ALL BORO MEDICAL SUPPLIES INC v. PROGRESSIVE NORTHEASTERN INSURANCE COMPANY (2008)

In this action to recover assigned first-party no-fault benefits, on January 31, 2008 the parties agreed to a trial on stipulated facts and to the admission into evidence of various exhibits.   The question presented is whether the failure of plaintiff's assignor to appear for an examination under oath (“EUO”) constituted a valid basis for denial of the claim.   For the reasons that follow, the Court answers this question in the negative.

FACTUAL BACKGROUND:

Plaintiff All-Boro Medical Supplies Inc. submitted a claim to defendant Progressive Northeastern Insurance Company for first-party no-fault benefits in the amount of $442.50 for durable medical equipment that it had provided to its assignor, Tony Stringer.   Defendant received the claim on February 14, 2005.   The motor vehicle accident in which Mr. Stringer was allegedly injured occurred on January 5, 2005.

On January 28, 2005, before it received the claim, defendant had sent Mr. Stringer a letter directing him to appear for an EUO on for April 21, 2005.   Mr. Stringer failed to appear for the EUO on that date.   On April 22, 2005, defendant sent a second letter sent Mr. Stringer, re-scheduling the EUO for May 3, 2005.   Again, Mr. Stringer failed to appear.   On May 18, 2005, defendant denied the claim on the ground that Mr. Stringer failed to appear for the EUO.

DISCUSSION:

As a condition to coverage under the revised Personal Injury Protection Endorsement (“Endorsement”), which is required to be included in automobile insurance policies issued or renewed after April 5, 2002, “the eligible injured person ․ shall ․ as may reasonably be required submit to examinations under oath by any person named by the [insurer] and subscribe the same․” (Insurance Department Regulations [11 NYCRR] § 65-1.1[b] ).  Inasmuch as the policy period for newly issued and renewed automobile insurance policies is one year (Insurance Law § 3425[a][8] ), it can be assumed that the automobile insurance policy applicable in this case contained the Endorsement since the underlying motor vehicle accident occurred after April 2003 (see Eagle Chiropractic, P.C. v. Chubb Indem. Ins. Co., 2008 N.Y. Slip Op. 50525(U), Slip Copy, 2008 WL 712036 [App. Term, 9th & 10th Jud. Dists.] ).

Another condition to coverage under the Endorsement is that an “eligible injured person shall submit to medical examination by physicians selected by, or acceptable to, the [insurer], when, and as often as, the [insurer] may reasonably require” (11 NYCRR 65-1.1).   In Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 A.D.3d 720, 827 N.Y.S.2d 217 [2nd Dep't 2006], the Court interpreted this language to mean that an insurer may require an eligible injured person to appear for a medical examination either “before the claim form is submitted or after the claim form is submitted.”   The court stated that such interpretation furthers “the policies underlying no-fault insurance, including, inter alia, the expeditious processing of claims” (35 A.D.3d at 722 [citations omitted ] ).   There is no reason to apply a different rule to EUOs.

 The Court thus finds that defendant acted within its rights under the Endorsement in scheduling an EUO of Mr. Stringer before it had received the claim.   Indeed, had the defendant not received the claim form on February 14, 2005, Mr. Stringer's failure to appear for the EUO would have constituted a valid ground for denying the claim “retroactively to the date of loss” (35 A.D.3d at 722).   While this Court agrees that when an EUO is requested as additional verification of a claim, the insurer is required to schedule the EUO within the same time period as medical examinations, to wit, within 30 calendar days from the date of receipt of the prescribed verification form (see All-Boro Medical Supplies, Inc. v. Progressive Northeastern Ins. Co., 17 Misc.3d 950, 952, 847 N.Y.S.2d 448 [Civ. Ct., Kings County 2007, Edwards, J.];   see also S & M Supply Inc. v. State Farm Mut. Auto. Ins. Co., 4 Misc.3d 130(A), 2004 N.Y. Slip Op. 50693(U), 2004 WL 1514330 [App. Term, 9th & 10th Jud. Dists.] ), there is no such requirement for the scheduling of pre-claim EUOs.

While defendant acted within its rights under the Endorsement in scheduling Mr. Stringer for a pre-claim EUO for April 21, 2005, once defendant received the claim from the plaintiff, the defendant was required to adhere to statutory and regulatory scheme for the processing of no-fault claims.   Thus, defendant was required to pay or deny the claim within 30 calendar days of its receipt (see Insurance Law § 5106[a];  11 NYCRR 65-3.8(a)(1);  Presbyterian Hosp. in City of N.Y. v. Maryland Cas. Co., 90 N.Y.2d 274, 278, 660 N.Y.S.2d 536, 683 N.E.2d 1 [1997] ) or request additional verification of the claim (11 NYCRR 65-3.5).   Generally, a request for addition verification of a claim must be made within 15 business days of receipt of one of the prescribed verification forms (see 11 N.Y.C.R.R. § 65-3.5(b)).  Where an insurer makes a timely and proper request for additional verification, the 30 day period in which it has to either pay or deny a claim does not begin to run until all demanded verification has been provided (11 NYCRR 65-3.8(a)(1)).

Here, while defendant had already scheduled Mr. Stringer's EUO for April 21, 2005 before it had received the claim, if defendant insisted upon conducting the EUO before deciding whether to pay or deny the claim, it had no choice but to re-schedule the EUO to a date within 30 calendar days from February 14, 2005, the date it received the claim (see All-Boro Medical Supplies, Inc., supra.;  S & M Supply Inc., supra.).   As a matter of law by failing to re-schedule the EUO, defendant could not assert Mr. Stringer's failure to appear for the EUO as its basis to deny the claim (see King's Medical Supply Inc. v. Kemper Auto & Home Ins. Co., 7 Misc.3d 128(A), 2005 N.Y. Slip Op. 50450(U), 2005 WL 756524 [App. Term, 2nd & 11th Jud. Dists.];  Ocean Diagnostic Imaging P.C. v. Allstate Ins. Co., 10 Misc.3d 145(A), 2006 N.Y. Slip Op. 50140(U), 2006 WL 287210 [App. Term, 2nd & 11th Jud. Dists.] ).

Since plaintiff established its entitlement to judgment as a matter of law by demonstrating that the necessary billing documents were mailed to and received by the defendant and that payment of the no-fault benefits was overdue (see Insurance Law § 5106[a];  11 NYCRR 65-3.8[a][1];  Mary Immaculate Hosp. v. Allstate Ins. Co., 5 A.D.3d 742, 742-743, 774 N.Y.S.2d 564 [2nd Dep't 2004];  New York and Presbyterian Hosp. v. Countrywide Ins. Co., 44 A.D.3d 729, 730, 843 N.Y.S.2d 662 [2nd Dep't 2007] ) and defendant has failed to establish a viable defense to the action, it is hereby

ORDERED that judgment be entered in favor of the plaintiff in the amount of $442.50, together with interest and attorneys fees pursuant to Insurance Law 5106 and regulations promulgated thereunder, plus costs and disbursements.

This constitutes the decision and order of the court.

PETER P. SWEENEY, J.