120-day rule crumbles

Matter of Progressive Cas. Ins. Co. (Elite Med. Supply of N.Y., LLC), 2018 NY Slip Op 04122 (4th Dept. 2018)

“In his awards, the master arbitrator found that the arbitrator had misapplied the 120-day rule, reasoning that, pursuant to that rule, a claimant who responds within the requisite 120-day period with a “reasonable justification” is permitted to have that objection decided by the arbitrator and, if overruled by the arbitrator, is to be afforded the opportunity to produce the requested information and allow the insurer to base its decision on such information (11 NYCRR 65-3.8 ). Contrary to petitioners’ contention, the master arbitrator did not impermissibly perform a de novo review of the evidence. Rather, the master arbitrator vacated the arbitrator’s awards based on “an alleged error of a rule of substantive law” (Matter of Acuhealth Acupuncture, P.C. v Country-Wide Ins. Co., 149 AD3d 828, 829 ). Thus, we conclude that the court’s decision to uphold the master arbitrator’s awards in this case was rational (cf. id.).”

This case highlights how important it is to respond and object to verification demands.  The worst thing that can happen, should an objection be lodged, is that the denial of the claim is without prejudice.  I would sense in certain circumstances an objection to an attendance at an EUO landing in a denial could also be a dismissal without prejudice.  The 120-day rule has been neutered and it may have ramifications far beyond 65-3.5 and 65-3.6.

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Legal Update (February 2026): The regulatory framework governing the 120-day rule and verification procedures under 11 NYCRR 65-3 may have been subject to amendments since this 2018 analysis, particularly regarding response timeframes, reasonable justification standards, and arbitration procedures outlined in sections 65-3.5, 65-3.6, and 65-3.8. Practitioners should verify current provisions and any subsequent case law interpretations that may have refined the application of verification objection procedures.