Key Takeaway
New York no-fault insurance regulation 11 NYCRR 65-3.2(b) violations raise questions about actionable claims and remedies beyond administrative penalties in insurance disputes.
New York’s no-fault insurance system operates under strict regulatory guidelines designed to ensure fair claims processing. One key regulation, 11 NYCRR 65-3.2(b), prohibits insurance companies from taking adversarial positions during claims processing. However, when insurers violate this regulation, the legal consequences and available remedies for injured parties remain unclear.
A recent Appellate Term decision in Integral Assist Med., P.C. v Tri-State Consumer Ins. Co. touched on this issue but left important questions unanswered. The case highlights a critical gap in New York insurance law: while some regulatory violations are treated as purely administrative matters, others may give rise to more significant legal claims, including potential bad faith or consumer protection violations.
Understanding these distinctions is crucial for both healthcare providers and patients navigating no-fault insurance claims, as the remedies available can vary dramatically depending on how courts classify specific regulatory violations.
Jason Tenenbaum’s Analysis:
Integral Assist Med., P.C. v Tri-State Consumer Ins. Co., 2017 NY Slip Op 50103(U)(App. Term 2d Dept. 2017)
“There is no merit to plaintiff’s argument on appeal that defendant “clearly took an adversarial position” during claims processing in violation of 11 NYCRR 65-3.2 (b).”
Assume that Defendant did take an adversarial role in the claims processing. What would happen at that point? The case on point states that a violation of 3.8(b)(4) is an administrative issue, not one that leads to preclusion due to its violation. Does a violation of 3.2(b) lead to the same result? Or, does this violation allow (under the right circumstance) an extra-contractual claim or a GBL 349 claim? The case law will have to be further developed.
My thinking is that a violation of 3.2(b) is not enough to impact a first-party no-contractual claim. But, this falls into the gambit of 349 and under certain extreme circumstances, bad faith.
Key Takeaway
The legal implications of violating 11 NYCRR 65-3.2(b) remain undeveloped in New York case law. While some regulatory violations are purely administrative, others may support broader claims under General Business Law Section 349 or bad faith theories. The distinction between administrative violations and actionable claims will require further judicial clarification as insurance dispute litigation continues to evolve.
