Insurance - No-Fault Automobile Insurance - Examination under Oath - Request for Justification by Medical Provider

Husch Blackwell LLP, Forest Hills, for defendant.

Law Offices of Gabriel & Moroff, P.C., Rockville Centre, for plaintiff.

The defendant Repwest Insurance Company has moved pursuant to CPLR 3212 seeking summary judgment dismissing the action. The plaintiff has cross-moved seeking summary judgment. The motions have been opposed respectively. The court has reviewed all the papers submitted and now renders the following determination.{**86 Misc 3d at 518}

The assignor, Jose David Torres, was involved in a motor vehicle accident on November 20, 2019, and sustained injuries. The plaintiff assignee performed medical services on his behalf and seeks $1,689.70 in payment for those services. The defendant, the insurer of the assignor, refused the payment on the grounds the assignor failed to appear for two scheduled examinations under oath (EUO). The plaintiff commenced this action seeking payment. The defendant duly answered. The defendant has now moved seeking summary judgment dismissing the action arguing the assignor failed to appear for examinations under oath which is a condition precedent for payment. The plaintiff opposes the motion arguing there was no legitimate basis for seeking any examination prior to payment and therefore summary judgment should be granted in plaintiff's [*2]favor.

Concerning first party no-fault benefits, an insurer may move seeking summary judgment dismissing the action on the grounds the assignor failed to attend a timely-scheduled independent medical examination (Vega Chiropractic, P.C. v Clarendon Natl. Ins. Co., 25 Misc 3d 144[A], 2009 NY Slip Op 52536[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]). For a medical provider to obtain summary judgment there must be evidentiary proof that claims were mailed and received and that payment is overdue (Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2d Dept 2004]).

The no-fault regulations permit an insurer to demand "all items necessary to verify the claim directly from the parties from whom such verification was requested" (11 NYCRR 65-3.5 [c]). Indeed, there are no limits to the information an insurer may request other than the limitation found in 11 NYCRR 65-3.2 (c). That regulation states that an insurer should not demand verification of facts "unless there are good reasons to do so" (id.). There are no specific no-fault regulations that provide any mechanism for a medical provider to contest the verification sought on the grounds it is improper or unnecessary (Burke 2 Physical Therapy, P.C. v State Farm Mut. Auto. Ins. Co. PIP/BI Claims, 71 Misc 3d 1229[A], 2021 NY Slip Op 50523[U] [Civ Ct, Kings County 2021]). Nevertheless, courts have suggested that a provider can specifically respond and object to the information sought (Victory Med. Diagnostics, P.C. v Nationwide Prop. & Cas. Ins. Co., 36 Misc 3d 568 [Nassau Dist Ct, 1st Dist 2012]).{**86 Misc 3d at 519}

In this case the insurer received bills for payment for services rendered from December 3, 2019, through December 10, 2019. Without paying or denying the bills the insurer sent a letter to the assignor informing him that "additional information is required in order to properly evaluate this claim" and that the assignor would have to submit to an examination under oath (see NY St Cts Elec Filing [NYSCEF] Doc No. 6 at 88, letter dated Jan. 9, 2020). The assignor failed to appear for the examination and a follow-up letter was sent dated February 11, 2020, scheduling the examination under oath for February 25, 2020. The assignor failed to appear and never objected to the examinations on the grounds the insurer never provided a basis for such examinations. The claims were subsequently denied and this action was commenced. In seeking summary judgment the insurer argues the assignor failed to appear for the examination under oath and consequently failed to satisfy a necessary condition precedent obligating the insurance company to pay the claim. In opposition, the medical provider argues the insurer failed to present any reasonable basis requiring an examination under oath and therefore, the insurer failed to comply with the no-fault regulations and the insurer's summary judgment motion must be denied and summary judgment should be granted in favor of the medical provider.

Concerning 11 NYCRR 65-3.2 (c) and the limits imposed upon insurers seeking verification only when there are good reasons to do so, there is some disagreement about which party bears the initial burden. In State Farm Mut. Auto. Ins. Co. v East Coast Med. Care, P.C. (2023 NY Slip Op 31032[U] [Sup Ct, NY County 2023]), the court explained that once an insurer demonstrates the verification demands were reasonable then the burden shifts to the provider to explain why the demands were not reasonable. However, in Ameriprise Ins. Co. v Pugsley Med. Care, P.C. (2016 NY Slip Op 33225[U] [Sup Ct, NY County 2016]), the court held the burden for reasonableness is on the provider not the [*3]insurer.

In any event, it is clear the information sought must have some rational relationship to the specific claims. Therefore, certain requests for verification are obvious, no explanation is required, and are per se reasonable. For example, "requests for medical records for the treatment in question, letters of medical necessity for the testing or treatment, copies of X ray or MRI films or test results" (Garden State Anesthesia Assoc., PA{**86 Misc 3d at 520} v Progressive Cas. Ins. Co., 41 Misc 3d 996, 1000 [Nassau Dist Ct, 1st Dist 2013]). Likewise, a request to establish medical necessity is reasonable pursuant to 11 NYCRR 65-3.2 (c) (Lenox Hill Radiology & MIA P.C. v Global Liberty Ins., 20 Misc 3d 434 [Civ Ct, NY County 2008]).

Turning to the other extreme, some requests are so unreasonable they violate 11 NYCRR 65-3.2 (c). In Omega Diagnostic Imaging, P.C. v MVAIC (29 Misc 3d 129[A], 2010 NY Slip Op 51779[U] [App Term, 1st Dept 2010]), the court held a verification request sent to the medical provider and the assignor seeking an affidavit of no insurance from the out-of-state driver that struck the assignor was without any good reason. The court explained that the out-of-state driver was not a party to the first party benefits action and was not under the control of the provider or the assignor. Again, in Pro-Align Chiropractic, P.C. v Travelers Prop. Cas. Ins. Co. (58 Misc 3d 857 [Suffolk Dist Ct, 3d Dist 2017]), the court held the insurer's requests were not reasonable and were burdensome.

