Key Takeaway
NY Appellate Division's East Acupuncture decision changes no-fault insurance interest calculations for Long Island healthcare providers and attorneys.
Understanding No-Fault Insurance Interest Calculations: A Critical Development for Long Island Providers
If you’re a healthcare provider or attorney dealing with New York’s no-fault insurance system on Long Island or in the greater NYC area, a recent Appellate Division decision has dramatically altered how interest calculations work on denied claims. This development affects thousands of providers across Nassau County, Suffolk County, and the five boroughs who rely on timely payment of no-fault benefits.
The East Acupuncture, P.C. v Allstate Ins. Co. decision represents a seismic shift in no-fault law that every provider and practitioner needs to understand. Let’s break down what this means for your practice and your bottom line.
Background: How No-Fault Interest Traditionally Worked
Under New York’s no-fault insurance regulations, healthcare providers have historically been entitled to interest on unpaid bills from the date of service. The system was designed to encourage prompt payment and discourage insurance companies from unnecessarily delaying legitimate claims.
For providers across Long Island—from Hempstead to Montauk, and throughout Queens, Brooklyn, Manhattan, the Bronx, and Staten Island—this interest provision served as a critical financial safeguard. When insurers delayed payment without justification, the accumulating interest helped offset the cash flow problems that could cripple a medical practice.
The East Acupuncture Decision: A Game Changer
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.
What This Means in Practice
For healthcare providers and attorneys handling no-fault cases in the New York metropolitan area, this decision creates several immediate concerns:
- Reduced Recovery Potential: Cases with long delays before litigation may lose years of accumulated interest
- Strategic Implications: Insurance companies now have a powerful incentive to issue formal denials rather than simply ignoring claims
- Cash Flow Impact: Providers may see significantly reduced settlements and judgments on older claims
The Legal Foundation: East Acupuncture v. Allstate
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. “
Breaking Down the Court’s Reasoning
The Appellate Division’s interpretation focuses on the timing of when interest begins to accrue after a denial. While the regulations appeared to provide for continuous interest with only a temporary pause during the denial period, the court read the statute more restrictively.
This interpretation aligns with the stated policy goal of encouraging quick resolution of disputed claims. However, as Jason notes, the practical reality of the no-fault system often falls short of this ideal, making the decision particularly impactful for providers who have waited years for resolution.
Practical Guidance for Long Island Healthcare Providers
Immediate Action Items
If you’re a healthcare provider in Nassau County, Suffolk County, or the five boroughs dealing with outstanding no-fault claims, consider these steps:
- Review Pending Claims: Identify any claims where formal denials were issued before litigation commenced
- Calculate Impact: Assess how the East Acupuncture rule affects your potential recovery on existing cases
- Adjust Strategy: Work with your attorney to determine whether earlier litigation might be warranted in certain cases
- Document Everything: Ensure proper documentation of all claim submissions and insurer responses
Long-Term Strategic Considerations
This decision fundamentally changes the risk-reward calculation for both providers and insurers. Providers may need to be more aggressive about pursuing litigation when faced with questionable denials, while insurers may find it advantageous to issue formal denials rather than simply delaying payment.
Frequently Asked Questions
Does this decision affect all no-fault claims in New York?
Yes, the Appellate Division decision applies statewide and affects how interest is calculated on all no-fault insurance claims where a formal denial was issued before litigation commenced.
Can this decision be appealed to the Court of Appeals?
While theoretically possible, the practical impact and the court’s reasoning make it unlikely that the Court of Appeals would reach a different conclusion without legislative intervention.
How should providers adjust their billing practices?
Providers should work closely with their attorneys to develop strategies that account for this new interest calculation method, potentially including more aggressive litigation timelines for questionable denials.
Does this affect arbitration proceedings?
The decision specifically mentions that interest re-commences after “suit or arbitration” is commenced, so the same principles should apply to arbitration proceedings under the no-fault system.
What can providers do to protect themselves going forward?
Maintain meticulous records, work with experienced no-fault attorneys, and consider more aggressive pursuit of questionable denials to minimize the impact of this rule on your practice’s financial health.
The Broader Implications for New York’s No-Fault System
This decision reflects broader tensions within New York’s no-fault insurance system. While designed to provide quick, efficient compensation for accident-related medical expenses, the system often becomes bogged down in disputes over coverage, medical necessity, and payment obligations.
For providers serving communities across Long Island—from the busy corridors of Roosevelt Hospital to the suburban practices of Levittown and beyond—understanding these legal developments is crucial for maintaining financial viability while continuing to provide quality care to accident victims.
Get Expert Legal Guidance
If you’re a healthcare provider or have been injured in a motor vehicle accident on Long Island or in the New York City area, understanding your rights under the no-fault system is more important than ever. The East Acupuncture decision highlights the complexity of no-fault law and the need for experienced legal representation.
Don’t let changes in the law cost you money you’re rightfully owed. Whether you’re dealing with denied claims, delayed payments, or disputes over medical necessity, having an experienced no-fault attorney on your side can make all the difference.
Call 516-750-0595 today to discuss your no-fault insurance issues with an attorney who understands both the law and the practical realities of New York’s complex insurance system. We serve clients throughout Nassau County, Suffolk County, and the five boroughs of New York City.
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- Critical Timing Issues in No-Fault Interest Claims
Legal Update (February 2026): The East Acupuncture decision’s impact on no-fault interest calculations discussed in this 2009 post may have been significantly modified by subsequent statutory amendments to Insurance Law § 5106, regulatory updates to interest rate calculations, and evolving Appellate Division interpretations over the past 17 years. Practitioners should verify current interest calculation provisions and recent case law developments before relying on the principles outlined in this analysis.
