Key Takeaway
NY court ruling on no-fault insurance policy exhaustion defense when claims are properly denied but coverage limits reached through arbitration awards to other providers.
Harmonic Physical Therapy, P.C. v Praetorian Ins. Co., 2015 NY Slip Op 50525(U)(App. Term 1st Dept. 2015)
“The defendant-insurer made a prima facie showing of entitlement to summary judgment dismissing the action for first-party no-fault benefits. The evidentiary proof submitted by defendant established that, following the timely denial of plaintiff-provider’s claim on the ground of lack of medical necessity, the governing insurance policy’s coverage limits had been exhausted through payment of no-fault benefits in satisfaction of arbitration awards rendered in favor of other health care providers, and that such payments were made in compliance with the priority of payment regulation (see 11 NYCRR 65-3.15; Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 ; New York and Presbyt. Hosp. v Allstate Ins. Co., 28 AD3d 528 ).
In opposition, plaintiff failed to raise a triable issue. Contrary to plaintiff’s contention, defendant was not precluded by 11 NYCRR 65-3.15 from paying other providers’ legitimate claims subsequent to the denial of plaintiff’s claims. Adopting plaintiff’s position, which would require defendant to delay payment on uncontested claims, or, as here, on binding arbitration awards – pending resolution of plaintiff’s disputed claim – “runs counter to the no-fault regulatory scheme, which is designed to promote prompt payment of legitimate claims” (Nyack Hosp. v General Motors Accept. Corp., 8 NY3d at 300).”
This case stands for the proposition that if you timely and properly handle claims but later have to pay out billing where the denials are vacated causing the policy to exhaust, then you maintain your policy exhaustion defense for the timely and properly denied claims. It is a proposition of law with which various master arbitrators agree. It also makes sense since penalizing an insurance carrier for timely and proper claims handling is antithetical to common sense and logic. And, congratulations to Maureen Knodel (drafter of the brief) and Kevin Glynn (argued it) from Moira Doherty’s office for a great result.
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