In Contact Chiropractic, P.C. v. New York City Transit Authority, the Court of Appeals, the highest Court in NY, tackled the split between the First and Second Departments regarding the statute of limitations in no-fault claims. In 2001, Girtha Butler was injured as a passenger on a bus owned by the New York City Transit Authority. NYCTA did not have no-fault coverage, but was self-insured with respect to that risk. Contact Chiropractic provided medical treatment to Butler and she assigned to them her right to recover first-party benefits from NYCTA. Contact Chiropractic submitted its claims to NYCTA from March 14, 2001 – August 27, 2001. On January 8, 2007, plaintiff commenced an action seeking reimbursement for outstanding invoices under CPLR §213 (2) which establishes a six-year period of limitations for an action based upon contractual obligation or liability.
NYCTA moved for dismissal under CPLR §214 (2) which applies a three-year statute of limitations to actions to recover upon a liability created or imposed by a statute because NYCTA is self-insured. NYCTA relied on the First Department case of M.N. Dental Diagnostics, PC v. NYCTA which stated that the obligation to provide no-fault benefits arises out of the no-fault statute and as such, the three-year statute of limitations applies. Contact Chiropractic opposed based on the Second Department case of Matter of ELRAC, Inc. v. Suero which stated that while an injured person’s claims for benefits are statutorily mandated, they arise out of an insurance contract and as such, are subject to the six-year statute of limitations. The Court of Appeals resolved the split in authority in favor of the First Department and held that self-insured entities are bound by a three, not six, year statute of limitations.
In matters involving no-fault claims against insurance companies liable for no-fault benefits due to the issuance of an insurance policy, the six-year statute of limitations still applies. This is a critical distinction among those of us who deal in No Fault or PIP law from time to time. Thanks to Mehreen Hyatt for her contribution to this post. Please email Brian Gibbons with any questions.