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.

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2 Responses

  1. Althouhg this is a great decision for insurers, one comment is in order. In dismissing the plaintiff’s complaint, the Court stated that defendant “sufficiently established that the denial of claim forms had been timely mailed.” Therefore, the Court did not adopt the approach of the Appellate Division, First Department in Unitrin Advantage v. Bayshore which held that it is not necessary for an insurer to timely deny a claim where the defense is predicated upon breach of a condition precedent. Query? Is Unitrin Advantage soley limited to courts in the Second Department even though it was decided by the Appellate Division?

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