Key Takeaway
Court ruling on insurer subrogation rights and agency law in NY no-fault cases, establishing when subrogation accrues and notice requirements to carriers.
American Tr. Ins. Co. v Smiley, 2021 NY Slip Op 05807 (1st Dept. 2021)
(2) “Before Supreme Court, defendants did not contest the affiant’s assertion that the September 7, 2017 notice was mailed the same day, three days before Ortiz signed the general release in question (see CPLR 2103 )”
(1) “The notice dated September 7, 2017, advising defendants’ insurer of the payment of PIP benefits covering the medical bills of nonparty Damaris Ortiz and demanding reimbursement, establishes that plaintiff insurer’s “right to subrogation ‘accrue upon payment of the loss’” on September 5, 2017″
(3) Contrary to defendants’ contention, the notices were not required to be sent directly to them, instead of their insurer, which was their “agent acting within the scope of agency” (Center v Hampton Affiliates, 66 NY2d 782, 784 ), and from which plaintiff had already recovered payments it made for another injured individual’s medical bills due to defendants’ liability arising from the same automobile accident (see Insurance Law § 5105). The insurer’s “knowledge” of plaintiff’s subrogation right “is imputed to principal,” who are “bound by such knowledge although the information is never actually communicated to ” (Center, 66 NY2d at 784 ). Notably, prior to plaintiff’s first payment of benefits covering Ortiz, the bill of particulars served by Ortiz upon defendants in her personal injury action advised of the expected PIP coverage by plaintiff. As such, defendants “knw[] or should have known that a right to subrogation exist” at the time Ortiz signed the general release”
Under the law of agency, “Defendant” knew of APIP subrogration prior to the release execution. The end result is the defendant carrier will either stick its insured with ATIC’s bill or pay over the limits.
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Frequently Asked Questions
What is New York's no-fault insurance system?
New York's no-fault insurance system requires all drivers to carry Personal Injury Protection (PIP) coverage. This pays for medical expenses and lost wages regardless of who caused the accident, up to policy limits. However, you can only sue for additional damages if you meet the 'serious injury' threshold.
