120-day rule crumbles

Case Background

The 120-day rule under 11 NYCRR 65-3.8 has long governed the timing requirements for responses to additional verification requests in New York no-fault insurance disputes. This regulatory provision establishes that when an insurer requests additional verification from a medical provider, the provider must respond within 120 days from the initial request. The purpose of this rule is to prevent indefinite delays in claim processing while still providing adequate time for providers to gather and submit required documentation.

However, the interpretation of what constitutes a proper response within this 120-day window has been subject to ongoing litigation. Insurance companies have historically taken the position that any response failing to provide complete verification materials results in automatic forfeiture of the claim. Medical providers, conversely, have argued that timely objections or explanations regarding the verification requests should preserve their rights even when complete materials are not immediately produced.

This Fourth Department decision in the Progressive case represents a significant shift in how courts evaluate compliance with the 120-day rule, particularly when providers submit timely objections based on reasonable justification rather than complete compliance with verification demands.

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.

Legal Significance

The Progressive decision fundamentally alters the strategic landscape for medical providers facing additional verification requests. Prior to this ruling, many providers believed they were required to produce the exact materials requested or face claim denial with prejudice. This case establishes that a timely objection with reasonable justification preserves the provider’s right to contest the verification request itself, and if that objection is overruled, to then produce the materials and have the claim evaluated on its merits.

This interpretation transforms the 120-day rule from an absolute deadline for production into a deadline for meaningful response, whether through production or objection. The court’s emphasis that the master arbitrator did not conduct an improper de novo review but rather corrected a substantive legal error demonstrates judicial recognition that strict application of verification procedures should not override fundamental fairness when providers engage with the process in good faith.

Practical Implications

For healthcare providers and their legal counsel, this decision mandates a more proactive approach to verification requests. Rather than simply attempting to gather all requested materials within 120 days, providers should evaluate whether the verification request itself is proper, reasonable, and legally justified. Timely objections based on grounds such as overbreadth, lack of relevance, or procedural defects can preserve rights that might otherwise be forfeited.

The ruling also has implications beyond sections 65-3.5 and 65-3.6, potentially affecting how courts evaluate responses to EUO demands, IME scheduling, and other procedural requirements in no-fault litigation. When providers make timely objections based on reasonable grounds, denials issued without addressing those objections may be considered without prejudice rather than final determinations on the merits.

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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.