Key Takeaway
Insurance companies must pay interest on delayed no-fault settlements in NY. Protect your rights and maximize recovery. Call 516-750-0595 for help.
Understanding Settlement Interest on Old No-Fault Cases in New York
When insurance companies fail to pay settlements promptly, the financial consequences can be substantial. The recent case Seaside Rehabilitation v Allstate Ins. Co., 2019 NY Slip Op 50918(U)(App. Term 2d Dept. 2019) demonstrates the important principle that settlement interest continues to accrue even when insurance companies delay payment for years.
What Happens When Insurance Companies Don’t Pay Settlements?
In the Seaside Rehabilitation case, a medical provider settled their no-fault insurance claim in open court on August 2, 2007. Despite the court-approved settlement, Allstate failed to pay the agreed amount. The provider had to wait nearly nine years before a judgment was finally entered on June 21, 2016, pursuant to CPLR 5003-a.
This type of delay is unfortunately common in no-fault insurance disputes throughout New York and Long Island. Insurance companies may drag out payments hoping that providers and injured individuals will accept less money or simply give up pursuing their rightful compensation.
The Interest Accrual Problem
When settlements aren’t paid promptly, the question becomes: does interest continue to accrue during the delay period? Insurance companies often argue that interest should be “tolled” or stopped during various periods, claiming that the delay wasn’t their fault.
In the Seaside case, Allstate tried to stay the accrual of no-fault statutory interest from the settlement date until August 23, 2016 – nearly nine years of interest they wanted to avoid paying.
Court Rules: Interest Continues to Accrue
The Appellate Term firmly rejected Allstates attempt to avoid paying interest, establishing several crucial principles for settlement interest in New York:
Settlement Creates Immediate Payment Obligation
Once a case settles, the court explained that “defendant was obligated to pay the agreed-upon amount to plaintiff” under CPLR 5003-a. The settlement itself creates the legal duty to pay – no additional demands or notices are required.
No Demand Required
Significantly, the court noted that “plaintiff, as the prevailing party, was not required to make a demand for the money.” This protects injured parties and medical providers from insurance companies who try to shift blame by claiming they weren’t properly asked for payment.
Insurance Company Must Prove Prevention
The burden is on the insurance company to demonstrate that the plaintiff somehow prevented them from making payment. As the court noted, “Defendant did not demonstrate that plaintiff had prevented defendant in any way from paying the settlement amount.”
This is a high bar for insurance companies to meet, and the Seaside case shows that mere delay tactics and procedural maneuvering won’t excuse the accrual of interest.
Implications for Personal Injury Cases
The Seaside Rehabilitation decision has significant implications for personal injury cases throughout New York and Long Island:
Medical Provider Rights
Medical providers who treat accident victims can be confident that once a settlement is reached, interest will continue to accrue if payment is delayed. This provides important financial protection for healthcare professionals who often wait months or years for insurance payments.
Assignment of Benefits
Many personal injury cases involve assignments of benefits, where injured parties assign their no-fault benefits directly to medical providers. The Seaside case confirms that these providers maintain strong rights to collect both the settlement amount and accumulated interest.
Insurance Company Tactics
Insurance companies can no longer use delay tactics as effectively to avoid interest obligations. The courts ruling makes clear that once a settlement is agreed upon, the clock keeps ticking on interest regardless of procedural delays.
Strategic Considerations for Legal Practitioners
The Seaside case provides important guidance for attorneys handling no-fault and personal injury cases:
Document Settlement Terms Carefully
When settling cases, ensure that settlement agreements clearly specify payment deadlines and interest provisions. While the court ruled favorably in Seaside, clear documentation prevents disputes.
Monitor Payment Deadlines
Track settlement payment dates carefully and be prepared to move for judgment entry promptly if insurance companies fail to pay. The longer the delay, the more substantial the interest accumulation becomes.
Challenge Interest Tolling Motions
Be prepared to oppose insurance company motions seeking to toll or stay interest accrual. The Seaside case provides strong precedent that such tolling requests should be denied absent clear evidence that the plaintiff prevented payment.
