Peer review testimony is admissible and sufficient

Understanding how insurance carriers defend against medical necessity claims is crucial for both healthcare providers and patients navigating New York’s no-fault insurance system. While peer review reports alone cannot prove lack of medical necessity at trial, carriers have found success using a more strategic approach that combines expert testimony with independent medical record analysis.

This distinction becomes particularly important when cases proceed to trial rather than being resolved through summary judgment motions. The Appellate Term’s decision in All Borough Group Medical Supply provides valuable guidance on how carriers can effectively challenge medical necessity determinations, especially in cases involving medical necessity reversals.

Peer review is a common cost-containment tool used by no-fault insurers to evaluate whether billed services were medically necessary. In this process, a physician who did not examine the patient reviews the treatment records and billing statements to determine whether the services provided met accepted standards of medical practice. While peer reviews serve an important gatekeeping function, New York courts have historically treated peer review reports with skepticism when offered as trial evidence, recognizing that the reviewing physician lacks firsthand knowledge of the patient’s condition.

Case Background

In All Borough Group Medical Supply, Inc. v Unitrin Advantage Insurance Co., a medical equipment supplier sued to recover no-fault benefits for equipment provided to an accident victim. Unitrin defended on the ground that the equipment was not medically necessary. The insurer had obtained a peer review report concluding that the equipment exceeded what was medically required for the patient’s injuries.

The case proceeded to trial on the medical necessity issue. Recognizing that the peer review report itself would not be admissible as evidence, Unitrin called its peer review physician as a trial witness. The doctor testified that he had conducted an independent review of the patient’s complete medical records and, based on that review, concluded that the medical equipment supplied was not medically necessary. His trial testimony provided the medical rationale that had been outlined in the peer review report, but now delivered through live testimony subject to cross-examination.

Jason Tenenbaum’s Analysis:

All Borough Group Med. Supply, Inc. v Unitrin Advantage Ins. Co., 2014 NY Slip Op 50462(U)(App. Term 2d Dept. 2014)

“At a trial on the issue of medical necessity, although peer review reports are not admissible to prove the lack of medical necessity, in the case at bar, defendant properly established the lack of medical necessity at trial through the testimony of its expert witness based on his independent review of plaintiff’s assignor’s medical records.”

So an independent review of the medical records that is consistent with the medical rationale in the peer review will win the day for the carrier. This holds true for a sub-peer review. Perhaps, I can convince a Kings County Civil Court judge that this is the law…

Legal Significance

The Appellate Term’s decision establishes an important principle governing the admissibility and sufficiency of medical testimony in no-fault trials. While the peer review report itself constitutes inadmissible hearsay when offered to prove medical necessity, the same physician who conducted the peer review can testify at trial about the opinions formed during that review process. The key requirement is that the testifying physician must base the opinion on an independent review of the medical records, not merely on statements in the peer review report.

This distinction reflects fundamental principles of evidence law. Peer review reports are created for the business purpose of claim evaluation and typically contain hearsay within hearsay—the peer reviewer’s opinions about what treating providers documented about patient statements and conditions. When the peer reviewer appears as a live witness, however, the testimony is no longer hearsay because it is subject to cross-examination and the jury can evaluate the witness’s credibility.

The requirement that the expert conduct an “independent review” of medical records ensures that the testimony has a proper foundation. The expert cannot simply parrot conclusions from the written peer review report. Instead, the expert must personally examine the underlying treatment records, imaging studies, and other medical documentation, then form independent opinions about medical necessity based on that review. This independent analysis may align with the peer review findings, but it must be grounded in the expert’s own examination of the evidence.

The decision’s reference to “sub-peer reviews” is particularly noteworthy. Some insurance carriers use two-tiered peer review processes, where an initial peer reviewer’s denial is then reviewed by a second physician. The Appellate Term indicates that the same evidentiary principles apply regardless of how many layers of peer review occurred—what matters is whether the testifying expert conducted an independent review of the actual medical records.

Practical Implications

For insurance carriers, this decision provides a clear roadmap for defending medical necessity claims at trial. Carriers should ensure that their peer review physicians are prepared to testify and have conducted thorough, independent reviews of complete medical records. The peer reviewer’s file should contain documentation of this independent review, including notes about specific records examined and medical reasoning applied.

Carriers must also recognize that simply producing a peer review report at trial will be insufficient. They need the actual peer reviewer available as a witness, or they must retain a separate expert who can conduct a new independent review and testify to findings that may align with the peer review conclusions. The latter approach can be risky if the new expert reaches different conclusions than the peer reviewer.

For healthcare providers, this decision highlights vulnerabilities in challenging peer review denials. Providers cannot defeat a carrier’s medical necessity defense simply by attacking the admissibility of the peer review report. If the carrier produces live expert testimony based on independent medical record review, providers must be prepared with their own expert testimony explaining why the services were medically necessary.

Providers should also focus cross-examination on the quality and completeness of the expert’s record review. Did the expert review all treatment notes? Did the expert consider the patient’s specific circumstances and complicating factors? Did the expert apply current medical standards or rely on outdated practices? Establishing gaps in the expert’s review can undermine the testimony’s persuasive value.

Key Takeaway

While peer review reports cannot standalone prove lack of medical necessity at trial, insurance carriers can successfully defend claims by presenting expert witness testimony based on independent medical record review that aligns with the peer review’s medical rationale. This strategic approach provides carriers with a pathway to challenge medical necessity even when peer review documentation has evidentiary limitations.

Legal Update (February 2026): Since this 2014 post, New York’s no-fault regulations and medical necessity determination procedures may have been modified through regulatory amendments or court decisions. The admissibility standards for peer review testimony and expert witness requirements in medical necessity disputes may have evolved, and practitioners should verify current evidentiary rules and procedural requirements under the most recent Insurance Law provisions and court precedents.

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