Court Hold that Overdue Date of Provider's Bill, Not Denial Issuance Date, Is Accrual of Six-Year Statute of Limitations for No-Fault Recovery Suit

NO-FAULT – STATUTE OF LIMITATIONS – ACCRUAL DATE FOR BREACH OF CONTRACT CAUSE OF ACTION
Chester Med. Diagnostic, P.C. a/a/o Ceeallah McQueen v. Kemper Cas. Ins. Co.
(NYC Civil Ct., Kings Co., decided 10/7/2008)

It's not every day that a court reaches back 97 years for precedent to decide a no-fault case, but this past Tuesday was one of those days.

With all the time he must have on his hands now that the Carothers trial is over, Kings Civil Judge Peter Sweeney dusted off the first edition New York Reports and held that the six-year statute of limitations for commencing a no-fault recovery suit based on breach of contract accrues when the bill or benefit at issue becomes "overdue", not necessarily when the no-fault insurer issues its denial.

• November 15, 2000 -- Kemper receives plaintiff provider's bill
• November 29, 2000-- Kemper issues a denial of that bill
• December 1, 2006 -- plaintiff commences this action
  

Timely commenced? Doesn't look like it, so Kemper moved to dismiss this action based on the plaintiff's failure to sue for breach of contract within the six-year SOL pursuant to CPLR § 213(2). Plaintiff cross-moved for summary judgment.

In denying Kemper's motion, Judge Sweeney held that the accrual date of plaintiff's breach of contract cause of action was not the denial issuance date, but the date on which plaintiff's bill allegedly became overdue, which was 30 days after Kemper received it:

It is now fairly well settled that an action to recover assigned first-party no-fault benefits under a policy of insurance is fundamentally a breach of contract action subject to the six-year statute of limitations contained in CPLR §213[2] (see Mandarino v. Travelers Property Cas. Ins. Co., 37 AD3d 775, 831 NYS2d 452 [2nd Dep't 2007]; Benson v. Boston Old Colony Ins. Co., 134 AD2d 214, 215, 521 NYS2d 14 [1st Dep't1987], lv. denied 71 NY2d 801, 527 NYS2d 767, 522 NE2d 1065 [1988]; Travelers Indem. Co. of Connecticut v. Glenwood Medical, P.C., 48 AD3d 319, 319-320, 853 NYS2d 26, 26 [1st Dep't 2008] ). The statute of limitations in a breach of contract action begins to run at the time the contract is breached, which in this case was when benefits become overdue (see Benson, 134 AD2d at 215; New Era Acupuncture, P.C. v. MVAIC, 18 Misc 3d 139(A), 2008 NY Slip Op. 50353(U) [App Term 2nd & 11 Jud Dists]. Benefits became overdue when the defendant failed to pay the claim within 30 days of November 15, 2000, when it received proof of the claim (see Insurance Law § 5106[a]; NYCRR § 65-3.8; Benson, 134 AD2d at 215; Micha v. Merchants Mutual Insurance Company, 94 AD2d 835, 463 NYS2d 110 [3rd Dep't 1983] ). The commencement of the action on December 1, 2000 was therefore timely.

To support this holding, Judge Sweeney relied on a 1911 decision from the New York Court of Appeals addressing the issue of anticipatory breach of contract:

The fact that the defendant may have repudiated the contract on November 29, 2000 when it issued a denial of the claim and mailed a copy of the denial to the defendant does alter this result. Under the doctrine of anticipatory breach, where one party clearly and unequivocally repudiates his contractual obligations under a contract prior to the time performance is required, the non-repudiating party may deem the contract breached and immediately sue for damages (see American List Corp. v. U.S. News & World Report, 75 NY2d 38, 550 NYS2d 590, 549 NE2d 1161 [1989]; De Lorenzo v. Bac Agency Inc., 256 AD2d 906, 908, 681 NYS2d 846, 848 [3rd Dep't 1998]; Long Is. R.R. Co. v. Northville Indus. Corp., 41 NY2d 455, 463, 393 NYS2d 925, 362 NE2d 558 [1977]).

While the plaintiff may have been entitled to bring the action under the doctrine of anticipatory breach when the defendant denied the claim, even though the 30 day period in which defendant had to pay the claim had yet to expire, plaintiff was well within its rights to elect to keep the contract in force and await the designated time for performance before bringing suit (Ga Nun v. Palmer, 202 NY 483, 493, 96 N.E. 99 [1911]; see also, Rachmani Corp. v. 9 East 96th Street Apartment Corp., 211 AD2d 262, 266, 629 NYS2d 382, 384 [1st Dep't 1995] ). As the Court of Appeals wrote in Ga Nun: "The man who wrongfully renounces a contract into which he has deliberately entered cannot justly complain if he is immediately sued for a compensation in damages by the man whom he has injured; and it seems reasonable to allow an option to the injured party, either to sue immediately, or to wait until the time when the act was to be done, still holding it as prospectively binding for the exercise of this option, which may be advantageous to the innocent party, and cannot be prejudicial to the wrongdoer" (Ga Nun, 202 NY at 490-491, 96 N.E. at 101 - 102, citing Hochster v. De la Tour, 2 Ellis & Blackburn, 678).

So the SOL date on a no-fault recovery suit just became muddier. How is a provider to know when the no-fault insurer received the bill? Perhaps from the received date listed on the NF-10. That date plus 30 days plus 6 years will be the SOL. Unless, of course, there are additional verification requests. Then the SOL will be the additional verification receipt date plus 30 days plus 6 years.

On plaintiff's cross motion for summary judgment, Judge Sweeney Dan Medicaled the plaintiff and denied the cross motion, finding:

Here, plaintiff's submissions are devoid of any admissible proof, such as an affidavit from someone familiar with plaintiff's business practices, establishing the admissibility of the claim form as a business record. Accordingly, plaintiff did not establish its prima facie case of entitlement to summary judgment notwithstanding defendant's admission that it received the claim on November 15, 2000. Plaintiff's failure to make out a prima facie case of entitlement to summary judgment mandates the denial of the motion regardless of the sufficiency of opposing papers (Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 [1985] ).