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Arbitration Award Upheld After Insurer’s Adversarial IME Tactics

Under New York’s no-fault insurance system, injured parties are required to submit to independent medical examinations (IMEs) as a condition of receiving benefits. Insurers rely on IME appearances as a key mechanism for evaluating the legitimacy and medical necessity of claims. However, this process is not without limits. When an insurer schedules an excessive number of examinations and treats the claimant as an adversary rather than a person entitled to statutory benefits, arbitrators and courts may view subsequent “no-show” defenses with deep skepticism.

Article 75 of the CPLR governs judicial review of arbitration awards, and the standard of review is deliberately narrow. A court will vacate an arbitration award only if it is irrational, exceeds a specifically enumerated limitation on the arbitrator’s power, or violates a strong public policy. This deferential standard means that when an arbitrator finds an insurer’s conduct unreasonable, the insurer faces a steep climb in challenging that determination. The Allstate Ins. Co. v Brown decision provides a vivid illustration of how courts apply this standard when an insurer’s IME practices appear to cross the line from legitimate investigation into bad-faith harassment.

The case also implicates the regulatory framework of 11 NYCRR 65-3.2, which governs the scheduling and conduct of IME examinations in no-fault cases. When insurers push the boundaries of this regulation, they risk not only losing the underlying claim but also exposure to broader bad-faith and consumer protection liability.

Case Background

In Allstate Insurance Co. v Brown, the claimant had been receiving no-fault benefits and had appeared for eight prior IME appointments scheduled by Allstate. Despite this demonstrated pattern of cooperation, Allstate asserted an IME no-show defense in arbitration, claiming the claimant failed to appear for a subsequent examination. The arbitrator rejected Allstate’s defense after reviewing the proof of mailing for the IME notices, the claimant’s track record of eight prior appearances, and — notably — Allstate’s treatment of the claimant as an adversary. Allstate petitioned under CPLR Article 75 to vacate the arbitration award, and the Appellate Term, First Department, declined to disturb it, finding the arbitrator’s determination rational and based on the evidence before her.

Jason Tenenbaum’s Analysis

Allstate Ins. Co. v Brown, 2019 NY Slip Op 51560(U)(App. Term 1st Dept. 2019)

“In particular, since the arbitrator’s rejection of petitioner’s IME no show defense was based, inter alia, upon her review of the proof of mailing the IME notices, the claimant’s appearance at eight prior scheduled IMEs and petitioner’s treatment of claimant as an adversary, the determination was therefore rational, as it was based on the evidence before her ”

Well, much can be said here. Allstate appears to have acted in bad faith or perhaps even violated GBL 349 based upon the snipped I see here.

Also, if this lady appeared for 8 IME’s and I assume they were all positive, what the heck is going on here? This case legitimizes the 65-3.2 analysis and shows what happens when you push the envelope with really bad facts.

While I know there is caselaw that attending one IME does not excuse attending another IME, this is a first-party non-assigned case with poor facts for the carrier. Assuming there were lost wages and further assuming if I were Ms. Brown, I would be jumping on the bad-faith bandwagon and the GBL 349 bandwagon right now. The Court opened the door. Walk through it Ms. Brown!

Legal Significance

The Allstate v Brown decision is significant for several reasons. First, it demonstrates that an arbitrator may consider the totality of the circumstances — including the claimant’s prior compliance history and the insurer’s overall conduct — when evaluating an IME no-show defense. This is not merely a mechanical question of whether adequate notice was mailed; the insurer’s pattern of behavior is fair game for the arbitrator’s review.

Second, the court’s reference to Allstate’s “treatment of claimant as an adversary” introduces a qualitative dimension into the IME analysis that goes beyond the procedural checklist. When an insurer schedules repeated examinations despite consistent prior appearances and presumably favorable (from the insurer’s perspective) medical findings at each one, the practice begins to look less like a legitimate investigation and more like a strategy designed to create a pretextual basis for denial. This is precisely the kind of conduct that exposes insurers to claims under General Business Law § 349, which prohibits deceptive business practices, and to common-law bad-faith claims.

Practical Implications

For claimants and their attorneys, this case provides strong ammunition in challenging excessive IME scheduling. Documentation is key: maintain a record of every IME the claimant has attended, every notice received, and every instance of the insurer’s adversarial conduct. When a carrier pushes past the bounds of reasonable medical investigation, the arbitration record should reflect the full pattern. For insurers, the lesson is to exercise restraint in IME scheduling. Each additional examination after the claimant has already appeared multiple times increases the risk that an arbitrator — and a reviewing court — will view the insurer’s conduct as adversarial rather than investigative, potentially opening the door to bad-faith liability and GBL 349 exposure far exceeding the value of the underlying no-fault claim.

Key Takeaway

An insurer cannot hide behind an IME no-show defense when the claimant has demonstrated a consistent pattern of cooperation and the insurer has treated the claimant as an adversary. Arbitrators have broad latitude to evaluate the reasonableness of an insurer’s conduct, and courts will not disturb those findings under the deferential Article 75 standard of review. Carriers that overreach on IME scheduling risk not only losing the underlying claim but also inviting far more damaging bad-faith and consumer protection litigation.

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