MARIGLIANO LMT v. CENTRAL MUT FIRE INS CO

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Civil Court, City of New York,

Adam MARIGLIANO, LMT Assignee of Guadalope Galeas, Oscar Galeas, Rafael Flores, Plaintiff, v. N.Y. CENTRAL MUT. FIRE INS. CO., Defendant.

Decided: October 02, 2006

Baker, Sanders, Barshay, Grossmanfass, Muhlstock & Neuwirth, Mineola, for plaintiff. Cambio, Votto, Cassata & Gullo, Staten Island, for defendant.

The issue presented in this action to recover assigned first-party no-fault benefits is how attorney's fees should be calculated in an action that involves multiple assignors and the submission of multiple bills on different dates.

Factual Background:

The trial of this action was scheduled to begin on April 26, 2006. At that time, the parties entered into a written stipulation settling all aspects of the action except for the issue of attorney's fees.   Pursuant to the stipulation, defendant agreed to pay a specified portion of each of the 21 bills that were in dispute. The bills were submitted on behalf of three assignors and each bill was submitted on a different date.

Plaintiff maintains that for each bill, he is entitled to an attorney's fees in the amount of $60.00 or 20% of the amount of the bill, plus interest thereon, subject to a maximum of $850.00, which ever amount is greater.   Defendant maintains that for each assignor, plaintiff is entitled to an attorney's fee in the amount of $60.00 or 20% of the aggregate amount of all the bills that were submitted on behalf of that assignor, plus interest thereon, subject to a maximum of $850.00.

For the following reasons, the court agrees with defendant.

Discussion:

The no-fault regulation that governs awards of attorney's fees is 11 NYCRR 65-4.6.

11 NYCRR 65-4.6[c] provides that “[e]xcept as provided in subdivisions [a] and [b]of this section 1 , the minimum attorney's fee payable pursuant to this Subpart shall be $60.”  11 NYCRR 65-4.6[e] provides, in pertinent part, that “[f]or all other disputes subject to arbitration, subject to the provisions of subdivisions [a] and [c] of this section, the attorney's fee shall be limited as follows:  20 percent of the amount of first-party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850 ․”

On October 8, 2003 2 , the New York State Insurance Department issued an opinion letter interpreting 11 NYCRR 65-4.6[c] and 11 NYCRR 65-4.6[e]. The precise question addressed by the New York State Insurance Department in the opinion letter was:

When an assignee No-Fault provider submits bills for health services rendered to an eligible injured person to that person's insurer, and such bills are either denied or partially paid and the provider thereafter initiates a court action to contest the denials of the multiple bills which results in a payment award to the provider, is the provider entitled to a minimum attorney's fee of $60 for each denied bill now required to be paid, or is the proper amount of attorney's fees based upon the aggregate sum of all bills awarded reimbursement by the Court in the single action that was commenced (emphasis added )?

The New York State Insurance Department answered the question was as follows:

The minimum amount of attorney's fees awarded to an assignee health provider who has prevailed in a court action brought against a No-Fault insurer is based upon the aggregate amount of payment required to be reimbursed based upon the amount awarded for each bill which had been submitted and denied.   The minimum attorney fee amount of $60 is not due and owing for each bill submitted as part of the total amount of the disputed claim sought in the court action.”

The Department of Insurance concluded that court initiated actions to resolve payment disputes come within the purview of 11 NYCRR 65-4.6[e] since such disputes are “subject to arbitration” in that the provider had the option to seek a resolution of the dispute by submitting it for No-Fault arbitration in the first instance.   It went onto reason:

Section 65-4.6[e] makes it clear that the amount of attorney's fees awarded will be based upon 20% of the total amount of first party benefits awarded.   That total amount is derived from the total amount of individual bills disputed in either a court action or arbitration, 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 (emphasis added ).”

Pursuant to Section 65-4.6[e], the total amount due the attorney will be derived by calculating 20% of the total claim which is resolved in favor of the applicant, which amount is totaled from the total amount of disputed bills which are submitted on behalf of the applicant.   This total amount is subject to a cap of $850.00.   Where the 20% of total claim awarded results in an amount less than $60, the attorney is entitled to the minimum $60 fee pursuant to Section 65-4.6[c].

Since the 20% calculation is based upon benefits awarded from the total number of disputed bills in a court action commenced, an attorney would not be entitled to a $60 fee for each disputed bill which is resolved in favor of the applicant.

