A conflict at the worst possible time for interest

I will save the commentary for another time, or another blog. My thoughts of the self-destructive behavior of attorneys probably belongs in an article I should write for the "journal of sociology", which academics publish from time to time. I almost remember a theory in one of my criminology classes that was called "labeling theory". In short, people live up to their labels. This is no exception.

On the law, the Appellate Division has now held that interest commences from the filing of a lawsuit if a bill is denied. Thus, all one needs to do is demonstrate that a denial was mailed before a lawsuit is commenced and pre-suit interest has just disappeared. This is completely in variance with the regulations which state that interest will toll upon issuance of a denial and re-commence after a suit or arbitration is commenced.

Thus assume a 2003 date of service that was submitted at that time. The bill is denied in 2007 and suit is commenced in 2009. The regulations, as I always understood them, stated that Applicant would be entitled to 4 years interest. The clock would then stop until 2009. In 2009, the clock would re-commence.

The Appellate Division has now held, in the above hypothetical, that the 2007 denial now wipes out all pre-suit interest. It is an interesting interpretation. From a policy standpoint, it makes sense since quick resolutions of disputed bills are the purported hallmark of no-fault. We all know that is false, in practice. But taken to its logical apex, the decision remains faithful to that intent.

The problem is that text which is clear on its face needs to be interpreeted as written, even in the face of a legislative intent that says otherwise. Be it as it may, this was a gift nobody probably saw coming.

Now to the central holding of East Acupuncture:


East Acupuncture, P.C. v Allstate Ins. Co.
2009 NY Slip Op 01191 (2d Dept. 2009)

"Accordingly, the Appellate Term properly determined that interest pursuant to Insurance Law § 5106(a) did not begin to accrue on the claims that were untimely denied by Allstate until East Acupuncture filed its complaint. Thus, the Appellate Term properly reversed the order of the Civil Court and remitted the matter for the new interest calculation. "