Key Takeaway
New York no-fault insurance law addresses when carriers can raise fraudulent procurement defenses and timing requirements under the 30-day pay or deny rule.
Understanding Fraudulent Procurement Defenses in No-Fault Insurance Claims
In New York’s no-fault insurance system, insurance carriers face strict timing requirements when denying claims. However, certain defenses—particularly those involving fraudulent procurement of the insurance policy itself—operate under different rules than standard coverage denials. This distinction becomes crucial when carriers discover that a policyholder may have misrepresented material facts during the application process.
The interplay between fraudulent procurement defenses and preclusion rules has evolved through various court decisions, creating a complex landscape for both insurers and healthcare providers. Understanding when carriers can raise these defenses, and whether they’re subject to the same timing constraints as other coverage disputes, remains a critical issue in no-fault litigation.
Jason Tenenbaum’s Analysis:
Doctrinally, a fraudulent procurement defense should not be bound by the 30-day pay or deny rule. This is so since the Appellate Division in Kaplun specifically held that an insurance carrier can seek recompense from an EIP for monies paid out due to this fraud and, therefore, the defense can be raised at an time. Contrariwise, the Court instructed us in Cornell Medical that an unjust enrichment cannot lie if the defense is precludable. GMAC was an aberrant act and the “preclusion” appeared to be more dicta than anything else.
Great Health Care Chiropractic, P.C. v Hanover Ins. Co., 2014 NY Slip Op 50359(U)
“With respect to defendant’s motion for summary judgment, although defendant contends that, in connection with the issuance of the insurance policy at issue, plaintiff’s assignor had misrepresented the state where the insured vehicle was garaged, defendant is precluded from asserting that defense in support of its motion and in opposition to plaintiff’s motion as it failed to establish that it had timely denied plaintiff’s claim on that ground (see Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603 “
Key Takeaway
The Great Health Care decision demonstrates that even fraudulent procurement defenses may be subject to preclusion if carriers fail to establish timely denial of claims on those grounds. This creates tension with established precedent suggesting such defenses should not be bound by standard timing requirements, highlighting the evolving nature of insurance defense strategies in no-fault cases.
Legal Update (February 2026): Since this 2014 analysis, New York courts have continued to refine the application of fraudulent procurement defenses and their relationship to preclusion rules under Insurance Law § 5106(a). Practitioners should verify current judicial interpretations and any amendments to no-fault regulations, as appellate decisions may have further clarified when carriers can raise these defenses and whether timing constraints apply differently than outlined in the original Kaplun and Cornell Medical framework.
