This is an action brought by plaintiff Brian Gokey (plaintiff) to recover unpaid no-fault insurance benefits from defendants Allstate Insurance Company (Allstate) and Blue Ridge Insurance Company a/k/a General Casualty of Wisconsin (Blue Ridge). The action arises out of an automobile accident that occurred in March 2003. Shortly before this case was to be tried, Allstate settled with plaintiff for fifty thousand dollars ($50,000.00), most of which was applied to outstanding unpaid medical bills.

The case against Blue Ridge was tried before the Court in a single day on October 29, 2008. Three witnesses testified on plaintiff's behalf: Dr. Robert Roth, plaintiff's primary care physician, who treated plaintiff for injuries sustained in the accident; plaintiff himself; and Kathy Murphy, a legal secretary at plaintiff's counsel's firm who mailed numerous documents relating to plaintiff's disability to both defendants. Blue Ridge presented no evidence.

In addition to the testimony of the three witnesses, the Court also received a number of documents into evidence on consent of both parties. The Court finds the testimony adduced to be credible and also credits the information contained in the various trial exhibits. Based upon this evidence, the Court makes the following Findings of Fact and Conclusions of Law:

Plaintiff, currently forty-four (44) years old, had been self-employed at his house painting business since 1995. By the end of 2002 the business was quite successful, employing up to nine or ten people during the busy season and owning a number of vehicles and other pieces of equipment.

Shortly after 1:00 p.m. on March 8, 2003, plaintiff was riding in the passenger seat of a vehicle being driven by a friend. While stopped at an intersection in Kingston, another vehicle collided with the rear of the car in which plaintiff was riding. Plaintiff was propelled sharply forward and felt intense pain in his lower back.

Plaintiff was transported to a nearby hospital. He was examined, prescribed pain medication, and directed to his primary care physician for followup care. Plaintiff complied with these recommendations.

It was ultimately determined that plaintiff had suffered the herniation of two lumbar discs in the accident. His doctors first attempted to treat plaintiff's intense pain with conservative treatment options such as physical therapy and medication. When these attempts proved to be futile, plaintiff underwent a double spinal fusion operation on several lower vertebrae. Even this operation was ultimately not successful in alleviating plaintiff's pain. He now has difficulty walking, standing or sitting for prolonged periods. Plaintiff's sleep is also frequently interrupted by pain.

From the time of the accident, plaintiff has been unable to return to his work. He is unable to perform the demanding physical tasks required of a house painter, and has even found it difficult to visit job sites to supervise other workers. His business having [*2]failed, plaintiff has since relocated to Florida and is unemployed.

In May 2003 plaintiff submitted the two-page "Application for Motor Vehicle No-Faults Benefits" (New York State Form NF-2) to Blue Ridge, the "excess" insurer for no-fault benefits (Allstate being the primary carrier).^[FN1] In that document plaintiff asserted that his average weekly earnings were one thousand dollars ($1,000.00). Following the submission of this claim, both Allstate and Blue Ridge began paying plaintiff's medical bills and lost wages, which were paid out at three thousand eight hundred dollars ($3,800.00) per month. Regularly and repeatedly, plaintiff forwarded through his counsel's office copies of notes from his treating physicians verifying that he was not fit to return to work.

In mid-November 2003 payments to plaintiff ceased. The reason given by Blue Ridge at page 1 of its three-page "Denial of Claim Form NF-10," admitted into evidence as part of Plaintiff's Exhibit 4, was "per independent medical examination as of 11/17/03."^[FN2] This litigation ensued.

The Court also finds as a matter of fact that plaintiff was unable to return to work for the entire three-year period encompassed by this lawsuit. Indeed, based upon the testimony adduced at the trial, it appears that plaintiff remains disabled up to the present time.

Finally, the Court finds that plaintiff was entitled to receive three thousand eight [*3]hundred dollars ($3,800.00) per month in lost wages for the period of twenty-eight and one-half months following the cessation of benefit payments by defendants.^[FN3] Thus, the total principal balance of unpaid payments ($3,800.00 times 28.5 months) is one hundred eight thousand three hundred dollars ($108,300.00).