Turning to the specific question whether an insurer must furnish an objective and specific basis why an examination under oath has been requested, it appears to be a split among the Departments of the Appellate Division.

The First Department holds that "[t]he reason for the EUO request is a fact essential to justify opposition to plaintiff's summary judgment motion" (American Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441, 441 [1st Dept 2015]). Further, in Country-Wide Ins. Co. v Delacruz (205 AD3d 473, 473 [1st Dept 2022]), the First Department noted that an insurer seeking summary judgment must provide a "specific objective justification" for requesting the examination under oath. The Court held the reason why an examination was requested was essential to afford the provider an opportunity to oppose the motion seeking to dismiss the action for the failure of the assignor to appear for the examination. Without such reason the motion could not be adequately opposed necessitating its denial on the grounds the motion was premature (see also State Farm Mut. Auto. Ins. Co. v Quality Orthopedic & Complete Joint Care, P.C., 2023 NY Slip Op 34867[U] [Sup Ct, NY County 2023]; State Farm Mut. Auto. Ins. Co. v Access Med. Diagnostic Solutions, P.C., 2023 NY Slip Op 30833[U] [Sup Ct, NY County 2023]).

The Second Department on the other hand has held the reason why an examination is requested does not play any role in{**86 Misc 3d at 521} whether the request is proper. In Interboro Ins. Co. v Clennon (113 AD3d 596 [2d Dept 2014]), the Court granted summary judgment to an insurer where the assignor failed to attend an examination under oath. Notably, the Court held that the assignor and the provider failed to raise any issues of fact as to the "propriety of the demand for the examination under oath" (id. at 597; see IDS Prop. Cas. Ins. Co. v Stracar Med. Servs., P.C., 116 AD3d 1005 [2d Dept 2014]). Recently, in Northern Med. Care, P.C. v Nationwide Affinity Ins. Co. of Am. (84 Misc 3d 136[A], 2024 NY Slip Op 51822[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2024]), the court, citing Interboro, explained that the

"defendant was not required to set forth objective reasons for requesting EUOs as, to make a prima facie showing of entitlement to summary judgment based on a failure to appear for an EUO, an insurer need only demonstrate as a matter of law that it duly scheduled at least two EUOs; that the party failed to appear as requested; and that the insurer timely issued a denial of the claim or claims on that ground 'following the [] failure to appear at the last scheduled EUO' " (2024 NY Slip Op 51822[U], *1-2).

The discrepancy between the departments was presaged in the trial court opinion Country-Wide Ins. Co. v Delacruz (71 Misc 3d 247, 252 n 5 [Sup Ct, NY County 2021]) and in MUA Chiropractic Healthcare, PLLC v Nationwide Mut. Ins. Co. (77 Misc 3d 140[A], 2022 NY Slip Op 51384[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2022]).

Moreover, the approach of the Second Department, which binds this court, does not conflict with 11 NYCRR 65-3.5 (e). 11 NYCRR 65-3.5 (e) states that "[w]hen an insurer requires an examination under oath of an applicant to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination" (id.). However, that does not mean a reasonable basis must be provided. Indeed, the very next sentence of the regulation provides that "[i]nsurer standards shall be available for review by department examiners" (id.). Two counsel opinions issued by the Department of Financial Services (formerly the Department of Insurance) are illuminating. In the first, the opinion states that

"the Department also added the provision in Section{**86 Misc 3d at 522} 65-3.5(e) to ensure that insurers would not request EUOs on either a routine or arbitrary basis, but would only do so when reasonably warranted, based upon the application of specific facts to objective standards established by the insurer in order to provide a reasonable basis for the request" (Ops Gen Counsel NY Ins Dept No. 02-10-14 [Oct. 2002]).

The opinion continued that the Department itself could "perform market conduct examinations of insurers and . . . evaluate the practices of insurers in requiring EUOs. The regulation contains no requirement for insurers to provide these standards for review by a claimant or claimant's attorney when an EUO has been requested" (id.). Again, in a subsequent opinion, it was held that "with respect to whether an insurer must include language stating the reason(s) for requiring the EUO, the regulation contains no such requirement" (Ops Gen Counsel NY Ins Dept No. 06-12-16 [Dec. 2006]). Therefore, only the Department of Financial Services can monitor the "specific objective justification" of 11 NYCRR 65-3.5 (e), not medical providers seeking reimbursement for claims (see Bronx Chiropractic Care, P.C. v State Farm Ins., 63 Misc 3d 132[A], 2019 NY Slip Op 50423[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]). Lastly, there is little merit to the argument that once a request for justification has been made by a medical provider then the above opinions of the Department of Financial Services are no longer relevant and an explanation must be afforded to the provider (cf. Kemper Independence Ins. Co. v Accurate Monitoring, LLC, 73 Misc 3d 585 [Sup Ct, NY County 2021]). As noted, only department examiners are tasked with insuring compliance with the specific rule that the insurer must maintain a justification for serving an EUO. That task cannot somehow be abrogated merely because a medical provider requests the justification as well. To the extent those arguments have been accepted (see e.g. Country-Wide Ins. Co. v Henderson, 77 Misc 3d 1218[A], 2022 NY Slip Op 51304[U] [Sup Ct, NY County 2022]), they merely serve to highlight the split in authority as noted above.

Therefore, based on the foregoing, the plaintiff has failed to present any question of fact [*4]why they failed to attend the EUO. Consequently, defendant's motion seeking summary judgment dismissing the action is granted. The plaintiff's motion seeking summary judgment is therefore denied.