Severance granted – reality is not a rosy

In New York no-fault insurance litigation, healthcare providers frequently consolidate multiple unrelated claims against a single insurance carrier into one lawsuit. This practice, while procedurally efficient for the plaintiff, creates significant joinder and severance issues that implicate fundamental principles of civil procedure. CPLR 603 governs the severance of claims and parties, authorizing courts to order separate trials or sever claims when justice requires.

The standards for severance in no-fault cases have been well-established through decades of Appellate Division jurisprudence. Courts examine whether the consolidated claims share common questions of law or fact sufficient to justify joint adjudication. When claims involve different assignors, different dates of service, different medical treatments, and different factual circumstances, they generally lack the commonality necessary for joinder. The mere fact that all claims are asserted against the same defendant insurance carrier does not create sufficient commonality.

Severance motions present strategic considerations for both parties. Insurance carriers seek severance to transform what appears to be a significant commercial litigation into multiple small-dollar collection actions. This strategy aims to discourage plaintiff’s counsel by increasing the time and expense required to prosecute each claim individually. Conversely, healthcare providers consolidate claims to achieve economies of scale, present a more substantial case to the court, and maintain leverage in potential settlement negotiations.

Case Background

High Definition MRI, P.C. v Mapfre Ins. Co. of N.Y., 2017 NY Slip Op 01800 (1st Dept. 2017) exemplifies the financial and strategic consequences of successful severance motions. High Definition MRI consolidated 198 separate no-fault claims into a single breach of contract action against Mapfre Insurance Company. The consolidated complaint sought to recover for unpaid medical services rendered to different patients on different dates spanning an extended time period.

Mapfre moved to sever the claims, arguing that each represented a distinct cause of action involving different assignors, different medical services, different denial letters, and different factual circumstances. The insurance carrier contended that no common issues of law or fact predominated across the 198 claims. High Definition MRI opposed severance, arguing that Mapfre’s anticipated defense of fraudulent incorporation created a common issue that affected all claims and justified consolidated adjudication.

The trial court granted Mapfre’s severance motion, and High Definition MRI appealed to the First Department seeking reversal of the severance order.

Jason Tenenbaum’s Analysis

“The court properly severed the breach of contract cause of action, since the 198 unrelated no-fault claims asserted therein raise no common issues of fact or law (see CPLR 603; Radiology Resource Network, P.C., v Fireman’s Fund Ins. Co., 12 AD3d 185 ). Plaintiff’s contention that the defense of fraudulent incorporation presents common factual and legal issues that predominate is unavailing, since defendant has made clear that it does not intend to pursue that defense”

So two things are going to happen here. First, Plaintiff walks away because they thought this would be a commercial action as opposed to a no-fault collection action and their shoes are too “white” to get sullied by a collections action. Second, Mapfre gets slaughtered in interest (let alone legal fees from their counsel) because cases in Civil New York go nowhere very slowly. By time these cases are final for trial and there is a judge ready to hear the cases, the interest factor will be at 300%. Add in hourly attorneys fees and who is the winner here? The expression is so true: Win the battle, lose the ____?

Legal Significance

The First Department’s decision reinforces the principle that healthcare providers cannot manufacture commonality through strategic pleading. The court’s rejection of the fraudulent incorporation argument is particularly instructive. Even when a defendant initially asserts a defense that would apply uniformly to all consolidated claims, if the defendant subsequently abandons that defense, it cannot serve as a basis for denying severance.

This holding places the burden on plaintiffs to identify genuine common issues at the time of the severance motion, not merely potential defenses that the defendant might raise. The decision also suggests that courts will scrutinize defendants’ litigation positions to determine whether claimed defenses are genuinely in play or merely hypothetical.

The case further clarifies that claims against the same insurance carrier, standing alone, do not satisfy CPLR 603’s commonality requirement. Each no-fault claim arises from a distinct contractual relationship between the insurer and a specific assignor, involves discrete medical services, and presents individualized questions about medical necessity, causation, and the validity of specific denials. These individualized issues predominate over any common questions about the defendant’s general claims handling practices.

Practical Implications

For insurance carriers defending consolidated no-fault actions, High Definition MRI provides a clear framework for seeking severance. Carriers should identify the distinct factual and legal issues presented by each claim, emphasize the lack of common proof, and clarify which defenses will actually be pursued at trial. Courts are particularly receptive to severance motions when the consolidated action includes dozens or hundreds of unrelated claims.

For healthcare providers, the decision illustrates the risks of over-consolidation. While joining multiple claims in a single action offers procedural efficiency, it exposes the provider to severance motions that can fundamentally alter the litigation landscape. Providers must carefully assess whether the claims truly share sufficient commonality to withstand severance scrutiny.

The decision also highlights the economic realities underlying no-fault litigation strategy. As counsel correctly observes, severed small-dollar claims in New York Civil Court can languish for years due to calendar congestion. During this period, statutory interest continues to accrue at nine percent per annum under CPLR 5004. While this benefits the ultimately successful plaintiff, it also means that the defendant carrier incurs substantial additional exposure, including both mounting interest obligations and ongoing legal fees for defending multiple severed actions. Neither party truly “wins” when litigation extends for years over relatively modest principal amounts.

Related Articles

• Understanding Severance in New York No-Fault Insurance Litigation
• Court rules on claim severance with multiple assignors
• When severance is denied in no-fault cases
• How severance requirements apply to NF-10 forms