Walking out of an EUO leads to a disclaimer and a whole lot moreJuly 17, 2014

American States Ins. Co. v Huff, 2014 NY Slip Op 05366 (1st Dept. 2014)

(1) “[p]laintiff’s motion for summary judgment as sought a declaration that plaintiff properly disclaimed coverage of its insured…”

(2) “Plaintiff commenced this action, in effect, seeking a declaration that it is not obligated to pay these no-fault benefits to defendants because, among other reasons, Huff failed to complete an examination under oath (EUO), as required by the subject insurance policy. Thus, plaintiff asserts that Huff breached a condition precedent to coverage under the policy, and defendant medical providers are not entitled to recover Huff’s no-fault benefits.”

(3) “We find that Supreme Court properly granted summary judgment in plaintiff’s favor. In support of its motion, plaintiff relied primarily upon Huff’s EUO, which was corroborated by the affidavit of plaintiff’s investigator who was present at the examination. The EUO established that Huff appeared for his EUO, but departed before questions regarding the accident and his injuries had been asked. The aborted EUO of Huff, the named insured, established a prima facie case that Huff had breached a condition precedent to coverage under the policy.”

(4) “In opposition, defendants do not dispute what occurred at the EUO. Instead, defendants argue that the transcript of the EUO was inadmissible. We find, however, that the EUO [*2]transcript of Huff was admissible evidence on the motion for summary judgment as it was certified by the court reporter and is considered a party admission (see Zalot v Zieba, 81 AD3d 935, 936 [2nd Dept 2011], lv denied 117 NY3d 703 [2011]))”

(5) “Insofar as defendants complain that plaintiff did not seek another EUO, the record demonstrates that Huff, represented by counsel, was advised of the ramifications of his refusal to continue the EUO, and confirmed that he understood.”

(6) “An assignee “stands in the shoes” of an assignor and thus acquires no greater rights than its assignor (see Arena Const. Co. v Sackaris & Sons, 282 AD2d 489 [2d Dept 2001]; see also Dilon Med. Supply Corp. v Travelers Ins. Co., 7 Misc 3d 927, 930 [Civ Ct, Kings County 2005]). Since the defense of the breach of a condition precedent to coverage under the policy may indisputably be raised by plaintiff against Huff, it is available as against defendants, who accepted assignments of no-fault benefits (see Hammelburger v Foursome Inn Corp., 54 NY2d 580, 586 [1981]; Losner v Cashline, L.P., 303 AD2d 647, 648 [2nd Dept 2003]).”

This is perhaps the DJ of the year so far.  So many principles of law have been established and/or confirmed.  First, the medical provider and or assignor must cooperate with the EUO, i.e., attend it and answer questions.  Second, the failure to cooperate during the EUO through walking out during it, objecting too many times, engaging in obstructionist behavior can lead to a violation of a condition precedent to coverage, provided Park v. Long Island Insurance Company warnings are set forth.

The unsettled question that may play out now is: what constitutes obstructionist behavior?  We know the outter bounds of what constitutes this behavior.  But, how many objections is required before a disclaimer may be issued?  What happens if an EIP or medical provider lies during the EUO?  How does Utica v. Timms (you can lie and not lose your benefits) work into this equation?  There a lot of unanswered questions.  In my mind, the extremes will allow for a disclaimer.  Misrepresentations and a few inappropriate objections will probably not trigger a Huff remedy.

On top of that, the contents of the EUO transcript are admissible without further foundation against the medical provider.  Counsel for Defendant was successful at making that argument in Civil Court Kings County against me a few years ago, i.e., you cannot use the contents of the EUO transcript against the innocent assignee.  I thought it was an incredulous argument, which would be shot down at the Appellate Term or Appellate Division.

Funny enough, counsel in the Civil Kings case pressed his luck in front of the First Department and rightfully saw what five learned jurists had to say about that argument.  These are all good things in my mind.

I believe that this case is probably somewhere between the ATIC dj appeals and Unitrin as to its precedential value.


5 Responses

  1. Anonymous says:

    The EUO transcript was admissible here as a party admission because the assignor was a party to the litigation. The assignor is not a party to a typical suit for first-party no-fault benefits in Civil Court. Instead, the assignor is explicitly not a party to the suit for first-party benefits by virtue of the assignment, as per six learned jurists of the Court of Appeals in Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 N.Y.2d 325 (1971) four learned jurists of the Appellate Division, Second Department in Cardtronics, LP v. St. Nicholas Beverage Discount Center, Inc., 8 A.D.3d 419 (2d Dep’t, 2004), and three learned jurists of the Appellate Term, Second Department, who ruled against you on that very issue in Mia Acupuncture, P.C. v. Mercury Ins. Co., 26 Misc.3d 39 (App. Term, 2d Dep’t, 2009).

  2. nycoolbreez says:

    what case says the EUO subject has to answer the questions posed?
    What case limits the number of objections that can be raised? what case says what is obstructionist behavior?

  3. The Hater says:

    Hell when I worked for the government I used to throw rude attorneys right out of our office during EBTs. Their brief cases would follow sliding along that slippery govt. tile floor.

    DJ of the year … more like BJ of the year

  4. nycoolbreez says:

    does the government do EBTs, I thought the government did depositions?
    I watched a female AUSA retch when a client at a proffer, who showed up with a bad case of ETOH body oder, picked his nose, pulled out a long whispy snot that looked like it made his eye tear, and smeared it on the observation window.

    would that be too rude at an EUO?

  5. The Hater says:

    We used to call them depositions. All of the creeps that practice in BI — both sides — and no fault decided to call them Examinations Before Trial. They probably did this to make their careers sound more intriguing.

    Of course in No Fault land you get the insurance industry trying to act like prosecutors or detectives. Examinations Under Oath — oh goodness how fucking scary.

    Yep the insurance industry is taking on the “Russian Mob.”

    “Hunny your Mummy [or Diddy] is home from work fighting against the mob for her insurance company.”

    Get a life. Become a soccer mom.