Thursday, July 30, 2009

Coverage Counsel

I'm not sure how it's possible, but apparently I never, before now, had a link in my blogroll to Roy A. Mura, Esq.'s wonderful blog Coverage Counsel. Mr. Mura's posts deal with no-fault issues, as well as a much wider range of insurance law matters.

Thursday, July 23, 2009

Provider EUOs

David M. Gottlieb, Esq. has previously covered this issue at No-Fault Paradise, but it seems to me that it's worth some additional attention.

On June 24, 2009, the NYS Insurance Department issued an opinion letter entitled "Examinations Under Oath of Assignees". The short question/answer summary is as follows:

May an insurer, when requesting verification in the form of an examination under oath of an assignee of no-fault personal injury protection (“PIP”) benefits, require a corporate assignee to designate a specific person to be examined?

No. Neither the Insurance Law nor the regulations promulgated thereunder permit an insurer to require that a corporate assignee of no-fault benefits designate a specific person of the insurer’s choice to submit to an examination under oath.

As the Insurance Department noted, "nowhere does the regulation address whether an assignee that is a corporate entity or partnership must submit a person for examination that is specifically identified by an insurer in its examination under oath notice." The Department therefore reasoned that there is, in fact, no allowance for the insurer to request the production of a specific person at an EUO. However, the Department opined that, if the provider does produce someone for the EUO, and that person is unable to provide the information sought, "the insurer may request additional examinations of the assignee until a person is submitted for examination by the assignee who can provide the items necessary to verify the claim." (Internal quotation marks omitted).

In his post, Mr. Gottlieb asked what is presumably the most important and immediate question for practitioners: "Would EUO requests, where they demanded that a specific person appear for the EUO, be defective as a matter of law?"

I'm not sure that there's an easy answer here, but it seems to me that if an insurer requests that a specific person (presumably, a professional shareholder) appear at an EUO, and only requests the appearance of that person, the request is invalid. It would seem that it would be invalid, ab initio, for an insurer to request something that it is simply not entitled to. To the extent that a provider could choose to produce a different person in response to such a request, the provider would be under no duty to do so given the specific nature of the request. As such, non-attendance (by anyone from the provider) at such a requested EUO should not constitute a failure to provide verification or to otherwise cooperate, as the insurer had no authority to make such a request in the first place.

It therefore appears to me that requesting that a provider produce a specific person at an EUO is no more valid than an insurer requesting an EUO at all under the Old Regulations (which contained no specific provision whatsoever allowing for EUOs as a form of verification). See King's Med. Supply v. Progressive Ins., 3 Misc.3d 126(A) (App. Term, 2d Dep't, 2004), holding that "[s]ince there was no provision authorizing such a procedure, defendant's request that plaintiff submit to an EUO did not toll the 30-day period within which it was required to pay or deny the claim."

Tuesday, July 21, 2009

An Addition to the Blogroll

I've been meaning to add it in for a while, but now that I finally got around to updating the layout of the blog (which shouldn't look much different to the reader, hopefully), I've added a link to No Fault Law - A Defense Attorney's Perspective. It's worth taking a look at.

Thursday, July 16, 2009

The Death of the Assignment of Benefits?

In 2007, the Court of Appeals reaffirmed the longstanding Appellate Division case law "that a carrier's failure to seek verification or object to the adequacy of claim forms pursuant to 11 NYCRR 65-3.5 precludes it from interposing any defenses based on such deficiencies." Hospital for Joint Diseases v. Travelers Property Cas. Ins. Co., 9 N.Y.3d 312, 318 (2007). The Appellate Division had long held that this rule precluded defenses related to, inter alia, the assignment of benefits form. The Court of Appeals therefore held "that the failure by Travelers to seek verification of the assignment in a timely manner prevents the carrier from litigating the issue now." Id. at 319.

Left open was the question of whether proof of the assignment is a part of a no-fault plaintiff's prima facie case. Travelers contended before the Court of Appeals that proof of the assignment was, indeed, a necessary component of a plaintiff's proof. The Court avoided the issue by holding that, "[e]ven assuming that this is true, we conclude that an assignment form stating that the patient's signature is 'on file' satisfies that burden where the carrier does not timely take action to verify the existence of a valid assignment." Id. at 320.

