A reasonable basis inquiry to the propriety of an EUO is foreclosed absent a timely objection

Crescent Radiology, PLLC v American Tr. Ins. Co., 2011 NY Slip Op 50622(U)(App. Term 2d Dept. 2011)

“The papers substantiate the basis for the EUO request. Moreover, plaintiff does not claim to have responded in any way to defendant’s request for an EUO. Therefore, plaintiff will not be heard to complain that there was no reasonable basis for the EUO request (cf. Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Mary Immaculate Hosp. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 130[A], 2008 NY Slip Op 52046[U] [App Term, 9th & 10th Jud Dists 2008]).”

This is an important case, and I think it can be read two ways.  First, it can be read to require that an objective basis be necessary to compel the attendance at an EUO, but that inquiry is waived without an objection.  Second, it can be read to require that an objection be lodged prior to a “reasonableness” inquiry being considered.

Since the DOI has opined that an objective basis inquiry has no bearing on whether to substantiate the validity of the EUO demand, it would seem that the court is therein discussing the reasonableness inquiry.  That being said, the prudent plaintiff attorney should (and usually does) communicate with the insurance carrier explaining why the EUO is improper, following receipt of the demand.  Similarly, the insurance carrier should promptly respond to the plaintiff’s objection letter explaining why the EUO is reasonable or justified.  At that point, the ball is in the plaintiff’s court to decide what to do.

Another procedural faux pause

Urban Radiology, P.C. v Clarendon Natl. Ins. Co., 2011 NY Slip Op 50601(U),2011 NY Slip Op 50601(U)(App. Term 2d Dept. 2011)

“the Civil Court denied plaintiff’s motion for summary judgment, as well as defendant’s cross motion for summary judgment dismissing the complaint, finding that “issues of fact remain for trial as to the propriety of the defendant’s denials and plaintiff’s purported failure to appear for an EUO. This appeal by defendant ensued from so much of the order as denied its cross motion.”

So Defendant failed to prove it mailed the EUO letters.  Nothing spectacular about that.  But, why didn’t Plaintiff cross-appeal?  Defendant already appealed, so Plaintiff might as well should try to make some money through an answering brief – one that he has to write anyway.

Now, Defendant has a second chance to prevail.

The failure to attend IMEs is now considered a Chubb coverage defense

Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 2011 NY Slip Op 01948 (1st Dept. 2011)

I would consider this matter the most precedential no-fault case I have seen in the last 4 years.  I am going to copy and past the entire decision, except for the opening paragraph.

“The motion court properly determined that plaintiff insurer may retroactively deny claims on the basis of defendants’ assignors’ failure to appear for independent medical examinations (IMEs) requested by plaintiff, even though plaintiff initially denied the claims on the ground of lack of medical necessity (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 721-722 [2006]). The failure to appear for IMEs requested by the insurer “when, and as often as, [it] may reasonably require” (Insurance Department Regulations [11 NYCRR] § 65-1.1) is a breach of a condition precedent to coverage under the No-Fault policy, and therefore fits squarely within the exception to the preclusion doctrine, as set forth in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]). Accordingly, when defendants’ assignors failed to appear for the requested IMEs, plaintiff had the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued (see Insurance Department Regulations [11 NYCRR] § 65-3.8[c]; Fogel, 35 AD3d at 721-22).

It is of no moment that the retroactive denials premised on failure to attend IMEs were embodied in blanket denial forms, or that they were issued based on failure to attend IMEs in a different medical speciality from that which underlies the claims at issue. A denial premised on breach of a condition precedent to coverage voids the policy ab initio and, in such case, the insurer cannot be precluded from asserting a defense premised on no coverage (see Chubb, 90 NY2d at 199).

There is likewise no merit to defendants’ contention that the IME request notices were [*2]invalid. Plaintiff satisfied its prima facie burden on summary judgment of establishing that it requested IMEs in accordance with the procedures and time-frames set forth in the No-Fault implementing regulations, and that defendants’ assignors did not appear. In opposition, defendants failed to raise an issue of fact that the requests were unreasonable (see generally Celtic Med. P.C. v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d 13, 14-15 [2007]; A.B. Med. Servs. PLLC v USAA Gen. Indem. Co., 9 Misc 3d 19, 21 [2005]).

Defendants’ argument that plaintiff was required to demonstrate that the assignors’ failure to appear for the IMEs was willful is unpreserved and, in any event, without merit. The doctrine of willfulness, as addressed in Thrasher v United States Liab. Ins. Co. (19 NY2d 159 [1967]), applies in the context of liability policies, and has no application in the No-Fault context, where the eligible injured party has full control over the requirements and conditions necessary to obtain coverage (cf. id. at 168).