In addition to the principal balance of one hundred eight thousand three hundred dollars ($108,300.00), plaintiff is entitled to interest. Plaintiff offers authority to suggest that he is entitled to compound interest, while Blue Ridge argues that the interest should not be compounded. Former 11 NYCRR § 65.15(h)(1) did provide for two percent per month in compound interest for unpaid no-fault benefits; this regulation was superseded, however, effective April 5, 2002 (well before the accrual of any part of plaintiff's claim). Under the new regulatory scheme, 11 NYCRR § 65-3.9(a) provides for "interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month." This is interpreted by the Court of Appeals as a simple interest calculation (Medical Society of State v Serio, 100 NY2d 854, 871 [2003]).

Blue Ridge argues that any interest cannot be applied before the date on which Allstate settled its claim with plaintiff. This position is without support. The Court of Appeals has held that "benefits are overdue if not paid by the insurer within 30 days after submission of proof of loss" (Id. at 871, citing 11 NYCRR § 65-3.9[a]). Plaintiff submitted his proof of loss, i.e., his form NF-2, well before Blue Ridge ceased making the payments due. Accordingly, plaintiff is entitled to two percent per month interest on each missed payment, calculated from thirty days after it was due until the present time.

Appended to this Decision and Order is a schedule prepared by the Court which details the calculation of interest and principal payments due plaintiff. It contains vertical columns for the date each payment was due, the principal amount of the payment, the interest due on that individual payment, and the subtotal of principal and interest on each payment. Thus, reading horizontally across the first row, one can see that in November 2003 plaintiff was due a payment of one thousand nine hundred dollars ($1,900.00); that two percent per month interest for the sixty-two (62) months between the end of November 2003 and the end of January 2009 on this amount equals two thousand three hundred fifty-six dollars ($2,356.00); and that the total due on this payment in principal [*4]and interest is four thousand two hundred fifty-six dollars ($4,256.00). Similarly, the second row shows a payment of three thousand eight hundred dollars ($3,800.00) due for December of 2003, with sixty-one (61) months of interest added; the third row, another $3,800.00 payment, this for January 2004, with sixty (60) months of interest added, and so on. Based on this computation, the total interest accrued for all missed payments as of the end of January 2009 is one hundred three thousand four hundred thirty-six dollars ($103,436.00). Together with the principal due of one hundred eight thousand three hundred dollars ($108,300.00), plaintiff is owed in toto the sum of two hundred eleven thousand seven hundred thirty-six dollars ($211,736.00).

Plaintiff's counsel points out that, under exceptional circumstances, a court may award fees in excess of the statutory maximum. Under the circumstances of this case, however, where the application of statutory interest should act as both a sufficient deterrent against dilatory tactics in futuro and as a substantial gain for this plaintiff, it would be an improvident exercise of the Court's discretion to award additional counsel fees.

Finally, Blue Ridge argues that the settlement between plaintiff and Allstate was in violation of the priority of payments rules set forth in 11 NYCRR § 65-3.15, as it was applied to certain medical bills that accrued subsequent to the accrual of plaintiff's right to some of the lost wages payments. Blue Ridge argues that this settlement inures to its disadvantage as the excess carrier, as the primary carrier Allstate may have been liable to make a portion of the lost wages payments now chargeable to Blue Ridge. Inasmuch as the merits of this particular dispute involve the relative rights of Blue Ridge and Allstate, any adjustment that might be due to Blue Ridge cannot be charged to plaintiff. Blue Ridge remains, of course, free to pursue any remedy it may have over against Allstate.

Accordingly, it is

ORDERED, that plaintiff's counsel shall submit, on notice of settlement, a final Judgment consistent with the terms of this Decision and Order.

Dated:January21, 2009

Troy, New York

________________________________________ [*5]

Henry F. Zwack

Acting Supreme Court Justice