Key Takeaway
Court distinguishes between Mallela defense and over-billing claims in no-fault insurance case, ruling that billing fraud doesn't qualify for extended defense timeline.
In New York no-fault insurance law, timing is everything when it comes to raising defenses against medical provider claims. Insurance companies typically have just 30 days to deny claims, but there’s a narrow exception known as the “Mallela defense” that allows extended time limits for certain coverage-related challenges. Understanding the distinction between this specialized defense and standard over-billing claims can mean the difference between a successful challenge and paying attorney fees.
The recent Court-Wide Insurance case highlights a crucial distinction that practitioners in New York no-fault insurance law must understand. When an insurance company attempts to raise defenses outside the standard 30-day window, courts scrutinize whether the challenge truly qualifies for the Mallela exception or falls into ordinary coverage disputes.
Jason Tenenbaum’s Analysis:
Matter of Country-Wide Ins. Co. v Bay Needle Acupuncture, P.C.2018 NY Slip Op 08238 (1st Dept. 2018)
This was an interesting case that discusses the distinction between the defenses of “Mallela” and “over-billing”.
“We find that petitioner’s defense is not a Mallela defense. It is based on the guilty plea of Andrey Anikeyev, who, according to petitioner, is respondent’s “de facto owner,” to conspiracy to commit health care fraud and mail fraud. Anikeyev pleaded guilty to billing insurance companies “for health care services for time periods in excess of the actual time period the patient spent with acupuncturist.” This plea supports nothing more than “a defense that the billed-for services were never rendered,” which is “more like a normal’ exception from coverage (e.g., a policy exclusion) a lack of coverage in the first instance” (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 565 ), and therefore does not fall into the “settled law recognizing a narrow exception to the 30-day deadline for defenses based on lack of coverage”
And then comes the real nail in the coffin: “Respondent is entitled to reasonable attorneys’ fees for this appeal, to be determined by Supreme Court”
Key Takeaway
Courts carefully distinguish between true Mallela defenses (which challenge fundamental coverage issues) and standard over-billing claims. When insurance companies mischaracterize billing fraud as a Mallela defense to avoid the 30-day deadline, they risk not only losing the case but also paying the medical provider’s attorney fees—a costly consequence that underscores the importance of properly categorizing coverage defenses.
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