SAMA PHYSICAL THERAPY, a/a/o Heather Thomas, Plaintiff, v. MVAIC, Defendant.
Plaintiff commenced this action against defendant to recover first party No-Fault benefits on November 20, 2013 and issue was joined on December 6, 2013. The parties appeared for trial on June 13, 2019, and as this Court is constrained to follow the order of the Honorable Jodi Orlow 1 dated December 16, 2014, the parties were directed to submit memoranda of law on the sole issue of whether the timing of defendant's examination under oath requests were reasonable. The parties submitted memoranda of law on July 1, 2019, and upon review of the parties' submissions, I render the following decision.
Findings of Fact
The parties stipulated to the following facts. This action stems from plaintiff providing No-Fault medical benefits to assignor Heather Thomas, for personal injuries sustained in a motor vehicle accident. Plaintiff submitted two bills to defendant, one submitted in the amount of $677.60 and received by defendant on October 12, 2011, and a second bill in the amount of $246.40, received by defendant on November 11, 2011. Defendant sent to plaintiff assignor a request for an examination under oath mailed on December 9, 2013 and January 2014.
Plaintiff argues that defendant's examination under oath requests were untimely as a matter of law, and therefore it is entitled to judgment for both bills. It argues that the case law supports the conclusion that defendant's failure to timely request plaintiff assignor appear for an examination under oath precludes defendant from asserting this defense. Plaintiff claims that the No-Fault regulations require defendant to make a request for an examination under oath within fifteen business days of receipt of the bills, and since defendant's requests were over two years later, they are untimely. Further, plaintiff argues that since the requests were untimely, defendant is precluded from an asserting a defense of failure to appear at the examination under oath. Finally, as defendant failed to pay or timely deny plaintiff's bills, plaintiff argues it is entitled to judgment in the amount of $924, with statutory interest and fees.
Defendant argues that plaintiff is not entitled to judgment because plaintiff assignor failed to appear at an examination under oath, requested by defendant because there was evidence that plaintiff assignor was not a qualified person under Insurance Law Article 52. It argues that while under the No-Fault regulations, a request for an examination under oath must be sent within fifteen days from the date of receipt of the bill, there is an exception for defenses premised on lack of coverage. Defendant argues that a similar exception exists where defendant believes that the applicant for MVAIC coverage is not a qualified person and therefore would not be covered under MVAIC guidelines, and that this defense can be raised at any time. Defendant admits that the requests for examinations under oath were made in excess of two years from receiving the bills but argues that it is irrelevant because its requests were based upon the MVAIC qualification process, and not the No-Fault verification procedures. Therefore, defendant argues that since plaintiff assignor failed to appear for the examinations under oath, which were properly mailed to them, judgment must be awarded for defendant and dismissal of plaintiff's Complaint is warranted.
Conclusions of Law
Article 51 of the Insurance Law, commonly referred to as the No-Fault Law, was enacted by the Legislature to correct certain maladies recognized under the common-law tort system of compensating automobile accident victims. (Licari v. Elliott, 57 N.Y.2d 230, 455 N.Y.S.2d 570, 441 N.E.2d 1088 .) The purpose of the No-Fault Law is to assure claimants of expeditious compensation for injuries sustained in a motor vehicle accident by ensuring prompt payment of first party benefits regardless of fault. (Dermatossian v. New York City Trans. Auth., 67 N.Y.2d 219, 501 N.Y.S.2d 784, 492 N.E.2d 1200 ; see also Matter of American Ind. Ins. Co. v. Nova Acupuncture, P.C., 137 A.D.3d 1270, 28 N.Y.S.3d 704 [2nd Dept. 2016].) Under the strict time frames of the No-Fault regulations which emphasize the great convenience of ‘prompt, uncontested first party insurance benefits’, an insurer may be precluded from untimely raising a defense, resulting in payment by the insurer of a No-Fault claim it might not have had to honor if the claim had been timely denied. (Viviane Etienne Med. Care v. Country-Wide Ins. Co., 25 N.Y.3d 498, 14 N.Y.S.3d 283, 35 N.E.3d 451 .)
Insurance Law § 5106 states that payment of No-Fault benefits shall be made as the loss is incurred, and such benefits are overdue if not paid within thirty (30) days from the date the claimant supplies proof of the fact and the loss sustained. Pursuant to 11 NYCRR § 65-3.5, an insurer shall forward verification forms to the claimant within ten (10) days from the date of receipt of the application for No-Fault benefits, and any additional verification forms must be sent to the claimant within fifteen (15) days of receiving the initial verification forms.
