Key Takeaway
New York appellate court clarifies that fraudulent procurement defense must comply with Insurance Law 3105 material misrepresentation standards and requires underwriting manual proof.
The landscape of no-fault insurance defenses in New York continues to evolve, particularly regarding how insurance companies challenge coverage based on alleged misrepresentations during policy procurement. A recent appellate decision has provided important clarification on what was previously known as the “fraudulent procurement” defense, establishing that it must now conform to the established framework for material misrepresentation claims.
This development represents a significant shift in how courts analyze these defenses. Rather than treating fraudulent procurement as a separate category, courts are now recognizing it as a subset of the broader material misrepresentation defense framework. This change has important implications for both insurance companies seeking to deny coverage and healthcare providers pursuing no-fault benefits.
The case highlights the ongoing efforts by prominent no-fault attorney Oleg Rybak to standardize these defenses under Insurance Law 3105, which governs material misrepresentation claims in New York. This standardization requires insurance companies to meet specific evidentiary requirements, including proof from underwriting manuals that demonstrate the materiality of any alleged misrepresentation.
Jason Tenenbaum’s Analysis:
Renelique v National Liab. & Fire Ins. Co., 2016 NY Slip Op 51615(U)(App. Term 2d Dept. 2016)
It appears that Oleg Rybak has gotten his point across that the “fraudulent procurement” defense is really a material misrepresentation defense in disguise. This defense has to fit within the parameters of Ins Law 3105 and be supported with proof from a underwriting manual.
“Defendant’s cross motion was based upon the ground that plaintiff’s assignor had procured the insurance policy in question by making a material misrepresentation as to his place of residence. As plaintiff argues, defendant failed to establish as a matter of law that the misrepresentation by plaintiff’s assignor was material (see Interboro Ins. Co. v Fatmir, 89 AD3d 993 ). Consequently, defendant’s cross motion should have been denied.”
Key Takeaway
Insurance companies can no longer rely on standalone “fraudulent procurement” arguments to deny no-fault coverage. Instead, they must prove material misrepresentation under Insurance Law 3105, which requires demonstrating that the alleged misrepresentation would have affected the insurer’s decision to issue coverage or influenced the premium charged. This higher evidentiary standard protects healthcare providers and patients from arbitrary coverage denials.
