No reasonable excuse found

Default judgments in New York no-fault insurance litigation present unique challenges for medical providers who fail to timely respond to declaratory judgment actions. Under CPLR 5015, a party seeking to vacate a default judgment must demonstrate both a reasonable excuse for the default and a meritorious defense to the underlying claims. This dual requirement protects the judicial system’s interest in finality while providing relief to parties genuinely prejudiced by circumstances beyond their control.

The standards for establishing reasonable excuse have evolved through extensive First Department jurisprudence. Courts distinguish between excusable neglect arising from law office failure, mail delivery problems, or legitimate confusion, and inexcusable inattention resulting from inadequate office procedures or disregard of legal obligations. The burden rests entirely on the defaulting party to prove entitlement to relief, and conclusory or inconsistent explanations will not suffice.

In declaratory judgment actions seeking declarations of no coverage based on examination under oath (EUO) non-compliance, insurance carriers frequently obtain defaults against medical providers who ignore service of process. Providers often later claim they did not recognize the litigation’s relevance or did not receive papers due to office relocations. However, appellate courts have consistently held that business entities must maintain proper procedures for receiving and responding to legal papers, and failures in these systems do not constitute reasonable excuse.

The DTG Operations case illustrates the consequences when medical providers attempt to excuse defaults through vague, contradictory affidavits that fail to establish either reasonable excuse or meritorious defenses. The First Department’s analysis provides important guidance on what evidence courts require when evaluating motions to vacate default judgments in the no-fault insurance context.

Case Background

DTG Operations, Inc., a no-fault insurance carrier, commenced a declaratory judgment action against Excel Imaging, P.C. and other medical provider defendants, along with the claimants who had received treatment. The plaintiff sought a declaration that the defendant providers had no right to collect no-fault benefits for medical services allegedly provided to the claimants, asserting that the claimants had failed to comply with properly scheduled EUOs.

After service of the summons and complaint, the defendants failed to appear or answer. Plaintiff moved for a default judgment, which the court granted. The defendant providers subsequently moved to vacate the default, submitting an affidavit from their office and billing manager. This affidavit became the focal point of the appellate court’s analysis regarding whether defendants had established the required showing for vacatur.

Jason Tenenbaum’s Analysis

DTG Operations, Inc. v Excel Imaging, P.C., 2014 NY Slip Op 05030 (1st Dept. 2014)

(1) “In this declaratory judgment action seeking a declaration that the medical provider defendants have no right to collect no-fault benefits for medical services allegedly provided to the claimant defendants, defendants-respondents failed to offer a reasonable excuse for their default and a meritorious defenseIn this declaratory judgment action seeking a declaration that the medical provider defendants have no right to collect no-fault benefits for medical services allegedly provided to the claimant defendants, defendants-respondents failed to offer a reasonable excuse for their default and a meritorious defense”

(2) “In support of their motion to vacate the default, defendants-respondents submitted, among other things, the affidavit of their office and billing manager who stated that she “d not recall” any court papers on this matter, but did not deny receiving any. She further stated that the office location had moved, but did not specify whether that move occurred before or after the date reflected in the affidavits of service. She further asserted that the “summons” did not provide any information from which to link this action to the claimant treated by defendants-respondents. However, the concise, 10-page complaint named defendants-respondents and claimants as defendants in the caption and plainly states that claimants sought medical treatment from defendants-respondents for which plaintiff sought a declaration that defendants-respondents were not entitled to reimbursement.”

(3)  “Further, defendants-respondents’ proffered defense, that the examinations under oath requested by plaintiff are improper, is contrary to law” (see 11 NYCRR 65-1.1).

Legal Significance

The DTG Operations decision reinforces several critical principles governing default vacatur motions in no-fault declaratory judgment actions. First, the court’s analysis of the office manager’s affidavit demonstrates that vague statements such as “do not recall” receiving papers fall far short of establishing non-receipt. When an affiant fails to affirmatively deny receiving service and cannot specify whether an alleged office relocation occurred before or after the service date, courts will find such evidence insufficient to establish reasonable excuse.

Second, the decision emphasizes that business entities bear responsibility for implementing systems that ensure legal papers are properly received and processed. The complaint in this case clearly identified the defendant providers and claimants in the caption and plainly stated the nature of the action. The manager’s assertion that the summons provided insufficient information to link the action to their patients was rejected as implausible given the complaint’s straightforward content. This holding underscores that defendants cannot escape default consequences by claiming they failed to read or understand documents properly served upon them.

Third, the court’s dismissal of defendants’ proffered defense regarding EUO propriety reflects the well-established principle that no-fault carriers possess statutory authority under 11 NYCRR 65-1.1 to request EUOs as a condition of coverage. A defense that is contrary to controlling law cannot qualify as meritorious, regardless of how vigorously it might be asserted. Providers seeking to challenge EUO demands must identify specific procedural or substantive defects rather than contesting the insurer’s general authority to request such examinations.

Practical Implications

For medical providers facing no-fault declaratory judgment actions, DTG Operations illustrates the importance of maintaining robust intake and calendar systems for legal papers. Office relocations must be managed with protocols ensuring that service of process continues to reach responsible personnel. When service is effected, providers must immediately review complaints to determine whether litigation affects their interests and must timely interpose defenses rather than assuming they can later excuse defaults through vague explanations.

For insurance carriers prosecuting declaratory judgment actions, this decision confirms that properly pled complaints identifying defendants and clearly stating claims will receive favorable treatment when defendants default and later seek vacatur. Carriers should ensure that complaints are sufficiently detailed to defeat later claims of confusion while maintaining the concise format courts prefer. When defendants move to vacate defaults, carriers should carefully scrutinize affidavits for the kind of vague, inconsistent statements the First Department found insufficient in this case.

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Legal Update (February 2026): Since this 2014 decision, New York’s no-fault regulations under 11 NYCRR 65-1 have undergone various amendments, and procedural requirements for declaratory judgment actions and default proceedings may have been modified. Practitioners should verify current provisions regarding reasonable excuse standards, service requirements, and motion practice in no-fault declaratory judgment cases.