 It is well settled that an administrative agency's construction and interpretation of its own regulations is entitled to the greatest weight (Matter of Herzog v. Joy, 74 A.D.2d 372, 375, 428 N.Y.S.2d 1 [1st Dept. 1980], affd. 53 N.Y.2d 821, 439 N.Y.S.2d 922, 422 N.E.2d 582 [1981];  Tommy and Tina, Inc. v. Department of Consumer Affairs of the City of New York, 95 A.D.2d 724, 724, 464 N.Y.S.2d 132 [1983], aff'd 62 N.Y.2d 671, 476 N.Y.S.2d 290, 464 N.E.2d 988 [1984] ).   If an administrative agency's interpretation of one of its own regulations is neither irrational or unreasonable or counter to the clear wording of a statutory provision, it should be upheld (John Paterno, Inc. By and Through Paterno v. Curiale, 88 N.Y.2d 328, 333, 645 N.Y.S.2d 424, 668 N.E.2d 395 [1996], Matter of New York Pub. Interest Research Group v. New York State Dept. of Ins., 66 N.Y.2d 444, 448, 497 N.Y.S.2d 645, 488 N.E.2d 466 [1985];  see also, Matter of Medical Malpractice Ins. Assn. v. Superintendent of Ins., 72 N.Y.2d 753, 761-762, 537 N.Y.S.2d 1, 533 N.E.2d 1030 [1988] ).

11 NYCRR 65-4.6 was promulgated by the Department of Insurance, the administrative agency empowered to implement and interpret the No-Fault Law (see Ostrer v. Schenck, 41 N.Y.2d 782, 396 N.Y.S.2d 335, 364 N.E.2d 1107 [1977];  Medical Society of State v. Serio, 100 N.Y.2d 854, 863, 768 N.Y.S.2d 423, 800 N.E.2d 728 [2003];  Breen v. Cunard Lines Steamship Company, Ltd., 33 N.Y.2d 508, 511, 355 N.Y.S.2d 333, 311 N.E.2d 478 [1974];  Insurance Law § 301).   In the court's view, its interpretation of 11 NYCRR 65-4.6 was neither irrational, unreasonable or counter to any statutory provision 3 .  Plaintiff's suggestion that opinion letters issued by administrative agencies carry little weight is without merit (see, e.g. New York State Ass'n of Life Underwriters Inc. v. New York State Banking Dept., 190 A.D.2d 338, 342-343, 598 N.Y.S.2d 824 [3rd Dep't 1993], aff'd 83 N.Y.2d 353, 610 N.Y.S.2d 470, 632 N.E.2d 876 [1994] ) [holding that deference had to be given to an opinion letter issued by the New York State Banking Department which interpreted Banking Law § 96 unless the interpretation was irrational or unreasonable];  see also Ocean Diagnostic Imaging P.C. v. State Farm Mut. Auto. Ins. Co., 9 Misc.3d 73, 75, 803 N.Y.S.2d 333 [App. Term, 2d & 11th Jud. Dists.2005];  S & M Supply Inc. v. State Farm Mut. Auto. Ins. Co., 4 Misc.3d 130(A), 2004 N.Y. Slip Op. 50693[U], 2004 WL 1514330 [App. Term, 9th & 10th Jud. Dists.];  Bronx Medical Services, P.C. ex rel. Rivera v. Lumbermans Mut. Cas. Co., 2003 N.Y. Slip Op. 51022(U), 2003 WL 21402045 [App. Term, 1st Dep't] 4

Plaintiff's contention that the holdings in Smithtown General Hosp. v. State Farm Mut. Auto. Ins., Co., 207 A.D.2d 338, 339, 615 N.Y.S.2d 426 [2nd Dep't 1994] and Hempstead General Hosp. v. Insurance Co. of North America, 208 A.D.2d 501, 501-502, 617 N.Y.S.2d 478 [2nd Dep't 1994] are dispositive of the issues before the court is also without merit.   At issue in Smithtown General Hosp. and Hempstead General Hosp. was the interplay between 11 NYCRR 65.17(b)(6)(iii) and 11 NYCRR 65.17(b)(6)(v), the predecessor no-fault regulations to 11 NYCRR 65-4.6[c] and 11 NYCRR 65-4.6[e]. 11 NYCRR 65.17(b)(6)(iii) provided:  “Except as provided in subparagraphs (I) and (ii) of this paragraph, the minimum attorney's fee payable pursuant to this section shall be $60.”  11 NYCRR 65.17(b)(6)(v) provided, in pertinent part, as follows:  “For all other disputes subject to AAA and IDA arbitrations, subject to the provisions of subparagraphs (i) and (iii) of this paragraph, the attorney's fee shall be limited as follows:  20 percent of the amount of first-party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850.”

