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 ) and East Acupuncture, P.C. v Allstate Ins. Co. (61 AD3d 202). 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.
Parsons Med. Supply, Inc. v GEICO Gen. Ins. Co., 2013 NY Slip Op 52328(U)(App. Term 2d Dept. 2014)
“Based upon an assessment of damages submitted by plaintiff, a judgment was entered on March 12, 2011 awarding plaintiff the principal sum of $2,680 plus interest in the sum of $1,393.60, the interest being awarded from October 27, 2008, the date of the filing of the summons and complaint. Defendant thereafter moved to modify the judgment, arguing that, pursuant to CCA 412, the interest should have been awarded from January 26, 2009, the date of the service of the summons and complaint. The Civil Court denied defendant’s motion. We reverse.”
“In this case, defendant timely denied the claims at issue and plaintiff did not commence the action within 30 days the of receipt of those denials. Thus, the interest did not begin to accrue until plaintiff commenced this action. New York City Civil Court Act 400 (1) provides that a Civil Court action is commenced by the filing of a summons and complaint. ”
“Because the no-fault regulations provide that, in situations such as the one here, interest on a no-fault claim does not accrue until the date of the inception of the action, CCA 412 applies (see 65 Siegel’s Practice Review, The New § 412, on the Accrual of Interest, at 1 [Sept. 2005]; All Boro Psychological Servs., P.C. v GEICO Gen. Ins. Co., 38 Misc 3d 268 [Civ Ct, Kings County 2012]). Therefore, the interest in this case should have been awarded from the date of the service of the summons and complaint, rather than from the date of the filing thereof.”
Because the no-fault regulations provide that, in situations such as the one here, interest on a no-fault claim does not accrue until the date of the inception of the action, CCA 412 applies (see 65 Siegel’s Practice Review, The New § 412, on the Accrual of Interest, at 1 [Sept. 2005]; All Boro Psychological Servs., P.C. v GEICO Gen. Ins. Co., 38 Misc 3d 268 [Civ Ct, Kings County 2012]). Therefore, the interest in this case should have been awarded from the date of the service of the summons and complaint, rather than from the date of the filing thereof.
Judge Levine’s theory on this has been affirmed. It makes sense when you think about it.
Interesting? Snooze and Lose
Aminov v Country Wide Ins. Co., 2014 NY Slip Op 24066 (App. Term 2d Dept 2014)
“First, contrary to plaintiff’s argument on appeal, defendant did prove the timely mailing of the denial. Where, as here, a provider does not commence the action within 30 days of receipt of the denial, the Insurance Department Regulations provide that statutory prejudgment interest (see Insurance Law § 5106 [a]) begins to accumulate when the action is commenced (see Insurance Department Regulations [11 NYCRR] § 65-3.9 [c]), “unless the applicant unreasonably delays the . . . court proceeding” (Insurance Department Regulations [11 NYCRR] § 65-3.9 [d] [emphasis added]). In this case, plaintiff took no action for seven years. Plaintiff’s argument that defendant should be required to pay interest for that period because defendant could have attempted to move the case forward lacks merit. It is plaintiff who brought this action and plaintiff should not be rewarded for its years of inaction by receiving a windfall of interest (see Arzu v NYC Tr. Auth., 35 Misc 3d 210 [Civ Ct, Kings County 2012]; compare Igor Shtarkman Neurologist, P.C. v Allstate Ins. Co., 191 Misc 2d 76 [Nassau Dist Ct 2002]). Thus, in our opinion, the Civil Court properly had that the interest in this case should be awarded from August 7, 2008.”
The only saving grace that exists nowadays is that most cases in Queens will not linger 5 years post notice of trial. So, the annuity seekers can still 8 times what is paid at the bank on their money through filing in Civil Queens or Bronx. But, you cannot drop a case off, pick it up 10 years later and expect 10 years of interest anymore. Interestingly, I thought it was going to be an insurance carrier appealing a windfall interest case that would have invoked the first appellate interpretation of the unreasonable delay rule, not a medical provider seeking an additur to the judgment.
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?
