Third-party vendor troubles

Insurance carriers in New York’s no-fault system often rely on third-party mailing services to handle the delivery of crucial documents, including NF-10 denial of claim forms. While this outsourcing can reduce operational costs, it creates significant legal vulnerabilities when carriers cannot prove these vendors followed proper mailing procedures.

Under New York No-Fault Insurance Law, insurance companies must demonstrate they properly mailed denial notices within required timeframes. When carriers use external mailing services, they must establish that these vendors have standard office practices and procedures that create a legal presumption of proper mailing. Failure to do so can result in substantial financial losses when courts rule against the carrier’s denial claims.

Jason Tenenbaum’s Analysis:

Compas Med., P.C. v 21st Century Ins. Co., 2015 NY Slip Op 50388(U)(App. Term 2d Dept. 2015)

“The affidavits set forth that envelopes containing the underlying NF-10 denial of claim forms were picked up by third-party mailing services to be taken to the post office. However, defendant failed to demonstrate the existence of a standard office practice and procedure utilized by the third-party mailing services so as to given rise to a presumption that the envelopes had been mailed”

And yet, the carriers continue to use bulk mailing vendors because they can save $.005 per parcel. Yet, the grief can spell losses into the hundreds of thousands on the back-end.

Key Takeaway

Insurance carriers who outsource mailing to third-party vendors must ensure these services can legally prove proper mailing procedures. The minimal cost savings from bulk mailing services become meaningless when carriers face hundreds of thousands in losses due to procedural failures in claim denials. Proper documentation of mailing practices is essential for successful no-fault claim management.