An objective standard is not necessary

Understanding EUO Requirements: When Objective Standards Don’t Apply

In New York’s no-fault insurance system, Examinations Under Oath (EUOs) serve as a critical investigative tool for insurance companies. When healthcare providers fail to appear for these examinations, insurers often seek to deny claims and pursue summary judgment. A recent appellate decision has clarified an important procedural point: insurers may not need to justify their reasons for requesting EUOs when providers simply fail to show up.

This ruling builds on established precedent regarding EUO no-show situations and reinforces the procedural requirements insurers must meet to successfully defend against provider claims. The decision is particularly significant for understanding how courts evaluate EUO objections and their effectiveness in the litigation process.

Case Background

New Way Medical Supply Corp. filed suit against State Farm Mutual Automobile Insurance Company seeking payment for no-fault benefits. State Farm defended by asserting that the healthcare provider had twice failed to appear for properly scheduled Examinations Under Oath. The insurer moved for summary judgment, arguing that the provider’s non-compliance with the EUO requests justified denial of the claims.

The provider opposed the motion, contending that State Farm had failed to establish that its EUO requests were based on objective, reasonable grounds for suspecting fraud or material misrepresentation. This argument reflected a line of cases suggesting that EUO requests must be justified by specific suspicions rather than issued as routine practice. The Appellate Term needed to determine whether, in the context of a provider no-show, insurers must demonstrate the underlying justification for their EUO requests to prevail on summary judgment.

Jason Tenenbaum’s Analysis:

New Way Med. Supply Corp. v State Farm Mut. Auto. Ins. Co., 2019 NY Slip Op 51158(U)(App. Term 2d Dept. 2019)

“This court has held on multiple occasions that since the Appellate Division, Second Department, stated that an insurer need only establish as a matter of law that it twice duly demanded an EUO from the provider that the provider twice failed to appear, and that the insurer issued a timely denial of the claims, an insurer does not need to set forth the objective reasons for the requested EUOs as part of its prima facie showing of entitlement to judgment as a matter of law”

Legal Significance

This decision clarifies an important distinction in EUO jurisprudence. While some cases have held that insurers must demonstrate objective grounds for requesting EUOs—particularly when providers appear and object to the examination—the Appellate Term makes clear that this requirement does not apply when providers simply fail to appear. The court’s reasoning reflects a pragmatic approach: when providers refuse to cooperate with properly noticed EUOs, they forfeit the right to challenge the underlying justification for those requests.

The ruling aligns with the broader principle that no-fault insurance system depends on cooperation and timely compliance with procedural requirements. EUOs serve as an essential tool for insurers to investigate potentially fraudulent or questionable claims. By excusing insurers from proving objective reasons when providers fail to appear, the court prevents providers from using procedural objections as a shield against legitimate investigative efforts they have already refused to participate in.

This streamlined approach to summary judgment also serves judicial economy. Requiring insurers to prove the merits of their suspicions in every no-show case would transform straightforward procedural violations into complex evidentiary battles about whether suspicions were sufficiently “objective.” The Appellate Term’s ruling avoids this unnecessary complexity by focusing on what matters: proper notice, failure to appear, and timely denial.

Practical Implications

For insurance companies defending against provider claims, this decision simplifies the path to summary judgment in no-show cases. Defense counsel need not expend resources gathering and presenting evidence of fraud indicators, suspicious billing patterns, or other objective bases for EUO requests. Instead, they can focus on establishing the three core elements: proper notice of the EUO, the provider’s failure to appear (twice), and timely issuance of claim denials.

For healthcare providers, this ruling underscores the critical importance of appearing for properly noticed EUOs, even when providers believe the requests lack sufficient justification. Providers who fail to appear lose the opportunity to challenge the validity of the EUO request itself. If providers believe an EUO request is improper, they must appear and object, or seek a protective order, rather than simply ignoring the notice.

Key Takeaway

When healthcare providers fail to appear for properly noticed EUOs, insurance companies can obtain summary judgment without demonstrating objective reasons for requesting the examinations. The court’s focus remains on procedural compliance—proper notice, non-appearance, and timely claim denial—rather than the underlying justification for the EUO request. This streamlined approach reflects the importance courts place on provider cooperation in the no-fault insurance investigation process.

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