The deemer acts to dismiss complaint against MVAIC

Case Background

The Motor Vehicle Accident Indemnification Corporation (MVAIC) serves as New York’s insurer of last resort, providing coverage when accident victims cannot recover from traditional insurance sources. MVAIC claims arise when injured parties or their medical providers cannot identify the tortfeasor’s insurer, when the tortfeasor lacks insurance, or when identified insurers have validly disclaimed coverage. However, the threshold question in any MVAIC action is whether alternative insurance coverage actually exists.

New York’s “deemer” statutes, codified in Insurance Law sections 370 and 5107, mandate that certain insurance policies must be deemed to include specific coverage provisions even when the policy documents themselves fail to include such provisions. These statutes reflect legislative policy that public safety requires minimum insurance coverage for motor vehicles operating in New York, regardless of where policies were issued or what terms private insurers might prefer.

In Daily Medical Equipment Distribution Center v. MVAIC, the plaintiff medical provider filed suit against MVAIC after Dollar Rent A Car indicated that its rental vehicle policy did not provide first-party no-fault benefits for a New Jersey rental. The Appellate Term’s analysis demonstrates how deemer statutes can preclude MVAIC actions even when insurers claim their policies lack required coverage.

Daily Med. Equip. Distrib. Ctr., Inc. v MVAIC, 2017 NY Slip Op 50039(U)(App. Term 2d Dept. 2017)

“Plaintiff and its assignor were aware of the identity of the owner of the vehicle in which the assignor had been a passenger at the time of the accident. Plaintiff contends that plaintiff, as assignee, exhausted its remedies against the vehicle’s owner before seeking relief from MVAIC (see Hauswirth v American Home Assur. Co., 244 AD2d 528 ; Modern Art Med., P.C. v MVAIC, 22 Misc 3d 126, 2008 NY Slip Op 52586 ). However, the letter from Dollar Rent A Car (Dollar), which identified the vehicle’s owner, Ride Share, LLC, as a licensee of Dollar and advised that coverage which would provide first-party no-fault benefits was not offered at the time the vehicle in question had been rented in New Jersey, is not dispositive. Rather, pursuant to Insurance Law sections 370 and 5107, the insurance provided by Dollar and/or Ride Share, LLC may, under appropriate circumstances, be deemed to include such coverage even if the policy in question failed to do so.”

This one is quite interesting, because it requires the medical provider and/or the collection attorney to appreciate the NY deemer statute and to analyze the validity of a disclaimer before bring suite against MVAIC. The safest way to go about this situation is to probably bring suit against Dollar (if bill not submitted – then employ Domotor) and MVAIC, or name both in an arbitration. What a dilemma this poses for the casual plaintiff no-fault free-lancer.

Legal Significance

The deemer statutes represent a critical component of New York’s comprehensive approach to ensuring accident victims receive compensation. Insurance Law section 5107 requires that automobile liability policies issued in New York include first-party no-fault benefits, while section 370 extends this requirement to out-of-state policies covering vehicles operated in New York. These provisions create “deemed” coverage that exists by operation of law regardless of policy language.

The Appellate Term’s holding emphasizes that an insurer’s representation that coverage was not provided does not establish that no coverage obligation exists. Medical providers and their counsel must independently evaluate whether deemer statutes apply before accepting an insurer’s denial as final. A letter from an insurance company stating that no-fault coverage was not offered at the time of rental does not constitute a valid disclaimer when the policy is deemed to include such coverage by statute.

This decision also addresses the exhaustion of remedies requirement for MVAIC claims. Before seeking recovery from MVAIC, claimants must exhaust remedies against all potential insurance sources. When deemer statutes may apply, those remedies are not exhausted simply because an insurer claims its policy lacks coverage. The potential for deemed coverage must be resolved before MVAIC becomes liable.

Practical Implications

For medical providers and collection attorneys, this decision requires enhanced due diligence before filing MVAIC actions. When an insurer denies coverage on the basis that its policy does not include no-fault benefits, counsel must analyze whether deemer statutes mandate inclusion of such benefits regardless of policy terms. This analysis involves examining where the policy was issued, where the vehicle was operated, the nature of the rental or lease transaction, and other factors that might trigger deemer provisions.

The safest approach in cases involving potential deemed coverage is to name both the primary insurer and MVAIC as defendants or respondents. This preserves all potential avenues for recovery while allowing courts to determine whether deemer statutes apply. Filing against MVAIC alone based solely on an insurer’s representation that coverage does not exist risks dismissal when deemed coverage actually applies.

Practitioners must also recognize that rental car situations present particular complexity under deemer statutes. Out-of-state rental companies may claim their policies comply with issuing state requirements without New York no-fault coverage, but operation of the vehicle in New York may trigger deemed coverage requirements regardless of policy terms.

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• New York No-Fault Insurance Law