HEMPSTEAD PAIN MED SERVICES v. GENERAL ASSURANCE CO (2006)

The Court conducted a trial on September 5, 2006 of the issues joined for disposition in plaintiff's complaint dated June 20, 2005 and the defendant's verified answer dated July 19, 2005.   At the trial the parties stipulated as to the facts and introduced consensually agreed exhibits.

Undisputed Facts

The plaintiff, Hempstead Pain and Medical Services, P.C., mailed the defendant, General Assurance Co., a no-fault insurance claim on March 7, 2003 (received 3-12-2003) seeking to recover $4,373.57 of benefits for services rendered between December 17, 2002 and February 2003 for injuries arising out of an automobile accident which occurred on November 5, 2002.   It is undisputed that this claim was made more than 45 days after services were rendered, due to the plaintiff's original incorrect submission of the claim to the wrong insurance carrier, Interboro Insurance Co., (Exhibits B, C & D).  The defendant timely denied the plaintiff's claim on April 9, 2003 for the sole reason that they were submitted in excess of the 45 days after the date services were rendered.   The denials contained an additional statement that “if there is any additional information you wish to submit, we may reconsider our position”.  (Exhibit A)

Issues

1. Did the defendants denial of claim premised upon the plaintiff's failure to file same within 45 days of service comport with the “reconsideration” requirements of NYCRR Sec. 65-3.3(e)?

2. Do the amendments to insurance regulation 68 require the defendant insurer to “excuse” a late (post 45 day) claim filing and allow same if the delay was caused by the initial filing of said claim with the wrong insurance carrier?

Discussion

The Court of Appeals and the Appellate Division have reviewed and upheld the New York State Insurance Regulation, NYCRR 65-3.3, which shortened the time period for filing no-fault insurance claims from 180 days to 45 days from the rendering of medical services.  In re Med. Soc'y of N.Y. v. Serio, 298 A.D.2d 255, 749 N.Y.S.2d 227, (N.Y.A.D. 1st Dept.2002), aff'd 100 N.Y.2d 854, 768 N.Y.S.2d 423, 800 N.E.2d 728 (N.Y.2003).   In its review, the Appellate Division made express note of the fact that the new regulations;  which allow a missed deadline to be excused upon “clear and reasonable justification” is more relaxed than the prior regulation, [which allowed a missed deadline to be excused upon a] showing that a timely filing was “impossible.”   This finding is drawn from amended regulation Sec. 65-3.3(e) which provides

When an insurer denies a claim based upon the failure to provide timely written notice of claim or timely submission of proof of claim, the applicant, such denial must advise the applicant that late notice will be excused where the applicant can provide reasonable justification of the failure to give timely denial notice.

Late Notice Advisory

 The plaintiff in this action advances the argument that the defendant did not comply with the Sec. 65-3.3(e) requirement of including a written advisory in its denial that late notice can be excused conditioned upon the submission of reasonable justification for the delay.   See SZ Medical, P.C. v. Country-Wide Ins. Co., 12 Misc.3d 52, 817 N.Y.S.2d 851 (N.Y.A.D. 2nd Dept.2006).   Absent said written declaration, a late filed claim denial is void;  which compels payment of the claim pursuant to NYCRR Sec. 65-2.4. The defendant counters it a denial contained the required “advisory” in that the last line on its denial states “if there is any additional information you wish to submit, we may reconsider our position”.

It is the Court's opinion that Sec. 65-3.3(e) does not mandate express language for inclusion in its mandatory “advise”.   The New York State Insurance Commissioner has the authority to mandate “official forms” which contain officially approved language.   A good example of same is the official no-fault insurance claim form NF-10 (rev. 3-1-2002) which was utilized in this case.  (Exhibit A).   Absent an unequivocal demonstration of specific mandatory language;  Sec. 65-3.3(e) is more reasonably interpreted to require only that the claimant be apprised that a late claim denial is not necessarily final and is subject to being given an opportunity to demonstrate a reasonable justification for delay.   While minimally stated, the insurer's written advise that claimant may submit additional information, (such as justification for delay) and that reconsideration is possible, appears to meet Sec. (e)'s underlying purpose of allowing for a “excuse” hearing as detailed in th SZ Medical, P.C. decision.¹  In point of fact;  the plaintiff did utilize the opportunity to make a subsequent “excuse” submission and the defendant did consider same.  (Exhibits C & D).  Accordingly, the Court finds no violation of Sec. 65-3.3(e) and defendant's denial is not voidable.

Reasonable Excuse

 The dispositive issue in the matter now involves whether the defendant's failure to “excuse” the plaintiff's late filing was justifiable.   As previously stated, the standard for excusing late filings was relaxed from one of “impossibility” to “clear and reasonable justification for delay”.   This appears to be a counterweight to the rather drastic measure of shortening the 180 day filing period to 45 days, and is consistent with the Insurance Commissioner's stated objective of reducing fraudulent no-fault claims by shortening the time lag between the alleged loss and the deadline for submitting proof of the loss, while at the time allowing bona fide claims which were subject to bureaucratic delay or mishap.   See In re Med. Soc'y of N.Y. v. Serio, 298 A.D.2d 255, 749 N.Y.S.2d 227, aff'd 100 N.Y.2d 854, 768 N.Y.S.2d 423, 800 N.E.2d 728 (2003).

To further this end the Commissioner promulgated regulation 65-3.5(l ) which provides

(l ) The insurer shall establish standards for review of its determinations that applicants have provided late notice of claim or late proof of claim.   In the case of notice of claim, such standards shall include, but not be limited to, appropriate consideration for pedestrians and non-related occupants of motor vehicles who may have difficulty ascertaining the identity of the insurer.   In the case of proof of claim, such standards shall include, but not limited to, appropriate consideration of emergency care providers, demonstrated difficulty in ascertaining the identity of the insurer and inadvertent submission to the incorrect insurer.   The insurer shall establish procedures, based upon objective criteria, to ensure due consideration of denial claims based upon late notice or late submission of proof of claim, including supervisory review of all such determinations.   Insurer standards shall be available for review by Department examiners.   Emphasis added.

While it is debatable that the inadvertent submission to the incorrect insurer is quite different from the other predetermined authorized excuses, it has none the less already been approved by the Insurance Department as justified.   Accordingly, the Court is compelled to find the plaintiff's delay in filing its claim excusable and the defendant's denial improper.   No other denials having been interposed, plaintiff shall be awarded judgment in the sum of $4,373.57 plus statutory attorney's fees, interest and costs.

FOOTNOTES

1.   The Appellate Term in SZ Medical, P.C. indicates in its decision that it is possible to “communicate said advise in any other manner”.

C. STEPHEN HACKELING, J.