As a service provider, you likely know all too well that sometimes the insurance company pays the client directly. But what happens if your customer keeps the insurance payment?
If you’re looking to get paid, you should know the law governing New York debt collection that applies when the customer fails to turn over the insurance monies. This law applies whether you are providing restoration, medical, or other services.
The insured, agreeing to have the work performed or treatment rendered, signs an assignment of benefits. Depending on the type of service you provide, the client may sign off stating their satisfaction with the work performed.
The insurance is then billed and the carrier pays the insured directly. Although most insurees endorse and turn over checks to the service provider, some do not. They may refuse to endorse the checks or fail to inform the service provider of payment.
So how does New York law help you recover your money?
The Law
Some of the following “causes of action” or remedies can be sought alone or in combination. One is not better than another. The objective is to use the laws that will support your claim and lead to a money judgment against the insured who failed to pay you.
Conversion
If the customer kept insurance money intended to pay you for your work, you have an action for conversion.
Your debt collection attorney must specifically allege that the debtor received the insurance checks and “converted” them for their use. The litigation should be supported by evidence to support the claim of conversion. Generally, if the canceled check can’t be obtained from the carrier, details of the payment including date of issuance, date cashed, and the amount will be essential to prove conversion.
Breach of Contract
You can claim breach of contract if a written contract exists. You performed a service for the client at an agreed-upon amount, fulfilling your duties by rendering the required services. Since the client failed to pay you, there is a “breach of contract.”
Breach of contract is straightforward and one of the most common actions brought by debt collection lawyers.
Quasi-Contract
In a rush to get the job done, you inadvertently neglected to get a signed agreement. Don’t worry, you can still pursue the client for payment. However, the wording of the complaint will have to be a little different. In a quasi-contract, the court may award you the reasonable value of your work — the amount the court considers a reasonable value for your services.
Unjust Enrichment
Fairness comes into play here. You could pursue the insured for unjust enrichment by showing three elements:
- You conferred a benefit on the insured
- The insured knew of the benefit and should reasonably have expected to repay you
- The insured accepted or retained the benefit without paying for its value.
Quantum Meruit
In a claim for quantum meruit. there is no mention of the agreed value of the work performed. Although the insurance company may have paid the homeowner more than what they owe, the homeowner may claim that the insurance overpaid, and you are not entitled to that amount.
The law implies that a contract existed between the parties, “and that the party who performs the service shall be paid a reasonable compensation.” The question is not whether a contract exists, but the price related to services.
Account Stated
Another law that could apply to your case is an account statement. The premise is that you sent bills to the insured for the amount owed to you. The client then kept the bills and did not object to them. In this case, you may be able to recover monies owed.
If you have a customer who kept an insurance payment for services rendered, reach out to set up a consultation with Frank, Frank, Goldstein and Nager. We have the experience that pays.
