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East Acupuncture, P.C. v. Allstate Ins. Co.

February 17, 2009

EAST ACUPUNCTURE, P.C., ETC., APPELLANT,
v.
ALLSTATE INS. CO., RESPONDENT.



APPEAL by the plaintiff, by permission, in an action to recover assigned first-party no-fault benefits for medical services rendered, from an order of the Appellate Term of the Supreme Court for the Second, Eleventh, and Thirteenth Judicial Districts, dated January 3, 2007, which reversed an order of the Civil Court of the City of New York (Milagros A. Matos, J.), dated June 27, 2005, and entered in Kings County, granting that branch of its motion which was for summary judgment awarding it interest on certain claims for no-fault benefits, with such interest accruing from 30 days after the defendant received proof of the claims, and remitted the matter to the Civil Court of the City of New York, Kings County, for a new calculation of interest accrued on those claims, with such interest accruing from the date it filed the complaint.

The opinion of the court was delivered by: Balkin, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

WILLIAM F. MASTRO, J.P., HOWARD MILLER, RUTH C. BALKIN and WILLIAM E. McCARTHY, JJ.

(Index No. 75115/05)

OPINION & ORDER

The principal issue on this appeal, which is a matter of conflicting decisions within our trial courts,*fn1 is whether a toll on the accrual of statutory interest on overdue no-fault claims pursuant to 11 NYCRR 65-3.9(c) applies to claims submitted to insurers by medical providers as assignees of policyholders, or is restricted to claims submitted directly by the policyholders themselves. We hold that the tolling regulation applies to both.

I.

The following facts are essentially undisputed. The plaintiff, East Acupuncture, P.C. (hereinafter East Acupuncture), a health care provider, treated several individuals injured in automobile accidents between July 20, 2000, and June 21, 2001 (hereinafter the injured persons), and received assignments of their no-fault benefits under automobile insurance policies issued by the defendant Allstate Ins. Co. (hereinafter Allstate). East Acupuncture, as an assignee, submitted claims for no-fault benefits to Allstate; in response, Allstate timely denied some claims, issued no denials for some claims, and untimely denied other claims.

As a result, by summons and verified complaint dated June 18, 2004, East Acupuncture, as the assignee of the injured persons, commenced the instant action against Allstate in the Civil Court of the City of New York, Kings County, to recover the claimed no-fault benefits, alleging, in relevant part, that it timely submitted bills and claims to Allstate for the payment of such services, but that they remained unpaid. Contemporaneously therewith, by notice of motion dated July 19, 2004, East Acupuncture moved for summary judgment in its favor for the amount of the principal sums demanded in the complaint plus statutory interest, arguing that Allstate had failed to establish that it paid or denied East Acupuncture's claims within the required 30 days under Insurance Law § 5106(a).

While that motion was pending, East Acupuncture and Allstate engaged in negotiations and ultimately entered into a stipulation of settlement providing that East Acupuncture would receive: 80 percent of the outstanding principal of all the assigned no-fault claims for which it sought payment; 100 percent of interest, accrued from the date East Acupuncture filed its complaint, on claims that Allstate had timely denied; and 90 percent of interest, accrued from 30 days after Allstate received proof of claim, on claims that Allstate had not denied. Finally, for claims that Allstate had untimely denied, the stipulation entitled East Acupuncture to recover 100% of interest "beginning either from [30] days after insurer received the claim or the date [East Acupuncture]'s complaint was filed to be DETERMINED BY THE COURT" (emphasis in original).

In their affirmations submitted to the Civil Court in support of and in opposition to East Acupuncture's motion for summary judgment, East Acupuncture and Allstate disagreed as to whether the interest toll pursuant to 11 NYCRR 65-3.9(c)*fn2 applied to the no-fault claims of medical providers as assignees of policyholders (hereinafter provider/assignees), such as East Acupuncture, or was limited to the claims submitted by the injured persons directly. More pointedly, East Acupuncture sought interest from 30 days after the claims' submission, while Allstate insisted that interest accrued only from the commencement date of the action. By order dated June 27, 2005, the Civil Court granted that branch of East Acupuncture's motion which was for summary judgment awarding it interest on the untimely denied claims, with such interest accruing from 30 days after Allstate received proof of the claims. The Civil Court concluded that the interest toll pursuant to 11 NYCRR 65-3.9(c) applied only to the claims of the injured persons, not to those of provider/assignees (see East Acupuncture, P.C. v Allstate Ins. Co., 8 Misc 3d 849, 851-852 [Civ Ct Kings County 2005]).

Allstate appealed from that order to the Appellate Term of the Supreme Court for the Second, Eleventh, and Thirteenth Judicial Districts. The parties reiterated their arguments below and were joined by the New York State Superintendent of Insurance (hereinafter the Superintendent), which was granted leave to file a brief and argue as amicus curiae.

Agreeing with Allstate and the Superintendent, the Appellate Term, by order dated January 3, 2007, reversed the order of the Civil Court and remitted the matter for a new calculation of interest on the untimely denied claims, with such interest accruing from the date East Acupuncture filed its complaint. The Appellate Term concluded that the interest toll pursuant to11 NYCRR 65-3.9(c) applied to the claims of both types of claimants, the injured persons and provider/assignees (see East Acupuncture, P.C. v Allstate Ins. Co., 15 Misc 3d 104 [App Term 2nd, 11th, & 13th Jud Dists 2007]). The Appellate Term additionally noted that although ...


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