Court Opinion

ID: 5852400
Source: CourtListenerOpinion
Date Created: 2022-01-13 00:06:40.478894+00
Date Added: 2024-06-11T08:44:08.311445
License: Public Domain

Weiss, J.,
dissents and votes to modify in the following memorandum. Weiss, J. (dissenting). I respectfully dissent. The facts in this case are undisputed. As the result of an accident, plaintiff sustained extensive personal injuries and made a claim for payments under the no-fault provisions in defendant’s liability insurance policy covering the involved automobile. The controversy arose when defendant determined that it had attained the outer limit of liability of $50,000 under its policy. Defendant contends that by payment of $34,391 in medical expenses, together with $16,992 gross wage loss claimed, *723the total is $51,383. In its computation of the gross wage loss claim, defendant deducted the 20% income tax deduction (Insurance Law, § 671, subd 2, par [a]) and Social Security disability benefits (Insurance Law, § 671, subd 2, par [b]). Although defendant’s actual payment totaled $41,047, it took credit for these statutory deductions in the amount of $10,336. Defendant rejected plaintiff’s claim for further required medical care on the ground that its outer limit of liability of $50,000 had been attained. Plaintiff then commenced an action for declaratory judgment on behalf of a class comprised of all similarly situated persons, and also sought punitive and exemplary damages. Defendant moved to dismiss the complaint pursuant to CPLR 3211 on the ground it failed to state a cause of action. Special Term, finding that the case centered upon an ambiguity perceived to exist in section 671 of the Insurance Law between the terms “ ‘Basic economic loss’ ” (subd 1) and “ ‘First party benefits’ ” (subd 2), upheld defendant’s interpretation of the law and granted an order dismissing the class action portion of the complaint and all portions seeking punitive damages. This appeal ensued. In its decision, Special Term found that only a question of law. was presented and it interpreted section 671 of Insurance Law by resolving the ambiguity in favor of defendant, holding that the complaint failed to state a cause of action to the extent aforesaid. If indeed the sole issue is the interpretation of section 671,1 disagree with both Special Term and the majority in this court. This court’s interpretation places its imprimatur upon the practice of automobile insurance carriers of , reducing insurance policy limits below the stated face amount of $50,000.* In so doing, carriers are permitted to appropriate unto themselves the section 671 (subd 2, pars [a], [b]) deductions from first-party benefits as though they had paid out such deducted sums to a claimant, thereby reducing the outer limit of their risk below $50,000. The statute mandates payment of “ ‘First party benefits’ ” to injured victims of automobile accidents (Insurance law, § 672 — “Entitlement to first party benefits”). Subdivision 2 of section 671 states that first-party benefits “means payments to reimburse a person for basic economic loss on account of personal injury”. “ ‘Basic economic loss’ means, up to fifty thousand dollars per person” (a) all medical expenses, and (b) loss of earnings from work up to $1,000 per month for not more than three years. Therefore, until a carrier has paid out a total of $50,000 of basic economic loss, comprised of any combination of medical expenses and loss of earnings it has not attained the outer limit of liability which it has assumed in return for a premium. Subdivision 2 of section 671 defines first-party benefits to be paid, and the deductions to be taken in reduction of those first-party benefits are set forth in paragraphs (a) and (b) thereof. The statute does not specify that deductions are to be taken from basic economic loss. Nowhere does the Insurance Law provide or permit reductions of the $50,000 liability limit by these deductions. This is readily apparent from provisions in the regulations such as, “[Bjasic economic loss of each eligible injured person on account of any single accident shall not exceed $50,000” (11 NYCRR 65.1 [c], 65.2, 65.11 [c], 65.12 [a]), “[W]hen claims aggregate to more than $50,000 * * * prior to the exhaustion of the $50,000. If the insurer pays the $50,000” (11 NYCRR 65.6 [m]). In 11 NYCRR 65.15 (m), under computation of basic economic loss, these words appear: “[I]f the insurer pays the $50,000 * * * the insurer will not be liable to pay such late claims”. It is now beyond cavil that the 20% deduction imposed by section 671 (subd 2, par [a]) was included in the statute to prevent a windfall recovery to injured persons and financial hardship to insurance carriers. By limiting first-party benefits to 80% of lost earnings, the Legislature took into account the facts that the lost earnings compensated under the law are not includable in income *724for the purposes of Federal income taxation and that claimants, therefore, derive a benefit in that respect. Accordingly, it was intended that insurance carriers should share in this benefit in the hope premiums might be lower (see Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 457). Defendant, and the majority herein, have transmogrified the statute in a conceptualization which bestows the promulgated benefit not upon accident victims, but upon insurance carriers. The legislative intent was to provide for payment of first-party benefits to accident victims by insurance carriers, which, for a paid premium, assume risk up to an outer limit of $50,000. The Court of Appeals in Kurcsics delineated the rule: “Where, however, the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency and its interpretive regulations are therefore to be accorded much less weight. And, of course, if the regulation runs counter to the clear wording of a statutory provision, it should not be accorded any weight” (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459). As stated in State Farm, Mut. Auto Ins. Cos. v Brooks (78 AD2d 456, 458-459, app dsmd 54 NY2d 753): “The No-Fault Law was enacted primarily to assure ‘that every auto accident victim will be compensated for substantially all of his economic loss, promptly and without regard to fault’ [citations omitted]. According to the legislative scheme an injured individual ‘is entitled to actual lost earnings claimed less 20%, unless such reduced figure exceeds $1,000 per month’ (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 456-457). As the Court of Appeals noted, it is not the purpose of this legislation to provide a windfall for either the injured person or the insurance carrier. Instead, the intention is ‘to compensate the accident victim for the earnings he or she would have, in fact, realized, while, at the same time, ensuring that an unjustified financial burden is not thrust upon the insurance companies which would eventually be reflected in higher insurance premiums’ (Kurcsics v Merchants Mut. Ins. Co., supra, p 457; emphasis added).” I would, for these reasons, reverse the order insofar as it dismissed portions of the complaint.

 We are not here concerned with the medical expense portion of basic economic loss.