Interest Through Payment: 2% Monthly No-Fault Interest Keeps Running After Judgment

Key Takeaways

• Supreme Court, Queens County declared that overdue no-fault benefits continue to accrue interest at 2% per month even after the claim is reduced to a judgment.
• The Appellate Term’s earlier statement that 9% per annum applies post-judgment was treated as advisory, not binding.
• The court reasoned that the Insurance Law’s punitive interest scheme supersedes the CPLR’s judgment-interest provisions (CPLR 5002–5004) for first-party no-fault benefits.
• The difference between 24% per year and 9% per year on an aged judgment is enormous — this issue alone can dwarf the underlying benefits.

The Decision

B.Z. Chiropractic, P.C. v Allstate Ins. Co., 2019 NY Slip Op 50241(U)(Sup. Ct. Queens Co. 2019)

The Appellate Term “suggested” that interest runs at 9% per year after a judgment is entered. Supreme Court Queens County recognized that the Appellate Term’s statement was advisory at best. The Court has now held, probably properly, that 2% interest runs until the judgment is paid. While Allstate may appeal this decision, it is likely to be affirmed.

” The portion of Petitioner’s Petition seeking a declaratory judgment on the proper interest rate which accrues on first party no-fault benefits after the entry of judgment is decided as follows…At the time that the underlying claims were filed, said interest accrued at a compound rate. It is well settled that “with respect to interest on first party benefits due under the no-fault statute,…the Insurance Law supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004 (Gov’t Emp. Ins. Co. v. Lombino, 57 AD2d 957, 959, 394 N.Y.S.2d 898 ) The policies of encouraging prompt payment of claims and reducing litigation outweigh limits on interest found elsewhere, See, Matter of McKenna v County of Nassau, Off. of County Attorney, 97 AD2d 440 (2d Dept 1983). The interest rate on No-Fault actions is intentionally punitive, with severe penalties in order to encourage prompt adjustment of claims. As such, the rate of interest is not reduced simply because the claim has been reduced to a judgment. While such claims remain overdue, they accrue interest at two percent per month. As such, plaintiff is entitled to a declaratory judgment recognizing same. “

The Legal Framework: Two Interest Regimes, One Judgment

The dispute exists because two statutory schemes collide at the moment a no-fault judgment is entered. On one side sits the no-fault law: overdue first-party benefits accrue interest at 2% per month under Insurance Law § 5106(a) and 11 NYCRR 65-3.9 — a deliberately punitive 24% per year designed to force carriers to pay or deny claims promptly. On the other side sits the CPLR: under CPLR 5003 and 5004, judgments ordinarily bear interest at 9% per annum from entry until satisfaction.

The question in B.Z. Chiropractic was which regime governs the post-judgment period on a no-fault claim. The carrier’s position — echoing the Appellate Term’s earlier suggestion — was that entry of judgment transforms the obligation into an ordinary money judgment carrying the ordinary 9% rate. The provider’s position was that the claim “remains overdue” until actually paid, so the punitive 2% monthly rate keeps running.

Supreme Court sided with the provider. Relying on the line of cases holding that the Insurance Law supersedes CPLR 5002, 5003 and 5004 for first-party no-fault interest, the court declared that the rate is not reduced “simply because the claim has been reduced to a judgment.” The punitive purpose — prompt adjustment of claims — would be undercut if a carrier could litigate to judgment and then warehouse the obligation at a civil-rate discount.

Why This Matters for Carriers and Providers

For carriers, the arithmetic is the message. An unpaid no-fault judgment accruing at 2% per month grows two-and-a-half times faster than at the CPLR rate — and on the older claims at issue here, the interest accrued at a compound rate, accelerating the growth further. Sitting on a no-fault judgment while an appeal winds along is an expensive strategy, and reserving practices should reflect the 24% exposure rather than assuming the 9% judgment rate.

For medical providers and collection counsel, the decision validated pressing for the statutory rate through the date of actual payment when computing judgment payoffs. It also illustrates a procedural lesson: the provider obtained this ruling through a declaratory judgment petition, forcing a clean answer to a question the Appellate Term had only touched in passing.

For both sides, the post’s original caution stands — this was a trial-level ruling that Allstate could appeal, and the post-judgment rate question was, at the time, genuinely unsettled. The decision’s reasoning, grounded in Lombino and McKenna, explains why the author thought affirmance likely. The flip side of punitive interest is the tolling doctrine: a provider that delays its own case can forfeit interest for the dormant period, so the 2% rate rewards diligence, not warehousing.

Practice Pointers

• Providers: when preparing a judgment payoff demand, compute interest at 2% per month through the anticipated payment date and show the math; do not let the judgment clerk default to 9%.
• Carriers: pay promptly once a judgment is final — every month of delay costs 2% — and scrutinize the accrual period for plaintiff-side delay that tolls interest.
• Both sides: check whether the claims at issue predate the simple-interest amendment to the regulation; as this decision notes, older claims accrued interest at a compound rate, which dramatically changes the calculation.
• Both sides: where an appellate statement is arguably dictum — as the Appellate Term’s 9% “suggestion” was here — a declaratory judgment action can be the cleanest vehicle to resolve the question.

Related Resources

• Post-judgment interest rates in no-fault cases: 24% vs 9% per annum
• Appellate Term’s advisory ruling on 9% post-judgment interest
• Understanding New York’s 2% interest rule on overdue no-fault claims
• Appellate Term’s significant error in interest calculations
• When interest was not tolled in no-fault cases
• Priority of payment under the no-fault regulation — the firm’s cluster hub on payment rules
• The firm’s Legal Encyclopedia
• No-Fault Defense practice page

Frequently Asked Questions

What is the interest rate on overdue New York no-fault benefits?

Overdue first-party no-fault benefits accrue interest at 2% per month — 24% per year — under Insurance Law § 5106(a) and 11 NYCRR 65-3.9. The rate is intentionally punitive to encourage carriers to pay or deny claims promptly.

Does the 9% CPLR judgment rate apply to no-fault judgments?

According to B.Z. Chiropractic v Allstate, no. The court held that the Insurance Law’s interest scheme supersedes CPLR 5002, 5003 and 5004, so the 2% monthly rate continues to run after entry of judgment, while the claim remains unpaid.

Why is no-fault interest so much higher than ordinary judgment interest?

Because it is designed as a penalty, not just compensation for the time value of money. The no-fault system depends on prompt claim adjustment, and the severe rate gives carriers a strong financial incentive to pay valid claims quickly rather than litigate and delay.