Key Takeaway
New York Court of Appeals rules on severance in no-fault insurance fraud cases involving multiple professional corporations and common scheme allegations.
This article is part of our ongoing coverage coverage, with 157 published articles analyzing coverage issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
New York Cent. Mut. Ins. Co. v McGee, 2011 NY Slip Op 06253 (2d Dept. 2011)
Point one: A Malella defense (or cause of action) against different providers, despite different contracts of insurance, should be consolidated.
“The Supreme Court improvidently exercised its discretion in, sua sponte, severing the action as to the 12 PCs, and, in effect, permitting the action to continue only against Dr. McGee and 3 of the 12 PCs. “Although it is within a trial court’s discretion to grant a severance, this discretion should be exercised sparingly” (Shanley v Callanan Indus., 54 NY2d 52, 57; see Curreri v Heritage Prop. Inv. Trust, Inc., 48 AD3d 505, 507; Lelekakis v Kamamis, 41 AD3d 662, 666). Severance is inappropriate where the claims against the defendants involve common factual and legal issues, and the interests of judicial economy and consistency of verdicts will be served by having a single trial (see Bentoria Holdings, Inc. v Travelers Indem. Co., 84 AD3d 1135; Curreri v Heritage Prop. Inv. Trust, Inc., 48 AD3d at 507-508; Lelekakis v Kamamis, 41 AD3d at 666; Naylor v Knoll Farms of Suffolk County, Inc., 31 AD3d 726, 727). Here, the complaint alleged the existence of a common scheme to fraudulently incorporate the PCs through the use of Dr. McGee’s professional license, which, if established, would render all of the PCs ineligible to recover no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319-322). The common factual and legal issues presented as to whether the 12 PCs were fraudulently incorporated predominate the action and, thus, the interests of judicial economy and consistency of verdicts would be not be served by requiring the plaintiff to commence multiple actions. To the contrary, such fragmentation would increase litigation and place “an unnecessary burden on court facilities” (Shanley v Callanan Indus., 54 NY2d at 57), by requiring four separate trials instead of one.”
Point two:
Med-pay only comes into play when Basic PIP is exhausted. I admittedly always thought that Med-pay was also triggered when Basic-PIP was denied based upon a violation of a condition precedent to coverage.
“The counterclaims are predicated on the defendants’ allegation that they are entitled to reimbursement for medical services provided under the medical payments coverage provisions of the subject insurance policies rather than the no-fault coverage provisions. However, medical payments coverage is excess coverage over mandatory no-fault coverage (see 11 NYCRR 65-1.1), and the defendants have failed to allege or otherwise demonstrate that the payments they seek exceed the no-fault threshold of $50,000 for basic economic loss of an eligible injured person for a single accident.”
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- New York No-Fault Insurance Law
Legal Update (February 2026): Since this 2011 decision, New York’s no-fault insurance regulations cited in 11 NYCRR 65-1 have undergone multiple amendments, particularly regarding coverage provisions and procedural requirements. Additionally, case law developments over the past 15 years may have refined the standards for severance in insurance coverage disputes and Malella defense consolidation. Practitioners should verify current regulatory provisions and recent appellate decisions when addressing similar severance and consolidation issues.
Legal Context
Why This Matters for Your Case
New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.
Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,353 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.
About This Topic
Insurance Coverage Issues in New York
Coverage disputes determine whether an insurance policy provides benefits for a particular claim. In the no-fault context, coverage questions involve policy inception, named insured status, vehicle registration requirements, priority of coverage among multiple insurers, and the applicability of exclusions. These articles examine how New York courts resolve coverage disputes, the burden of proof on coverage defenses, and the interplay between regulatory requirements and policy language.
157 published articles in Coverage
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Frequently Asked Questions
What are common coverage defenses in no-fault insurance?
Common coverage defenses include policy voidance due to material misrepresentation on the insurance application, lapse in coverage, the vehicle not being covered under the policy, staged accident allegations, and the applicability of policy exclusions. Coverage issues are often treated as conditions precedent, meaning the insurer bears the burden of proving the defense. Unlike medical necessity denials, coverage defenses go to whether any benefits are owed at all.
What happens if there's no valid insurance policy at the time of the accident?
If there is no valid no-fault policy covering the vehicle, the injured person can file a claim with MVAIC (Motor Vehicle Accident Indemnification Corporation), which serves as a safety net for people injured in accidents involving uninsured vehicles. MVAIC provides the same basic economic loss benefits as a standard no-fault policy, but the application process has strict requirements and deadlines.
What is policy voidance in no-fault insurance?
Policy voidance occurs when an insurer declares that the insurance policy is void ab initio (from the beginning) due to material misrepresentation on the application — such as listing a false garaging address or failing to disclose drivers. Under Insurance Law §3105, the misrepresentation must be material to the risk assumed by the insurer. If the policy is voided, the insurer has no obligation to pay any claims, though the burden of proving the misrepresentation falls on the insurer.
How does priority of coverage work in New York no-fault?
Under 11 NYCRR §65-3.12, no-fault benefits are paid by the insurer of the vehicle the injured person occupied. For pedestrians and non-occupants, the claim is made against the insurer of the vehicle that struck them. If multiple vehicles are involved, regulations establish a hierarchy of coverage. If no coverage is available, the injured person can apply to MVAIC. These priority rules determine which insurer bears financial responsibility and are frequently litigated.
What is SUM coverage in New York?
Supplementary Uninsured/Underinsured Motorist (SUM) coverage, governed by 11 NYCRR §60-2, provides additional protection when the at-fault driver has no insurance or insufficient coverage. SUM allows you to recover damages beyond basic no-fault benefits, up to your policy's SUM limits, when the at-fault driver's liability coverage is inadequate. SUM arbitration is mandatory and governed by the policy terms, and claims must be made within the applicable statute of limitations.
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About the Author
Jason Tenenbaum, Esq.
Jason Tenenbaum is the founding attorney of the Law Office of Jason Tenenbaum, P.C., headquartered at 326 Walt Whitman Road, Suite C, Huntington Station, New York 11746. With over 24 years of experience since founding the firm in 2002, Jason has written more than 1,000 appeals, handled over 100,000 no-fault insurance cases, and recovered over $100 million for clients across Long Island, Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, the Bronx, and Staten Island. He is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
Jason is admitted to practice in New York, New Jersey, Florida, Texas, Georgia, and Michigan state courts, as well as multiple federal courts. His 2,353+ published legal articles analyzing New York case law, procedural developments, and litigation strategy make him one of the most prolific legal commentators in the state. He earned his Juris Doctor from Syracuse University College of Law.
Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
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