PSYCH MASSAGE THERAPY ASSOC PLLC v. PROGRESSIVE CASUALTY INSURANCE CO (2004)

Plaintiff brought suit to recover payment under the No Fault regulations for medical services it provided to its assignor, an insured of defendant.   Defendant moved for summary judgment pursuant to CPLR § 3212, arguing that plaintiff's failure to comply with defendant's verification requests made the commencement of this action premature.   Plaintiff opposed defendant's motion, arguing that defendant's follow-up request was untimely, as defendant sent it twenty-five days after submitting the initial request.

This Court finds that defendant's verification requests were timely and proper under the No Fault regulations.   The No Fault regulations require defendant to submit a follow-up verification request if it does not receive a response from plaintiff within thirty days of issuing its initial verification request.   As defendant sent its follow-up request on the 25th day, it complied with the requirement of submitting its follow-up within thirty days from the date of the initial request.   There is no statutory or case law that requires defendant to wait until the 30th day to issue its follow up request.   To find that defendant must wait thirty days before issuing its follow up request serves no valid purpose under the No Fault Law. Moreover, finding defendant's follow-up request was untimely would be inconsistent with the purpose of the No Fault Law and would result in unfair prejudice to defendant.

Under the No Fault regulations, an insurer must either pay or deny a claim within thirty days or it will be precluded from offering any defenses at trial.   See 11 NYCRR 65.15(g);  Presbyterian v. Maryland, 90 N.Y.2d 274, 660 N.Y.S.2d 536, 683 N.E.2d 1 (1997).   An insurer may toll the thirty day period by properly requesting verification within fifteen days from the date of receipt of the bill.  11 NYCRR 65.15(d)(1).   Upon submitting a proper verification request, an insurer must issue a follow up request for verification if it does not receive the requested information within thirty days from the date of requesting the verification.  11 NYCRR 65.15(e)(2).   If it does not receive the verification after its follow up request is sent, its time to pay or deny the claim is tolled pending submission of the requested information.  11 NYCRR 65.15.(g)(1);  Westchester County Medical Center v. New York Central Mutual Fire Ins., 262 A.D.2d 553, 692 N.Y.S.2d 665 (2nd Dept.1999).   Further, an insurer may not issue a denial while its verification request is outstanding.   See Westchester Med., supra.

While the regulations require an insurer to submit a follow-up request within thirty days from the date of submission of the request, it does not mandate that the insurer wait thirty days before sending a follow-up request.   Instead, this time frame is a limit to the amount of time an insurer may wait before sending a follow up request.   See Keith v. Liberty Mutual Fire Ins. Co., 118 A.D.2d 151, 503 N.Y.S.2d 441 (2nd Dept.1986).   This determination is consistent with the case law and the goals of the No Fault law.

There is no case law or statutory authority for the proposition that an insurer must wait thirty days before sending its follow-up request, or it will be precluded from offering defenses at trial.   While there are no cases that specifically address this issue, there are cases that address the timeliness of follow-up verification requests.   In Presbyterian v. American Transit Ins. Co., 287 A.D.2d 699, 733 N.Y.S.2d 80 (2nd Dept.2001), the defendant requested additional verification on October 5, 1999 and sent its follow-up letter on November 1, 1999, twenty-seven days later.  Id. at 700, 733 N.Y.S.2d 80. The Court noted that both requests were timely, stating that “defendant did not sit on its rights, but rather promptly requested additional verification of the claim.”   See 11 NYCRR 65.15(d)(2);  65.15(e)(2);  Presbyterian v. Amer. Trans., 287 A.D.2d at 701, 733 N.Y.S.2d 80.

There are also numerous cases indicating the defendants timely sent follow-up verification requests exactly 30 days after sending its initial requests.   See New York Hospital Medical Center v. State Farm Mutual Auto. Ins. Co., 293 A.D.2d 588, 741 N.Y.S.2d 86 (2nd Dept.2002);  Boro Med. & Psych Treatment P.C. v. Countrywide Ins., 2002 WL 31995682 (App. Term 2nd & 11th Jud. Dists.2002);  Long Island First Aid Med. Supply, Inc. v. Progressive Cas. Ins. Co., 196 Misc.2d 258, 764 N.Y.S.2d 335 (Civ. Queens 2003).

In the present case, penalizing defendant for sending a follow-up request twenty-five days after its initial request is inconsistent with the goals of the No Fault Law. The purpose of the No Fault law is to allow swift compensation for qualified injured persons from the insurance companies.   See Presbyterian v. Maryland, 90 N.Y.2d at 284, 660 N.Y.S.2d 536, 683 N.E.2d 1.   The regulations require insurers to act quickly in evaluating insureds' claims and to avoid prejudicial delays.   See Dermatossian v. NYCTA, 67 N.Y.2d 219, 501 N.Y.S.2d 784, 492 N.E.2d 1200 (1986).   The verification requirement exists in order for insurers to have the opportunity to promptly investigate and respond to legitimate claims, not to delay payment.   See id.

In this case, defendant complied with the No Fault regulations by quickly responding to plaintiff's claim in the form of a verification request.   When it had not received plaintiff's claim within twenty five days, it promptly responded by submitting a follow-up request.   Plaintiff has not challenged the propriety of defendant's request, but only challenges defendant's ability to send a follow-up request earlier than thirty days from the date of the initial request.   Essentially, plaintiff seeks to penalize defendant for being too prompt, which is wholly inconsistent with defendant's duties under the No Fault Law.

Finally, defendant would suffer undue prejudice if its verification request was found improper.   If the Court were to accept plaintiff's argument, defendant would have to pay a claim for which it complied with the regulations and sought proper verification.   This result would be unduly harsh, as defendant would be precluded from asserting any defenses to plaintiff's claim.   Furthermore, defendant's early follow-up verification request did not prejudice plaintiff in any manner, as plaintiff is not under any time frame to respond to defendant's verification request.   Therefore, the date of defendant's submission of its follow-up request is irrelevant for the purposes of plaintiff's response.

It is also undisputed that plaintiff never responded to defendant's verification requests and has not challenged the propriety of defendant's requests.   Plaintiff's sole argument is that defendant acted too promptly in seeking verification.   However, defendant's actions were not only permissible but were consistent with the goals of the No Fault law in seeking prompt response to insured's claims.   In this matter, plaintiff was able to respond to the verification request, but simply received follow-up notice that it had not done so earlier than the time allotted to defendant by the No Fault regulations.   Plaintiff's failure to respond had no relation to the dates defendant submitted its initial and follow-up verification.

Accordingly, as defendant complied with the letter and spirit of the No Fault regulations, and plaintiff suffered no prejudice from defendant's expeditious response to plaintiff's claim, defendant's verification requests are deemed timely and proper.   As plaintiff never responded to defendant's timely and proper verification requests, defendant was under no duty to issue a denial.   See Westchester Medical v. Travelers Prop., 2001 WL 1682931 (Nass. S.C. 2001).   Therefore, plaintiff commenced the action prematurely.   As there are no issues of fact in dispute, defendant's motion is granted.

This constitutes the decision and order of the Court.

AUGUSTUS C. AGATE, J.