To practice in the New York “no-fault world,” you must have the following attributes: patience, determination, perseverance, a sense of humor and thick skin. In this area of the law, common sense is neither necessary nor even recommended. There is a plethora of pressing and practical issues that need to be addressed in order to prevent the no-fault world from imploding. This article will outline and expose some of these issues so that, hopefully, the New York State Department of Financial Services and the state Legislature can expeditiously resolve them.
While I have been a plaintiff’s personal injury attorney for 23 years, I have practiced in the area of New York no-fault law for over 13 years, starting on the plaintiff/applicant’s side, representing medical providers, and later switching to the defense side, representing insurers and self insurers. Since I have been on both sides of no-fault litigation, I have a unique perspective of evaluating the current no-fault system and can say with certainty that it is just not working. In fact, the system is clearly broken.
For over 40 years, the Superintendent of Insurance has promulgated regulations implementing the New York’s no-fault law, which are presently codified in Article 51 of the Insurance Law. “The primary aims of this new system were to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York Serio, 800 N.E.2d 728, 731 motorists.” Med. Soc’y v. Serio, 800 N.E.2d 728, 731 (N.Y.2003) It is beyond dispute that these objectives are not being met.
New York courts are overwhelmed by an unprecedented critical backlog of cases involving no-fault disputes. In the Bronx and Manhattan Civil Courts, it has become standard practice for motions to be adjourned several times with no court rules or scheduling orders providing guidance or policy with regard to the number of adjournments allowed.
Motions in these no-fault cases are adjourned not only at the request of one of the parties, who has often failed to provide opposition after numerous adjournments, but also on a sua sponte basis by court, because it either has more motions scheduled than can be heard in a single day or not enough judges to cover them.
As of Jan. 2, 2006, all no-fault cases filed in the New York County Civil Court must be noticed for a preliminary conference by the plaintiff, pursuant to 22 NYCRR 208.9. If a plaintiff’s counsel fails to comply with this rule, the defendant insurer is left with no recourse, as motions to compel discovery are not allowed, and filing for a preliminary conference is only permitted by a plaintiff. Additionally, after the preliminary conference is held, a compliance conference is scheduled, which is typically adjourned numerous times without any penalty or procedure for enforcement.
Even when motion practice is completed and a notice of trial has been filed, a typical no-fault case is likely years from actually appearing before a judge. In Queens Civil Court, cases are presently being adjourned for trial to 2018. In addition, in many cases that are appearing on the trial calendar for the second time, the Queens Civil Court is adjourning them and, based on the number of cases scheduled and the number of available judges, proceeding with cases bearing older index numbers. This provides a problem for both sides, as many of these cases require the production of an expert witness, and there is no guarantee as to whether a case will actually go forward on the scheduled trial date. Since there is no set procedure or guidance in place, it is difficult for counsel to properly represent and advise their clients, as producing an expert witness more than once for the same trial can be costly, especially in light of the low dollar amount of many of these cases.
In the Bronx Civil Court, trials are being adjourned to 2016. In the Nassau and Suffolk County District Courts, mandatory arbitration programs have been instituted which require arbitration for all civil actions where the recovery sought for each cause of action is $6,000 or less exclusive of costs and interest. See Rules of the Chief Judge, Sec. 28.2.
Due to the restriction of the number of cases assigned to an arbitrator, it can take several years after filing the notice of trial just to receive the arbitration date. If any party who has not defaulted is displeased with the arbitration award, it can demand a trial de novo, which once again prolongs the life of the case. It is obvious that in every case there will be at least one party that is unhappy with the outcome, therefore making these mandatory arbitrations a needless delay before the inevitable trial. While these lengthy delays may provide job security for defense counsel, they are detrimental to insurers, as interest is accruing on the claims. Since increased costs are unavoidably passed on to consumers in the form of higher premiums and/or reduced benefits, these delays also harm the general public and undermine the primary no-fault policy objectives of providing affordable coverage and expeditious medical benefits for eligible injured persons.??
It is clear that a plaintiff has the right to choose its venue. Pursuant to N.Y. Ins. Law §5106(b), every insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.
Once the election is made to arbitrate a claim for first-party no-fault benefits, the right to litigate future claims arising out of the same accident is foreclosed. See Roggio v. Nationwide Mut. Ins. Co., 66 N.Y.2d 260, 496 N.Y.S.2d 404, 487 N.E.2d 261 (1985).
