Court Holds $850 No Fault Attorney Fee Applies to Every NF-3

Saturday, December 30, 2006 | 0

By Larry Rogak

Alpha Chiropractic P.C. a/a/o Stephen Whyte, Victoria Orlando, Maria Reynoso, Leovanny Ramirez, Rafael Tavarez, Javier Tavarez, Mirta Rodriguez, Arthur Jenkins v. State Farm Mutual Auto Ins., 2006 NY Slip Op 26498 (Civil Court, Queens County) (Siegal, j)

In this no-fault benefits suit, the court dealt with the question of how to apply statutory attorney fees.

"The relevant provisions governing attorney's fees, under the relevant regulations, are the following: 11 NYCRR section 65-3.10, which provides, in pertinent part, as follows: '(a) an applicant or an assignee shall be entitled to recover their attorney's fees, for services necessarily performed in connection with securing payment, if a valid claim or portion thereof was denied or overdue. *** If such a claim was overdue but not denied, the attorney's fee shall be equal to 20 percent of the amount of the first-party benefits and any additional first-party benefits plus interest payable pursuant to section 65-3.9 of this subpart, subject to a maximum fee of $60.'"

"However, pursuant to Insurance Law section 5106(a), such attorney's fees are 'subject to limitations promulgated by the superintendent [of the NY State Dept. of Insurance].' The regulation setting forth those limitations is 11 NYCRR section 65-4.6 which, as is relevant to the matter at bar, provides that:"

" (c) Except as provided in subdivisions (a) and (b) of this section [those sections dealing with claims that were neither denied nor overdue or which were resolved prior to arbitration], the minimum attorney's fee payable pursuant to this Subpart shall be $60."

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" (e) *** the attorney's fee shall be limited as follows: 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the***court, subject to a maximum fee of $850.***"

"The dispute between the parties is not so much as to the applicability of the foregoing provisions, but rather the manner in which they are to be applied: the plaintiff provider contending that the statutory interest and attorney's fees awarded should be based upon each individual claim as submitted through an NF-3 proof of claim; the defendant insurer arguing that the measure of the statutory interest and attorney's fees be determined by the aggregate of bills which are the subject of the within no-fault action and that interest should be calculated from the date of the commencement of the arbitration or lawsuit."

"The Appellate Division in Smithtown General Hospital v. State Farm, 207 AD2d 338, in reversing a decision regarding attorney's fees, held that the lower court 'incorrectly interpreted the $850 ceiling to apply to the entire action, rather than to each claim, and failed to set a minimum fee of $60 per claim.' Following the Smithtown case insofar as awarding attorney's fees for each claim set forth in separate causes of action, as opposed to the entire action, are the decisions in Willis Acupuncture, P.C. v. GEICO, 6 Misc 3rd 1002(A) [Civil Court, City of New York, Kings Co. 2004]) and A.M. Medical Services P.C. v. New York Central Mutual Fire Insurance Company, NYLJ, 7/24/06, p25, col 1 [Civil Court, City of New York, Queens Co.])"

"On the other hand, the court notes a recent decision holding contra to Smithtown - Marigliano, LMT v. NY Central Mutual Fire Insurance Company, 2006 NY Slip Op. 26395 [Civil Court, City of New York, Richmond Co.], citing an October 8, 2003 opinion letter issued by the New York State Department of Insurance (which opinion letter was also cited by the defendant in its memorandum). The court found such opinion not inconsistent with the Smithtown decision which dealt with multiple claims of several assignors, rather than of one assignor, as is the case herein and in Marigliano. The opinion letter states that "the total amount [of attorney's fees] is derived from the total amount of individual bills disputed in ***a court action***, regardless of whether one bill or multiple bills are presented as part of a total claim for benefits, based upon the health services rendered by a provider to the same eligible insured.'"

"Notwithstanding the Marigliano court's well-written decision in support of the October 8, 2003 opinion letter, this court respectfully disagrees and finds the opinion letter unpersuasive for several reasons."

"The interpretation sought by the Superintendent... would force a provider to wait until all treatment is concluded before billing an insurance company - an interpretation plainly running afoul of other insurance regulations. As was also said by the court in A.M. Medical Services, supra, 'such standard [proffered by the defendant herein and the Department of Insurance] not only flies in the face of the regulatory policy of promoting prompt payment of claims, but also provides carriers with a disincentive to settlement, and encourages the undesirable effect of increasing the existing tsunami that is pending no-fault litigation in this county.'"

"Moreover, there is the unambiguous, explicit language of the Appellate Division in the Smithtown decision. This court cannot ignore the plain fact that the statutory 'proof of claim' form refers to an NF-3 (or functional equivalent) which, while often enumerating a number of medical services provided over more than one date, relates to a single bill, there also often being more than one NF-3 upon which a no-fault complaint seeks recovery. The court also finds significant the fact that, despite years of opportunity to advocate the amending of the no-fault regulations set forth above to either clarify or redefine the term 'claim' as it relates to the application of interest and attorney's fees, the Insurance Department has failed to do so, while a number of no-fault provisions have been amended (e.g., section 65-3.10 and 65-4.6 - the very subject of the opinion letter-have, together, been amended several times since 2001)."

"Therefore, this court, following Smithtown and its progeny, finds that the statutory attorney's fees shall be awarded as per each NF-3 herein, rather than upon the total principle awarded by the court... Plaintiff shall further be awarded attorneys fees as to each NF-3 herein pertaining to assignor Victoria Orlando, equal to 20% of the amount set forth in each such NF-3 plus interest, provided that each such fee is not less than the statutory minimum of $60 nor exceed the statutory maximum of $850."

Lawrence N. Rogak is an insurance defense attorney in New York. He writes The Rogak Report, a daily insurance law newsletter, and his insurance law articles appear in several industry publications. For more information see href=http://www.Rogak.com target="new"> www.Rogak.com.

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