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and interest accrues from date overdue unless there is a timely and proper denial.
LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 2007 NY Slip Op 10443 (App. Div. 3d)
[W]e first reject defendant's contention that Supreme Court improperly
awarded interest to plaintiffs by not tolling the interest for the period
between 30 days after plaintiffs received the claim denial until plaintiffs
commenced this action. Since [*2]defendant failed to raise this challenge to the
proposed judgment before Supreme Court, the issue is unpreserved for our review
(see Ferran v Dwyer, 252 AD2d 758, 759 [1998]; Hopper v Lockey, 241 AD2d 892,
893-894 [1997]). In any event, the argument is meritless. Interest on untimely
paid no-fault claims is calculated at the rate of 2% per month, compounded,
commencing 30 days after proper presentment of the claim (see 11 NYCRR 65.15 [h] [1]; Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501, 501 [1994]; Smithtown Gen. Hosp. v State Farm Mut. Auto. Ins. Co., 207 AD2d 338, 339 [1994]). Interest will be stayed only in those circumstances where a claimant
has failed to submit the claim to arbitration or to commence an action within 30
days after receipt of the timely denial of the claim and does not, thereafter,
begin to accrue until action is taken (see East Acupuncture, P.C. v Allstate
Ins. Co., 15 Misc 3d 104, 106 [2007]). Here, defendant did not issue a proper
and timely denial to plaintiffs' no-fault claims and, thus, defendant is not
entitled to the benefit of the tolling provision. This interpretation of the
regulatory scheme promotes the prompt resolution and compensation of claims and
prohibits any reward to a "dilatory insurance company" (Elmont Open MRI &
Diagnostic Radiology, P.C. v Country-Wide Ins. Co., 15 Misc 3d 552, 558 [2007]).
Thus, to avoid penalizing injured parties and to encourage the prompt resolution
of claims, insurance companies are not entitled to a tolling of the accumulation
of interest where they have failed to pay or properly deny a claim within the
required time limits (see Cardinell v Allstate Ins. Co., 302 AD2d 772, 774
[2003]).
Finally, Supreme Court did not err in awarding counsel fees on a per claim
basis rather than a per assignor basis. When forced to commence an action to
compel the payment of a proper no-fault claim, a claimant is entitled to recover
counsel fees in the sum of 20% of the amount of first-party benefits, plus
interest, subject to a maximum fee of $850 (see Insurance Law § 5106 [a]; 11
NYCRR 65.17 [b] [6] [v]; 65.18 [f] [5]). Notably, the Superintendent of
Insurance issued an opinion letter on October 8, 2003 that counsel fees are
calculated on a per assignor basis (see Ops Gen Counsel NY Ins Dept No. 03-10-04
[Oct. 2003]; Marigliano v New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 1079
[2006]). We conclude that such opinion letter is not an appropriate
interpretation of the statute. Although we ordinarily give deference to the
agency's interpretation of its own regulations, such deference need not be
accorded where, as here, the interpretation conflicts with the explicit language
of the controlling statute (see Marigliano v New York Cent. Mut. Fire Ins. Co.,
15 Misc 3d 766, 774 [2007]; Alpha Chiropractic P.C. v State Farm Mut. Auto. Ins.
Co., 14 Misc 3d 673, 678 [2006]).
The Superintendent's interpretation undermines the goal of the no-fault
law to fully compensate a claimant for economic loss resulting from the wrongful
denial of a claim and wastes judicial assets by encouraging the commencement of
multiple actions in order to recover the maximum available counsel fees (see
Midwood Total Rehab. Med., P.C. v State Farm Mut. Auto. Ins. Co., 16 Misc 3d
480, 482 [2007]). Moreover, in spite of the Superintendent's opinion letter, the
well-settled case law is that the statute requires payment of counsel fees on a
per claim basis (see Marigliano v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d
at 772; Valley Stream Med. & Rehab., P.C. v Liberty Mut. Ins. Co., 15 Misc
3d 576 [2007]; Alpha Chiropractic P.C. v State Farm Mut. Auto. Ins. Co., 14 Misc
3d at 673; Willis Acupuncture, P.C. v Government Empls. Ins. Co., 6 Misc 3d
1002[A] [2004]).
A peculiar result of this case is that, since this case comes out of an Appellate Division, Trial Courts and Appellate Terms in the entire state must follow this until their own Appellate Division rules differently. Yes, even if you practice in the 1st or 2nd Department this decision is binding on the Trial Courts and Appellate Terms. If anyone is interested on why this is the case, have a look at: Striver 140 LLC v. Cruz, 1 Misc.3d 29 (App. Term 1st Dept. 2003);Fairbanks Gardens Co., v. Gandhi, 168 Misc.2d 128 aff’d. 244 A.D.2d 315 (2nd Dept. 1997); Mountain View Coach Lines, Inc. v. Storms, 102 A.D.2d 663 (2nd Dept. 1984).
For those who keep up on these things, compare this case with East Acupuncture, P.C. v AllstateIns. Co., 15 Misc 3d 104, 106 [2007]). In East Acu, the Court told us what happens when there is a timely and proper denial. This case clears up what happens when there is no timely and proper denial.
Edit: it looks like I was wrong about East Acu. Thanks to Jeffrey S. Siegel of Bruno, Gerbino & Soriano, LLP, for pointing it out in the comments.
Additionally, a closer reading of East Accupuncture would find the following: "Interest is thereafter stayed only where the claimant fails to submit the claim to arbitration or to commence an action within 30 days after receipt of the untimely denail of claim and resumes when the action is taken" Yes it says untimely. Also nice of the 3rd dep't to throw in the word "proper" Hmmm what does that mean. As far as the attorneys fees portion of the decision, what is the definition of the term "claim?" Wasn't that what the fight was about?Does this mean that the Appellate Division, 3rd overruled the Appellate Term 2nd?
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