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Bundled No-Fault Claims: The First Department Supports Severance Into Separate Actions
By: Charles W. Benton, Esq.

FOR THE DEFENSE

Bundled No-Fault Claims: The First Department Supports
Severance Into Separate Actions


By: Charles W. Benton, Esq.
Bruno, Gerbino & Soriano, LLP
Melville, New York


A recent decision of the Appellate Division, First Department, directly addresses an insurer=s right to severance when a lawsuit bundles numerous different no-fault claims.

In Radiology Resource Network, P.C. v. Fireman=s Fund Insurance Company, 2004 N.Y. App. Div. LEXIS 13164 (1st Dept. 2004), the First Department found that the lower court had properly exercised its discretion under CPLR ' 603 in granting Fireman=s Fund=s motion to sever 68 different no-fault claims constituting this particular lawsuit. The 68 claims had all been assigned by 68 different assignors to one plaintiff, a vendor of medical services. The Appellate Division noted that the no-fault claims at issue arose from 68 different accidents. The Court found that even if all of the insurance policies were identical, each claim would raise unique legal and factual issues relating to such matters as the validity of the assignments, the necessity and reasonableness of plaintiff=s services in light of each assignor=s medical condition, defendant=s receipt of bills from plaintiff, and the sufficiency of the no-fault forms that were submitted. The validity of such defenses, in the Court=s view, would depend on the particular facts relating to a particular claim. Just because the claims were for services provided by the same no-fault vendor, and were being asserted against the same insurance company, did not change the fact that individual issues were likely to predominate in the resolution of each claim, and that the claims were likely to raise few, if any, common issues of law or fact.

The Radiology Resource Court found that trying all 68 no-fault claims together would be unwieldy and would create a substantial risk of confusing the trier of fact. In the Court=s view, the interests of convenience and avoidance of prejudice was best served by severing the claims.

The First Department analyzed the two leading cases on severance of no-fault claims, Hempstead General Hospital v. Liberty Mutual Insurance, 134 A.D.2d 569, 521 N.Y.S.2d 469 (2nd Dept. 1987) and Mt. Sinai Hospital v. Motor Vehicle Accident Indemnity Corp., 291 A.D.2d 536, 738 N.Y.S.2d 247 (2nd Dept. 2002). The Hempstead case held that, under the particular circumstances presented, the lower court acted within its discretion in denying a motion to sever 29 assigned no-fault claims. In the view of the Radiology Resource court, the decision in Hempstead does not stand for the proposition that the granting of a severance motion in a case involving more than twice as many assigned claims is an abuse of judicial discretion warranting reversal on appeal. The First Department found that Hempstead must be read in light of the Mt. Sinai decision. In Mt. Sinai, the Second Department found that the lower court also acted within its discretion in granting a motion to sever five assigned no-fault claims, when those claims arose from five different accidents on five different dates and had no relation or similarity to each other, other than the fact that the claims were for no-fault benefits.

Radiology Resource adheres to the basic principle that lower courts have broad discretion and power under CPLR ' 603 to order the severance or separate trial of actions. The exercise of such power is ordinarily a matter of judicial discretion. Monford v. Sulka & Co., 79 A.D.2d 502, 433 N.Y.S.2d 573 (1st Dept. 1980). Since the power to sever is discretionary, a trial court=s decision to do so will generally not be upset on appeal unless an appellant can show a clear abuse of discretion on the part of the trial court. See Southworth v. Macko, 294 A.D.2d 920, 741 N.Y.S.2d 813 (4th Dept. 2002). The First Department=s holding in Radiology Resource and its treatment of the two Second Department cases regarding severance of no-fault claims, Hempstead General and Mt. Sinai, are illustrative of the principle that an appellate court should defer to a trial court=s decision on severance unless a clear abuse of discretion can be shown. Thus, a defendant wishing to sever no-fault or any other types of claims into separate actions must make a strong presentation of the facts and of the law to the trial court. Failure to do so may result in an adverse decision with regard to severance. A lower court severance decision is unlikely to be upset on appeal absent a clear abuse of discretion.

Editors Note: Charles W. Benton is a graduate of Fordham University School of Law and an associate of the Appeals Division at Bruno, Gerbino & Soriano, LLP, located in Melville, New York.

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