EUO No-Show and Transcript Subscription: Key No-Fault Defense Principles in New York

Kemper Independence Ins. Co. v Cornerstone Chiropractic, P.C., 2020 NY Slip Op 03876 (1st Dept. 2020)

In New York no-fault insurance defense, the Examination Under Oath (EUO) is one of the most powerful investigative tools available to carriers. When claimants or their assignees refuse to cooperate with scheduled EUOs — or fail to subscribe and return the resulting transcripts — courts have consistently held that this non-compliance violates a condition precedent to coverage. The practical result: the insurer may deny all claims associated with that claimant, regardless of whether the underlying medical services were actually rendered.

Kemper adds important clarity on two separate but related grounds for denial, and introduces a nuanced question about what the Department of Financial Services intended when it enacted 11 NYCRR 65-3.5(p).

Background: What Happened in Kemper

Kemper Independence Insurance Company sought summary judgment against Cornerstone Chiropractic after the claimants failed to cooperate with EUO requests. The case presented two distinct EUO-related issues:

• Transcript subscription failure — The claimants failed to subscribe and return the transcripts of their completed EUOs
• Repeated no-shows — The claimants failed to appear at two separately scheduled EUOs

Additionally, Kemper faced a potential hurdle: it could not demonstrate that it had properly delivered the denial notices. The question was whether this gap in the record defeated the carrier’s motion for summary judgment.

Ground 1: Failure to Subscribe and Return EUO Transcripts

The First Department’s first holding addressed the transcript subscription issue. Citing Hereford Ins. Co. v Forest Hills Med., P.C., 172 AD3d 567, the court confirmed that the claimants’ failure to subscribe and return the EUO transcripts violated a condition precedent to coverage.

This holding reinforces a well-established principle: participation in an EUO is not a one-step obligation. The claimant must appear for the examination, provide truthful answers, and then subscribe (sign) the completed transcript and return it to the carrier. Failure at any of these steps can independently constitute a breach of the condition precedent.

Notably, the court also confirmed that the carrier’s failure to present proof of proper delivery of the denial notices did not defeat this ground for summary judgment, citing Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559. This is an important win for the defense bar — it means procedural imperfections in how denials are served do not revive a provider’s right to payment when a condition precedent has already been violated.

Ground 2: Failure to Appear at Two Scheduled EUOs

Independently, the court held that plaintiff was entitled to summary judgment because the defendants failed to appear at two scheduled EUOs. This mirrors the long-standing rule that two EUO no-shows triggers a complete coverage defense, as established in Hertz Vehs. LLC v Significant Care, PT, P.C., 157 AD3d 600 and Mapfre Ins. Co. of N.Y. v Manoo, 140 AD3d 468.

The two-EUO rule exists because carriers must send a second EUO request after a first no-show before being entitled to deny claims. Once both scheduled appearances are missed, the defense is fully established. Both grounds for denial existed simultaneously in Kemper, making the insurer’s position particularly strong.

The 65-3.5(p) Technical Defect Question

The most analytically interesting aspect of Kemper is the First Department’s treatment of a procedural timing issue. The carrier was one day late in issuing its follow-up EUO request after the first no-show. The claimant argued that this tardiness defeated the carrier’s ability to rely on the second no-show.

The court disagreed, finding that:

“Considering the brevity of the delay and JS’s ultimate failure to appear, we find that plaintiff’s ‘one-day tardiness in issuing its follow-up request for the EUO scheduled for’ JS was ‘a technical defect excusable under 11 NYCRR 65-3.5(p)’” (Z.M.S. & Y. Acupuncture, P.C. v Geico Gen. Ins. Co., 56 Misc 3d 926, 930).

65-3.5(p) – was this what DFS mean? This is a fair question. The regulation was added to address technical defects in the EUO scheduling process, but the precise scope of what qualifies as “technical” versus substantive remains a case-by-case determination. The Kemper decision provides useful precedent that a one-day delay — when the claimant ultimately still fails to appear — falls on the excusable side of that line.

Why This Matters: Legal Significance

This case reinforces several critical principles for practitioners handling no-fault defense matters in New York:

• Two distinct grounds: Carriers can build their summary judgment motion on either transcript subscription failures or EUO no-shows — or both simultaneously, strengthening the record considerably.
• Denial delivery doesn’t sink the defense: Procedural imperfections in how denials are served do not automatically revive the provider’s right to payment when a condition precedent has been violated.
• Minor scheduling delays may be forgivable: A one-day miss on the follow-up EUO notice does not forfeit the carrier’s no-show defense when the claimant ultimately fails to appear.

The decision is significant because it confirms that courts will not use technical carrier errors to rescue claimants who have fundamentally failed to cooperate with the EUO process. The violation of the condition precedent is the dispositive issue.

Practical Implications for Carriers and Providers

For no-fault carriers: Document both EUO no-shows carefully and maintain records of transcript return requests. When a claimant fails to return a signed transcript, issue a formal demand and document the failure. Even if there is a minor procedural hiccup in the scheduling timeline, the 65-3.5(p) technical defect provision may preserve the defense — but carriers should strive to follow scheduling requirements precisely to avoid having to invoke the exception at all.

For medical providers: Claimants who assign their benefits to providers transfer their rights — but also their obligations. A claimant’s EUO non-compliance can extinguish the provider’s ability to collect payment even for legitimately rendered services. Providers should counsel patients on EUO obligations as part of their intake process.

For claimants and personal injury plaintiffs: Failure to cooperate with EUO requests has consequences far beyond the immediate no-fault claim. Non-compliance can affect the validity of the entire policy benefits and create complications for any related third-party personal injury lawsuit.

Related Articles

• Understanding EUO Requirements in New York No-Fault Insurance Cases
• How to Challenge EUO No-Show Denials: When Improper Notice Can Reverse Insurance Denials in New York
• EUO No-Show Consequences: What Happens When You Skip Your Examination Under Oath in New York
• Personal Knowledge Requirements for EUO Non-Appearances: NY Legal Standards
• New York No-Fault Insurance Law