LMK

Michael Gullo, Esq. a partner at Gullo & Associates, L.L.P. and Anthony DeGuerre, Esq. an associate Gullo & Associates, L.L.P. recently authored an article in the New York Law Journal regarding the recent case LMK Psychological Services, P.C. v. State Farm. The article addresses the Appellate Division, 3rd Department’s determination of attorney’s fees. In the article, boldly entitled: Abuse of Power: No-Fault Regs and ‘LMK Psychological.‘, the authors argue that the holding of LMK was in error.

Here are some of the relevant parts:

The court in LMK Psychological Service, PC failed to consider that a claimant for no-fault benefits may not share the statutory attorney’s fees with their counsel. If the court had made that consideration, the court could not have found that the Opinion Letter of Oct. 8, 2003 undermined the goals of no-fault litigation. Instead, like the plaintiffs in New York State Association of Insurance Agents Inc., et al., the court should have concluded that for a party not aggrieved by the interpretation of the regulations any judicial decision interpreting the no-fault regulations in opposition to the New York State Insurance Department’s Office of General Counsel’s opinion letter of Oct. 8, 2003, is an improper exercise of power by the Judicial Branch of government over a department of the Executive Branch.14

In New York State Association of Insurance Agents Inc., et al. the plaintiffs, a group of insurance brokers, sought a declaratory judgment to hold invalid a letter written by the deputy superintendent of Insurance, stating that the imposition of interest where premiums have been advanced is optional and where charged must be in accordance with statutory limits.15 In analyzing their request for declaratory relief, the court found that the plaintiffs were not affected by the letter, as the superintendent of Insurance’s letter posed no threat to the substantive rights of the plaintiffs.

The plaintiffs in New York State Association of Insurance Agents Inc., et al., were similarly situated as the plaintiff in LMK Psychological Service, PC. The LMK court improperly declared what “reasonable attorney fees” were in favor of the plaintiff who had no stake in the award of attorney fees and in contravention of the clear direction of what “reasonable attorneys fees” are as set forth by the New York State Department of Insurance’s regulations and the opinion letter of Oct. 8, 2003. The claimant for no-fault benefits in LMK Psychological Service, PC was made whole, was not an attorney, and was not subject to a fee sharing arrangement with its counsel. Thus, it was erroneous for the court in LMK Psychological Service, PC to find that the claimant was aggrieved by the New York State Department of Insurance’s interpretation of what constitutes “reasonable attorney’s fees” and the decision in LMK Psychological Service, PC was an improper exercise of power by the judicial branch of government over a department of the executive branch.

Mellisa A. Pirillo, Esq., an associate at Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, L.L.C. responds with a letter to the editor (which I edited down to save some space):

The authors’ central argument is that the Appellate Division should not have even reached the issue as the plaintiff medical provider was “not aggrieved by the opinion letter’s interpretation.” In other words, the authors believe that because the plaintiff’s attorney, rather than the plaintiff itself, is the one whose legal rights are affected by the opinion letter, the plaintiff had no standing to challenge the propriety of the opinion letter.

The authors’ theory is seriously flawed. The authors rely heavily on N.Y. State Ass’n. of Ins. Agents, Inc. v. Schenk, 72 Misc.2d 434 (N.Y. Sup. 1972) aff’d 44 A.D.2d 757 (4th Dept. 1974) a case completely inapposite to the point attempted to be made by the authors. That case was brought by insurance agents challenging an Information Letter from the Superintendent of Insurance of New York State interpreting the Insurance Department’s interpretation of the Insurance Law’s imposition of interest on certain claims. The court found the plaintiff did not have standing to sue because there was no justiciable controversy before the Special Term to grant a declaratory judgment, and the complaint was barren of any information on how the plaintiff was aggrieved by the interpretation by the Superintendent.

The authors completely overlook that under the No-Fault Regulations and case law concerning such, going back more than 25 years, the medical provider, not the medical provider’s attorney, possesses the cause of action to recover attorney’s fees. See, Massapequa General Hosp. v. Allstate Ins. Co., 118 Misc.2d 155 (N.Y.Dist.Ct.,1983); Pops & Estrin v. Reliance Ins. Co., 562 N.Y.S.2d 914 (N.Y. City Civ. Ct. 1990); 11 NYCRR 65.15(i); 11 NYCRR 65-3.10(a). Accordingly, then, because the plaintiff medical provider in LMK was the party whose legal rights were aggrieved by the opinion letter, the Appellate Division was correct in ruling on the propriety of the Insurance Department’s interpretation contained in that letter. N.Y. State Ass’n. of Ins. Agents, Inc. v. Schenk, 72 Misc.2d 434 (N.Y. Sup. 1972) aff’d 44 A.D.2d 757 (4th Dept. 1974) is simply inapplicable.

Finally, I’ll offer my take on defendant’s argument, which has absolutely nothing to do with the law:

If the Courts do decide to limit attorney fees to each lawsuit as the authors would suggest, who benefits the most. Certainly it’s not the Courts. The filings will only increase as the amount of bills in any given lawsuit decrease. The insurance companies? Well, no, they will be paying their attorneys to defend those increased lawsuits. Instead of paying for one lawsuit for eight bills, they will be paying for four lawsuits, each with two bills in dispute (for example). Let’s look at it another way; defense firms will be paid for each separate lawsuit. Instead of collecting one fee to answer one complaint for those eight bills, now they will get a separate fee for the four lawsuits that will take its place, along with the motions, trials, opinion letters, discovery, and court appearances.

Who benefits the most? Whose interests are represented?

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