In both Smithtown General Hosp.5 and Hempstead General Hosp.6 the court interpreted 11 NYCRR 65.17(b)(6)(iii) and 11 NYCRR 65.17(b)(6)(v) as requiring awards of attorney's fees to be calculated on a “per claim” basis.   Plaintiff contends that since the language of 11 NYCRR 65.17(b)(6)(iii) and 11 NYCRR 65.17(b)(6)(v) is virtually identical to the language of 11 NYCRR 65-4.6[c] and 11 NYCRR 65-4.6[e], the holdings in Smithtown General Hosp. and Hempstead General Hosp. are controlling.   The court disagrees.   The holdings in Smithtown General Hosp. and Hempstead General Hosp. have little bearing on the precise issue presented here, whether the court should defer to Department of Insurance's interpretation of 11 NYCRR 65-4.6. This issue was not before the court in either Smithtown General Hosp. or Hempstead General Hosp. Indeed, at the time those cases were decided, the Department of Insurance had yet to interpret 11 NYCRR 65-4.6 or the predecessor regulations governing attorney fee awards.

Further, defendant correctly points out that the holding in Smithtown General Hosp. is not at all inconsistent with the Department of Insurance's interpretation of 11 NYCRR 65-4.6. While the court in Smithtown General Hosp. held that attorney's fees should be calculated on a “per claim” basis, the complaint 7 filed in Smithtown reflects that each of the 21 claims at issue in the action was submitted on behalf of a different assignor.   The holding is therefore perfectly consistent with Department of Insurance's view, as stated in the opinion letter, that attorneys fee awards should be based on “the total amount of individual bills disputed in either a court action or arbitration, 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 8 (emphasis added )”

 For all of the above reasons, the court adopts the Department of Insurance's interpretation of 11 NYCRR 65-4.6 and holds that for each assignor in the action, plaintiff is entitled to an attorney's fee in the amount of $60.00 or 20% of the total amount of the first-party benefits awarded for services provided to that assignor, plus interest thereon, which ever amount is greater, subject to a maximum of $850.00.

Accordingly, it is hereby

ORDERED that judgment be entered in plaintiff's favor in accordance with the stipulation of settlement together with interest and attorney's fees, as provided for under the No-Fault Law and the regulations promulgated thereunder, as well as costs and disbursements.   Attorney's fees are to be calculated as set forth above.

This constitutes the decision and order of the court.

FOOTNOTES

1.   Neither of these subdivisions apply in this case.

2.   http://​www.​ins. state.ny.us/ogco2003 /rg031004.htm

3.   The only statutory provision dealing with attorney's fees under the No-Fault Law is Insurance Law § 5106[a], which, in pertinent part, provides that “[i]f a valid claim [for first-party benefits] or portion was overdue, the claimant shall also be entitled to recover his attorney's reasonable fee, for services necessarily performed in connection with securing payment of the overdue claim, subject to limitations promulgated by the superintendent in regulations.”

4.   In Ocean Diagnostic Imaging P.C., S & M Supply Inc. and Bronx Medical Services, P.C., the various Appellate Terms held that the Department of Insurance's interpretation of a regulation as articulated in an advisory “Circular Letter” is entitled to great deference.   The court sees no reason why the Department of Insurance's interpretation of a regulation as articulated in an opinion letter should be treated differently.

5.   In Smithtown, the court stated:  “[c]oncerning attorneys' fees, once a court action has been commenced, 11 NYCRR 65.17(b)(6)(v) grants an attorneys' fee on no-fault insurance claims of 20% of the amount of first party benefits awarded plus interest, with a ceiling of $850 per claim.   Further, pursuant to 11 NYCRR 65.17(b)(6)(iii), with certain exceptions not here applicable, there is a minimum fee of $60 on each such claim.   Here, although the court awarded attorneys' fees, it failed to follow the formula provided under 11 NYCRR 65.17(b)(6)(v), 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.   Accordingly, upon remittitur, the Supreme Court is directed to calculate the attorneys' fee due in accordance with 11 NYCRR 65.17(b)(6)(v), and 65.17(b)(6)(iii)” (207 A.D.2d at 338, 615 N.Y.S.2d 426).

6.   In Hempstead General Hosp., the court stated:  “[o]nce an action to recover no-fault insurance benefits has been commenced, 11 NYCRR 65.17(b)(6)(v) grants attorney's fees of 20% of the amount of the first-party benefits awarded, plus interest, with a ceiling of $850 per claim․ Further, pursuant to 11 NYCRR 65.17(b)(6)(iii), with certain exceptions not applicable to this case, there is a minimum fee of $60 per claim․ Accordingly, upon remittitur, the Supreme Court is directed to calculate the attorney's fees due in accordance with 11 NYCRR 65.17(b)(6)(v) and 65.17(b)(6)(iii) (emphasis added )” (208 A.D.2d at 501, 617 N.Y.S.2d 478).

7.   Defendant provided the court with a copy of the complaint in support of its position.

8.   Whether holding in Hempstead General Hosp. conflicts with the Department of Insurance's interpretation of 11 NYCRR 65-4.6 remains unclear.

PETER P. SWEENEY, J.