Divided New York Court of Appeals Establishes 3-Year Limit to Bring No-Fault Claims

On May 1, 2018, the New York Court of Appeals ruled that an injured person has a three-year window to file a no-fault claim against a self-insured entity such as the New York City Transit Authority. No fault benefits, under New York law, consist of lost wages and medical payments for treatement related to injuries sustained in a car, bus or truck accident. These include pedestrians or bicyclists hit by a vehicle, as well as drivers and occupants of a vehicle.

In this case in 2001, a passenger on a New York City bus, was injured in a motor vehicle accident and sought Chiropractic treatment. As is often the case, the injured patient  assigned her right to recover first-party benefits from the self-insured NYCTA to her physician's office.  Six years later, the medical provider sued the transit authority seeking reimbursement for alleged unpaid invoices, but the transit authority argued the suit was time-barred, relying on an Appellate Division, First Department case, holding that a self-insured entity’s obligation to pay out no fault claims is based in statute, and thus subject to a three-year statute of limitations.  The Chiropractic office countered that it had six years to file suit, relying on an Appellate Division, Second Department, ruling that no-fault claims, while statutorily mandates, are still contractual by nature.

A Civil Court said the six-year time frame applied, and the ruling was affirmed by two Second Department appeals courts.   But, in a 4-3 ruling, New York’s high court—with the majority that the three-year statute of limitations applied. This issue divided lower and appellate courts and even the high court itself.  Judge Eugene Fahey said that no-fault is a “creature of statute” and that the NYCTA met its statutory obligations by self-insuring. He was joined in the majority by Judges Janet DiFiore, Paul Feinman and Leslie Stein, with Stein authoring a two-sentence concurring opinion clarifying that the decision does not resolve the question of whether insurance companies issuing contractual policies involving no-fault claims are beholden to a three-year or six-year statute of limitations.

However, Judge Michael Garcia said he disagreed with the majority’s finding that filing suit against a self-insured entity is by nature statutory because there is no contract with a private insurer.  “Allowing six years for bringing claims against an insured but only three years for bringing claims against a self-insurer is both unfair and unnecessary,” Garcia said.

Attorneys for the New York City Transit authority, said the court’s ruling will bring significant cost savings for the transit authority in terms of future litigation. They further stated “They’ll be able to defend many more cases on this basis and get them dismissed.”  They further concluded that the ruling may encourage medical providers to bring no-fault claims more quickly and that defense attorneys in no-fault cases representing entities that are not self-insured may argue for a three-year statute of limitations. This decision however, will leave many medical offices with unpaid bills and will potentially leave injured parties without payment of their medical bills and lost wages, since there had been a consensus prior to this ruling that the applicable statute of limitations was six years.