August 10, 2016

Kew Gardens Med & Rehab, P.C. v Country-Wide Ins. Co. (2016 NY Slip Op 51240(U))

Headnote

The main issue in this case was whether a medical services provider who failed to commence a no-fault action within 30 days of receipt of an insurer's denial of a claim form should be awarded statutory interest, and if so, when interest should begin to accrue. The court held that statutory prejudgment interest does not begin to accumulate until an action is commenced and that if the provider unreasonably delays the court proceeding, interest should not be awarded. The court found that the plaintiff in this case took no meaningful action to prosecute the case until it served a motion to compel discovery on August 30, 2013, and therefore, interest should be computed from that date rather than from April 30, 2002. The judgment was modified to reflect this decision.

Reported in New York Official Reports at Kew Gardens Med & Rehab, P.C. v Country-Wide Ins. Co. (2016 NY Slip Op 51240(U))

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Kew Gardens Med and Rehab, P.C., as Assignee of ISHMAIL ATRAZ, Respondent,
against
Country-Wide Insurance Company, Appellant.

Appeal from a judgment of the Civil Court of the City of New York, Queens County (Richard G. Latin, J.), entered July 29, 2014. The judgment, insofar as appealed from as limited by the brief, entered pursuant to so much of an order of the same court as, upon granting plaintiff’s motion for summary judgment, directed that the judgment include an award of statutory interest pursuant to Insurance Law § 5106 (a), in the sum of $15,457.93, computed from April 30, 2002.

ORDERED that the judgment, insofar as appealed from, is modified by deleting the provisions thereof computing statutory interest pursuant to Insurance Law § 5106 (a) from April 30, 2002 and awarding interest in the sum of $15,457.93, and by providing that interest be computed from August 30, 2013; as so modified, the judgment, insofar as appealed from, is affirmed, without costs, and the matter is remitted to the Civil Court for a recalculation of the statutory interest pursuant to Insurance Law § 5106 (a) in accordance herewith, and the entry of an appropriate amended judgment thereafter.

Plaintiff commenced this action to recover assigned first-party no-fault benefits in April 2002. By order dated July 3, 2014, the Civil Court granted plaintiff’s motion for summary judgment and directed that the judgment include statutory interest. A judgment was entered pursuant to that order, which awarded plaintiff, among other sums, the principal amount of $5,255.74 and $15,457.93 in statutory interest (see Insurance Law § 5106 [a]), computed as of April 30, 2002. On appeal from the judgment, defendant limits its arguments to the award of statutory interest, contending that, due to plaintiff’s inaction, it should not have been awarded statutory interest or, in the alternative, that statutory interest should not begin to accrue until August 30, 2013, when plaintiff served a motion to compel discovery.

Where a provider does not commence a no-fault action within 30 days of receipt of the insurer’s denial of claim form, the Insurance Department Regulations provide that statutory prejudgment interest (see Insurance Law § 5106 [a]) does not begin to accumulate until an action is commenced (11 NYCRR 65—3.9 [c]). If an action has been commenced, statutory interest accumulates “unless the applicant unreasonably delays the … court proceeding” (11 NYCRR 65—3.9 [d]). In this case, plaintiff took no meaningful action to prosecute the case until it served a motion to compel discovery on August 30, 2013. Plaintiff should not be rewarded for its years of inaction by receiving a windfall of interest (see V.S. Med. Servs., P.C. v Travelers Ins. Co., 49 Misc 3d 152[A], 2015 NY Slip Op 51760[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; Aminov v Country Wide Ins. Co., 43 Misc 3d 87 [App Term, 2d Dept, 2d, 11th & 13th [*2]Jud Dists 2014]).

Accordingly, the judgment, insofar as appealed from, is modified by deleting the provisions thereof computing statutory interest from April 30, 2002 and awarding interest in the sum of $15,457.93, and by providing that interest be computed from August 30, 2013. The matter is remitted to the Civil Court for a recalculation of the statutory interest pursuant to Insurance Law § 5106 (a) and the entry of an appropriate amended judgment thereafter.

Pesce, P.J., Solomon and Elliot, JJ., concur.

Decision Date: August 10, 2016