Policy Exhaustion (again) must comport with the priority of payment regimen

Ortho Passive Motion, Inc. v Allstate Ins. Co., 2017 NY Slip Op 50771(U)(App. Term 2d Dept. 2017)

(1) “Following a nonjury trial in this action by a provider to recover assigned first-party no-fault benefits, the Civil Court (Lisa S. Ottley, J.) awarded plaintiff a judgment in the principal sum of $2,114.50. The court noted that the parties had stipulated that, among other things, defendant had timely denied the claims at issue. The judgment was entered on March 3, 2014. Eight months later, defendant moved, insofar as is relevant to this appeal, pursuant to CPLR 5019 (a) and 5240, to modify the judgment on the ground that the coverage limits of the insurance policy had been exhausted. Plaintiff opposed the motion. Defendant appeals from so much of an order of the Civil Court entered July 6, 2015 as denied defendant’s motion.”

(2) “In support of its motion, defendant argued that there are no funds available to pay the judgment because the $50,000 policy limit in basic personal injury protection had been exhausted. Assuming, arguendo, that such contention, if established, would entitle defendant to some form of postjudgment relief (see e.g. CPLR 5015 ), we find that, in any event, defendant’s motion papers failed to establish an exhaustion of the coverage limits of the insurance policy at issue, as defendant failed to demonstrate that the policy had been exhausted at the time the claims at issue were deemed complete (see 11 NYCRR 65-3.15; Alleviation Med. Servs., P.C. v Allstate Ins. Co., 55 Misc 3d 44 ; see Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 )”

This case does not establish a set of facts engendering sympathy.  Allstate should have known the policy was exhausted when the trial occurred (this would not change the outcome but it could have avoided procedural nuances that make this case problematic outside the substantive issue).  Assuming the policy exhausted after entry of judgment, then Allstate really messed up since they knew they had or would receive a judgment.  Looks like a bad set of facts.

Related Articles

• Policy exhaustion and priority of payment principles
• Priority of payment requirements revisited
• Policy exhaustion appeals heading to Madison Avenue
• Partner affirmation requirements in policy exhaustion cases
• New York No-Fault Insurance Law

Legal Update (February 2026): Since this 2017 decision, New York’s no-fault regulations under 11 NYCRR Part 65 have undergone periodic amendments, and the priority of payment provisions governing policy exhaustion may have been modified or clarified through regulatory updates. Additionally, subsequent case law may have further refined the standards for demonstrating policy exhaustion in post-judgment relief motions. Practitioners should verify current regulatory provisions and recent appellate decisions when addressing policy exhaustion defenses and priority of payment requirements.