Key Takeaway
Court ruling allows insurers to preserve policy limit defenses even when compelled payments exceed coverage limits, protecting exhaustion claims in no-fault cases.
St. Barnabas Hosp. v Country Wide Ins. Co., 2010 NY Slip Op 09121 (2d Dept. 2010)
Now this is an interesting one, and is quite hypertechnical in practice. Here is the pertinent part of the holding:
“ince the only issues decided in connection with the motion for summary judgment on its cause of action to recover no-fault medical payments were the questions of whether the defendant had failed to pay or deny the relevant claim within the statutory time frame, and whether the defendant had received verification of that claim, the defendant is not collaterally estopped from seeking to modify the amount of the judgment that was in satisfaction of the plaintiff’s claim, based upon the contention that the policy limits have been partially exhausted”
The best way of understanding this issue is to assume the following:
1. $50,000 policy
2. Bill in the amount of $45,000 denied on lack of medical necessity received 8/1/10
3. Bill in the amount of $30,000 denied on lack medical necessity received 9/1/10
Defendant goes to trial and loses the $30,000 bill on 10/1/10 and loses. Defendant then goes to trial on $45,000 bill and loses on 11/1/10.
According to this case, Defendant may now move for partial summary judgment on the $30,000 bill to the extent of reducing its liability to $5,000 (the policy limits).
Try this hypothetical. Bill #1 is $50,000, and assume same facts. Defendant after losing at trial on the $30,000 bill may now move for summary judgment to dismiss the complaint! Of course, many might be saying that Defendant should have moved at trial or through motion practice to dismiss the $30,000 bill based upon the policy exhaustion defense. Yet, it may happen that a decision on the $50,000 bill was pending when the $45,000 bill went to trial. The carrier thought they could win both. Oops.
Now, I have another hypothetical, but I am not going to share that on here, since I am going to test it out first. I cannot give away all my secrets on this blog.
