Failure to timely give notice of claim results in a declaration of non-coverage

Interboro Ins Co. v. Milwood

If it is a condition precedent to coverage that is violated, it is a possible DJ.  This is one of a few that I have accumulated on this Unitrin’esque theory.  It is interesting.

 

Judge Levine gets stringsighted by the Second Department

Westchester Med. Ctr. v Hereford Ins. Co., 2012 NY Slip Op 04156 (2d Dept. 2012)

I found this case interesting, not for the proposition of law that it represented, but based upon the case citations.

The underlying premise is that the 30-day written notice of claim requirement is a precludable condition precedent to coverage.  The road that was taken to re-articulate this point was interesting.

“the defendant’s failure to respond to the no-fault billing within the requisite 30-day period precluded it from raising the defenses that it was not provided with timely notice of the underlying motor vehicle accident or proof of claim (see Bayside Rehab & Physical Therapy P.C. v GEICO Ins. Co., 24 Misc 3d 542, 545 (LEVINE J.); Rockman v Clarendon Natl. Ins. Co., 21 Misc 3d 1118[A], 2008 NY Slip Op 52093[U] [Civ Ct Richmond County 2008] (LEVINE, J.); Vincent Med. Servs., P.C. v New York Cent. Mut. Fire Ins. Co., 21 Misc 3d 142[A], 2008 NY Slip Op 52442[U] [App Tm 2d Dept 2008]).”

“Finally, although the defense of lack of coverage is not precluded by the defendant’s failure to pay or deny the subject no-fault claim within the requisite 30-day period (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d [*2]312, 318; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199), here, the defendant’s submissions were insufficient to raise triable issues of fact with respect to a lack of coverage defense (see Mercury Cas. Co. v Encare, Inc., 90 AD3d 475; D.S. Chiropractic, P.C. v. Country-Wide Ins. Co., 24 Misc 3d 138[A], 2009 NY Slip Op 51584[U] [App Tm 2d Dept 2009]).”

It is remarkable that the App. Div. 2nd Dept. cited to 1) Civil Court; 2) App. Term 2d Dept; and 3) Inapplicable 1st Dept  case law in order to reach the conclusion that it did.

I am waiting to see if the First Department will expand Unitrin to include 30-day failure to give proper written notice of  claim cases.  I am actually more interested to see what the upstate Appellate Divisions have to say about all of this.  Since the upstate court calendars move quickly, we may know rather soon what the Fourth Department has to say…

The Court of Appeals discusses a condition precedent

New York & Presbyt. Hosp. v Country Wide Ins. Co., 2011 NY Slip Op 07149 (2011).

This case has a lot of value for many reasons.  Like so many cases from the appellate courts, the value comes from what some have denominated as dicta or other powerful statements that surround the central holding.

The question presented was relatively straightforward.  The answer really made the reader wonder whether the Court of Appeals agrees with the Unitrin holding.  Clearly, there was no reason to even get within 100 feet of this issue; yet, the Court of Appeals came really close to reaching it.  Pretty scary.

Query: could a hospital satisfy the 30-day prompt notification rule through submitting a timely proof of claim within 45-days of the date of service?  The argument from the hospital was that since the NF-5 is the functional equivalent of an NF-2 and an NF-3, the submission of it within 45-days should satisfy both regulations.  Otherwise, the argument follows, why would the NF-5 substitute for both of those forms?  Public policy would on some level support the hospitals’ argument because the NF-5 was created just for hospitals, and the “fraud prevention” goal of the 2002 amendments to Part 65 of the regulations are not directed to hospitals.  Rather, as the Court of Appeals discussed in Serio, this purpose of the regulations is directed towards the Brooklyn medical mills.  (I editorialized a bit there)

The Court of Appeals held that a submission of the NF-5 which is after the 30-day time period (to submit proof of loss) but prior to the 45-day time period (to submit a bill), where there was no prior proof of loss would be violative of the condition precedent to coverage under the policy.

To quote from the case:

“By ruling that the notice of accident condition was satisfied based on the plain language of 11 NYCRR 65-3.3 (d), the Appellate Division disregarded the separate and distinct nature and purpose of these requirements. Even more troubling, such a construction effectively reads the 30-day written notice of accident requirement out of the no-fault regulations. But nothing in 11 NYCRR 65-3.3 (d) explicitly dispenses with the 30-day notice of accident requirement. Rather, 11 NYCRR 65-3.3 (d) merely provides that a NF-5 form may constitute the written notice required under the notice of accident provision.

In other words, these regulations (read alone or in tandem) cannot be interpreted to mean that a hospital/assignee’s timely submission of a proof of claim for health services within 45 days of discharge of the injured person excuses the insured/assignor’s failure to give the threshold notice of accident within 30 days of the accident, or that health care service providers are exempt from the written 30-day notice of accident requirement. Neither 11 NYCRR 65-1.1 nor 11 NYCRR 65-3.3 (d) contains such language. That is, while 11 NYCRR 65-3.3 (d) allows a completed hospital facility form to satisfy the written notice of accident requirement, the regulation does not provide (or suggest) that a “proof of claim” in that form filed within 45 days of treatment satisfies the 30-day notice of accident requirement where, as here, the form was submitted to Country Wide after the 30-day period has expired.”