Insurance Law § 5221(b) states that defendant MVAIC shall provide for the payment of first party benefits to a qualified person for basic economic loss arising out of the use or operation of an uninsured motor vehicle. Further, Insurance Law § 5521(b)(6) states that ‘if a controversy arises between the corporation and an insurer concerning the obligation to pay first party benefits, payment of first party benefits by the corporation shall not be stayed pending resolution of the controversy.
It is undisputed that defendant's requests for examination under oath were made outside of the fifteen-day time frame requirement of the No-Fault Law. (See 11 NYCRR 65-3.5[b].) Therefore, the issues presented are whether defendant MVAIC is subject to the No-Fault requirements, and if so, whether there is an exception to the 15-day rule when MVAIC asserted a defense of no coverage due to the injured party not being a ‘qualified person’.
The Legislature has made it clear that MVAIC is subject to the same requirements under the No-Fault regulations as insurers. (Insurance Law § 5221[b].) While it is true at the commencement of the No-Fault Law, MVAIC was not subject to its requirements, this created an imbalance and unfairness to injured parties, and therefore the Legislature amended the Insurance Law to specifically hold MVAIC subject to the same guidelines as other insurance companies. (See Canty v. MVAIC, 95 A.D.2d 509, 467 N.Y.S.2d 50 [2nd Dept. 1982].) The Appellate Division has further determined that defendant MVAIC maintains the same rights and obligations which are applicable to an insurer subject to Insurance Law Article 51. (N.Y. Hosp. Med. Ctr. v. Motor Vehicle Accident Indemnification Corp., 12 A.D.3d 429, 784 N.Y.S.2d 593 [2nd Dept. 2004], lv appeal denied 4 N.Y.3d 705, 792 N.Y.S.2d 898, 825 N.E.2d 1093 .)
A review of the relevant law leads to the ultimate conclusion that MVAIC's defense that the injured party is not a ‘qualified person’ is subject to preclusion if not presented in a timely denial or if not investigated through timely verification requests, including requests for an examination under oath. (See T & S Med. Supply Corp. v. MVAIC, 63 Misc. 3d 150[A], 2019 WL 2113971 [App. Term 2nd Jud. Dept. 5/10/2019]; Complete Med. Servs., P.C. v. MVAIC, 20 Misc. 3d 85, 864 N.Y.S.2d 665 [App. Term 2nd Jud. Dept. 2008].) Contrary to defendant's position, the Appellate Division rejected the premise that the 30-day claim determination does not begin to run until after MVAIC is satisfied the assignor is a qualified covered person. (See id.) Pursuant to N.Y. Hosp. Med. Ctr., the appellate courts have consistently found that defendant's obligations under the No-Fault Law do not begin only upon the qualification of the injured party as a covered person. (See Daily Med. Equip. Distrib. Ctr., Inc. v. MVAIC, 53 Misc. 3d 148[A], 2016 WL 6682240 [App. Term 2nd Jud. Dist. 2016]; Kings Highway Diagnostic Imaging, P.C. v. MVAIC, 19 Misc. 3d 69, 860 N.Y.S.2d 794 [App. Term 2nd Jud. Dept. 2008].)
As a result of N.Y. Hosp. Med. Ctr. and its progeny, it can be held that a determination that the injured party is not a qualified person is a defense subject to preclusion, and not a condition precedent to establishing a valid claim. (See T & S, supra.) Unlike the defense of no coverage, determining whether the injured party is a “qualified person”, is not a condition precedent to coverage, and must be presented as an affirmative defense and is subject to preclusion. While defendant correctly points out that lack of coverage can be based upon failure of the injured party to file an accident report within twenty-four hours of the occurrence, the lack of coverage exception to the No-Fault time frames cannot be based upon MVAIC's investigation as to whether an individual is a ‘qualified person.’ (See Meridian Health Acupuncture, P.C. v. MVAIC, 22 Misc. 3d 141[A], 2009 WL 679496 [App. Term 2nd Jud. Dept. 2009]; Ocean Diagnostic Imaging v. MVAIC, 8 Misc. 3d 137[A], 2005 WL 1919996 [App. Term 2nd Dept. 2005].) This timeframe exception for failure to timely file an accident report is consistent with Insurance Law § 5208, which clearly states that filing an accident report is a condition precedent to the right to apply for payment from MVAIC. However, even an expansive reading of the No-Fault regulations and MVAIC guidelines cannot lead one to determine that the issue of “qualified persons” is not subject to preclusion under the relevant statutory and case law.
