Priority of Liens in Personal Injury Settlement: Motor Vehicle Accident Indem. Corp. v Bader & Yakaitis LLP et al., 2020 NY Slip Op 50798(U) Supreme Court, New York County, Index No. 450314/2019. Decided 08 July 2020.

• Author: Rogak, Lawrence N.
• Position: [COURTSIDE]

This lawsuit arose out of a motor vehicle accident where a claimant was injured by an uninsured motorist. When a settlement was reached with the tortfeasor, a dispute arose over the priority of several liens on the settlement funds.

This was a motion to determine whether defendant Bader & Yakaitis LLP, a law firm, and defendant Devina Pope were personally liable to re pay plaintiff Motor Vehicle Accident Indemnification Corporation 's (MVAIC's) statutory lien.

As an introductory matter, MVAIC is a New York quasi-governmental agency which provides insurance benefits for certain victims of uninsured motorists. As relevant to this case, a "covered person" means a person who meets the statutory requirements of eligibility for No Fault benefits (it does not mean a person who has valid insurance coverage).

Pope sustained personal injuries on March 25, 2013, as the result of an automobile collision with non-party Ben Haidara. At the time of the collision, Haidara was insured by Unique Insurance Company, which was not authorized to do business in New York (and therefore not required to provide New York PIP benefits). Haidara was therefore a "non-covered person" under Articles 51 and 52 of the Insurance Law (the No Fault statute and the MVAIC statute, respectively).

Pope, as a "covered person," was en titled to receive no-fault benefits from plaintiff MVAIC. Pope accordingly filed for and received $12,124.03 in no-fault benefits from MVAIC for her medical treatment.

Pope retained Bader to sue Haidara for Pope's injuries. Bader brought an action against Haidara in Supreme Court, New York County. The action settled for $40,000-without notice to MVAIC. Haidara deposited those funds in Bader's bank account.

MVAIC contended that after issuing Pope $12,124.03 in no-fault benefits, it possessed a statutory lien under Insurance Law [section] 5104 (b) on "any recovery" Pope obtained in the action against Haidara. MVAIC brought this action against Bader and Pope, asserting claims for (i) breach of fiduciary and legal duty owed by Bader under Insurance Law [section] 5104 (b) ; and (ii) breach of Pope's statutory and legal duty to repay plaintiff's lien.

Two New York City agencies, the Office of Child Suport Services (OCSS) and the Investigation, Revenue and Enforcement Administration (IREA), also claimed liens over the settlement funds. OCSS claimed a lien of $43,228.27 for unpaid child support. IREA claimed a $1,495.60 Medicaid lien. Bader itself, as Pope's...