This one fell under the radar

Understanding Interest Tolling in New York PIP Law: A Critical Legal Analysis

When dealing with Personal Injury Protection (PIP) claims in New York, particularly in Long Island and New York City jurisdictions, attorneys and claimants often encounter complex regulations that can significantly impact the financial outcome of their cases. One of the most overlooked yet crucial aspects involves the tolling of interest under 65-3.9(d) regulations—a provision that can either benefit or harm claimants depending on how they handle their cases.

The Law Office of Jason Tenenbaum has extensive experience navigating these intricate PIP regulations throughout Long Island and New York City, helping clients understand when their rights to statutory interest may be compromised by procedural delays.

The Radar Case: Arzu v NYC Transit Authority

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.

Understanding the Legal Framework

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, “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.”).

The Strategic Implications for Long Island and NYC Practitioners

This regulatory framework creates a complex strategic environment for attorneys practicing PIP law in Long Island and New York City. The balance between maximizing interest recovery and avoiding tolling requires careful timing and procedural awareness.

The 2% monthly interest rate represents a significant financial incentive—potentially yielding 24% annually when compounded. However, this opportunity comes with substantial risk. Once interest begins to toll under 65-3.9(d), claimants may find themselves in a position where years of potential interest accumulation are lost due to procedural delays.

Court’s Analysis and Observations

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.

Remedy

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.

Practical Lessons for PIP Practitioners

The Arzu case provides several critical insights for attorneys handling PIP matters in Long Island and New York City jurisdictions:

Timing Is Everything

The case demonstrates that successful PIP litigation requires meticulous attention to timing. While the prospect of substantial interest accumulation may seem attractive, the risk of tolling under 65-3.9(d) can quickly transform a potentially profitable case into a procedural nightmare.

Discovery Compliance

The court’s emphasis on the plaintiff’s four-year delay in responding to discovery demands highlights the importance of maintaining active case management. Even when pursuing a strategy of allowing interest to accumulate, basic procedural obligations must be met promptly.

Strategic Case Selection

Not all cases are suitable for interest accumulation strategies. Practitioners must carefully evaluate whether their clients can afford extended litigation timelines and whether the underlying claims have sufficient merit to justify the procedural risks.

Impact on Long Island and NYC Practice

In the competitive legal landscape of Long Island and New York City, understanding these nuanced PIP regulations can provide significant advantages for both plaintiffs’ and defense attorneys.

For Plaintiffs’ Attorneys

The decision to pursue interest accumulation strategies requires careful risk assessment. While successful implementation can result in substantial additional compensation, the consequences of triggering interest tolling can be severe.

For Defense Counsel

Recognition of potential 65-3.9(d) defenses can provide powerful tools for limiting exposure in cases where plaintiffs have delayed prosecution. However, defense counsel must also be mindful of their own obligations to move cases forward promptly.

Frequently Asked Questions

What is 65-3.9(d) in New York PIP law?

65-3.9(d) is a regulation that governs when interest stops accruing (tolls) in PIP cases. It provides that interest shall accrue once an applicant submits a dispute to arbitration or courts “unless the applicant unreasonably delays the court proceeding.” This prevents plaintiffs from sitting on cases indefinitely while interest compounds.

How much interest accrues on PIP claims?

Interest accrues at 2% per month on overdue PIP benefits. When compounded, this can result in approximately 24% annual interest, making it substantially higher than typical bank interest rates.

What constitutes “unreasonable delay” under the regulation?

Courts examine the specific circumstances of each case. In Arzu, the court found that waiting four years to respond to discovery and five years to resume prosecution constituted unreasonable delay sufficient to toll interest.

Can defense attorneys use 65-3.9(d) as a strategy?

Yes, defense attorneys can argue that plaintiff’s unreasonable delays should trigger interest tolling. However, they must be careful not to contribute to delays themselves, as both parties have obligations to move cases forward promptly.

What should plaintiffs do to avoid interest tolling?

Plaintiffs should maintain active prosecution of their cases, respond promptly to discovery demands, and avoid extended periods of inactivity. While interest accumulation strategies can be profitable, they must be balanced against the risk of tolling.

How does this apply to Long Island and NYC cases?

These regulations apply uniformly across New York State, including Long Island and New York City jurisdictions. However, local court practices and judicial attitudes may influence how these rules are applied in practice.

Contact Our Experienced PIP Legal Team

If you’re dealing with complex PIP interest calculations or facing potential tolling issues in Long Island or New York City, the experienced legal team at the Law Office of Jason Tenenbaum is here to help. Our deep understanding of New York’s no-fault regulations can help protect your rights and maximize your recovery.

Don’t let procedural delays cost you thousands in accumulated interest. Contact us today at 516-750-0595 for a consultation regarding your PIP case. Our team has the experience and knowledge to navigate these complex regulations and achieve the best possible outcome for your situation.

Whether you’re a healthcare provider seeking to recover unpaid benefits, an individual dealing with insurance claim denials, or an attorney looking for consultation on complex PIP matters, we’re here to help you understand your rights and options under New York law.

Related Articles

• When defaults affect interest calculations in no-fault claims
• New York’s 2% interest rule clarification on overdue no-fault claims
• When interest tolling applies in no-fault cases
• Cases where interest was not tolled despite claims
• Post-judgment interest rates: 24% vs 9% in no-fault cases

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Legal Update (February 2026): Since this 2012 post, New York’s no-fault regulations, including provisions under 11 NYCRR §65-3.9(d) regarding interest tolling, may have been subject to amendments or clarifications through regulatory updates or judicial interpretation. Practitioners should verify current interest calculation procedures, tolling provisions, and any modifications to the 2% monthly interest rate structure when handling PIP claims with extended litigation timelines.