MVAIC cannot prove lack of coverage and wants interest tolled indefinitely
Hilda-Bloor Med., P.C. v MVAIC, 2013 NY Slip Op 50382(U)(App. Term 1st Dept. 2013)
“Defendant failed to submit any competent proof establishing that plaintiff’s assignor was not qualified to receive no-fault benefits (see Englington Med., P.C. v Motor Veh. Acc. Indem. Corp., 81 AD3d 223, 229 ; Matter of MVAIC v Interboro Med. Care & Diagnostic PC, 73 AD3d 667 ). Nor did defendant show that plaintiff was required to “exhaust its remedies” prior to commencing this action”
“In the event it is determined that the cited tolling provision is applicable, the result would be the accrual of interest from the commencement date of the action and not, as defendant would have it, a complete moratorium on the payment of interest”
I like the theory that interest should toll indefinitely, and perhaps one who knowingly places a case into a court with rampant congestion should be charged with some of the accrued interest. It is not as if the defendant placed the case into Bronx Civil court, where matters get adjourned forever…
NY PIP at the US Supreme Court – not as exciting as you think
Dave Gottlieb has posted extensively on this case, and has some good insights on it. This case represents a course in Civil Procedure and its effects on no-fault are minimal. But I will sort this out for the non attorneys who read this, or the attorneys that forgot first year Civil Procedure in law school.
Shady Grove apparently filed a class action lawsuit in Federal court, arguing that Allsate failed to pay interest on numerous cases. The action was based solely upon New York no-fault law. Therefore, the federal court would only have jurisdiction to entertain this matter if there was diversity between any of the parties and $5 million in dispute. According to New York State law and, as is relevant to this case, a class action may not be brought when the damages solely consist of a penalty. Statutory interest and the resulting attorney fees are clearly penalties. Under the Federal Rules of Civil Procedure, a class action can be brought irrespective of whether the object of the action is to collect a penalty. So, you would think that since this case was brought in Federal court, the Federal Rules ipso facto would apply. This is not necessarily true.
In the last century, the Supreme Court held in the Erie and Hannah line of cases that where State substantive law applies, a Federal Court in a diversity matter must apply the state substantive law. The Court, however, held that where the difference between state law and federal law only applies procedural rules, the Federal procedural rules would apply.
The question then is whether the New York class action statute is procedural or substantive. The Second Circuit observed that it is, for the most part, hybrid and held that it is substantive to the extent that Shady Grove could not bring this action in Federal Court since it could not be brought in State Court.
The Supreme Court in a very divided opinion reversed the Second Circuit and held, as far as I am concerned, that the dispute is procedural. Therefore, since the action may be brought in Federal Court in accordance with the Federal Rules of Civil Procedure, the Second Circuit was incorrect in allowing for this lawsuit’s dismissal.
This case now allows for massive forum shopping, for the minimal amount of class action litigation that no-fault has spawned. However, it opens up the door to perhaps more class action lawsuits and the massive discovery, which is always advantageous to the plaintiff class members in this type of litigation. Perhaps, we have entered a new era in no-fault litigation? I do not think so, but as to issues involving interest and attorney fee disputes on a more global level, it is definitely possible.
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.
A conflict at the worst possible time for interest
I will save the commentary for another time, or another blog. My thoughts of the self-destructive behavior of attorneys probably belongs in an article I should write for the “journal of sociology”, which academics publish from time to time. I almost remember a theory in one of my criminology classes that was called “labeling theory”. In short, people live up to their labels. This is no exception.
On the law, the Appellate Division has now held that interest commences from the filing of a lawsuit if a bill is denied. Thus, all one needs to do is demonstrate that a denial was mailed before a lawsuit is commenced and pre-suit interest has just disappeared. This is completely in variance with the regulations which state that interest will toll upon issuance of a denial and re-commence after a suit or arbitration is commenced.
Thus assume a 2003 date of service that was submitted at that time. The bill is denied in 2007 and suit is commenced in 2009. The regulations, as I always understood them, stated that Applicant would be entitled to 4 years interest. The clock would then stop until 2009. In 2009, the clock would re-commence.
The Appellate Division has now held, in the above hypothetical, that the 2007 denial now wipes out all pre-suit interest. It is an interesting interpretation. From a policy standpoint, it makes sense since quick resolutions of disputed bills are the purported hallmark of no-fault. We all know that is false, in practice. But taken to its logical apex, the decision remains faithful to that intent.
The problem is that text which is clear on its face needs to be interpreeted as written, even in the face of a legislative intent that says otherwise. Be it as it may, this was a gift nobody probably saw coming.
Now to the central holding of East Acupuncture:
East Acupuncture, P.C. v Allstate Ins. Co.
2009 NY Slip Op 01191 (2d Dept. 2009)
“Accordingly, the Appellate Term properly determined that interest pursuant to Insurance Law § 5106(a) did not begin to accrue on the claims that were untimely denied by Allstate until East Acupuncture filed its complaint. Thus, the Appellate Term properly reversed the order of the Civil Court and remitted the matter for the new interest calculation. “