The Appellate Term, 2d Dep't, has since taken the Hospital for Joint Diseases decision and run with it. In Westchester Neurodiagnostic, P.C. v. Allstate Ins. Co., decided last month, the App. Term held that "proof of the assignment of benefits form is not an element of plaintiff's prima facie case." ___ Misc.3d ___, 2009 NY Slip Op 51385(U) (App. Term, 2d Dep't, 2009). I believe this is the first time an appellate court has explicitly announced this rule.

This month, in Davydov v. Progressive Ins. Co., the Appellate Term dealt with the situation of an assignment form existing, but not actually naming the proper parties. ___ Misc.3d ___, 2009 NY Slip Op 29299 (App. Term, 2d Dep't, 2009). In that case, the assignee was misidentified as "Dr. Albert Davydov, DDS, P.C. rather than Dr. Albert Davydov, DDS." Id. Nevertheless, citing to Hospital for Joint Diseases, and over a dissent by Justice Golia, the Appellate Term held that even this issue was waived.

I wouldn't be surprised if the carriers in Westchester Neurodiagnostic and Davydov try taking their arguments to the Appellate Division, but these decisions represent the current state of the law on assignments. It would thus appear now that, without having made verification requests, no assignment-related defense will hold any water. Indeed, in such situations, the assignment form should not even be subject to production through the discovery process, as discovery demands related to precluded defenses are palpably improper. See Midborough Acupuncture, P.C. v. State Farm Ins. Co., 21 Misc.3d 10, 12 (App. Term, 2d Dep't, 2008).

On the other hand, I have no question in my mind that many trial court judges will continue to consider the assignment a necessary part of a plaintiff's burden. Some judges still continue to hold that an assignor's signature on the assignment form must be authenticated in order for a plaintiff to make out its prima facie case, even though the Appellate Term has held otherwise for years. See A.B. Medical Services PLLC v. Prudential Property & Cas. Ins. Co., 7 Misc.3d 14 (App. Term, 2d Dep't, 2005). That being said, any judge reading this would necessarily be too well-informed to make such an error.

And, of course, many defense attorneys who know better still continue to make such frivolous arguments while feigning ignorance of the last decade of no-fault jurisprudence. I've had defense attorneys tell me, with a straight face, that Hospital for Joint Diseases doesn't preclude them from questioning the validity of the language of the assignment form for the first time at trial.

If anyone believes that, in the absence of relevant verification requests, any assignment-related defenses still survive, please feel free to share.

Thursday, June 25, 2009

State Farm v. Langan

In State Farm Mut. Auto. Ins. Co. v. Langan, 55 A.D.3d 281 (2d Dep't, 2008), the Appellate Division, 2d Department, held that, regarding no-fault benefits, a loss is "accidental" where the incident is "unexpected, unusual and unforeseen" from the point of view of the injured person. Generally speaking, this struck a blow against insurers who seek to disclaim coverage where only one person intentionally caused the loss. Thus, for example, where insurers previously sought to disclaim no-fault coverage for an occupant of a vehicle that was intentionally struck (but where said occupant played no role in the scheme), Langan provides that such a disclaimer would be invalid. The disclaimer would only be appropriate where the insurer can demonstrate that the injured person in question was a party to the intentional conduct.

It thus bears noting that, on June 11, 2009, the Court of Appeals dismissed State Farm's further appeal in that matter. See State Farm Mut. Auto. Ins. Co. v. John Robert Langan,etc., 2009 NYSlipOp 74754 (Ct. of App., 2009), which dismissed the appeal sua sponte on the basis that the App. Div.'s order "does not finally determine the action within the meaning of the Constitution." As a result, the App. Div.'s holding will apparently remain settled law (at least in the 2d Dep't) for the foreseeable future.

Practitioners citing to Langan in briefs may consider noting in the citation that the appeal was dismissed (e.g., State Farm Mut. Auto. Ins. Co. v. Langan, 55 A.D.3d 281 (2d Dep't, 2008), app. dismissed, 2009 NYSlipOp 74754 (Ct. of App., 2009)).

Friday, April 03, 2009

EUO No-Show by Patient Subject to Preclusion

I'll have a post regarding the unsurprising result in LMK later, but there's a new decision from the Appellate Division, Second Department that requires some attention.