Related Case Law and Precedents
The Seaside decision follows a line of favorable precedents for injured parties and medical providers:
B.Z. Chiropractic, P.C. v Allstate
The court cited B.Z. Chiropractic, P.C. v Allstate Ins. Co., 56 Misc 3d 139, 2017 NY Slip Op 51091, which established that prevailing parties are not required to make payment demands after settlement.
Craniofacial Pain Management v Allstate
In Craniofacial Pain Mgt. v Allstate Ins. Co., 61 Misc 3d 155, 2018 NY Slip Op 51825, the court similarly rejected attempts to toll interest accrual, reinforcing the principle that settlement creates an immediate payment obligation.
Calculating Settlement Interest
Understanding how settlement interest is calculated is crucial for maximizing recovery:
No-Fault Statutory Interest Rate
No-fault cases in New York carry statutory interest rates that can be substantially higher than commercial rates. This makes prompt settlement payment even more important for insurance companies and delay even more costly.
Compounding Effect
Interest compounds over time, meaning that the financial impact of payment delays grows exponentially. In cases like Seaside, where payment was delayed for nearly nine years, the accumulated interest can exceed the original settlement amount.
Judgment Interest vs. Settlement Interest
The court noted an important distinction between settlement interest and post-judgment interest. Once judgment is entered, different interest calculations may apply, making it crucial to understand the timing of various legal proceedings.
Protecting Your Rights in Settlement Disputes
If youre dealing with delayed settlement payments from insurance companies in New York or Long Island, several steps can protect your interests:
Document Everything
Maintain careful records of settlement dates, payment deadlines, and any communications with insurance companies about payment delays.
Act Promptly
Dont wait indefinitely for settlement payments. The law provides mechanisms to convert settlements into judgments and enforce payment obligations.
Understand Your Interest Rights
Settlement interest can significantly increase your recovery, especially in cases involving substantial delays. Make sure youre calculating and claiming all interest youre entitled to receive.
Frequently Asked Questions About Settlement Interest
How long does an insurance company have to pay a settlement?
While specific payment deadlines can vary based on settlement agreements, insurance companies generally must pay settlements promptly once agreed upon. Unreasonable delays can result in substantial interest charges and additional legal consequences.
Can insurance companies avoid paying interest by claiming I didn’t demand payment?
No. As established in the Seaside case and related decisions, prevailing parties are not required to make payment demands after settlement. The settlement itself creates the obligation to pay, and interest accrues automatically if payment is delayed.
What interest rate applies to no-fault settlement delays in New York?
No-fault cases in New York carry statutory interest rates that are typically higher than standard commercial rates. The exact rate can depend on when the settlement was reached and other factors specific to your case.
Can I convert my settlement into a judgment if the insurance company won’t pay?
Yes. Under CPLR 5003-a, court settlements can be converted into judgments, which provide additional enforcement mechanisms and may affect interest calculations. This process should be handled promptly to protect your rights.
How much additional money can settlement interest add to my recovery?
Settlement interest can be substantial, especially in cases involving long delays. In some cases, accumulated interest can equal or exceed the original settlement amount. The exact calculation depends on the settlement amount, applicable interest rate, and length of delay.
If youre dealing with delayed settlement payments or insurance company disputes in New York or Long Island, dont let insurers avoid their obligations. Our experienced legal team understands settlement interest law and will fight to ensure you receive every dollar youre owed. Call 516-750-0595 for a free consultation.
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Common Questions
Frequently Asked Questions
How long do I have to file a personal injury claim in New York?
In New York, the statute of limitations for most personal injury claims is three years from the date of the accident. However, medical malpractice claims must be filed within two and a half years. It's crucial to consult with an attorney as soon as possible to protect your rights.
What damages can I recover in a personal injury case?
In New York personal injury cases, you may recover economic damages (medical expenses, lost wages, property damage) and non-economic damages (pain and suffering, emotional distress). The specific damages depend on the severity of your injuries and their impact on your life.
