Key Takeaway
AIG's failure to properly handle no-fault claim denials highlights insurance company obligations under New York's strict 30-day statutory period requirements.
This case from the New York Appellate Division demonstrates a fundamental principle in New York no-fault insurance law: insurance companies must follow strict procedural requirements when denying claims. The decision in NYU-Hospital for Joint Diseases v American International Group reveals how even major insurers can stumble on basic statutory obligations, particularly regarding the critical 30-day denial period.
Under New York’s no-fault system, insurers have specific timeframes to either pay or properly deny claims. When they fail to meet these deadlines, they risk losing their right to deny payment altogether. This case illustrates the consequences when insurers attempt to buy time with vague delay letters rather than following proper additional verification procedures.
Jason Tenenbaum’s Analysis:
NYU-Hospital for Joint Diseases v American Intl. Group, Inc., 2011 NY Slip Op 04437
“In opposition, the insurer failed to raise a triable issue of fact as to whether it had timely denied the claim. Contrary to the insurer’s contention, its letter to the hospital stating that payment of the claim was delayed “pending adjuster’s review” and “investigation” did not serve to toll the 30-day statutory period (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d at 1046; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535, 536), and, in any event, was not a timely request for verification made within 10 business days after the insurer’s receipt of the hospital’s claim (see 11 NYCRR 65-3.5)”
Okay – why didn’t AIG just pay this before it ended up at the appellate level? One better – what the heck was AIG cross-appealing? As a taxpayer, I should have standing to protest decisions like these.
Key Takeaway
AIG’s generic delay letter failed to stop the 30-day statutory clock because it wasn’t a proper denial or timely verification request. This case reinforces that insurers cannot use vague “investigation pending” language to circumvent strict no-fault deadlines, demonstrating why understanding verification requirements is crucial for both providers and insurers.
Legal Update (February 2026): Since this 2011 post, New York no-fault insurance regulations under 11 NYCRR 65-3, particularly section 65-3.5 governing denial procedures and timeframes, may have been amended or updated. The specific requirements for additional verification requests and the 30-day denial period provisions cited in this analysis should be verified against current regulatory text, as procedural requirements and insurer obligations may have evolved. Practitioners should consult the most recent version of 11 NYCRR 65-3 to ensure compliance with current denial and verification procedures.