The decision in Westchester Med. Ctr. v. Lincoln Gen. Ins. Co., 2009 NY Slip Op 02589 (App. Div., 2d Dep't, 2009) has just been posted.

The decision has a few holdings. The ostensible main holding is that letters "advising the plaintiff that the processing of its claim was being held pending an investigation of the loss, which included verifying the claimant's involvement in the motor vehicle accident and conducting examinations under oath of any individuals with personal knowledge of the facts" are not valid verification requests. Id. This holding is nothing groundbreaking.

The much more interesting holding comes later: "Where, as here, the defendant's denial of liability also was based upon an alleged breach of a policy condition, to wit, the failure of the plaintiff's assignor to appear at an examination under oath, such an alleged breach does not serve to vitiate the medical provider's right to recover no fault benefits or to toll the 30-day statutory period. Rather, such denial was subject to the preclusion remedy." Id. (internal citations omitted).

So, in short, EUO no-shows by patients require timely denials. Presumably this holding also applies to other policy conditions, such as attendance at IMEs. If so, this would extinguish any hope raised by the last sentence of Fogel that such a no-show is a coverage defense because "an insurer may deny a claim retroactively to the date of loss for a claimant's failure to attend IMEs." Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 A.D.3d 720 (2d Dep't, 2006). Clearly, now, such defenses are not based upon a lack of coverage, and must be denied within 30 days. Presumably, timely and valid requests for EUOs and IMEs still toll the 30 days, but the eventual denial must be timely, as well. So, whatever a "retroactive" denial mentioned in Fogel is, it's still something that must be timely.

Tuesday, March 03, 2009

MVAIC & Qualified Persons

Judge Noach Dear's decision in Kipor Medicine P.C. v. MVAIC, 2009 NY Slip Op 29085 (Civ. Ct., Kings Cty., 2009) was published today on the Slip Opinion site. This was published as a Decision of Interest in the New York Law Journal last week and will be published in the official Miscellaneous Reports.

As noted in the version published in the Law Journal, I handled this trial of counsel to the Law Offices of Bruce Newborough for Plaintiff.

In the case, MVAIC alleged that it had never received proof of the assignor's residency in New York and that, therefore, the assignor was not a "qualified person" under Insurance Law § 5202(b). As noted by the Court, however, the definition of "qualified person" is not limited to New York residents. Moreover, the fact that MVAIC had not received proof of residency was not sufficient proof that the assignor did not meet the definition of a "qualified person." MVAIC likewise submitted no other proof to demonstrate that the assignor was not qualified.

Wednesday, February 18, 2009

Timeliness of EUO Requests

This morning brings us the Appellate Term, 2d Department's decision in Great Wall Acupuncture, P.C. v. New York Central Mutual Insurance Company, 2009 NYSlipOp 50224(U) (App. Term, 2d Dep't, 2009).

In a summary judgment motion, "defendant asserted that it timely denied plaintiff's claims based on plaintiff's owner's failure to appear for scheduled examinations under oath (EUOs)." Id. However, the Appellate Term found that "defendant failed to timely request the EUO after receiving plaintiff's bills." Id. As a result, they held that "defendant is precluded from, inter alia, relying upon plaintiff's failure to appear at an EUO as a defense to this action." Id.

The App. Term has thus established a sharp contrast between EUO requests and IMEs. As the App. Div. held in Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 A.D.3d 720 (2d Dep't, 2006), "an insurer may deny a claim retroactively to the date of loss for a claimant's failure to attend IMEs when, and as often as, the insurer may reasonably require." (Internal quotation marks omitted). Such retroactive denial is not available for EUOs that are not requested under the verification time frames, and a failure to attend untimely-requested EUOs is apparently not a coverage issue.

Thursday, February 12, 2009

LMK Update

The newly-shaven David M. Gottlieb, Esq. has a great post over at No-Fault Paradise about the oral arguments before in the Court of Appeals in LMK Psychological Servs., P.C. v. State Farm Mut. Auto. Ins. Co., 46 A.D.3d 1290 (3d Dep't, 2007)

Based on David's post, both State Farm/Rivkin Radler and the Insurance Dep't. appear to be in The Twilight Zone. When it comes to interest, the argument is that providers should file suit immediately once a claim is denied and/or overdue. When it comes to attorney's fees, however, providers should apparently wait until all treatment is finished to consolidate all bills into a single suit to avoid exhausting the attorney's fees.

