Windfall interest

Understanding Statutory Interest in No-Fault Insurance Cases

In no-fault insurance litigation, statutory interest serves as compensation for delays in payment and an incentive for timely case resolution. However, courts have consistently held that plaintiffs cannot benefit from their own inaction when seeking interest awards. The case of V.S. Med. Servs., P.C. v Travelers Ins. Co. illustrates this principle perfectly, showing how a medical provider’s three-year delay in prosecuting their case cost them significant interest payments.

This decision reinforces important precedents about interest when liability is stipulated and demonstrates the courts’ unwillingness to reward procedural delays with financial windfalls.

Jason Tenenbaum’s Analysis:

V.S. Med. Servs., P.C. v Travelers Ins. Co., 2015 NY Slip Op 51760(U)(App. Term 2d Dept. 2015)

“With respect to the award of statutory interest, the record shows that plaintiff did nothing to prosecute this action for approximately three years after the parties had stipulated to vacate the dismissal of the action. Plaintiff should not be rewarded for its years of inaction by receiving a windfall of interest (see 11 NYCRR 65-3.9 ; Aminov v Country Wide Ins. Co., 43 Misc 3d 87, 89 ).

Accordingly, the judgment is modified by providing that the accrual of statutory interest is further stayed to February 27, 2009, and the matter is remitted to the Civil Court for a recalculation of the interest in accordance herewith and the entry of an appropriate amended judgment thereafter.”

This makes sense.

Key Takeaway

Courts will not allow plaintiffs to benefit financially from their own procedural delays. When medical providers or other parties fail to actively prosecute their no-fault insurance claims, they risk losing statutory interest for the period of inaction. This principle prevents manipulation of the litigation process and ensures that interest calculations reflect genuine delays caused by defendants, not plaintiff negligence.