The Independent Contractor Defense and CPLR 3211(a)(7) Dismissal in New York No-Fault Cases

The Decision

Health & Endurance Med., P.C. v Travelers Prop. Cas. Ins. Co., 2011 NY Slip Op 51120(U)(App. Term 2d Dept. 2011)

Contrary to plaintiff’s contention, defendant was permitted to move to dismiss on the ground that the complaint fails to state a cause of action notwithstanding defendant’s service of an answer (CPLR 3211 ; ). Plaintiff’s claim forms state that the services at issue were rendered by an independent contractor. Where services are rendered by an independent contractor, the independent contractor is the provider entitled to the payment of the assigned first-party no-fault benefits (see Rockaway Blvd. Med. P.C. v Progressive Ins., 9 Misc 3d 52 ). This court has held that a statement in a claim form, that the services were provided by an independent contractor, may not be corrected once litigation has commenced, even if the statement was erroneous (A.M. Med. Servs., P.C. v Progressive Cas. Ins. Co., 22 Misc 3d 70 ). Thus, defendant has conclusively demonstrated that plaintiff is not the provider entitled to payment of the assigned first-party no-fault benefits (A.M. Med. Servs., P.C., 22 Misc 3d 70; Rockaway
Blvd. Med. P.C., 9 Misc 3d 52), and defendant’s motion to dismiss for failure to state a cause of action should have been granted (see CPLR 3211 )”

The Legal Background: Who Is the “Provider” Entitled to No-Fault Benefits?

New York’s no-fault scheme pays first-party benefits to the eligible injured person, who routinely assigns those benefits to the medical provider that treated him or her. The assignee provider then bills the insurer directly and, if the claim is denied or ignored, sues in its own name. But the right to be paid belongs to the entity that actually rendered the services. As the Appellate Term held in Rockaway Blvd. Med. P.C. v Progressive Ins., cited in this decision, where the services were rendered by an independent contractor rather than by the billing professional corporation or its employees, it is the independent contractor — not the billing entity — who is the “provider” entitled to payment of the assigned first-party no-fault benefits.

The practical consequence is that a professional corporation that uses independent-contractor physicians or other treating professionals, but bills under its own name, has billed for benefits it has no right to collect. The defect is not a mere technicality; it goes to whether the plaintiff has any claim at all.

What makes this decision particularly unforgiving is the second holding it applies: under A.M. Med. Servs., P.C. v Progressive Cas. Ins. Co., a statement in a claim form that the services were provided by an independent contractor may not be corrected once litigation has commenced — even if the statement was erroneous. In other words, the plaintiff cannot come to court after suing and say the box was checked wrong. The claim form’s own recital locks the billing provider out.

CPLR 3211(a)(7) After an Answer Has Been Served

The procedural point is just as important as the substantive one. Plaintiff argued that the insurer could not move to dismiss because it had already served an answer. The Appellate Term rejected that argument. Under the CPLR, a motion to dismiss for failure to state a cause of action is one of the grounds that is not waived by serving an answer; it may be raised at any time, including by post-answer motion.

That matters strategically. A defense that can be asserted under CPLR 3211(a)(7) does not require the insurer to wait for discovery, serve a summary judgment motion supported by affidavits of claims personnel, or prove timely denial of the claim. Here, the plaintiff’s own claim forms — documents the plaintiff itself generated and submitted — stated that the services were rendered by an independent contractor. On that record, the court held the insurer had “conclusively demonstrated that plaintiff is not the provider entitled to payment,” and the motion to dismiss should have been granted.

Note the court’s framing: the defense was sufficient to non-suit the plaintiff at the pleading stage. The case ended not because the insurer proved a defense at trial, but because the plaintiff’s own papers established it had no cause of action to plead.

Why This Matters

For billing providers and their counsel, this line of cases is a structural warning. How a practice engages its treating professionals — as employees or as independent contractors — determines who may bill for no-fault benefits. A professional corporation that bills in its own name for services rendered by independent contractors is exposed to dismissal, and under A.M. Med. Servs. the designation on the claim form cannot be walked back once suit is filed. The time to get the employment relationship and the claim form right is before the bill goes out the door.

For insurers and defense counsel, the decision confirms a clean, economical path to dismissal. Where the claim forms on their face recite that an independent contractor rendered the services, the defense can be raised by motion under CPLR 3211(a)(7) even after an answer has been served, without the evidentiary burdens that accompany summary judgment practice on other no-fault defenses.

Practical Takeaways

• Audit claim forms before billing. The representation about who rendered the services controls, and it cannot be corrected after litigation begins.
• Providers using independent contractors should ensure the contractor — the entity actually entitled to payment — is the one billing for the services.
• Defense counsel should review the plaintiff’s claim forms at intake; an independent-contractor recital supports a pre-answer or post-answer CPLR 3211(a)(7) motion.
• Serving an answer does not waive a failure-to-state-a-cause-of-action defense; the motion remains available later in the case.

Related Resources

• A formulation of a prima facie case — our cluster hub on the elements of a prima facie no-fault case in New York
• The firm’s Legal Encyclopedia — plain-language explainers on New York no-fault and personal injury doctrine
• No-Fault Defense practice page
• The first application of the new precludable independent contractor rule
• Motion seeking leave to amend the answer to seek affirmative defense of lack of standing is proper
• Are all of the cards stacked in Allstate’s favor?
• Understanding Legal Standing in New York: A Comprehensive Guide for Long Island and NYC Residents

Legal Update (February 2026): Since this 2011 decision, New York courts have continued to refine the application of independent contractor defenses in no-fault cases, and procedural rules under CPLR 3211 may have been subject to amendments or clarifications through subsequent case law and regulatory updates. Practitioners should verify current provisions regarding standing requirements and the ability to correct claim form designations in no-fault litigation.