December 22, 2003

King’S Med. Supply v Allstate Ins. Co. (2003 NY Slip Op 51681(U))

Headnote

The court considered a case in which a medical supply company was seeking first-party no-fault insurance benefits from an insurance company. The insurance company objected to the claim on the basis that the prices of the medical equipment provided exceeded the prevailing rates in the geographic location. The main issue decided was whether the regulation permitting reference to prevailing fees in the geographic location applied, or whether the 150 percent limitation on fees under the Insurance Department regulation was applicable. The court held that the 150 percent rule was an applicable fee schedule within the contemplation of the regulation, and that it represented a legislative determination to help contain the no-fault premium. Therefore, the court reversed the order denying the medical supply company's motion for summary judgment, granted the motion, and remanded the matter to the lower court for the calculation of statutory interest and an assessment of attorney's fees.

Reported in New York Official Reports at King’S Med. Supply v Allstate Ins. Co. (2003 NY Slip Op 51681(U))

King’S Med. Supply v Allstate Ins. Co. (2003 NY Slip Op 51681(U)) [*1]

King’s Med. Supply v Allstate Ins. Co.

2003 NY Slip Op 51681(U)

Decided on December 22, 2003

Appellate Term, Second Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the Official Reports.

Decided on December 22, 2003

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 9th and 10th JUDICIAL DISTRICTS

PRESENT:DOYLE, P.J., WINICK and SKELOS, JJ.
NO. 2003-50 S C

KING’S MEDICAL SUPPLY INC., a/a/o Marino Santos, Appellant, – –
against
ALLSTATE INSURANCE COMPANY, Respondent.

Appeal by plaintiff from an order of the District Court, Suffolk County (H. Bergson, J.), entered October 18, 2002, denying its motion for summary judgment.

Order unanimously reversed without costs, plaintiff’s motion for summary judgment granted and matter remanded to the court below for the calculation of statutory interest and an assessment of attorney’s fees.

In this action to recover assigned first-party no-fault insurance benefits, defendant insurer objected to plaintiffs claim for medical equipment on the ground that the supplier’s prices exceeded the prevailing rates for such equipment in its “geographic location” (cf. 11 NYCRR 68.5 [b], Reg. No. 83). The Insurance Department regulation permitting reference to “the prevailing fee in the geographic location of the provider” to determine appropriate no-fault compensation pertains only where “the superintendent has not adopted or established a fee schedule applicable to the provider” (id.; e.g. Tucciarone v Progressive Ins. Co., 204 AD2d 864 [1994]). The regulations, however, explicitly limit a provider’s medical equipment claims to 150 percent of cost (11 NYCRR App. 17-C, Part E [b] [1]) which clearly is an applicable fee schedule within the contemplation of 11 NYCRR 69.5 (b) (see King’s Med. Supply v Travelers Prop. Cas. Corp., 194 Misc 2d 667, 673 [2003]). As “[tjhe purpose of [Insurance Law § 51083 and the fee schedules promulgated thereunder [was] ‘to significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium” (Goldberg v Corcoran, 153 AD2d 113, 118 [1989]), we must assume that the 150 percent rule represents a legislative determination that the net effect of this straightforward, categorical limitation on fees, coupled with suppliers’ marketplace competition to moderate prices (or at least to minimize price disparities), “help[s] contain the no-fault premium” (id.). If the premises underlying this [*2]determination are empirically unsound, the solution is remedial legislation.
Decision Date: December 22, 2003