Policy Exhaustion and priority of payment

Mount Sinai Hosp. v Dust Tr., Inc., 2013 NY Slip Op 01811 (2d Dept. 2013)

“The plaintiff hospital, as assignee of Alison Cassani, commenced this action to recover no-fault medical benefits from the defendant, a self-insured taxi corporation. The plaintiff moved for summary judgment on the complaint. However, the Supreme Court denied that motion on the ground that the defendant had not yet received all requested verification. The plaintiff subsequently moved for leave to reargue its motion for summary judgment. The Supreme Court, in an order entered September 28, 2011, granted leave to reargue and, upon reargument, granted the plaintiff’s motion for summary judgment on the complaint, finding that the requested verification had been received. A judgment was entered on October 13, 2011, in favor of the plaintiff and against the defendant in the principal sum of $59,609.44, plus interest, costs, and an attorney’s fee.”

(So at this point, it is learned that Defendant did not have a defense to the no-fault claim)

“The defendant thereafter made a motion, denominated as one pursuant to CPLR 2221(a) to modify so much of the order entered September 28, 2011, as, upon reargument, granted the plaintiff’s motion for summary judgment on the complaint, and to vacate the judgment, asserting that the judgment, together with the total amount of $181,379.82 it previously paid medical providers on behalf of Cassani, exceeded its no-fault coverage of $200,000, which was the amount of coverage required by the Rules of the New York City Taxi & Limousine Commission (see TLC Rule § 58-13, ). The defendant asserted that the plaintiff may only recover the sum of $18,620.18, which was the available balance of its coverage. The Supreme Court granted the defendant’s motion, and, in effect, upon renewal, vacated the order entered September 28, 2011, and the judgment entered October 13, 2011, and, thereupon, granted the plaintiff’s motion for summary judgment only to the extent of permitting it to recover the sum of $18,620.18 from the defendant, inclusive of interest, costs, and an attorney’s fee.”

(Motion to renew in actuality.  Defendant is seeking to limit its exposure now knowing that it is doomed on the merits)

“The issue of partial exhaustion of the defendant’s coverage was raised for the first time after the judgment was entered, even though the plaintiff had previously moved for summary judgment on the complaint, seeking a certain amount of benefits (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 82 AD3d 1085, 1086). No reasonable justification was provided for the failure to raise the issue of partial exhaustion earlier.”

(Court says this should have been part of an omnibus motion for summary judgment)

“The failure to present such reasonable justification by itself requires denial of the defendant’s motion, and, in any event, the evidence submitted in support of the motion, i.e., an affidavit of the defendant’s claims manager setting forth the policy limits and the amount of benefits allegedly paid to other medical providers, failed to establish the order in which the medical services were rendered, and the order in which the claims were received. Thus, on this record, it cannot be determined whether the defendant’s purported payments were made in compliance with 11 NYCRR 65-3.15.”

This is a very tough loss to take.

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Legal Update (February 2026): The regulatory framework governing no-fault insurance policy limits and priority of payment has been subject to multiple amendments since 2013, including updates to 11 NYCRR 65-3 provisions regarding coverage thresholds and claim processing procedures. Additionally, CPLR 2221 motion practice has evolved with procedural modifications that may affect reargument and vacatur standards in no-fault exhaustion cases. Practitioners should verify current regulatory provisions and recent appellate decisions when handling policy exhaustion matters and related motion practice.