Parsons Med. Supply, Inc. v GEICO Gen. Ins. Co. (2013 NY Slip Op 52328(U))

Appeal from an order of the Civil Court of the City of New York, Kings County (Reginald A. Boddie, J.), entered October 19, 2011. The order, insofar as appealed from as limited by the brief, denied defendant’s motion to modify a judgment.

ORDERED that the order, insofar as appealed from, is reversed, with $30 costs, defendant’s motion to modify the judgment is granted, and the matter is remitted to the Civil Court for a re-calculation of statutory interest in accordance with the decision herein.

On this appeal in an action by a provider to recover assigned first-party no-fault benefits, the issue is whether prejudgment interest should accrue from the filing, or the service, of the summons and complaint.

Insofar as is relevant to this appeal, the facts are as follows: Plaintiff filed the summons and complaint in this action on October 27, 2008, but service was not completed until January 26, 2009. Subsequently, a nonjury trial was held, limited to the issue of medical necessity. At the beginning of the trial, the parties stipulated that, among other things, defendant had sent timely denials of the claims at issue in December 2007 and January 2008. After the trial, the Civil Court found that defendant had not proven its defense and directed that judgment be entered in favor of plaintiff. Based upon an assessment of damages submitted by plaintiff, a judgment was entered on March 12, 2011 awarding plaintiff the principal sum of $2,680 plus interest in the sum of $1,393.60, the interest being awarded from October 27, 2008, the date of the filing of the summons and complaint. Defendant thereafter moved to modify the judgment, arguing that, pursuant to CCA 412, the interest should have been awarded from January 26, 2009, the date of the service of the summons and complaint. The Civil Court denied defendant’s motion. We reverse.

The no-fault regulations provide, in pertinent part:

“If an applicant does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken . . .” (Insurance Department Regulations [11 NYCRR] § 65-3.9 [c]).
In this case, defendant timely denied the claims at issue and plaintiff did not commence the action within 30 days the of receipt of those denials. Thus, the interest did not begin to accrue until plaintiff commenced this action. New York City Civil Court Act 400 (1) provides that a Civil Court action is commenced by the filing of a summons and complaint. However, section 412 of the New York City Civil Court Act further provides:
“In any action, petition, order to show cause or other proceeding wherein interest accrues from the date of the inception of the action, petition, order or proceeding, said entitlement to interest shall not begin to accrue until service is completed by the actual index number being properly depicted on the summons and provided to the party to be charged with the payment of interest.”
Because the no-fault regulations provide that, in situations such as the one here, interest on a no-fault claim does not accrue until the date of the inception of the action, CCA 412 applies (see 65 Siegel’s Practice Review, The New § 412, on the Accrual of Interest, at 1 [Sept. 2005]; All Boro Psychological Servs., P.C. v GEICO Gen. Ins. Co., 38 Misc 3d 268 [Civ Ct, Kings County 2012]). Therefore, the interest in this case should have been awarded from the date of the service of the summons and complaint, rather than from the date of the filing thereof.

Accordingly, the order, insofar as appealed from, is reversed, defendant’s motion to modify the judgment is granted, and the matter is remitted to the Civil Court for a re-calculation of statutory interest in accordance with this decision.

Pesce, P.J., Weston and Rios, JJ., concur.

Decision Date: November 12, 2013