Contractual deemer

The Statutory Deemer Provision and Out-of-State Insurers

Out-of-state insurance companies often attempt to avoid New York no-fault coverage obligations by claiming they lack sufficient ties to the state and therefore should not be subject to New York’s financial security requirements. However, New York’s regulatory framework includes specific provisions that can “deem” certain policies to satisfy the state’s financial security requirements, regardless of the insurer’s geographic connections. Understanding these contractual and statutory deemer provisions is crucial for medical providers seeking payment under New York No-Fault Insurance Law.

New York Insurance Law Section 5107 and its implementing regulations address when out-of-state policies must provide no-fault benefits for accidents occurring within New York. The statutory deemer provision essentially expands the reach of New York no-fault law to encompass certain out-of-state policies that might otherwise escape coverage obligations. This expansion reflects legislative recognition that motor vehicle accidents frequently involve vehicles registered in other states, and that New York’s no-fault system would be undermined if out-of-state insurers could easily avoid payment responsibilities.

The interplay between statutory deemer provisions and specific policy language creates complex coverage questions that require careful analysis. While the statute may deem certain policies to provide no-fault coverage, insurers can potentially avoid this result by demonstrating that their particular policy clearly excludes such coverage or that the circumstances fall outside the deemer provision’s scope. This tension between statutory mandates and freedom of contract produces nuanced litigation that often turns on close reading of both insurance policies and regulatory text.

Case Background: Domny Medical Services v Universal Insurance Co.

In Domny Medical Services, P.C. v Universal Insurance Co., a medical provider sought reimbursement for healthcare services provided to an individual injured in a motor vehicle accident. Universal Insurance Company defended the claim by arguing that, as an out-of-state insurance company with no ties to New York, it should not be liable for providing no-fault benefits under New York law. The insurer essentially contended that its policy was not subject to New York’s no-fault requirements and that it had no obligation to pay for services rendered in connection with an accident subject to New York’s regulatory regime.

The provider countered by arguing that the defendant’s policy should be deemed to satisfy New York’s financial security requirements and to provide for the payment of first-party benefits under the statutory and regulatory deemer provisions. The plaintiff asserted that the insurer’s lack of geographic ties to New York did not absolve it of payment obligations when its policy covered an accident occurring within New York or involving a New York resident.

The Civil Court was called upon to determine whether the insurance company had demonstrated, as a matter of law, that its policies should not be deemed to provide no-fault coverage or that the specific policy at issue did not otherwise mandate coverage under the circumstances presented.

Jason Tenenbaum’s Analysis:

Domny Med. Servs., P.C. v Universal Ins. Co., 2021 NY Slip Op 50301(U)

“Defendant does not deny that it issued the insurance policy pursuant to which plaintiff seeks payment, but argues that, as an out-of-state company with no ties to New York, it is not liable for these services. Contrary to defendant’s contention, it has not demonstrated, as a matter of law, that its policies should not “be deemed to satisfy New York’s financial security requirements and to provide for the payment of first-party benefits” (Matter of American Ind. Ins. Co. v Nova Acupuncture, P.C., 137 AD3d 1270, 1272 ; see Insurance Law § 5107; 11 NYCRR § 65-1.8) or that the policy at issue does not otherwise mandate coverage under the circumstances

The defense that you do not have ties to New York will warrant statutory deemer dismissal.. But does it mean that the policy itself does not provider for the benefits? Read the policy carefully.

Legal Significance and Coverage Analysis

The court’s holding in Domny Medical Services reinforces several important principles about no-fault coverage obligations. First, an insurer’s lack of geographic ties to New York does not automatically exempt it from providing no-fault benefits. The statutory deemer provisions can impose coverage obligations on out-of-state insurers whose policies would otherwise not be subject to New York law. This reflects the comprehensive nature of New York’s no-fault scheme, which seeks to ensure that injured persons have access to prompt medical reimbursement regardless of technical questions about which state’s law governs a particular insurance policy.

Second, the decision emphasizes that insurers bear the burden of demonstrating that their policies fall outside the deemer provisions. Simply asserting a lack of New York connections is insufficient. The insurer must affirmatively establish through policy language analysis, regulatory interpretation, or other means that its particular policy should not be deemed to provide no-fault coverage. This burden-shifting reflects courts’ general preference for construing coverage provisions broadly to effectuate the remedial purposes of no-fault legislation.

Third, and perhaps most importantly, the court distinguished between the statutory deemer question and the separate question of what the policy itself requires. Even if a policy is not deemed to satisfy New York’s financial security requirements under the statutory provision, the policy’s own language may nonetheless mandate coverage for the accident in question. This distinction reminds practitioners that coverage analysis must examine multiple potential bases for recovery: statutory deemer provisions, regulatory requirements, and the policy’s own terms.

The decision aligns with the Court of Appeals’ guidance in American Independent Insurance Co. v Nova Acupuncture, which addressed similar questions about when out-of-state policies must provide no-fault coverage. The Nova Acupuncture decision established that courts must undertake a careful, fact-specific analysis of policy language and circumstances rather than applying categorical rules based solely on an insurer’s domicile or principal place of business.

Practical Implications for Providers and Insurers

For medical providers seeking reimbursement from out-of-state insurers, this decision provides important strategic guidance. When faced with a coverage disclaimer based on lack of New York connections, providers should investigate both the statutory deemer provisions and the specific policy language. Discovery should target the policy itself, any endorsements, and documents establishing where the accident occurred, where the insured resides, and other factors that might trigger coverage obligations.

Providers should also be prepared to cite regulatory provisions, particularly 11 NYCRR § 65-1.8, which implements the statutory deemer requirements. Understanding how these regulations operate and what factual predicates trigger their application can be decisive in establishing coverage. Even when statutory deemer arguments fail, careful policy analysis may reveal that the policy’s own terms require coverage despite the insurer’s out-of-state status.

For insurance companies, the decision counsels thorough coverage analysis before issuing blanket disclaimers based on lack of New York ties. Insurers should examine whether the statutory deemer provisions apply based on the specific facts of each case. Additionally, insurers should carefully review their policy language to determine whether the policy itself creates coverage obligations independent of any statutory deemer requirement. Failing to conduct this comprehensive analysis may result in courts finding waiver or preclusion of coverage defenses.

The decision also highlights the importance of clear policy drafting for insurers seeking to avoid New York no-fault obligations. Policy language that explicitly addresses New York accidents and delineates when coverage applies or does not apply will receive greater deference than ambiguous provisions that leave coverage questions unresolved.

Key Takeaway

Courts must look beyond an insurer’s geographic ties when evaluating no-fault coverage obligations. Even out-of-state insurers may be subject to New York’s deemer provisions, which can establish coverage requirements regardless of the company’s connections to the state. The specific policy language remains the determining factor for coverage obligations, and insurers bear the burden of demonstrating that their policies fall outside both statutory deemer requirements and policy-based coverage mandates. Providers should carefully analyze both statutory deemer provisions and specific policy terms when pursuing claims against out-of-state carriers.

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