Saturday, October 07, 2006

Fee, Fi, Ho, Hum

As Matthew S. Lerner, Esq. of the New York Civil Law blawg recently posted1, Judge Peter Paul Sweeney of Civil Court, Richmond County has issued an opinion on the proper calculation of attorney's fees. See Marigliano v NY Cent. Mut. Fire Ins. Co., 2006 NY Slip Op 26395 (Civ Ct., Richmond Cty., 2006).

Judge Sweeney (now sitting once again in Civil Court, Kings County, and in fine spirits concerning the move as per conversations between His Honor and the undersigned yesterday) adopted the interpretation of the attorney's fees portions of the Regulations opined upon by the NYS Insurance Department on October 8, 2003. As the Ins. Dep't concluded therein:

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.

In Marigliano, plaintiff favored a calculation whereby each individual bill would be entitled to a separate fee calculation, each with its own $60/$850 boundaries (actually, plaintiff probably argued for a minimum of $80, but that's a recurring issue for a future post on No-Fault Urban Legends). Given that there were three (3) assignors in the suit, the Court's ruling will result in three (3) separate fee calculations, with the same $60/$850 bounds. Without having seen the underlying briefs, I am guessing that plaintiff's preferred calculation would have led to attorney's fees in excess of $1,200. Using the calculation set forth by the Ins. Dep't, attorney's fees probably didn't even exceed $850 (although the theoretical maximum for fees in a suit with three separate assignors would actually be $2,550, it is unlikely that the bills for each assignor reach that level).

This has been a pressing issue for some time, and I almost hope that the plaintiff appeals so that we can get a an on-point determination from the Appellate Term. Plaintiffs often break up very small bills into multiple causes of action in a Complaint in order to multiply their attorney's fees (and plaintiff's counsel in Marigliano is certainly no exception). Any bill lower than $300 will bring in attorney's fees at the $60 minimum, so sometimes plaintiffs will have 20+ causes of action per assignor, each with bills of around $150, in order to greatly boost the fees. Whereas using the calculation on which the Ins. Dep't has opined might not even result in fees that hit the $850 ceiling, using the plaintiffs' preferred calculation can far exceed $850, as seen in my rough guesses re: Marigliano above. It's obviously very frustrating when negotiating on behalf of a carrier that is otherwise dead in the water on their defense in a given action - a carrier either must face paying the full amount of the bills plus interest, fees (with a calculation likely done by the plaintiff and accepted by the clerk, anyway), and costs or give in to a demand that flouts regulatory limits. This often hardly constitutes a "settlement."

I am inclined to believe that if the Appellate Term of the 2d Dep't hears this matter, faced with a very clear opinion letter from the Insurance Department and no contrary and on-point Appellate Division holdings, they will be likely to uphold the Civil Court determination and memorialize the opinion letter as binding common law. In the absence of contrary Appellate Division holdings, the Appellate Term appears to favor adopting the opinions of the Ins. Dep't, as seen on the matter of whether providers can be reimbursed for services performed by independent contractors. See A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc. 3d 36 (App. Term, 2d Dep't, 2005).2 The Appellate Term also seems concerned of late with systemic abuses by no-fault medical providers and their attorneys, another factor weighing in the carriers' favor. See, e.g., the fairly recent scheduling of sanctions hearings by the Appellate Term for Marylou A. Paolucci, Esq. and Alden Banniettis, Esq.3 Of course, the Appellate Term is highly unpredictable, and I have surely been wrong before.

1. The post at bar is a modified version of a comment I posted to the subject New York Civil Law post.

2. However, the Appellate Term has never paid any attention to Ins. Dep't opinions that conflict with established appellate case law. For example, the Appellate Term has never given any weight to the January 11, 2000 opinion letter that medical necessity may be part of a plaintiff's prima facie burden (even where a carrier is precluded from raising the lack of medical necessity as a defense), as this is surely contradicted by the seminal Court of Appeals holding in Presbyterian Hospital v. Maryland Casualty Co., 90 N.Y.2d 274 (1997) and numerous appellate decisions holding that a plaintiff need only prove that it submitted claim forms to the carrier on which it stated the fact and amount of the loss sustained and that such claims have not been paid or properly denied.

3. Although the Appellate Term has published a motion decision whereby they declined to sanction Ms. Paolucci, I have not yet seen a decision either way concerning Mr. Banniettis.

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