Guide to Recovery of PIP in New York

This is a basic primer on New York law as pertaining to recovery of no-fault (AKA "PIP") payments.  It by no means covers all the intricacies of New York law, and therefore should be used as reference only. Some issues of law are mentioned more than once on this page, where we felt the issue belongs under more than one heading.  This guide is provided subject to this disclaimer.

CONTENTS:

• N.Y. Insurance Law § 5104 (a):
  • No recovery by one "covered person" against another "coverd parson" of PIP.
  • No recovery for "pain and suffering" from a "covered person" without reaching the "serious injury threshold".

• N.Y. Insurance Law § 5104 (b): Recovery of PIP damages (and "pain and suffering") from a non-covered person.

• N.Y. Insurance Law § 5105 (a): Right to recover PIP if one car involved is over 6,500 pound uloaded or a vehicle principally used for transportation for hire.

• N.Y. Insurance Law § 5105 (b): Disputes between insurers must be resolved through arbitration (Arbitration Forums).

• Other selected New York laws of subrogation.

N.Y. Insurance Law § 5104 (a):No recovery by one "covered person" against another "coverd parson" of PIP. Also, no recovery of "pain and suffering" from a "covered person" without reaching the "serious injury threshold".

(a) Notwithstanding any other law, in any action by or on behalf of a covered person against another covered person for personal injuries arising out of negligence in the use or operation of a motor vehicle in this state, there shall be no right of recovery for non-economic loss, except in the case of a serious injury, or for basic economic loss. The owner, operator or occupant of a motorcycle which has in effect the financial security required by article six or eight of the vehicle and traffic law, or which is referred to in subdivision two of section three hundred twenty-one of such law, shall not be subject to an action by or on behalf of a covered person for recovery for non-economic loss loss, except in the case of a serious injury , or for basic economic loss.

What this statute says:

• If the vehicles involved in an accident are "covered," they can not sue each other for losses covered (or that should be covered) by PIP. They also cannot sue for pain and suffering types of losses unless there was a "serious injury."  Note that section 5105, discussed below, will introduce significant exceptions to this rule (i.e. when one of the vehicles involved in the accident weighs more than 6,500 pounds, or is a vehicle for hire).
• A motorcycle which is properly insured is afforded the same protection from suit.  Note that this provision is necessary, as the driver of a motorcycle does not fit the definition of a "covered person."  By the same token, this indicates that this section does not deny the motorcycle driver the right to sue. (This is discussed further in the notes below).

Notes on This Section:

• PLEADINGS: This statute allows law suits to recover two types of damages from a covered person: "pain and suffering" type damages if there is serious injury and economic losses (i.e. medical bills, lost wages etc.) that go beyond what should be covered by PIP (i.e. above basic economic loss). CPLR 3016(g) reqiures that the complaint in such actions must specify that these damages occured. Therefore:
  • In order for one covered person to recover pain and suffering from a covered person, the complaint must state that the plaintiff sustained serious injury as defined in Insurance Law 5102(d). This rule also applies when an insurer makes an underinsured motorist subrogation claim.
  • In an action to recover economic losses beyond PIP (i.e. Additional PIP expenses of the insurer or expenses incurred by the injured party), the complaint must state that the plaintiff sustained economic loss greater than basic economic loss as defined in 5102(a).
  Failure to plead serious injury and/or economic damages beyond basic economic loss is grounds for dismissal Monahan v. Twyman, 79 Misc.2d 44, 359 N.Y.S.2d 518 (Sup. Ct. Ulster Cty 1974), Agnostakios v. Laureano, 85 Misc.2d 203, 379 N.Y.S.2d 664 (N.Y.City Civ.Ct. 1976).
• Additional PIP may be recovered: This statute prohibits only the recovery of "basic economic loss," which means the first $50,000 of medical expenses and lost wages. It does not prohibit recovery of Additional PIP ("APIP") payments or economic losses beyond "basic economic loss" sustained by the injured party. See Allstate Ins. Co. v. Mazzola 175 F. 3d 255 (3rd Cir. 1999). The STATUTE OF LIMITATIONS for recovery of Additional PIP is 3 years from the date of the accident even if the first Additional PIP payment was not made within 3 years of the accident. Allstate Ins. Co. v. Stein 1 N.Y.3d 416, 775 N.Y.S.2d 219 (2004). There is further discussion of Additional PIP claims in the section below entitled "Other selected New York laws of subrogation."
• Accidents outside New York: This statute only precludes recovery of basic economic loss for an accident which occurs in New York. Federal Ins. Co. v. Barsky, 267 A.D.2d 275, 700 N.Y.S.2d 57 (2nd Dept. 1999). NOTE: we do not state any opinion as to the laws of any other State. Many other states' laws prohibit recovery of PIP type losses for accidents in their state.
• PIP can be recovered if a vehcle is insured by a company not authorized in New York or not meeting New York's required liability coverage: In order to be insulated from PIP recovery, one must be a "covered person." The definition of "covered person" requires having insurance that meets the requirements of V&T 311(4), which states that an automobiles registered in New York must be insured by an "insurer duly authorized to transact business in" New York. Vehicles registered out of New York state must be insured by "an authorized insurer" or by an unauthorized insurer which has filed with the Commisioner of Insurance a letter "consenting to service of process and declaring its policies shall be deemed to be varied to comply with the requirements of this article." If these conditions are not met, PIP and "pain and suffering" can be recovered. Although it is not perfectly clear, it seems that unauthorized insurers are subject to the requirement of arbitration found in section 5105.
• Motorcycles may recover Basic Economic Loss and are not subject to the "serious injury" requirement before recovering pain and suffering: This statute only preculed recovery by one "covered person" against another "covered person." "Covered person" is anyone who is covered under PIP. N.Y. Insurance Law § 5102(j) defines a "covered person" as: "Any pedestrian injured through the use or operation of, or any owner, operator or occupant of, a motor vehicle . . ." The definition of a "motor vehicle," provided in § 5102(f) excludes a motorcycle. Several cases have therefore held that a motorcycle driver can sue for pain and suffering even without meeting the "serious injury" requirement. See e.g. Carbone v. Visco, 115 A.D.2d 948, 497 N.Y.S.2d 524 (4th Dept., 1985). Basic economic loss should also be recoverable on behalf of a motorcyclist. See also Goodkin v. U.S., 773 F.2d 19 (2nd Cir. 1984) and Laba v. Petrullo,191 Misc.2d 758, 742 N.Y.S.2d 787 (Dist. Ct. Nassau Cty, 2002) indicating that a noncovered person is entitled to recover for economic loss.

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N.Y. Insurance Law § 5104 (b): Recovery of PIP damages (and pain and suffering) from a non-covered person.

(b) In any action by or on behalf of a covered person , against a non-covered person, where damages for personal injuries arising out of the use or operation of a motor vehicle or a motorcycle may be recovered, an insurer which paid or is liable for first party benefits on account of such injuries has a lien against any recovery to the extent of benefits paid or payable by it to the covered person. No such action may be compromised by the covered person except with the written consent of the insurer , or with the approval of the court, or where the amount of such settlement exceeds fifty thousand dollars. The failure of such person to commence such action within two years after accrual gives the insurer a cause of action for the amount of first party benefits benefits paid or payable against any person who may be liable to the covered person for his personal injuries. The insurer's cause of action shall be in addition to the cause of action of the covered person except that in any action subsequently commenced by the covered person for such injuries, the amount of his basic economic loss loss shall not be recoverable.