Defendants’ argument that all IMEs must be conducted by physicians is unavailing. Although Insurance Department Regulations (11 NYCRR) § 65-1.1(d) states that “[t]he 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,” the regulations permit reimbursement for medically necessary treatment services that are rendered by non-physicians, such as chiropractors and acupuncturists, as well (see Five Boro Psychological Servs., P.C. v AutoOne Ins. Co., 22 Misc 3d 978, 979-980 [2008]).

We have considered defendants’ remaining contentions and find them unavailing.”

Now, anything found in the condition portion of the policy endorsement is considered a coverage defense.  Here are the new coverage defenses that appeared overnight:

1) 30-day notice to report the loss.

2) 45-days to submit a bill

3) Attend IMEs

4) Attend EUO’s
Also, the medical provider or the EIP in a non-assigned case now bears burden to prove the lack of reasonableness of a request to attend an IME (or EUO), following the demonstration that the IME/EUO notices were mailed in accordance with the no-fault time frames and that the injured person (or provider where relevant) failed to appear.
I can say a lot about this decision, but I will confine my analysis to one thought.  If we are willing to let MVAIC  escape liability due to the failure of an EIP or medical provider to comply with a condition precedent to coverage, then this paradigm should not be anything different.  I previously made this point on here, both in jest and in condemnation of the courts giving MVAIC a free ride as opposed to my clients.  Yet, I never thought a court would follow the above thought process to its natural progression.

EUO letter need not be in large font – ADA litigation here we come

GLM Med., P.C. v State Farm Mut. Auto. Ins. Co., 2011 NY Slip Op 50194(U)(App. Term 2d Dept. 2011)

In an affront to those who have blurry vision and can only see large print, the Appellate Term rebuffed Judge Garson’s denial of a summary judgment predicated upon EUO defaults because the print on the letters was not large and in bold.  According to the Appellate Term: “Further, contrary to the Civil Court’s determination, there is no requirement that EUO scheduling letters conspicuously highlight the time and place of the EUO by use of, among other things, a bold or larger font”.  I am just thinking that if certain attorneys can become millionaires for suing restaurants and move theaters because a certain seat or bench is a centimeter outside the acceptable range for ADA purposes, why should this be any different?

The above said, the Court was correct in holding how it did.  Did anybody see the hidden gem in this case?

“In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that plaintiff had failed to appear for scheduled examinations under oath (EUOs) or, in the alternative, that plaintiff’s action was premature, in that plaintiff had not provided requested additional verification.”

I have never seen that before.

Summary judgment granted on EUO no-show defense – interesting analysis

Dover Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 2010 NY Slip Op 51605(U)(App. Term 1st Dept. 2010)

The Appellate Term, First Department, which many have felt is more favorable to the providers than the Appellate Term, Second Department, 2nd, 11th and 13th Jud. Dis., granted State Farm’s motion for summary judgment dismissing the complaint, based upon the provider’s failure to attend duly scheduled EUO’s.  Before I begin my discussion of the case, it bears to note that the Appellate Term, First Department has historically been less forgiving to the providers than the Appellate Term, Second Department, 2nd, 11th and 13th Jud. Dis., on the discreet issue of the violation of conditions precedent to coverage.  The no-fault historians out there will note that at the same time the original Appellate Term, Second Department, 2nd, 11th and 13th Jud. Dis. Fogel decision was adjudicated, the Appellate Term, First Department decided Inwood v. General AssuranceInwood was a huge case, because I think it set in motion the current analysis as it relates to the IME no show and EUO no show defense.  In subsequent cases, the Appellate Term, Second Department has (until recently as evidenced in the Rios dissents) scrutinized the IME no-show affidavits, EUO no-show affidavits and the doctor affidavits attesting to the non-appearance of the EIP, and has denied insurance carrier summary judgment motions due to certain perceived infirmities in those affidavits.  As I have confessed on here before, I fell victim to the scrutinizing of these affidavits once because I left out the words “and to the attorney” on an IME no show vendor affidavit.  These defects, however, are usually overlooked by the Appellate Term, First Department in the policy violation cases.  A close reading of Inwood will prove this point.

