MVAIC is at it again

The Motor Vehicle Accident Indemnification Corporation (MVAIC) serves as New York’s safety net for no-fault insurance coverage when traditional insurance isn’t available. However, MVAIC cases often involve complex procedural requirements that can trap unwary practitioners. A recent Appellate Term decision highlights ongoing confusion around the “exhaustion of remedies” requirement — a procedural hurdle that has created a split between different judicial departments.

This jurisdictional divide has significant practical implications for attorneys handling New York No-Fault Insurance Law cases. Understanding which department’s precedent applies can mean the difference between a successful claim and a dismissed case based on procedural grounds.

Jason Tenenbaum’s Analysis:

JJ & R Chiropractic PC v MVAIC, 2019 NY Slip Op 51559(U)(App. Term 1st Dept. 2019)

” efendant MVAIC failed in its burden to establish, prima facie, that plaintiff’s assignor was not a “qualified person” entitled to no-fault coverage (see Socrates Med. Health, P.C. v MVAIC, 29 Misc 3d 129, 2010 NY Slip Op 51780 ). Nor has defendant established that plaintiff was required to “exhaust its remedies” against the vehicle’s owner prior to commencing this action”

For some reason, I do not find MVAIC issues blog worthy. Perhaps it is because I do not deal with them frequently. But the exhaustion of remedies has caused a department split in the Appellate Terms. I take MVAIC will leave this alone since the majority of their cases take place in the Second Department, which has historically been more receptive to MVAIC’s “coverage” issue analysis.

Legal Significance

The exhaustion of remedies doctrine typically requires plaintiffs to pursue all available remedies against primary sources before seeking recovery from secondary or backup sources. In the MVAIC context, this doctrine would require medical providers to exhaust remedies against vehicle owners or operators before pursuing claims against MVAIC as the insurer of last resort.

The First Department’s rejection of this requirement in JJ & R Chiropractic creates significant practical benefits for providers. Rather than pursuing potentially judgment-proof vehicle owners or uninsured operators—often a futile exercise—providers can proceed directly against MVAIC when the circumstances warrant coverage. This streamlines recovery and prevents the waste of judicial resources on collection efforts against defendants with no ability to pay.

However, the Second Department has taken a different view in other cases, requiring providers to demonstrate exhaustion before MVAIC coverage attaches. This split creates forum shopping opportunities and strategic venue considerations. Cases filed in counties within the First Department’s jurisdiction benefit from the more provider-friendly exhaustion standard, while Second Department cases face stricter exhaustion requirements.

The split also reflects different judicial philosophies about MVAIC’s role. The First Department views MVAIC as a true safety net that should be accessible when insurance is genuinely unavailable, without requiring plaintiffs to jump through exhaustion hoops. The Second Department takes a more restrictive view, treating MVAIC as a last resort that should only be accessed after all other avenues have been pursued and proven fruitless.

Practical Implications

For plaintiff attorneys, this decision creates strategic venue opportunities. When representing medical providers seeking MVAIC coverage, filing in First Department counties avoids exhaustion defenses. This is particularly valuable when the underlying vehicle owner or operator is judgment-proof or cannot be located for service.

For MVAIC defense counsel, the decision limits available defenses in First Department cases. Without the exhaustion requirement, MVAIC must focus on substantive coverage defenses—whether the claimant qualifies as a “qualified person” under the statute, whether proper notice was provided, and whether the accident meets MVAIC coverage criteria.

The decision also affects case valuation and settlement negotiations. In Second Department cases, exhaustion requirements add procedural hurdles that may encourage settlement or create opportunities for dismissal. In First Department cases, the absence of exhaustion requirements means cases proceed more directly to merits determinations, potentially affecting settlement value.

Key Takeaway

The First Department rejected MVAIC’s exhaustion of remedies defense, creating a split with the Second Department’s approach. This jurisdictional divide means attorneys must carefully consider venue selection in MVAIC cases, as different departments apply varying standards to procedural requirements and coverage defenses. The First Department’s provider-friendly approach eliminates the requirement to pursue futile collection efforts against judgment-proof defendants before accessing MVAIC coverage, while the Second Department maintains stricter exhaustion requirements that favor MVAIC’s position as insurer of last resort.

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