Travelers Ins. Co., 2015 NY Slip Op 51760(U)(App. Term 2d Dept. 2015)

“With respect to the award of statutory interest, the record shows that plaintiff did nothing to prosecute this action for approximately three years after the parties had stipulated to vacate the dismissal of the action. Plaintiff should not be rewarded for its years of inaction by receiving a windfall of interest (see 11 NYCRR 65-3.9 [d]; Aminov v Country Wide Ins. Co., 43 Misc 3d 87, 89 [App Term, 2d, 11th & 13th Jud Dists 2014]).

Accordingly, the judgment is modified by providing that the accrual of statutory interest is further stayed to February 27, 2009, and the matter is remitted to the Civil Court for a recalculation of the interest in accordance herewith and the entry of an appropriate amended judgment thereafter.”

This makes sense.

This one fell under the radar

Arzu v NYC Tr. Auth., 2012 NY Slip Op 22008 (Civ. Ct. Kings Co. 2012)

The last thorny issue in PIP practice that has not gotten much attention: 65-3.9(d).  This is the toll of interest that applies when a plaintiff lets a case sit in limbo ad finitium.

As we all know, interest accrues at 2% per month.  For those who have been lucky to find old reg bills that were prosecuted within the 6-year SOL, that 2% is compounded.  Yet, what happens when a Plaintiff purchases an index number and bottles a case up for 10 years?

Well, one particular plaintiff attorney, in my estimation “mastered” this trick.  You cannot blame him and have to respect him.  If you are able to sit on receivables without a client demanding immediate recompense, then why would you not attempt to obtain at least 24% on your receivables, when the amount you can obtain from the bank on this money is 1.05%?

Here, we have an endorsed complaint for $25,000 and a plaintiff who happily waited for Defendant to draw first blood.  Defendant woefully failed to comprehend who he was dealing with and ended up in a situation where the within case was not even trial ready, and 10-years of interest accrued.

Defendant, however, appears to have outfoxed the Plaintiff by arguing that 3.9(d) applies and interest must toll.  Yet, Plaintiff still did not make out badly.  Here are some snippets of this case that should arouse some thought.

Rule of Law

(1) Significantly, claimants or applicants are also required to act promptly or face the tolling of insurance. Pursuant to 11 NYCRR §65-3.9(c), where the applicant does not commence litigation within 30 days of the denial of the claim or payment of benefits, the interest shall be tolled until such action is taken. Pursuant to 11 NYCRR §65-3.9(d), interest shall accrue once the applicant has submitted a dispute to arbitration of the courts “unless the applicant unreasonably delays the …court proceeding.” Thus, “[f]ailure to act promptly after a denial of claim results in a toll of the statutory interest provisions, for to do otherwise would reward a recalcitrant plaintiff with a windfall of punitive interest payments and would contravene the legislative goal of promptly resolving no fault claims.” Devonshire Surgical Facility et al v. American Transit Ins. Co., 2011 NY Slip Op 50793(U), 31 Misc 3d 1221(A) (Civil Ct., NY Co., 2011). See East Acupuncture. P.C., supra, 61 AD3d at 210.

(2) Per the clear language of the regulation, the interest which accrues on overdue no fault penalties acts as an incentive for both insurers and claimants to act promptly. The insurer must first promptly adjust the claims or face payment of interest to an applicant who prevails in litigation. However, once a denial or payment of benefits has been made by the insurer, the incentive to act promptly switches to the applicant who first initiate the lawsuit within 30 days of the denial and must then not unreasonably delay the prosecution of the case in order to avoid the tolling of interest. See, Devonshire Surgical, supra at 4; See also, LMK Psychological Services, Inc., 12 NY3d 217, 223-24 (2009) (the Superintendent of Insurance has interpreted the tolling of interest provision contained in subdivision (c) to apply, regardless of whether the particular denial at issue was untimely so as to encourage applicants to swiftly seek to resolve any dispute). Canarsie Med. Health, P.C. v. National Grange Mut. Ins. Co., 21 Misc 3d 791, 797 (Sup. Ct., NY Co. 2008)(The regulation contains a “built-in protection against potential delay by providing that where an applicant chooses not to timely press forward to seek redress for a denial, there will be no interest penalty assessed against the insurer until such time as the applicant chooses a remedy. This is in keeping with the intent of the No-Fault Law as a whole because it seeks to encourage the parties moving forward toward a quick resolution, while not economically favoring one side or the other.”).

Court’s Observation

(1) Here, plaintiff’s delay in prosecuting the case is especially egregious. Plaintiff first waited nearly four years to respond to discovery demands resulting in defendant filing a motion to preclude plaintiff from offering evidence. Only upon receipt of this motion did plaintiff enter into a So-Ordered stipulation whereby plaintiff was to provide copies of the allegedly unpaid [*4]bills within 45 days or be precluded from offering such evidence at trial. Defendant disputes that it ever received the sought disclosure as a rationalization as to why it did not serve plaintiff with a notice to resume prosecution and file a note of issue for approximately five years. Yet, ironically, plaintiff claims that it actually mailed the sought after discovery in 2005. Hence, by its own admission, plaintiff concedes that it waited five years to resume prosecution of the case, and that it was spurred to action by being served by defendant with a notice to resume prosecution and file a note of issue.


To make both the insurer and applicant equally responsible for moving the case forward would contravene both the explicit language of the regulations and the intent of the legislation by creating an incentive for the applicant to do nothing and hence receive a windfall in punitive interest payments as the case languished in perpetuity. As such, this Court holds that inaction on the part of the applicant for five years after it received discovery from the defendant constitutes an unreasonable delay and directs that the interest be tolled from one year after plaintiff complied with the discovery request.

An Aside

I probably would have made a pre-answer motion to dismiss under Lopes v Liberty Mut. Ins. Co., 24 Misc.3d 127(A)(App. Term 2d Dept. 2009).   I think there would be a decent chance of success and you would limit the interest exposure.  Be careful for Domotor issues; still, make Plaintiff properly plead out his case.