Now, onto the merits of this case.  We see that the EUO endorsement does not have be annexed to the moving papers.  The Appellate Term, First Department has said this a few times, so this is of no moment.  To me, the huge issue involves the following part of the decision: “Defendant-insurer made a prima facie showing of entitlement to judgment as a matter of law dismissing the complaint by establishing that it mailed the notices requiring the principal of plaintiff medical services provider to appear for an examination under oath (EUO) and that the principal failed to appear for such an examination”

The Department of Insurance in a circular letter opined that an EUO request is improper if it seeks the deposition of a particular member of a P.C. or LLC.  This case appears to be contra to the DOI letter.  Now, I am not going to say that this decision overrules what the DOI said in their opinion letter, since it is unknown, at this juncture, whether those arguments were preserved in the record in the court below and properly articulated on appeal.  To quote the famous phrase: “your guess is as good as mine”.  It would behoove the plaintiffs bar to probably locate the record on appeal in this case and copy it, since this issue has been adjudicated adversely to the insurance carriers in numerous arbitrations and unpublished lower court opinions.  Finally, I sense this case overturns Judge Hirsch’s interesting decision out of District Court, Nassau County, in Dynamic v. State Farm.

EUO letters were mailed and the Claimant failed to attend the EUO: summary judgment granted

Points of Health Acupuncture, P.C. v Lancer Ins. Co., 2010 NY Slip Op 51455(U)(App.Term 2d Dept. 2010)

You have seem this before.

“Contrary to the Civil Court’s findings, defendant established the timely mailing of the EUO scheduling letters. Defendant submitted the affirmation of a partner in the law firm retained by defendant to conduct plaintiff’s EUO in which he set forth in detail his firm’s standard office practice and procedure for the mailing of EUO scheduling letters (see New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Top Choice Med., P.C. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 133[A], 2009 NY Slip Op 50230 [U] [App Term, 2d, 11th & 13th Jud Dists 2009]). In addition, counsel alleged facts sufficient to establish that plaintiff had failed to appear at counsel’s law office for the duly scheduled EUOs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]; W & Z Acupuncture, P.C. v Amex Assur. Co., 24 [*2]Misc 3d 142[A], 2009 NY Slip Op 51732[U] [App Term, 2d, 11th & 13th Jud Dists 2009]). Since the appearance of the plaintiff at an EUO is a condition precedent to the insurer’s liability on the policy (see Insurance Department Regulations [11 NYCRR] § 65-1.1; Stephen Fogel Psychological, P.C., 35 AD3d at 722), the Civil Court should have granted defendant’s motion for summary judgment dismissing the complaint. We note that, contrary to the Civil Court’s finding, the affidavit submitted by defendant’s no-fault specialist established that defendant timely mailed its denial of claim forms.”

EUO no-show (case #3)

Points of Health Acupuncture, P.C. v Lancer Ins. Co., 2010 NY Slip Op 51338(U)(App. Term 2d Dept. 2010)

Part I:

“[c]ontrary to the finding of the Civil Court, defendant established the timely mailing of the EUO scheduling letters with respect to plaintiff’s claims for the sums of $222.76 (dates of service: October 23, 2006 and October 30, 2006), $501.21 and $167.07. Defendant submitted the affirmation of a partner in the law firm retained by defendant to conduct plaintiff’s EUO in which he set forth in detail his firm’s standard office practice and procedure for the mailing of EUO scheduling letters.  In addition, counsel alleged facts sufficient to establish that plaintiff had failed to appear at counsel’s law office for the duly scheduled EUOs,”

Part II:

“The first set of letters sent by defendant to plaintiff after defendant received plaintiff’s $334.14 claim (dates of service: July 24, 2006-July 31, 2006) and plaintiff’s $222.76 claim (dates of service: August 14, 2006 and August 15, 2006) merely stated that defendant was waiting for the results of an investigation by its special investigation unit as well as the scheduling of an EUO. Since it is well settled that an insurer’s delay letters, which request no verification, do not toll the statutory time period within which a claim must be paid or denied (see Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535 [2005]; Careplus Med. Supply, Inc. v Selective Ins. Co. of Am., 25 Misc 3d 48 [App Term, 9th & 10th Jud Dists 2009]; Ocean Diagnostic Imaging P.C. v Citiwide Auto Leasing Inc., 8 Misc 3d 138[A], 2005 NY Slip Op 51314[U] [App Term, 2d & 11th Jud Dists 2005]), defendant did not toll the statutory period within which defendant had to pay or deny said claims. While the rest of the letters sent by defendant in response to the remaining claims sent by plaintiff were in fact verification requests, the affidavit submitted by defendant’s no-fault specialist failed to establish that they were timely mailed (see New York & Presbyt. Hosp., 29 AD3d 547; Residential Holding Corp., 286 AD2d 679; Top Choice Med., P.C. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 133[A], 2009 NY Slip Op 50230[U] [App Term, 2d, 11th & 13th Jud Dists 2009]).”

