Lack of Coverage Defense: Detailed Record-Search Affidavit Proves No Policy Existed

When insurance companies face coverage disputes, the burden of proof can shift dramatically based on the quality of evidence presented. A 2017 New York Appellate Term decision demonstrates how a thorough, well-documented search for insurance records can effectively establish that no coverage existed, even when the initial claim seemed plausible.

Key Takeaways

• An insurer can establish a lack-of-coverage defense with an affidavit from an employee describing, in detail, the record search showing no policy was in effect on the accident date.
• In Compas Med. v Hereford, the affidavit was held sufficient to show prima facie that the claim did not arise out of a covered incident, shifting the burden to the provider.
• Lack of coverage is a core coverage defense — it is not subject to the 30-day preclusion rule that bars most untimely no-fault defenses.
• Conclusory “no policy found” statements fail; the affidavit must describe how the search was performed and what it covered.

This case highlights the importance of comprehensive record searches in New York no-fault insurance law disputes. Insurance companies must be prepared to provide detailed documentation of their search efforts, not just conclusory statements about coverage. The court’s acceptance of Hereford’s detailed affidavit shows that proper documentation can successfully shift the burden back to the plaintiff to prove their claim.

The Decision

Jason Tenenbaum’s Analysis:

Compas Med., P.C. v Hereford Ins. Co., 2017 NY Slip Op 51083(U)(App. Term 2d Dept. 2017)

“In support of its cross motion and in opposition to plaintiff’s motion, defendant submitted an affidavit by its employee who described the details of a record search she had performed and stated that her search had revealed that there was no relevant Hereford Insurance Company policy in effect on the date of the accident in question. We find that defendant’s affidavit was sufficient to demonstrate, prima facie, that plaintiff’s claim did not arise out of a covered incident.”

My sense is that Hereford may have been the WC carrier? Or was this just a stab in the dark that Hereford was the no-fault carrier?

The Legal Framework

Lack of coverage occupies a privileged place among no-fault defenses. Most defenses — medical necessity, fee schedule, excessive treatment — must be asserted in a denial issued within 30 days of receipt of the claim, or they are precluded. But a defense that the alleged injury does not arise out of a covered incident at all goes to the existence of coverage rather than to the merits of the claim, and under the Central General Hospital v Chubb line of authority it survives even an untimely denial or no denial.

The proof problem is that the carrier is being asked to prove a negative: no policy existed. New York courts solve this the same way they handle proof of mailing — through a sworn description of a diligent search. The affiant must explain what databases or records were searched, by whom, using what identifiers (policy number, plate, VIN, insured name), and what the search returned. The detail is what converts a self-serving conclusion into prima facie proof.

Once the carrier makes that showing, the burden shifts to the provider to come forward with evidence that a policy actually existed — a police report naming the carrier, an NF-2 application, a policy declaration page. If the provider has nothing, summary judgment follows. The framework parallels the burden-shifting analysis collected in the firm’s hub on a formulation of a prima facie case.

Why This Matters for Carriers and Providers

For carriers — particularly livery and for-hire carriers like Hereford that are frequently sued on guesswork — this decision is a template. Providers sometimes bill whichever carrier appears in a database or on a police report, and a detailed search affidavit is the cleanest exit from a suit on a policy that never existed. As Jason’s note suggests, the underlying confusion in Compas may have been a workers’ compensation/no-fault mix-up or simply a misidentified carrier.

For medical providers, the case is a warning about intake diligence. Before billing and suing a carrier, verify coverage through the NF-2, the police report, and the DMV insurance records. Suing the wrong carrier wastes the 30-day billing window against the right one and produces exactly the result here — dismissal with nothing to show for it. The companion problem appears in documentation showing the wrong insurance carrier was sued.

Practice Pointers

• Carriers: the search affidavit should name the affiant’s role, the systems searched, the identifiers used, the date range, and the result. Mirror the structure courts approve for mailing affidavits.
• Carriers: plead lack of coverage even if the denial was late — Chubb-type defenses are not precluded, unlike the defenses that can be defeated by insufficient evidence when proof falls short.
• Providers: answer a search affidavit with documents, not argument. A declaration page or police report naming the carrier creates a triable issue; rhetoric does not.
• Providers: confirm the correct carrier before suit; the statute of limitations and the 45-day billing rule do not pause while the wrong defendant is litigated.

Frequently Asked Questions

How does an insurer prove that no policy existed in a no-fault case?

Through an affidavit from an employee with knowledge who describes the details of the record search performed — the systems checked, the identifiers used, and the result showing no policy in effect on the accident date. Compas Med. v Hereford holds that such a detailed affidavit establishes, prima facie, that the claim did not arise from a covered incident.

Is lack of coverage waived if the insurer’s denial was late?

No. A defense that the claim does not arise out of a covered incident goes to the existence of coverage and is not subject to the 30-day preclusion rule, so it survives an untimely denial or even the absence of one.

What should a provider do if a carrier claims no policy existed?

Produce affirmative proof of coverage: the police report identifying the insurer, the NF-2 application, DMV insurance verification, or a policy declaration page. If the provider cannot rebut the carrier’s detailed search affidavit, the burden-shifted motion will likely be granted.

Related Resources

• A formulation of a prima facie case — the firm’s hub on summary judgment burdens in no-fault litigation
• Lack of coverage sustained
• Lack of coverage: there was no lease for the vehicle
• Documentation shows wrong insurance carrier was sued
• The firm’s Legal Encyclopedia
• No-fault defense practice