An AOB is not necessary at all

Understanding Standing and Assignment of Benefits in No-Fault Litigation

Standing represents a threshold jurisdictional requirement in all civil litigation. A plaintiff must demonstrate a legally cognizable interest in the subject matter of the lawsuit to invoke the court’s jurisdiction. In no-fault insurance litigation, healthcare providers typically sue insurance carriers in their own names to recover payment for medical services rendered to accident victims. The legal mechanism allowing providers to bring these suits in their own names is the assignment of benefits—a transfer of the patient’s right to receive insurance proceeds to the provider.

The question whether a provider must submit an executed assignment of benefits document to establish standing has generated considerable litigation and varying judicial interpretations. Some courts have required providers to prove the existence of a valid assignment before recovering no-fault benefits. However, the Court of Appeals clarified in Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co. that an assignment of benefits is not part of a plaintiff’s prima facie case in no-fault litigation.

This distinction between assignment as a jurisdictional prerequisite versus an affirmative defense carries significant practical implications. If assignment were part of the prima facie case, every provider would need to submit assignment documentation with their initial proof. However, if assignment constitutes an affirmative defense, the burden rests on defendants to timely and properly raise assignment issues through denials or verification requests.

Case Background and Appellate Decision

Beal-Medea Prods., Inc. v Geico Gen. Ins. Co., 2016 NY Slip Op 50594(U)(App. Term 2d Dept. 2016)

“Plaintiff’s motion should have been granted. Defendant’s CPLR 4401 motion for judgment as a matter of law was made before the close of plaintiff’s case, and was therefore premature (see Kamanou v Bert, 94 AD3d 704 ). Furthermore, the court’s reason for granting the application was erroneous, as a no-fault plaintiff is not required to submit an executed assignment of benefits in order to demonstrate its prima facie entitlement to recover on a no-fault claim (see Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 ; Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 , affd 9 NY3d 312 ; Urban Radiology, P.C. v GEICO Gen. Ins. Co., 39 Misc 3d 146, 2013 NY Slip Op 50850 ). Rather, for the assignment of benefits to become a subject of inquiry, a defendant must first demonstrate that it timely and properly raised an issue with respect to the assignment (see Hospital for Joint Diseases, 21 AD3d 348; Urban Radiology, P.C., 39 Misc 3d 146, 2013 NY Slip Op 50850).”

An Assignment of Benefits is not a permitted inquiry unless raised in a verification or denial. The Court (again) noted that an AOB is not part of a prima facie case.

Legal Analysis: Prima Facie Case Versus Affirmative Defenses

The Appellate Term’s decision in Beal-Medea Productions reinforces well-established principles governing assignment of benefits in no-fault litigation. The court identified two separate errors committed by the trial court: procedural error in granting a CPLR 4401 motion before the close of plaintiff’s case, and substantive error in requiring submission of an executed assignment of benefits as part of the prima facie case.

The procedural error merits brief discussion. CPLR 4401 permits a party to move for judgment as a matter of law when the opposing party has been fully heard on an issue and there is no valid line of reasoning supporting that party’s position. However, such motions must be made after the opposing party has completed presentation of their case. A motion made before the close of plaintiff’s case proves premature because the plaintiff has not yet had full opportunity to present all evidence. The trial court’s grant of defendant’s premature motion constituted reversible error independent of the assignment issue.

More significantly, the court addressed the substantive question whether providers must submit executed assignments of benefits to establish their prima facie entitlement to recover. Drawing on the Court of Appeals’ decision in Viviane Etienne Med. Care and the Appellate Division’s rulings in Hospital for Joint Diseases v Allstate Ins. Co., the court definitively held that assignment of benefits is not part of a no-fault plaintiff’s prima facie case.

This holding reflects sound policy considerations. The no-fault regulations establish specific requirements for what constitutes a complete claim submission: verification of treatment, itemized bills, proof of medical necessity, and other specified documentation. The regulations do not require submission of assignment of benefits documentation. Imposing such a requirement would effectively amend the regulations through judicial interpretation, adding burdens not contemplated by the regulatory scheme.

Furthermore, the court emphasized that assignment issues can only “become a subject of inquiry” when the defendant “timely and properly raised an issue with respect to the assignment.” This language establishes clear procedural requirements for defendants seeking to challenge standing based on assignment deficiencies. The defendant must raise the assignment issue through appropriate mechanisms—typically a denial of claim citing lack of assignment or a verification request seeking assignment documentation.

The requirement that defendants “timely” raise assignment issues prevents defendants from lying in wait, allowing litigation to proceed, and then ambushing plaintiffs with standing challenges at trial. If a defendant believes assignment documentation is necessary to evaluate the claim, it must request such documentation through verification during the claims process. If the defendant believes the assignment is invalid or non-existent, it must deny the claim on that basis within the regulatory timeframes.

The further requirement that defendants “properly” raise assignment issues means using procedurally appropriate mechanisms. A generic denial without specific reference to assignment problems will not suffice to make assignment a subject of inquiry. Similarly, a verification request that fails to specifically identify assignment documentation as required will not permit later standing challenges based on lack of assignment.

Practical Implications for No-Fault Practice

Jason Tenenbaum’s observation—“An Assignment of Benefits is not a permitted inquiry unless raised in a verification or denial”—captures the essential practical takeaway from this decision. For providers and their attorneys, this ruling confirms that assignment documentation need not be submitted as part of the initial proof of claim or as part of the prima facie case at trial.

However, providers should not interpret this holding as eliminating the need for valid assignments entirely. While assignment is not part of the prima facie case, it remains a potential affirmative defense that defendants can raise if they timely and properly identify assignment issues. Prudent providers should still obtain proper assignments of benefits from patients and maintain those assignments in their files, even though submission is not required absent specific demands from carriers.

For insurance carriers and defense counsel, this decision underscores the importance of addressing assignment issues during the claims process rather than deferring them until litigation. If a carrier questions whether a valid assignment exists, it should either deny the claim on that basis or send a verification request specifically seeking assignment documentation. Failure to timely raise assignment issues during the claims process may forfeit the ability to challenge standing at trial.

The decision also highlights a common tactical error: attempting to obtain judgment as a matter of law before the opposing party completes its case. Defense counsel must wait until plaintiff rests before moving for judgment as a matter of law. Premature motions, even if potentially meritorious on the substantive issue, will be denied as procedurally improper.

This ruling reflects the broader evolution of no-fault litigation toward streamlined procedures that prevent defendants from raising technical defenses not identified during the claims process. Courts increasingly hold carriers to strict compliance with claim handling requirements, including the obligation to raise specific defenses through denials or verification requests within regulatory timeframes. Assignment challenges, like other affirmative defenses, must be timely and properly asserted during the administrative phase of the claim or be waived.

Related Articles

• Assignment of Benefits NY – When Patients Can Still Sue Despite AOB
• Proving standing without an assignment?
• Motion seeking leave to amend the answer to seek affirmative defense of lack of standing is proper
• Standing – the Defense Applied Outside the No-Fault Arena