A Higher Authority Rings In

Larry Rogak posted an update on the PIP limit reduction question to his Rogak Report earlier today.  For those of you who may not be members of that Yahoo Group, here's Larry's post:

Dear Readers:

For the past day or so, opinions have been flying back and forth on the question of whether interest and attorney fees reduce available PIP limits.  As you know, my opinion, based on my interpreration of an Insurance Department opinion letter, was that they do -- at least in the case of court and arbitration awards, if not settlements.   Other great legal and claims department minds disagreed with me.

As I told you in an earlier posting, I wrote to the New York State Insurance Department for clarification.  Today, I got a phone call from a very highly placed member of that august body, who agreed to give me an informal verbal opinion right away, with a formal written opinion to come much later.

On the condition that I not mention the name of this highly placed figure (other than to say that his first name is, without a doubt, the most handsome and distinguished name in the English language), I was given permission to share with you the following unofficial Insurance Department opinion:

Neither interest, nor statutory attorney's fees, reduce available PIP limits under any circumstances.

It's not easy to say I was wrong.  So I won't say it.  Instead, I will say that my opinion has been superceded by a higher authority.

I did present my point of view to this highly-placed Insurance Department official, to wit, that reducing PIP limits by the amount of interest payments does not hurt claimants because the 24% interest rate is so generous.   But this official begged to differ.  He said that he did not believe that the intent of the Legislature was for such reduction to take place, especially in light of the fee schedules for medical services, which have not been raised to keep up with free-market rates.

For those of you who believe that my opinion is better than the Insurance Department's, let me say this to you: you are very sagacious.  But let me also say that not even the Courts always agree with the Insurance Department's interpretations, and have overruled them from time to time (most recently in the notorious LMK case).

So for the foreseeable future, until some court rules otherwise, the most official word we have on the subject is that neither attorney fees nor interest reduce PIP limits.

While my own personal opinion did not rule the day, give me credit for one thing: I made the effort to get an authoritative answer for a question that had never been definitively addressed before, and I shared it with all of you at no charge.

Larry Rogak

I didn't know that a highly-placed Insurance Department official shared my first name...