Unitrin citing in the Second Department

The landscape of New York No-Fault Insurance Law continues to evolve through appellate decisions that shape how insurance companies can enforce examination under oath (EUO) requirements. The Unitrin Advantage Insurance Co. v Bayshore Physical Therapy decision from 2011 represented a significant victory for insurance carriers by holding that willfulness need not be established to prove failure to cooperate with EUO demands. While subsequent decisions have narrowed Unitrin’s application in certain respects, it remains viable for specific propositions of law.

A recent Second Department case demonstrates the ongoing relevance of the Unitrin precedent, though its application has become more limited over time. This decision addresses two critical aspects of EUO enforcement: the standard for proving failure to cooperate and the procedural requirements for summary judgment motions when claimants fail to appear for scheduled examinations.

The case highlights how courts handle EUO objections and the consequences of non-compliance with properly scheduled examinations. Understanding these nuances is essential for both healthcare providers and insurance companies navigating the no-fault system.

Case Background

In Metro Health Products, Inc. v State Farm Mutual Automobile Insurance Co., the plaintiff healthcare provider brought a no-fault action seeking reimbursement for medical supplies provided to an accident victim. State Farm moved for summary judgment based on the plaintiff’s assignor’s failure to appear for a scheduled EUO. The plaintiff opposed the motion, arguing that the defendant had not established willful failure to cooperate and that discovery should be permitted before the summary judgment motion was decided.

The Civil Court granted State Farm’s motion, and the plaintiff appealed to the Appellate Term. The appeal raised two distinct issues: whether the defendant needed to prove willfulness in establishing failure to cooperate, and whether the court should have delayed its decision pending discovery regarding the reasonableness of the EUO demand.

Jason Tenenbaum’s Analysis:

Metro Health Prods., Inc. v State Farm Mut. Auto. Ins. Co., 2015 NY Slip Op 51419(U)(App. Term 2d Dept. 2015)

Do not get too excited; anyway, Unitrin is not what it used to be. The citing here is to a limited proposition of law: ” To the extent plaintiff asserts that defendant did not demonstrate that plaintiff’s failure to cooperate was willful, defendant complied with the regulations (see 11 NYCRR 65) and there is no requirement to establish willfulness (see Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559 ).”

The case also deals with the standard rule that an MSJ for an EUO no-show will not be delayed pending discovery, especially where there has been no objection to the reasonableness of the EUO.

Legal Significance

The Appellate Term’s decision in Metro Health Products illustrates the constrained but continuing viability of the Unitrin precedent. When Unitrin was first decided in 2011, it represented a major shift in EUO enforcement by eliminating the willfulness requirement. However, subsequent cases have cabined Unitrin’s application, making it less of a blanket rule and more of a targeted principle applicable in specific circumstances.

The court’s citation to Unitrin here is limited to a narrow proposition: when an insurer complies with 11 NYCRR 65, which governs the claims process for no-fault benefits, the insurer need not additionally prove that the claimant’s failure to cooperate was willful. This distinguishes situations where insurers follow proper regulatory procedures from those where procedural defects exist. In effect, regulatory compliance substitutes for proof of willfulness.

The decision also addresses the frequently litigated question of whether courts should delay summary judgment pending discovery about the reasonableness of EUO demands. The Appellate Term held that absent timely objections to the EUO’s reasonableness, discovery is not warranted and summary judgment may proceed. This creates a procedural trap for unwary plaintiffs: failing to object promptly to unreasonable EUO demands may waive the right to challenge them later through discovery.

Practical Implications for Attorneys and Litigants

For insurance companies seeking to enforce EUO requirements, this decision provides a roadmap for success. Insurers must ensure strict compliance with 11 NYCRR 65 in scheduling and conducting EUOs. When regulatory compliance is demonstrated, courts will not require additional proof that the claimant’s non-appearance was willful. This makes EUO-based denials easier to sustain on summary judgment when proper procedures are followed.

For healthcare providers and their counsel, the decision highlights the importance of timely objections to EUO demands. If an EUO appears unreasonable in timing, location, or other material respects, the provider must object promptly rather than relying on the ability to challenge reasonableness through discovery later. Once the deadline for objections passes without response, courts are likely to foreclose discovery and grant summary judgment to insurers.

The decision also serves as a reminder that while Unitrin has been narrowed in some respects, it remains good law for specific propositions. Practitioners should not assume that all aspects of Unitrin have been overruled, but should instead carefully analyze which portions of the decision remain viable and under what circumstances courts will apply them.

Key Takeaway

This decision reinforces that insurance companies need not prove willfulness when establishing failure to cooperate in EUO matters, provided they comply with regulatory requirements. The court also confirmed that EUO no-show cases can proceed to summary judgment without delay for discovery, particularly when no objections to the examination’s reasonableness were raised.

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