However, no where in the law is the discrepancy amongst departments more apparent than in the no-fault world. The “cherry picking” of the venue has reached new limits. In the Second Department, unless a trial stipulation has been executed or motion practice regarding a party’s prima facie case has been decided, a plaintiff is required to produce a witness at trial in order to establish its prima facie case. See, Bajaj v. General Assur., 18 Misc.3d 25, 852 N.Y.S.2d 576 (A.T. 2d Dept. 2007). If the plaintiff medical provider is unable or unwilling to produce a witness at the time of trial, the courts may grant additional adjournments to plaintiffs for lack of a witness or even dismiss cases without prejudice. This provides the plaintiff medical provider the opportunity to attempt to refile the action in the First Department, where there is no requirement for the plaintiff to produce a witness to establish its prima facie case. See, RJ Medical, P.C. v. All-State Ins. Co., 15 Misc.3d 1140(A), 841 N.Y.S.2d 823 (NYC Civ. Ct., Bronx Co. 2007).
Another area where “cherry picking” the venue is apparent is a case where the statute of limitations is an issue. A plaintiff medical provider may choose to file its claim against a self insurer or any entity whose coverage is based upon a statutory obligation (as opposed to a contractual obligation) in the Second Department, as the statute of limitations is six years instead of the three year statute of limitations followed in the First Department (See, M.N. Dental Diagnostics, P.C. v. New York City Tr. Auth., 82 AD3d 409, 917 N.Y.S.2d 856 (1st Dept. 2011) where the First Department, held that the three year statute of limitations is applicable to no-fault suits against the NYCTA and self insurers.)
Similarly, pursuant to the NYCRR 65-4.5, arbitration is to be held “within the general locale of the applicant’s residence but, in no event, more than 100 miles from such residence.” Notwithstanding this rule, practically speaking, the American Arbitration Association schedules arbitrations in the county where the applicant’s counsel is located and not within the general locale of the applicant’s residence. This has prompted applicant’s counsels to open offices in different departments and to “cherry pick” their venue by choosing the most beneficial address and filing in the department whose case law best supports their position in the particular case.
For example, in Unitrin Advantage Ins., 82 A.D.3d 559, 918 N.Y.S.2d 473, the First Department, reaffirmed that an assignor’s failure to appear for the requested IMEs (or EUO’s) voids the policy ab initio and allows the insurer to deny claims retroactively to the date of loss, regardless of whether the denials were timely issued. Therefore, if an applicant has a claim where EUO or IME no shows are an issue, it may be beneficial for them to file that claim in the Second Department. As arbitrators typically follow the laws in the department where they sit, it should come as no surprise that many applicants’ counsels have recently decided to move their offices, or establish satellite offices on Long Island (which is part of the Second Department), thereby situating their cases outside the First Department and case law, such as Unitrin, which is unfavorable to their clients.
Due to the recent increase in no-fault filings, the number of arbitrations has surged in recent years. Although numbers for 2013 are not yet available, in 2012, the American Arbitration Association received 143,000 new arbitration filings, a 50 percent increase from 2011 and more than double the filings in 2010. Given this extraordinary uptick in demand, the American Arbitration Association hired 31 new arbitrators in 2012, with the largest number of these arbitrators sitting in Nassau County (Second Department).
Finally, pursuant to 11 NYCRR 65-3.9(d)), “[i]f an applicant has submitted a dispute to arbitration or the courts, interest shall accumulate, unless the applicant unreasonably delays the arbitration or court proceeding. “
As thousands of no-fault cases linger while awaiting trial, pursuant to this rule, insurers and self insurers are faced with the staggering accrual of interest. Since, under the current no-fault system, the court’s delay will not stay the accrual of interest, this built-in lag time is frequently used by plaintiff’s counsel as a “bargaining chip.”
In sum, based on my years of experience practicing no-fault law from both plaintiff/applicant/provider and defendant/insurer/self-insurer perspectives, it is my opinion that the current no-fault system is severely broken and barely functional.
The foregoing issues, until addressed and rectified by the Department of Financial Services and the Legislature, will continue to snowball and will persist in impeding and obstructing the no-fault system, which is intended to promptly and economically resolve claims for first-party benefits.
Robyn M. Brilliant is a solo practitioner, practicing in the areas of no-fault law and personal injury. Susan Nudelman, an attorney, and Brandon Hughes, legal assistant for Robyn Brilliant, assisted in the preparation of this article.