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Priority of payment
Priority of Payment

Priority of payment

By Jason Tenenbaum 3 min read

Why Trust This Analysis

This article is part of our ongoing priority of payment coverage, with 6 published articles analyzing priority of payment issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.

Understanding Priority of Payment in No-fault Insurance Cases

Priority of payment rules in New York’s no-fault insurance system determine which healthcare providers get paid first when multiple claims compete for limited coverage benefits. These regulations, established by the New York State Insurance Department, create a hierarchy for reimbursing medical providers who treat accident victims.

The complexity of these rules becomes apparent when insurance carriers make payments to some providers before others, potentially exhausting available coverage. This can leave legitimate healthcare providers unpaid, leading to disputes about whether the carrier’s payment decisions followed proper regulatory procedures.

When such disputes arise, courts must examine whether the insurance company correctly applied priority rules and whether any payments made to other providers were appropriate under the governing regulations. These cases often involve intricate factual determinations about the timing of treatments, the nature of services provided, and compliance with regulatory requirements.

Case Background

The Easy Care Acupuncture, PC v MVAIC matter arose from a dispute between a healthcare provider and the Motor Vehicle Accident Indemnification Corporation concerning payments made to medical facilities treating the same patient. The central question involved whether MVAIC properly exhausted available no-fault coverage by making payments to other providers, and whether those payments complied with regulatory priority requirements.

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The parties cross-moved for summary judgment, each claiming entitlement to judgment as a matter of law. The healthcare provider argued that improper payments to other facilities violated priority of payment regulations, leaving them unpaid despite providing legitimate medical services. MVAIC countered that its payment allocation followed appropriate regulatory guidelines and that no coverage remained available for the plaintiff’s claims.

The Appellate Term, First Department, reviewed the lower court’s determination and found that both parties’ submissions created factual disputes requiring trial resolution.

Court Ruling Creates More Questions Than Answers

Jason Tenenbaum’s Analysis:

Easy Care Acupuncture, PC v MVAIC, 2017 NY Slip Op 51346(U)(App. Term 1st Dept. 2017)

“The parties’ respective submissions reveal the existence of triable issues of fact as to whether defendant partially exhausted the coverage by payments to another provider, and whether those payments were proper under the insurance department regulations.”

I am unsure how you even resolve the above-issue under the priority of payment regimen, since the opinion does not contain any facts.

Key Takeaway

This appellate decision highlights the procedural challenges in priority of payment disputes. The court identified disputed factual issues about whether an insurance carrier properly allocated benefits among competing providers, but the published opinion lacks the factual details necessary to understand how such determinations should be made in practice.

The Easy Care Acupuncture decision exemplifies a recurring problem in no-fault insurance jurisprudence: appellate courts issue rulings that establish legal principles but omit the factual context necessary for practitioners to apply those principles to future cases. The opinion announces that priority of payment compliance presents a triable issue of fact, yet provides no guidance about what evidence would demonstrate proper or improper payment allocation.

This gap creates uncertainty for both insurance carriers implementing payment systems and healthcare providers challenging those systems. Without clear standards for evaluating priority compliance, similar cases will continue generating litigation over questions that should have been resolved by this precedent. The lack of factual detail also prevents practitioners from understanding what documentation insurers should maintain or what evidence providers must present to successfully challenge payment priorities.

Practical Implications

Healthcare providers facing priority of payment disputes should recognize that establishing improper payment allocation requires more than general allegations. While this case permitted the matter to proceed to trial, practitioners must develop comprehensive evidence showing both that competing providers received payments and that those payments violated specific regulatory requirements.

Insurance carriers must maintain detailed records documenting not only payment amounts and dates but also the regulatory basis for prioritizing each payment. The factual disputes identified in this case suggest that bare assertions of regulatory compliance will not suffice at summary judgment. Carriers should implement systems that contemporaneously document the priority analysis for each payment decision, creating clear audit trails that can withstand later scrutiny in litigation.

Legal Context

Why This Matters for Your Case

New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.

Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,600 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.

Frequently Asked Questions

Common Questions About This Topic

3 answers from the firm's New York personal-injury and employment-law practice. Click any question to expand.

What is priority of payment in no-fault insurance?

Priority of payment is the rule for paying claims when they aggregate to more than the $50,000 basic economic loss limit. Payments are made in the order in which each service was rendered or each expense was incurred, provided the claims were made before the $50,000 was exhausted; if the insurer pays out the limit before receiving claims for earlier services, it is not liable for those late claims; claims received at the same time are paid in the order of rendition of services (11 NYCRR 65-3.15). Insurers may keep paying verified claims while verification of another is pending (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 (2007)).

Can I challenge the order of payment under a no-fault policy?

Yes. A provider whose claim was submitted before exhaustion, for services rendered earlier than services the insurer paid, can assert that 11 NYCRR 65-3.15 required payment of its claim first. In Nyack Hospital, once the hospital's verification arrived and verified claims exceeded $50,000, the insurer was required to pay the hospital ahead of unpaid claims for later services, and the Court of Appeals remitted for that computation (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 (2007)). The proof is documentary: dates of service and receipt, verification correspondence, and the insurer's payment log. The dispute goes to arbitration or court (Insurance Law § 5106(b)).

What happens when multiple providers claim the same policy funds?

The insurer must apply 11 NYCRR 65-3.15: among claims made before exhaustion, pay in the order in which each service was rendered or expense was incurred; among claims received at the same time, pay in order of rendition of services; and do not pay a claim for earlier services that arrives after the $50,000 is gone. While one claim awaits verification, the insurer may pay other verified claims, but when the verification arrives it must pay the earlier-rendered services ahead of later ones within the remaining limit (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 (2007)). Bill within 45 days (11 NYCRR 65-1.1) and answer verification promptly.

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Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.

New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.

If you need legal help with a priority of payment matter, contact our office at (516) 750-0595 for a free consultation. We serve clients throughout Long Island (Huntington, Babylon, Islip, Brookhaven, Smithtown, Riverhead, Southampton, East Hampton), Nassau County (Hempstead, Garden City, Mineola, Great Neck, Manhasset, Freeport, Long Beach, Rockville Centre, Valley Stream, Westbury, Hicksville, Massapequa), Suffolk County (Hauppauge, Deer Park, Bay Shore, Central Islip, Patchogue, Brentwood), Queens, Brooklyn, Manhattan, the Bronx, Staten Island, and Westchester County. Prior results do not guarantee a similar outcome.

Part of the Priority of Payment & Policy Exhaustion archive in the No-Fault Insurance Law section of the New York Legal Encyclopedia.

Jason Tenenbaum, Personal Injury Attorney serving Long Island, Nassau County and Suffolk County

Written By

Jason Tenenbaum, Esq.

Jason Tenenbaum is a personal injury attorney serving Long Island, Nassau & Suffolk Counties, and New York City. Admitted to practice in NY, NJ, FL, TX, GA, MI, and Federal courts, Jason is one of the few attorneys who writes his own appeals and tries his own cases. Since 2008, he has authored more than 2,600 articles on no-fault insurance law, personal injury, and employment law — a resource other attorneys rely on to stay current on New York appellate decisions.

Education
Syracuse University College of Law
Experience
24+ Years
Articles
2,600+ Published
Licensed In
6 States + Federal

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