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PIP Insurers Must Pay More Than Policy Limit When Denied Claims are Lost After Policy Exhaustion.

A recurring dilemma in New York PIP is the following situation: a claim is properly denied, and later, other claims are paid in the regular course of business which exhaust the policy. Later, the denied claim goes to trial or arbitration and the provider wins. Under the current state of the case law, in this scenario the insurer must pay the provider, even though the policy is exhausted (contrast with the situation where a bill is in delay status when the policy is exhausted by subsequent bills; in that case, the insurer does not have to pay). The post-exhaustion payment rule was set forth in Alleviation Medical v Allstate Ins. Co., 55 Misc 3d 44 (App Term 2d Dept 2017), and is relied upon in the case below. The Alleviation case is currently pending appeal to the Appellate Division (and I personally think it should be reversed, because of the general rule that policy exhaustion ends an insurer's obligation to pay). But until then, PIP insurers are on the hook for post-exhaustion judgments and awards for bills that were denied.--LNR

Appeal from an order of the Civil Court of the City of New York, Kings County (Reginald A. Boddie, J.), entered September 25, 2015. The order denied defendant's motion for summary judgment dismissing the complaint.

ORDERED that the order is modified by providing that the branch of defendant's motion seeking summary judgment dismissing so much of the complaint as sought to recover on a bill for $630 is granted; as so modified, the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant appeals from an order of the Civil Court which denied defendant's motion for summary judgment dismissing the complaint. In support of its motion, defendant alleged that, after it had denied the claims that are the subject of this action, it paid other claims and that those subsequent payments had exhausted the available coverage. However, even if true, this allegation does not warrant summary judgment dismissing the complaint on the basis of an exhaustion of available coverage defense (see 11 NYCRR 65-3.15; Alleviation Med. Servs., pc. v Allstate Ins. Co., 55 Misc 3d 44 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2017]; see also Nyack Hasp. v General Motors Acceptance Corp., 8 NY3d 294 [2007]).

Accordingly, the order is modified by providing that the branch of defendant's motion seeking summary judgment dismissing so much of the complaint as sought to recover on the bill for $630 is granted.

First Am. Alliance, Inc. v Ameriprise Ins. Co.

Edited by Lawrence N. Rogak

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Author:Rogak, Lawrence N.
Publication:Insurance Advocate
Date:Jan 14, 2019
Words:435
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