Key Takeaway
Understanding no-fault insurance defaults and interest rules in New York. Expert Long Island attorneys explain the SZ Med v Lumbermens decision and 65-3.9(d). Call 516-750-0595.
This article is part of our ongoing damages coverage, with 16 published articles analyzing damages issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
Understanding No-Fault Insurance Defaults and Interest Rules in New York
The complex world of New York no-fault insurance involves intricate rules about defaults, interest calculations, and procedural requirements that can significantly impact both medical providers and injured parties. The recent appellate decision in SZ Med., P.C. v Lumbermens Mut. Cas. Co., 2010 NY Slip Op 20044 (App. Term 2d Dept. 2010), provides a fascinating look into these complex issues and highlights why attention to procedural details can make or break a case in the Long Island and New York City legal landscape.
The Strange Case of SZ Med. v. Lumbermens Mutual
This “default” case is quite strange. SZ Med., P.C. v Lumbermens Mut. Cas. Co., 2010 NY Slip Op 20044 (App. Term 2d Dept. 2010).
The majority and the dissent have a different take on the facts and circumstances of this matter. At its core, this case involves a summary judgment victory on default, where the lower court vacated the default but the appellate term reversed. The details are where this case gets nasty.
It is alleged that the judgment on the underlying order was not entered for 4 years after the victory on the motion. A motion to vacate was not filed for 8 months after a proposed judgment was served upon Defendant. There are allegations of improprieties involving an attorney promising to work something out, yet allegedly reneging on his promise. There are checks representing 40% of the balance that are alleged to be cashed, but have the word “void” written on them. It appears there are no denial of claim forms, so as to substantiate the over billing defense. I am assuming the affidavit of the carrier is equally devoid of any facts to clarify the matter. And then, there is 65-3.9(d)(the interest tolling provision involving the failure to prosecute a claim) which made its debut in appellate case law today. Also, Mr. Amos Weinberg’s name and his suspension from the practice of law were mentioned in the dissent. A lot of stuff for a 5015(a)(1) vacatur of default case.
That sums up the facts of this case.
The real issue that caused concern, for both the minority and the majority tangentially, involved the plaintiff waiting 4 years to enter a judgment, and collecting 24% per annum on the principle sum from when he was granted leave to enter judgment to when the judgment was entered. During the pre-LMK era, this was a non-issue because every late denial lost the interest toll. Thus, nobody concerned themselves with 3.9(d), since there were so many old denials and defective denials in circulation. The focus was on how to stop Pre-LMK non tolled penalty interest. Since it has been held that interest always tolls until an action is commenced, save those instances where a bill is not denied, the only way to obtain a return that is 12 times prime is to put a matter into litigation and sit on it. Some Plaintiffs do this, and given the rate of return that no-fault interest offers, it is not necessarily a bad idea from a business perspective.
But now that we are post LMK, there is now going to be a focus on closing the last loop hole to collect interest: 3.9(d). I think we all knew this was coming. Admittedly, this was not the best case to argue this point because the defendant’s papers seeking to vacate the default seemed porous.
As to the part about Mr. Weinberg breaking his promise, this could hold water if there was a better showing of a meritorious defense. Through reading thousands of decisions, the trend in the Second Department and the other Appellate Divisions is that the better the defense, the more forgiving the court will be as to finding a reasonable excuse. This is not always true – and we have seen many cases where a showing of a strong meritorious defense did not make up for a weak reasonable excuse. Since there was no meritorious defense through the presented proofs, the court turned a blind eye to this potential issue.
This is how I read this case. But mark my words: 3.9(d) will be the next monster that attacks the plaintiffs bar. And honestly, if an action is not being actively prosecuted, should a medical provider really be earning 24% on that money? It does not seem equitable to me.
Understanding New York’s No-Fault Insurance System
To fully appreciate the implications of the SZ Med. decision, it’s essential to understand the broader framework of New York’s no-fault insurance system and how it affects residents throughout Nassau County, Suffolk County, and the New York metropolitan area. This comprehensive system was designed to provide immediate medical coverage and lost wage benefits to injured parties regardless of fault, while reducing the burden on courts by eliminating many traditional tort claims.
Related Articles
- Understanding New York’s 2% Interest Rule on Overdue No-Fault Claims: DOI Clarification
- Post-judgment interest rates in no-fault cases: 24% or 9% per annum?