What this statute says:

• A covered person may recover basic economic loss (i.e. the losses covered by PIP) from a party at fault for the accident. By extension, this will mean that the insurer who pays PIP benefits may recover from a non-covered person who is at fault. The balance of this subsection discusses how that recocvery is made.
• If the covered person sues the non-covered person within two years of the accident , the covered person's insurance company has a lien against their recovery for the amount of PIP they paid. This means that:
• The insurance company gets a portion of its insured's recovery equal to their PIP payments. So, if insurer has paid $25,000 in PIP, and the insured gets a $30,000 judgment, the insured keeps $5,000, and the insurance company gets $25,000. Note that the PIP bills will be considered in the case when the judge or jury assigns damages.
• The insured must protect the rights of the insurance company. This means that they can not settle the case without the insurance company's permission unless a judge signs off, or the recovery is at least $50,000, so that they can be certain they can pay back all of the insurance company's PIP losses.
• If the insured does not sue within 2 years of the accident, the insurance company may then directly sue the non-covered person at fault to recover its PIP costs. In this case, the insured can still file suit as well, but will not be able to sue for the PIP losses, since the insruance company has already sued for that.

Notes on This Section:

• STATUTE OF LIMITATIONS:The injured party has three years from the date of accident to sue for damages. The insurance company's right to sue begins only after two years have passed from the accident, and runs three years from then. Example: If the date of accident is January 5, 2005, the injured party can sue until January 5, 2008. If the injured party has not sued by January 5, 2007, then the insurance company can sue from January 5, 2007 through January 5, 2010. Safeco Ins. Co. of Amer. v. Jamaica Water Supply Co., 83 A.D.2d 427, 444 N.Y.S.2d 925 (2nd Dept. 1981) (per Hopkins, J.P.), aff'd 57 N.Y.2d 994, 457 N.Y.S.2d 245, 443 N.E.2d 493 (1982).
• A PIP insurer asserting a lien should provide its insured's attorney with documentation: In order to protect its lien, a PIP insurer is best andvised to provide its insured's attorney with the trial proof needed to include the PIP benefits in the jury verdict. Hyde v. North River Ins. Co., 1981, 112 Misc.2d 855, 447 N.Y.S.2d 789, affirmed 92 A.D.2d 1001, 461 N.Y.S.2d 468.
• The PIP lien is created by operation of law. No notice is required. HOWEVER, NOTICE IS CERTAINLY ADVISABLE: Since the PIP lien is provided for by statute, it arises by law. Therefore, the failure of the PIP carrier to inform its insured of its lien does not prejudice the lien. General Acc. Ins. v. Roberts, 266 A.D.2d 791, 699 N.Y.S.2d 158 (3 Dept. 1999), leave to appeal dismissed 94 N.Y.2d 899, 707 N.Y.S.2d 143, 728 N.E.2d 339 (2000). However, it is our opinion that providing some notice of this lien will be advisable, and will help avoid potential headaches later.
• Insured's attorney is not entitled to contingency fee on the lien amount: Breier v. Government Emp. Ins. Co., 79 A.D.2d 967, 435 N.Y.S.2d 283, (1st. Dept. 1981). Thus, if an insurance company pays $50,000 in PIP, and the insured recovers $100,000 from a defendant who is not a "covered person," the Insurance company gets $50,000, and the attorney and his/her client share the remaining $50,000 as per their retainer.

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N.Y. Insurance Law § 5105 (a): Right to recover PIP if one car involved is over 6,500 pound uloaded or a vehicle principally used for transportation for hire.

(a) Any insurer liable for the payment of first party benefits to or on behalf of a covered person and any compensation provider paying benefits in lieu of first party benefits which another insurer would otherwise be obligated to pay pursuant to subsection (a) of section five thousand one hundred three of this article or section five thousand two hundred twenty-one of this chapter has the right to recover the amount paid from the insurer of any other covered person to the extent that such other covered person would have been liable, but for the provisions of this article, to pay damages in an action at law. In any case, the right to recover exists only if at least one of the motor vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds unloaded or is a motor vehicle used principally for the transportation of persons or property for hire . However, in the case of occupants of a bus other than operators, owners, and employees of the owner or operator of the bus, an insurer which, pursuant to paragraph one of subsection (a) of section five thousand one hundred three of this article of this article, provides coverage for first party benefits for such occupants under a policy providing first party benefits to the injured person and members of his household for loss arising out of the use or operation of any vehicle of such household, shall have no right to recover the amount of such benefits from the insurer of such bus.