For the first time, the Court of Appeals discussed the reasonable excuse issue.  This was discussed after holding that the Hospital’s arguments “where the insurer is not readily identifiable” lacked merit.  In this regard, the Court of Appeals cited 65-3.5(l): “Indeed, the regulations specifically direct carriers to consider whether the injured person was a pedestrian or an occupant of a vehicle who may have difficulty identifying the proper carrier in assessing untimely notices of accident

I suspect this overturns the sweeping holding of the Appellate Term, First Department in Bronx Expert Radiology, P.C. v NYC Tr. Auth., 32 Misc 3d 140(A)(App. Term 1st Dept. 2011), as it construes the due consideration portion of 65-3.5(l), since the Court of Appeals appear to have relegated this to more of a regulatory market conduct issue.

My favorite part of this opinion, and the dicta that I discussed above is right here:

“Finally, as an assignee of all the rights, privileges and remedies to which Benitez was entitled under the No-Fault law, Presbyterian stood in the shoes of Benitez and acquired no greater rights than he had (see Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121, 126 [1975] [Chief Judge Breitel wrote, “[i]t is elementary ancient law that an assignee never stands in any better position than his assignor.”]). Here, because no written notice of accident was given, there was a failure to fully comply with the terms of the no-fault policy, which is a condition precedent to insurer liability.”

“As a result, the assignment effectively became worthless (i.e., Benitez assigned nothing to Presbyterian) — you cannot assign your right to benefits if your right to those benefits has not been triggered, or if you had no right to those benefits in the first place.

So it follows that maybe there is a reason why the Court of Appeals did not grant leave in the Unitrin matter.

Call this a win for the carriers – the nature and extent seems pretty significant.  That would make it two significant victories for the defense bar in one year.

"Due consideration" an element to a late notice claim.

Bronx Expert Radiology, P.C. v NYC Tr. Auth., 2011 NY Slip Op 51571(U)(App. Term 1st Dept. 2011)

Prima facie defenses to a 45-day or 30-day rule violation now requires “due consideration” to the explanation the provider gave.  So the affidavit now reads:  “We considered the excuse, and found it unavailing because….”  That should do the trick.

“Defendant’s cross motion for summary judgment dismissing the complaint was properly denied as defendant failed to establish that it gave “due consideration” to the explanation offered by plaintiff for the late submission of its no-fault claims as required by the insurance regulations (see 11 NYCRR 65-3.5[l]; Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854, 863 [2003]; Bronx Expert Radiology v Clarendon Natl. Ins. Co., 23 Misc 3d 133[A], 2009 NY Slip Op 50747[U] [2009]).”

Contract of insurance is vitiated?

Ciampa Estates, LLC v Tower Ins. Co. of N.Y., 2011 NY Slip Op 03911 (1st Dept. 2011)

“An insured’s failure to comply with the notice of claim provision vitiates a contract of insurance (see Great Canal Realty Corp. v Seneca Ins. Co., 5 NY3d 742, 743 [2005])”

“Furthermore, because defendant sent out its disclaimer of coverage within six days of ultimately receiving a notice of claim on behalf of Estates, the disclaimer was timely as a matter of law under Insurance Law § 3420”

Someone please explain this all to me…  Coverage?  Policy exclusion?  Who knows?  Who cares? Huh?

The first appellate case interpretting the one year rule

Marc Habif, D.C./Complete Care Chiropractic v Kemper Auto & Home Ins., 2010 NY Slip Op 20219 (App. Term 2d Dept. 2010)

“[1] plaintiff’s assignor had been involved in an accident on December 12, 2005[;] [2] that plaintiff’s assignor had submitted an application for no-fault benefits on February 1, 2006[;] [3] that plaintiff had provided services between January 3, 2007 and May 14, 2007 [;][4] that plaintiff had established its prima facie case[;][4] and that defendant had not received any no-fault claims on plaintiff’s assignor’s behalf until January 18, 2007[.]  “[t]he stipulation is silent as to whether plaintiff’s assignor had received any relevant treatment from any provider, and therefore incurred any relevant expenses, within the one-year period following the accident”

The court ended up reversing the judgment and remanding the matter to the Civil Court for a new trial.  The missing link here is that there was no stipulated facts regarding whether Plaintiff Assignor had any relevant treatment within one year from the date of the loss.  This case really does not shed any light on the one year rule issue, and really should be a (U) or misc.3d(A) cite.

There is one thing you can take out of this case.  This particular issue is best addressed by a summary judgment motion, with an affidavit discussing the absence of any treatment within one year of the date of the loss, based upon a detailed review of the claim file, computer records, etc.  Just my opinion.