The peer review and its entry into evidence?

Peer review reports form the foundation of most medical necessity denials in New York no-fault insurance litigation. When insurers deny treatment as not medically necessary, they typically rely on peer review physicians who examine medical records and opine that the services were unnecessary or excessive. However, the admissibility and proper use of these peer review reports at trial presents complex evidentiary challenges that can determine the outcome of contested medical necessity cases.

The central tension involves the hearsay rule. Peer review reports are out-of-court statements offered to prove the truth of the matter asserted — specifically, that treatment was not medically necessary. As such, they constitute hearsay unless an exception applies. While insurers can call the peer review physician as an expert witness at trial, the question becomes whether the underlying peer review report itself can be admitted into evidence or whether it serves only as background for the expert’s testimony.

Courts have recognized that peer review reports can serve multiple purposes at trial. They may be admissible as business records under certain circumstances, or to explain the basis for a denial of claim. However, when offered to prove the substantive truth of medical opinions contained within them, peer review reports face significant admissibility challenges. The distinction between using a report to establish a defense versus using it merely to show why a claim was denied has generated substantial litigation.

Case Background

In Radiology Today v GEICO, a non-jury trial was held on the insurer’s medical necessity defense. Before the defendant called any witnesses, the Civil Court indicated that the peer review report could not be admitted into evidence “for the truth of what is in there.” The court further stated that defendant would be unable to meet its burden of proving medical necessity without the peer review report being admitted for its truth.

The insurer argued that it could use a substitute doctor — an expert witness who could testify based on the peer review report’s findings and conclusions — without the report itself being admitted. The Civil Court disagreed and directed a verdict in favor of the medical provider, apparently concluding that the insurer could not prove its defense without the inadmissible peer review report.

The Appellate Term reversed, finding that the Civil Court had misapplied evidentiary principles governing peer review reports and expert testimony at trial.

Jason Tenenbaum’s Analysis

Radiology Today, P.C. v Geico Ins. Co., 2017 NY Slip Op 51768(U)(App. Term 2d Dept. 2017)

(1) In this action by a provider to recover assigned first-party no-fault benefits for services it had provided to its assignor, a nonjury trial was held on the first cause of action, limited to defendant’s defense of lack of medical necessity (see CPLR 3212 ). Prior to defendant calling any witnesses, the Civil Court indicated that, as defendant would not be able to admit into evidence the peer review report upon which the denial of claim had been based “for the truth of what is in there,” defendant would not be able to meet its “burden.” The court disagreed with [*2]defendant’s position that a “substitute doctor” could testify without the peer review report being admitted into evidence and directed a verdict in favor of plaintiff.

(2) “Contrary to the apparent holding of the Civil Court, an insurer cannot use a peer review report at trial for its “truth,” i.e., to prove the insurer’s defense of lack of medical necessity (see Alev Med. Supply, Inc. v Government Empls. Ins. Co., 40 Misc 3d 128, 2013 NY Slip Op 51096 ; A-Quality Med. Supply v GEICO Gen. Ins. Co., 39 Misc 3d 24, 26 ). Indeed, the “admission of a peer review report into evidence as part of a defendant’s proof of lack of medical necessity may constitute impermissible bolstering of its expert’s testimony” (A-Quality Med. Supply, 39 Misc 3d at 26). While an insurer’s expert witness’s testimony should be limited to the basis for the denial as set forth in the peer review report (see e.g. Park Slope Med. & Surgical Supply, Inc. v Progressive Ins. Co., 34 Misc 3d 154, 2012 NY Slip Op 50349 ), “it is plaintiff’s burden to make an appropriate objection in the event the testimony goes beyond the basis for the denial and, if necessary, produce the peer review report”

Legal Significance

The Appellate Term’s decision establishes several important evidentiary principles for medical necessity trials. First, it confirms that peer review reports are generally inadmissible hearsay when offered to prove the truth of medical opinions contained within them. Insurers cannot simply submit peer review reports as exhibits and rely on their contents to establish that treatment was not medically necessary. This rule protects providers’ cross-examination rights and ensures that expert opinions are subject to testing through adversarial process.

Second, the decision clarifies that insurers can prove medical necessity defenses through live expert testimony even when the peer review report itself is not admitted. The concept of a “substitute doctor” is well-established in no-fault practice — an insurer can retain a different physician to review the medical records and testify at trial, rendering the same opinions reached in the original peer review. This approach avoids hearsay concerns because the testifying expert’s opinions are formed independently, even if they reach the same conclusions as the peer review.

Third, the ruling addresses the scope of permissible expert testimony at trial. While the testifying expert should be limited to the basis for denial set forth in the peer review report, this limitation protects providers’ ability to prepare their case based on the denial reasons actually communicated. If an insurer’s expert were permitted to introduce entirely new theories of lack of medical necessity at trial, providers would be unfairly surprised and unable to adequately respond.

The decision also addresses the impermissible bolstering concern. Admitting the peer review report while also having an expert testify would essentially give the insurer two expert opinions rather than one — the peer reviewer’s documented conclusions plus the testifying expert’s opinions. This duplication unfairly weights the evidence in the insurer’s favor and may improperly enhance the credibility of the testifying expert.

Practical Implications

For insurance carriers defending medical necessity challenges, this decision provides a clear roadmap for trial preparation. Carriers should retain testifying experts who can independently review the medical file and form opinions about medical necessity. These experts’ testimony will be admissible even if their conclusions mirror those in the original peer review report. However, carriers should not attempt to introduce the peer review report itself as substantive evidence of lack of medical necessity.

For medical providers challenging medical necessity denials, the ruling creates important strategic opportunities. Providers should object if insurers attempt to admit peer review reports for their substantive truth rather than merely to explain the basis for denial. Additionally, providers should carefully scrutinize expert testimony to ensure it remains within the scope of the peer review report’s findings. When experts venture beyond the denial’s stated basis, providers should object and, if necessary, introduce the peer review report to demonstrate that the testimony exceeds its proper scope.

The decision also highlights the importance of discovery in medical necessity cases. Providers should obtain copies of peer review reports during discovery to understand the specific grounds for denial and prepare responsive medical evidence. Knowing the peer reviewer’s criticisms allows providers to obtain rebuttal opinions addressing those specific concerns.

Related Articles

• Understanding how hearsay rules affect expert testimony in no-fault cases
• Building strong medical evidence to counter necessity challenges
• How carriers use medical evidence to support necessity denials
• Establishing a prima facie case when medical necessity is disputed
• New York No-Fault Insurance Law