And, really, let's be honest: the concept of "exhaustion" of attorney's fees is just made up. They invented it out of nowhere for this litigation. Just look at the provisions concerning attorney's fees in the Regs:

11 NYCRR § 65-4.6(b)(1) provides that, in a specific scenario, "[i]f the resolved claim was initially denied, the attorney’s fee shall be $80." § 65-4.6(b)(2) provides "[i]f the resolved claim was overdue but not denied, the attorney’s fee shall not exceed..." The word "claim" in these provisions only makes sense if a claim is an individual bill. Otherwise, each "claim" could have a mixture of bills that were denied and not denied, and these provisions would write themselves out of existence.

Moreover, § 65-4.6(e) provides that "[f]or all other disputes subject to arbitration, subject to the provisions of subdivisions (a) and (c) of this section, the attorney’s fee shall be limited as follows: 20 percent of the amount of first-party benefits, plus interest thereon, awarded by the arbitrator or court, subject to a maximum fee of $850." Thus, at a minimum, each time a court or arbitrator resolves a matter and grants payment to the provider, there is a maximum of $850. There is no "coverage limit" of $850 in attorneys per patient, per provider. This appears nowhere in the Insurance Law, the Mandatory PIP Endorsement, or anywhere else in the Regs.

It is disappointing, but not surprising, that a carrier would attempt to fabricate a new category of coverage limit where none actually exists.

Friday, February 06, 2009

Fraud in the Procurement, Part 2

The Appellate Division, 4th Department has issued a decision today that is relevant to my post last week regarding the defense of fraudulent procurement.

At the end of that post, I noted that "procurement is fraudulent where there are material misrepresentations and, had the carrier had known the truth, the policy would not have otherwise been issued." I failed to give a citation for this proposition, but the 4th Department has given me a fresh case to cite to.

In Rafi v Rutgers Cas. Ins. Co., the Court holds that "in order to prevail on its affirmative defense, defendant was required to submit proof concerning its underwriting practices with respect to applicants with similar circumstances in order to meet its burden of establishing that it would not have issued the same policy had the correct information been included in the application." 2009 NYSlipOp 00905 (4th Dep't, 2009) (internal quotation marks omitted).

Do note, though, that Rafi does not appear to concern an automobile insurance policy. As such, the reference in that decision to the policy being "void ab initio" due to material misrepresentation is inapplicable to no-fault (and other automobile insurance) litigation. That said, the definition provided in Rafi of what qualifies as a material misrepresentation made in the procurement of the policy should still apply to auto policies.

Where the misrepresentation concerns the insured's state of residence, as is typical allegation in no-fault litigation, this is presumably a simple burden for the carrier to meet. That is, where the insured lives in Queens, but procures an automobile insurance policy with the carrier by falsely stating that she lives in Pennsylvania, the carrier should easily be able to produce an affidavit from underwriting stating that the carrier would never have issued a Pennsylvania policy (which has its own set of specific provisions that comply with PA law) to a New York resident. Instead, the affidavit would presumably allege, had the carrier known the truth, the carrier would have either issued a different policy (that complied with New York law) or no policy at all.

Thursday, February 05, 2009


The Appellate Term's decision in A.B. Med. Servs., PLLC v. Country-Wide Ins. Co., 2008 NYSlipOp 52651(U) (App. Term, 2d Dep't, 2008) was posted today.

The decision is kind of messy, covering various issues briefly, but there's one interesting point. The Appellate Term found the following: "Since the affidavit of defendant's no-fault litigation supervisor lacks specificity to support the assertion that defendant did not receive the verification it requested, it was insufficient to establish that the verification was still outstanding and, thus, that defendant's time to pay or deny the claims was tolled."

I'm not sure what this means, and I can't find this language in prior no-fault decisions. What level of specificity is now required in a claim rep's affidavit to establish that requested verification was not received? Is it not enough for the rep to simply state that the verification was never received?

In any event, it appears that the Appellate Term has opened up a new avenue of attack on insurers' affidavits.