What this statute says:

• If an PIP carrier or workers' compensation policy pays PIP style damages, they may recover against a responsible party provided that one of the motor vehicles involved in the accident either weighs 6,500 pounds unloaded or is a vehicle for hire (e.g. a taxi or a vehicle used in shipping goods). NOTE: the vehicle which is over 6,500 pounds or a vehicle for hire need not be the vehicle at fault in the accident.
• A PIP carrier who paid PIP benefits to its insured which was injured as a passenger on a bus may not recovery from the insurer of the bus unless the person was an operator, owner, or employee of the owner or operator of the bus.

Notes on This Section:

• STATUTE OF LIMITATIONS: See below, discussion on § 5105 (b).
• The right of an insurer to recover PIP from adverse insuer is a direct right:. I.e. the right is not "subrogated" from the insured, but a separate right held by the insurer. This also means that a release signed by the insured will not destroy the right to PIP loss transfer. See State Farm Mut. Auto. Ins. Co. v. City of Yonkers, 21 A.D.3d 1110, 801 N.Y.S.2d 624, (2nd Dept. 2005) and Doherty v. Barco Auto Leasing Co., 144 A.D.2d 424 (2nd Dept. 1988). NOTE THAT THIS IS NOT THE CASE FOR "ADDITIONAL PIP" which is a classical subrogation right Nationwide Ins. Co. v. Mocchia 663 N.Y.S.2d 640 (2ND Dept 1997).

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N.Y. Insurance Law § 5105 (b): Disputes between insurers must be resolved through arbitration (Arbitration Forums).

(b) The sole remedy of any insurer or compensation provider to recover on a claim arising pursuant to subsection (a) hereof, shall be the submission of the controversy to mandatory arbitration pursuant to procedures promulgated or approved by the superintendent. Such procedures shall also be utilized to resolve all disputes arising between insurers concerning their responsibility for the payment of first party benefits.

What this statute says:

• Where one insurer or workers' compensation provider is trying to recover based on section 5105(b), the insurer must take the other insurer to binding arbitration. The Superintendent of Insurance can set the rules for the arbitration. Insurers who disagree as to who disagree as to which company should provide PIP benefits must also arbitrate this question. NOTE that in 11 N.Y.C.R.R. 65.10(b) the Superintendent selected Arbitration Forums as the exclusive arbitrator for these matters.
• Click here to read 11 N.Y.C.R.R. 65.10 which are the Superintendent's regulations for arbitration authorized by this section. This link will open in a new window. To return to this window, close the new window.

Notes on This Section:

• STATUTE OF LIMITATIONS: The right to recover PIP from a covered person is a statutory right that attaches with each PIP payment. So, if the date of loss was January 5, 2005, and the first PIP payment was on January 10, 2005, then arbitration must be innitiated by January 10, 2008 in order to recover for all payments. If arbitration is filed thereafter, it will be timely for any payments made less than three years before the arbitration was innitiated. Motor Vehicle Acc. Indemnification Corp. v. Aetna, 89 N.Y.2d 214, 652 N.Y.S.2d 584 (1996) ("[S]ince MVAIC . . . did not make its demand for compulsory arbitration until October 20, 1992, the three-year Statute of Limitations had actually run as to that payment and as to all other payments made more than three years before the date of the demand."). Read the New York State Insurance Department analysis of this rule here and here (links open in a new window).
• You must use Arbitration Forums: The regulations at 11 N.Y.C.R.R. 65.10(b) require that Arbitration Forums, Inc. be used for PIP arbitration.
• Self-insurers are insurers and therefore are subject to the arbitration requirement. Those seeking to recover PIP from self-insurers, and self-insurers seeking to recover from other insurers, must arbitrate. See City of Syracuse v. Utica Mut. Ins. Co., 90 A.D.2d 979, 456 N.Y.S.2d 571 (4th Dept. 1982), affd. 61 N.Y.2d 691, 472 N.Y.S.2d 600, 460 N.E.2d 1085(1984), Criterion Ins. Co. of Washington, D. C. v. Commercial Union Assur. Co., 89 Misc.2d 36, 41, 390 N.Y.S.2d 953, 958 (N.Y. Sup. Ct. 1976), and Click here to read 11 N.Y.C.R.R. 65.10 which treats self-insurers as insurers.
• Accidentally suing instead of arbitrating will still cover the Statute of Limitations: 11 N.Y.C.R.R. 65.10(d)(5)(i) specifies that if a matter that should go to Arbitration Forums is "inadvertently placed in litigation," the case can be discontinued for purposes of submitting the matter to Arbitration Forums, and for Statute of Limitations purposes it will be counted as if the matter was filed with Arbitration Forums on the day that the litigation was instituted.
• Statute of Limitations will be extended if there is a coverage dispute: 11 N.Y.C.R.R. 65.10(d)(5)(i) specifies that if there is a dispute as to coverage pending, the running of the Statute of Limitations is delayed until the matter is resolved.
• No Tort Claims Notice required for a PIP arbitration. Statute of limitations is 3 years: The right to recover PIP through arbitration is a statutory right, and not an old-fashioned tort. Therefore, there is no requirement of giving a tort claims notice before seeking recovery of PIP from a city or the state (i.e. the government does not need to be warned within 90 days of the accident that you plan to seek recovery). City of Syracuse v. Utica Mut. Ins. Co., 83 A.D.2d 116, 443 N.Y.S.2d 901 (4th Dept. 1981), affd. 61 N.Y.2d 691, 460 N.E.2d 1085, 472 N.Y.S.2d 600 (1984). Similarly, the regular 3 year statute of limitations described above applies, not the 1 year 90 days generally required for suing a city. This is because loss transfer is a case against an insurance company, not against the city (if the city is self-insured, the loss transfer case is still treated as a case against an insurance company. City of Syracuse v. Utica Mut. Ins. Co., (4 Dept. 1982) 90 A.D.2d 979, 456 N.Y.S.2d 571, affd. 61 N.Y.2d 691, 472 N.Y.S.2d 600, 460 N.E.2d 1085.

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Other selected New York Subrogation laws.