- PIP interest tolling case that fell under the radar
- When interest tolling applies in no-fault claims
- Court rules interest was not tolled in no-fault dispute
Legal Context
Why This Matters for Your Case
New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.
Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,353 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.
Keep Reading
More Damages Analysis
$5 Million Verdict Affirmed for Childhood Sexual Abuse Survivor Under NY Survivors Act
NY appellate court affirms $5M verdict for childhood sexual abuse survivor under the Survivors Act. Learn your rights. Call 516-750-0595 for a free consultation.
Feb 18, 2026
Damages – expert witness not necessary
New York appellate court rules that expert witness testimony is not always required to prove damages when injuries are straightforward and within a jury's understanding.
May 12, 2020
Understanding New York’s 2% Interest Rule on Overdue No-Fault Claims: DOI Clarification
Expert analysis of NY's 2% interest rule on overdue no-fault insurance claims. DOI clarification from experienced Long Island personal injury attorney.
Feb 8, 2011
Interest was not tolled
New York appeals court rules that no-fault statutory prejudgment interest continues to accrue during litigation delays unless the plaintiff unreasonably caused the delay.
Feb 8, 2018
Giant Oops from the Appellate Term
Appellate Term grants clarification motion on 9% interest rate in no-fault case despite CPLR 5004 allowing different rates when other statutes apply.
Dec 27, 2017
Tolling of interest
New York no-fault insurance law on statutory interest tolling when providers delay prosecution of claims against insurers.
Sep 16, 2016Common Questions
Frequently Asked Questions
What types of damages can I recover in a New York personal injury case?
You can recover economic damages (medical expenses, lost wages, future earnings) and non-economic damages (pain and suffering, emotional distress, loss of enjoyment of life). In certain cases, punitive damages may also be available if the defendant's conduct was willful or reckless.
How are pain and suffering damages calculated in New York?
New York does not cap pain and suffering damages in most cases. Juries consider the severity and permanence of injuries, impact on daily life, age of the victim, and comparable verdicts. Courts may reduce excessive verdicts that deviate materially from reasonable compensation.
Can I recover damages beyond no-fault insurance benefits?
Yes, if you meet the serious injury threshold under Insurance Law §5102(d). A personal injury lawsuit against the at-fault driver allows recovery of full medical expenses (beyond the $50,000 PIP limit), complete lost wages, and pain and suffering damages.
What statutory interest applies to overdue no-fault claims?
Under 11 NYCRR §65-3.9, overdue no-fault claims accrue interest at 2% per month from the date the claim became overdue. A claim is overdue if not paid or denied within 30 days of the insurer receiving proof of claim. This interest is a powerful incentive for prompt processing.
When does interest begin to accrue on a no-fault claim?
Interest begins on the 31st day after the insurer receives all requested verification (or the date verification was due if the insurer failed to request it timely). If the insurer fails to pay or deny within 30 days, 2% monthly interest accrues automatically until payment.
Was this article helpful?
About the Author
Jason Tenenbaum, Esq.
Jason Tenenbaum is the founding attorney of the Law Office of Jason Tenenbaum, P.C., headquartered at 326 Walt Whitman Road, Suite C, Huntington Station, New York 11746. With over 24 years of experience since founding the firm in 2002, Jason has written more than 1,000 appeals, handled over 100,000 no-fault insurance cases, and recovered over $100 million for clients across Long Island, Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, the Bronx, and Staten Island. He is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
Jason is admitted to practice in New York, New Jersey, Florida, Texas, Georgia, and Michigan state courts, as well as multiple federal courts. His 2,353+ published legal articles analyzing New York case law, procedural developments, and litigation strategy make him one of the most prolific legal commentators in the state. He earned his Juris Doctor from Syracuse University College of Law.
Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
If you need legal help with a damages matter, contact our office at (516) 750-0595 for a free consultation. We serve clients throughout Long Island (Huntington, Babylon, Islip, Brookhaven, Smithtown, Riverhead, Southampton, East Hampton), Nassau County (Hempstead, Garden City, Mineola, Great Neck, Manhasset, Freeport, Long Beach, Rockville Centre, Valley Stream, Westbury, Hicksville, Massapequa), Suffolk County (Hauppauge, Deer Park, Bay Shore, Central Islip, Patchogue, Brentwood), Queens, Brooklyn, Manhattan, the Bronx, Staten Island, and Westchester County. Prior results do not guarantee a similar outcome.