Friday, January 30, 2009

Excuses, Excuses

This morning brings us the Appellate Division's decision in Westchester Med. Ctr. v. Hartford Cas. Ins. Co., 2009 NY Slip Op 00528 (App. Div., 2d Dep't, 2009).

There is nothing groundbreaking here, although it does potentially add to the insurance carriers' roster of what counts as a "reasonable excuse" for the purposes of vacating a default. Here, Hartford's "employee reasonably believed that the action had been discontinued after she advised the plaintiff's counsel's office that no-fault benefits had been exhausted, thereby demonstrating a reasonable excuse for the short period of time in which they failed either to appear or to answer the complaint." Id.

I'm not exactly sure how one could reasonably believe an action was discontinued based upon merely communicating a defense to plaintiff's counsel, especially where there does not seem to have been a stipulation of discontinuance ever executed, or even an overt communication by plaintiff's counsel that one would be forthcoming. This seems to me to fall somewhere short of being "reasonable." In any event, the vacatur of the default might still be proper, given the apparent "short" delay and, perhaps more importantly, the issue of policy exhaustion.

Footnote: after having vacated the default, the Supreme Court ordered that the matter be transferred to the District Court ("325(d)-ing" the case, in the parlance), as the damages failed to meet the minimum required for Supreme Court jurisdiction.

Thursday, January 29, 2009

Fraud in the Procurement

Today, we turn to a fundamental aspect of New York's insurance laws. The basic question is: can an insurance carrier cancel a New York automobile insurance policy retroactively? The basic answer is: no. As we'll see, the legal acrobatics involved in getting to that answer have an important impact on no-fault litigation.

Vehicle and Traffic Law ("VTL") § 313(1)(a) provides that "[n]o contract of insurance…shall be terminated by cancellation by the insurer until at least twenty days after mailing to the named insured at the address shown on the policy a notice of termination..."

Thus, "[i]t has long been recognized that this provision supplants an insurance carrier's common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation, and mandates that the cancellation of a contract pursuant to its provisions may only be effected prospectively." Liberty Mut. Ins. Co. v. McClellan, 127 A.D.2d 767, 769 (2d Dep’t, 1987). See also A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., 12 Misc.3d 8 (App. Term, 2d Dep’t, 2006).

Even where there is an allegation that fraud was committed in the procurement of the insurance policy, "Vehicle and Traffic Law § 313 places the burden on the insurer to discover any fraud before issuing the policy, or as soon as possible thereafter, and protects innocent third parties who may be injured due to the insured’s negligence." Insurance Co. of North America v. Kaplun, 274 A.D.2d 293, 298 (2d Dep’t, 2000). Thus, where a carrier has failed to properly cancel an insurance policy in accordance with VTL § 313 prior to an accident, the carrier "is responsible to any innocent third parties injured in the accident, despite the proof adduced...that [the insured] obtained the policy by misrepresentations." Id.

Nevertheless, "[w]hen the insured brings an action to recover benefits under a policy, the insurance carrier may assert as an affirmative defense that the insured's misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured." Id. at 298-299.

In no-fault matters, medical providers who treat patients through an assignment of benefits do not qualify as "innocent third parties" for this purpose. See A.B. Med. Servs. PLLC v Commercial Mut. Ins. Co., supra.

However, in order to assert such a defense in a no-fault matter, the carrier must present "evidence that plaintiffs' assignors participated in the fraudulent scheme." D.A.V. Chiropractic, P.C. v. GEICO Indem. Co., 21 Misc.3d 138(A) (App. Term, 2d Dep’t, 2008). Where the carrier fails to demonstrate that the assignor was a party to the fraudulent procurement, the carrier fails to even create a triable issue of fact sufficient to defeat a provider’s motion for summary judgment, no less satisfy the burden for the carrier’s own motion for summary judgment. Id.

For the purposes of typical no-fault litigation, either on a motion or at trial, the core issue of this defense will be whether the carrier has submitted sufficient admissible evidence to demonstrate that the assignor was a party to a scheme to fraudulently procure an insurance policy. The procurement is fraudulent where there are material misrepresentations and, had the carrier had known the truth, the policy would not have otherwise been issued.