It is instructive to review the Court of Appeals decision in Cent. Gen. Hosp. v. Chubb Group of Ins. Cos., 90 N.Y.2d 195, 659 N.Y.S.2d 246, 681 N.E.2d 413 (1997) in analyzing when a defendant insurance company can deny a claim outside of the strict No-Fault timelines. In Chubb, the Court of Appeals held that an insurer may assert a lack of coverage defense at any time premised on the fact or founded belief that the alleged injury does not arise out of an insured incident, but a defense based on a breach of a policy condition must be timely asserted or can be subject to preclusion. (Chubb, at 248, 681 N.E.2d 413.)
Here, defendant MVAIC is not asserting that the injuries claimed did not arise out of a covered accident, but that the injured party may not be a ‘qualified person’ under MVAIC guidelines. This defense is based upon a breach of a policy condition, and therefore is outside the strict exception permitted under Chubb and is subject to preclusion if not timely asserted. Since it is undisputed that the requests for examination under oath were made over two years after receipt of the bills, defendant is precluded from asserting a lack of coverage based upon the injured party not being a qualified person. (See Acupuncture Now, P.C. v. American Commerce Ins. Co., 61 Misc. 3d 151 [A], 2018 WL 6441287 [App. Term 2nd Jud. Dept. 2018]; Great Health Care Chiropractic, P.C. v. Travelers Ins. Co., 49 Misc. 3d 145[A], 2015 WL 7304036 [App. Term 2nd Dept. 2015].)
Defendant's reliance on Canty v. MVAIC, 95 A.D.2d 509, 467 N.Y.S.2d 50 (2nd Dept. 1982) to support its claim that it is not subject to the timeframes when determining if an injured party is a qualified person is misplaced. In Canty, the Appellate Division discussed the statutory requirements to determine whether an injured party is a ‘qualified person’ but did not discuss whether MVAIC's investigation is an exception to the No-Fault time frame. Rather, the Court in Canty clearly stated that MVAIC is under the same obligation to pay No-Fault benefits to qualified persons to the same extent as if an insurance policy providing No-Fault benefits was in effect. (Id. at 511, 467 N.Y.S.2d 50.) Therefore, it is illogical to assume that MVAIC's investigation into determining whether a party is a ‘qualified person’ is a unique exception to the No-Fault statutory time frames, but the same investigation performed by insurance carriers to determine if an individual was a ‘qualified person’ is subject to the time frames. There are numerous cases, many cited by plaintiff, in which the courts have precluded insurance carriers from asserting a defense based upon the failure to timely seek verification or requests for examinations under oath. (See LMS Acupuncture, P.C. v. Titan Ins. Co., 57 Misc. 3d 132[A], 2017 WL 4318033 [ App. Term 2017]; A.C. Med., P.C. v. Ameriprise Ins. Co., 54 Misc. 3d 127[A], 2016 WL 7329730 [App. Term 2nd Jud. Dept. 2016].) Therefore, it is only logical and proper to assume that MVAIC is not given greater latitude in determining whether an injured party is a ‘qualified person’ than other insurance carriers and would thereby be required to comport with the time frames demanded under the No-Fault statutory regulations.
Accordingly, I find that defendant failed to pay or timely deny plaintiff's claims, and therefore plaintiff is entitled to judgment in its favor in the amount of $924 with statutory interest and fees.
This constitutes the decision of the Court.
1. The parties appeared before Judge Orlow for a motion and cross-motion for summary judgment, and an order was issued on December 16, 2014 in which it was determined that both parties established their prima facie burdens and ‘the sole question for trial is whether the timing of the EUO requests was reasonable given that MVAIC's verification requests were mailed in October and November 2011 but the EUO requests were mailed in December 2013 and January 2014.’ It is assumed that the decision incorrectly states the MVAIC verification requests were mailed in October and November, as it is stipulated between the parties that plaintiff mailed the bills in October and November, and defendant mailed the EUO verification requests in December and January. Nevertheless, a trial was held before Judge Orlow on July 5, 2016, where the sole issue presented was whether the assignor was a qualified person under Insurance Law Article 52. A notice of appeal was filed, and prior to it being perfected, Judge Orlow sua sponte recalled and set aside the trial decision and judgment and ordered a new trial.
Tracy A. Catapano-Fox, J.
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