A New York court has reversed its decision to dismiss an “assignment of proceeds” case filed by Nick Orso’s Body Shop against Adirondack Insurance, where the shop is seeking to recover short pay on claims of $4,600 plus attorney fees, costs and penalties.
In filing the motion to dismiss, the insurer claimed that Orso’s lacked “standing” to bring the action due to a clause in both vehicle owners’ policies prohibiting them from assigning the claimed losses without prior written consent of the insurer. The court found in favor of the insurer and upheld the motion, noting that Orso’s had not submitted any New York case law invalidating such an anti-assignment provision.
Orso’s appealed the decision, contending that New York law held that enforceability of anti-assignment clauses in insurance policies are limited in that they’re only valid to pre-loss assignments, not post-loss assignments. The court then ruled to reinstate the complaint and remit the case back to court for further proceedings.
“The importance of this decision is that we can continue to help our customer by delivering a proper, safe repair in the absence of our offer of ‘reasonable negotiation’ and have a chance to stand in the consumer’s shoes to collect for the repairs we’ve done,” said Mike Orso, president of Nick Orso’s. “I think some insurance companies would rather not face the shop but instead deny a consumer payment and spin it so the shop is made out to be the bad guy. Shops need to admit they’re saddled with all the liability and responsibility of the repair; who better to resolve the cost of the repairs than us from a position of knowledge? We are still the professionals.”
Added Joseph Talarico, Esq., who was assisted by Erica L. Eversman, J.D., “This was an important and pivotal point in the assignment of claim proceeds issue. We have hundreds of claims pending against various insurance companies, and we’ve put substantial resources and effort into these short-pay collections.”
According to court documents, in the first case, Orso’s submitted an estimate of $5,105.69 to Adirondack for necessary repairs, and the insurer in turn provided an estimate of $1,449.31, minus a $500 deductible. In response to a notice of deficiency, the insurer amended the amount it was willing to pay to $2,844.28, minus the $500 deductible. Orso’s then submitted a final bill of $4,963.23, claiming an additional $2,118.85 was required to complete necessary repairs. The insurer refused to pay this.
In the second case, Orso’s submitted an initial estimate of $7,903.20, and the insurer responded with its own estimate of $4,310.61, less a $200 deductible, which it subsequently amended to $5,700.74 minus a $500 deductible. After Orso’s protested, the insurer paid $5,500.74 and the vehicle owner paid a $200 deductible. Orso’s then claimed a final bill of $8,275.88, for a difference of $2,575.14 the insurer refused to pay.
Orso claims he has prevailed in “hundreds” of previous assignment of proceeds cases, receiving full payment, court costs and penalties, and is confident he’ll prevail in the case against Adirondack.
“Many of the companies we’ve sued have come to the decision that it would be prudent to simply follow the regulations and ‘negotiate a settlement’ at the shop on each repair or enter into ‘global settlements’ before spending money on legal fees for matters they can’t win,” he said. “It appears most attorneys tend to follow the N.Y. regulations, settling the claims on the merits before subjecting their insurer clients to court fees and sanctions or exposure to continued patterns of unfair claims activity.”
VIDEO: Attorney Erica Eversman explains "assignment of proceeds"
Read the actual court decision