Part III:

“Notwithstanding the foregoing, defendant correctly asserts that plaintiff’s cross motion for summary judgment was premature under CPLR 3212 (f). Defendant established that while facts may exist that are essential to justify the denial of plaintiff’s summary judgment motion, defendant was unable to set forth such facts with respect to its non-precluded defense that plaintiff was fraudulently incorporated.”

As to Part I: These bills were probably received after the EUO defaults.

As to Part II: These bills were probably received prior to the EUO defaults and the EUOs were probably not scheduled within 15-30 days after receipt of the bills, so this makes sense.  It appears that the the carrier said that the bills would be delayed until its counsel felt like setting up EUO’s.

As to Part III: “You can have it both ways”???

Now, here is something interesting.  If you are conducting EUO’s to get information from providers based upon corporate structure issues, then aren’t you admitting that you do not have sufficient material to mount a meaningful defense?  Yet in this case, the court held that even though the carrier admitted (through its actions of scheduling provider EUO’s) that it had insufficient evidence to mount a meaningful defense on the issue of corporate structure, the carrier’s papers were still sufficient to: (a) raise an issue of fact in answering a summary judgment motion; and (b) allow for broad discovery.

I think the carrier should have to elect its remedy.  The carrier must: (a) seek an EUO and either deny for a provider’s default or conduct a more in depth investigation including denying for corporate fraud issues should the provider attend; or (b) deny based upon the information the carrier has and hopes it has enough information to survive summary judgment, trial or arbitration.

But, is it fair that an insurance carrier should deny for an EUO, which was improperly scheduled, and then get to defend on the basis for which the EUO was scheduled, i.e., corporate fraud?

I think summary judgment should have been granted to the provider on the second set of bills.  Sorry for not towing the company line on this one – but fair is fair.

Lastly, this is why the District Court was wrong in Dynamic v. State Farm.  The carrier, should it believe something is amiss, must schedule EUO’s, and the provider should attend or detail why the EUO’s are improper.  These issues need to be developed pre-litigation.

Notwithstanding the above, if the carrier’s EUO demands are untimely, then all defenses including those that the EUO was supposed to expound upon should be precluded, as a matter of equity.  Sloppy work on either the defense or the plaintiff side should not be tolerated.

EUO no-show (case #2)

Infinity Health Prods., Ltd. v Progressive Ins. Co., 2010 NY Slip Op 51334(U)(App. Term 2d Dept. 2010)

“To raise a triable issue of fact based on the assignor’s failure to appear at scheduled EUOs, defendant was required to demonstrate that its initial and follow-up requests for verification were timely (see Insurance Department Regulations [11 NYCRR] §§ 65-3.5 [b]; 65-3.6 [b]) and establish, by an affidavit of one with personal knowledge, that the assignor had failed to appear for the EUOs (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]). Since defendant failed to establish that the EUO scheduling letters were timely mailed (see Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]), defendant failed to demonstrate that the 30-day claim determination period (Insurance Department Regulations [11 NYCRR] § 65-3.8) was tolled. As a result, defendant failed to establish that its denial of claim forms were timely and, thus, that it is not precluded from raising as a defense the failure of plaintiff’s assignor to appear for an EUO.”

I previously published a blog entry where I discussed the EUO time frames in great detail.  At least, the court seems to finally be consistent here on what is necessary to prove the EUO no-show defense.

And then there is the dissent, with which I completely agree.

This one takes the cake

Dynamic Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 2010 NY Slip Op 20285 (Dis. Nassau 2010)

I am somewhat flabbergasted at this decision.  I am pretty down the middle (I think) and I really try to be as fair as I can on this blog.  With that introduction, I will say the following.  I would probably volunteer to do the appeal on this one, just because it is off on the law, the facts and is against the trend of every modern case that has come out of both branches of the Appellate Term, Second Department, as well as some “hidden” Appellate Division precedent, which I will not disclose.  You can read the facts of this case at your leisure.

Partner's affirmation demonstrated the "no-show" component of an EUO no-show defense

Crotona Hgts. Med., P.C. v Farm Family Cas. Ins. Co., 2010 NY Slip Op 50716(U)(App. Term 2d Dept. 2010)

“In opposition to plaintiff’s motion and in support of its cross motion for summary judgment, defendant submitted the affirmation of a partner in the law firm retained by defendant to conduct plaintiff’s EUO. Counsel alleged facts sufficient to establish that plaintiff had failed to appear at counsel’s law office for duly scheduled EUOs”

A partner’s affirmation is sufficient so show a non-appearance at an EUO.  The affirmation probably established how the partner knew that the Plaintiff failed to attend the EUO.  See generally, Progressive Classic Ins. Co. v. Kitchen, 46 A.D.3d 333 (1st Dept. 2007).