• Release and Subrogation:. One common defense against a subrogation claim is that the company's insured has already signed a release to the adverse party. Example: Insurance company (I) paid a $5,000 property damage claim to client (C), and attempts to subrogate against adverse party (A). A (or A's insurance company) claims that C signed a release, releasing A from any further liability. While this can be a valid defense, it very often is not, as there are several exceptions that can be explointed:
  • Release signed after claim was paid: If I paid its insured (C) before C signed the release, then the right of subrogation survives. This is because the subrogation right attaches at the point that I paid the claim. Once the subrogation right attached, it was I's right, and not C's right, so C could not sign that right away. A good case discussing this rule is Allstate Ins. Co. v. Mazzola, 173 F. 3d 255, 260 (2nd Cir. 1999).
  • Adverse party/insurance company knew/should have known subrogation rights existed: An otherwise valid release will not be effective if the released party (A or A's insurance company) knew or should have known that someone had subrogation rights. Hartford Ins. Group v. Posen, 511 N.Y.S. 2d. 1, 2 (N. Y. City Civ. Ct., 1986). Therefore, it is good policy for an insurance company to send a notice of subrogation rights to the adverse party and adverse insurance company as soon as it becomes aware of a claim or potential claim. If such notices were not sent, one can still argue that the adverse "should have known" of the potential subrogation rights.
  • Releases will never effect PIP loss transfer rights. This is because the right of loss transfer (i.e. one insurance company arbitrating against another insurance company) is considered a separate right created by statute (N.Y. Insurance Law 5105). It is not a right that is "subrogated" from the insured, and therefore the insured has no power to destroy it. See State Farm Mut. Auto. Ins. Co. v. City of Yonkers, 21 A.D.3d 1110, 801 N.Y.S.2d 624, (2nd Dept. 2005) and Doherty v. Barco Auto Leasing Co., 144 A.D.2d 424 (2nd Dept. 1988).NOTE THAT THIS IS NOT THE CASE FOR "ADDITIONAL PIP" which is a classical subrogation right Nationwide Ins. Co. v. Mocchia 663 N.Y.S.2d 640 (2ND Dept 1997).
• Additional PIP may be subrogated: New York Insurance Law 5105 prohibits only the recovery of "basic economic loss" which means the first $50,000 of medical expenses and lost wages. It does not prohibit recovery of Additional PIP ("APIP") payments. See Allstate Ins. Co. v. Mazzola 175 F. 3d 255 (3rd Cir. 1999). Some additional notes:
  • The STATUTE OF LIMITATIONS for recovery of Additional PIP is 3 years from the date of the accident even if the first Additional PIP payment was not made within 3 years of the accident. Allstate Ins. Co. v. Stein 1 N.Y.3d 416, 775 N.Y.S.2d 219 (2004).
  • There are two methods for recovering APIP. The insurer may assert a lien against its insured's personal injury claim, or it may make a direct suit against the party at fault. Aetna Cas. and Sur. Co. v. Jackowe, 96 A.D.2d 37, 468 N.Y.S.2d 153 (2nd Dept. 1983), Fowler v. Pebble Hill Bldg. Corp., 120 A.D.2d 486, 487-488, 501 N.Y.S.2d 690, 692 (2nd Dept. 1986) . Because the insured's case might fizzle if their noneconomic claim is barred due to serious injury threshold, a backup suit may be in order if one goes the lien route.
  • APIP and other economic losses not covered by PIP may be recovered even if serious injury threshold is not reached. This is because 5104 only excludes basic economic loss, and only requires serious injury for recovery of non-economic losses. . See Colvin v. Slawoniewski, 15 A.D.3d 900, 789 N.Y.S.2d 368 (4th Dept., 2005), Tortorello v. Landi, 136 A.D.2d 545, 545-546, 523 N.Y.S.2d 165 (2nd Dept., 1988).
• BE CAREFUL SETTLING WITH JOINT TORTFEASORS!: A joint tortfeasor is one party who is responsible for a loss along with some others. Example: A and B are in a car accident, and one of their cars hits parked car C. As to the loss incurred by C, A&B are "joint tortfeasors." Under New York law, with certain significant exceptions (particularly CPLR Article 16), joint tortfeasors are "jointly and severally liable." This means that the injured party can recover 100% of its loss from any one of the parties at fault. So, in our example, C could sue A for $5,000 and win. It would be A's responsibility to seek "contribution" from B. The important warning for insurers about joint tortfeasors is this: Under New York General Obligation law 15-108(c) a joint tortfeasor who settles may not recover contribution from another tortfeasor. Example:
  • A settles with C for $5,000. A then sues B saying that B was 50% responsible for the accident. A cannot recover from B.
  General Obligations Law 15-108(b) provides that a settling tortfeasor is also not subject to a claim of contribution from another tortfeasor. General Obligations Law 15-108(a) provides that once a tortfeasor settles, the remaining tortfeasor is only liable for the lesser of his share of the fault or the remaining unpaid damage. Example:
  • A settles with C for $2,000. C then sues B for the remainign $3,000. Even if B is found 80% liable, A can only recover $3,000. If B is found 20% liable (meaning that A was really 80% liable and should have paid $4,000), a recovers $1,000 from B, and in the end is "out" $1,000.
  Note, finally, that this rule covers only contribution, not indemnification. Example:
  • General Contract (GC) hires Subcontractor (SC) to do some work, and the contract says SC will indemnify GC for any liability arising from SC's work. SC's work causes injury to P. GC settles with P. GC can recover from SC under indemnification. Mas v. Two Bridges Associates, 75 N.Y.2d 680 (1990).
The same is true for example with a party that settles because it is vicariously liable for the act of another. Example:
• Employee E employs worker W, who causes damage, Employee E is vicariously liable and may pay a claim to the injured party. However, a party that is vicariously liable is entitled to indemnification from the party principally at fault, and thus, after settling, E can seek indemnification from W. Rogers v. Dorchester Associates, 32 N.Y.2d 553, 566 (1973).

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