Insurer May Raise Affirmative Defense Despite Late Request for Verification
In Pine Hollow Medical, P.C. v. Global Liberty Ins. Co. of New York, 2009 WL 1693575 (N.Y.City Civ.Ct), plaintiff Pine Hollow, a medical service provider, brought an action pursuant to Insurance Law §5106(a) to recover for services it provided to its assignor Jonathan Aurelien for injuries he allegedly sustained in an auto accident. Defendant Global Liberty Insurance moved for summary judgment on the grounds that plaintiff's suit was premature since plaintiff failed to comply with defendant's verification requests. Plaintiff did not dispute defendant's assertion that it never provided the requested information, but asserted that defendant's follow-up verification request was late because it was made on the eleventh day after thirty days had already transpired since defendant's first request for verification, in violation of 11 NYCRR 65-3.6(b).
After Aurelien was allegedly injured in the accident and received medical treatment at Pine Hollow, Global sent a verification request to plaintiff's attorney for a letter of medical necessity from the referring physician. Having received no response, defendant mailed a second verification request for the same letter of medical necessity. Defendant was thus one day late in requesting the follow-up verification.
The court explained that pursuant to Insurance Law § 5106(a) and 11 NYCRR 65-3.5, an insurer is required to either pay or deny a claim for no fault automobile insurance benefits within thirty days from the date an applicant supplies proof of claim or it will be precluded from offering any defenses at trial. An insurer may toll the thirty-day period by properly requesting additional verification within fifteen days from the receipt of the no fault insurance claim forms. If the requested verification has not been supplied to the insurer thirty calendar days after the original request, the insurer shall, within ten calendar days, follow up with the party from whom the verification was requested. If the insurer does not receive the verification request after its follow-up request is sent, its time to pay or deny the claim is tolled pending submission of the requested information.
The insurer must pay or deny the claim within thirty days after it receives verification of all relevant information it requested pursuant to its original request for additional information.
The court examined several divergent opinions on whether the defendant insurance company must wait until thirty days have expired before sending out the follow-up verification request. Stating that based upon the aforementioned precedent it would appear that since defendant was one day outside the ten-day window period in which it had to mail its follow-up verification request, defendant could not take advantage of the tolling period and hence could not argue that the instant lawsuit was premature. However, the court explained, unlike the arguments presented in the precedent cases, defendant in the instant case raised the argument that even if its follow-up verification request was untimely, such untimeliness was not fatal but would merely reduce the number of days it had to either pay or deny the claim. Specifically, defendant argued that since it was only one day late in mailing its follow-up verification request, the thirty-day period it had to pay or deny the claim would still begin to run after it received all of the requested verification but would be reduced by one day to twenty-nine days.
New York regulations, in 11 NYCRR 65-3.8(j), state that “for the purposes of counting the 30 calendar days after proof of claim, wherein the claim becomes overdue…with the exception of section 65-3.6 of this subpart, any deviation from the rules set out in this section shall reduce the 30 calendar days allowed.” Section 65-3.6(b) governed the follow-up requirements for verification requests if any verification had not been supplied to the insurer pursuant to the additional request.
After reviewing New York law on the subject, the court explained that, based upon precedent, it was clear that defendant should not be deprived entirely of the opportunity to review and obtain the needed proof due to its one-day tardiness in submitting its follow-up request. The regulation, 11 NYCRR 65-3.8(j), addressed only the repercussions of an insured's failure to request the additional verification within the set time lines since it expressly excluded section 65-3.6, which discussed follow-up verification requests and then set forth that any deviation from the time frame shall reduce the thirty days allowed in which to pay or deny the claim.
Thus, the court granted defendant's motion for summary judgment and dismissed the case, holding that it would be “patently absurd and contravene the meaning of the 11 NYCRR 65-3.8(j) to impose a more draconian punishment” on an insurer who was one day late in requesting follow-up verification than on an insurer who was one day late in requesting additional verification.