Key Takeaway
New York bad faith insurance claims face legislative challenges despite progressive majority. Analysis of third-party vs first-party bad faith standards and actionable carrier behaviors.
This article is part of our ongoing no-fault coverage, with 271 published articles analyzing no-fault issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
One of the things that I find readily amazing is that notwithstanding a veto proof progressive majority, bad faith reform cannot pass the Legislature. The current law, which comes from the 1994 Pavia standard, on third-party claims requires an almost criminal indifference before bad faith is actionable. In my thinking, the only sure fire way to get third party bad faith is to prove on motion: (1) liability; (2) threshold; and (3) 30-day demand letter to tender, assuming the injuries are in excess of the policy. Outside that formula, you may end up with the recent NYCM case were the opinion of their IME doctor denying causation was sufficient beat back a bad faith claim as a matter of law. Yes, you can give the bad faith speech before you open, prove your case and hope the defense does so bad that you can get to trial on the assigned bad faith claim that comes post trial.
Now, what is most interesting is that first-party bad faith (PIP and UM/UIM/SUM) is actionable when the carrier behaves poorly and the benefit denial or settlement offer is unreasonable. This fits under 349 and standard bad faith. For the no-fault practitioners, your bad faith/349 is probably going to be limited to a wage case where your client was significant injured and the carrier’s behavior is quite inappropriate.
What is some of the bad behavior? Repetitive EUOs, Unjustified defenses based upon IME results, Harassment through DJs that on their face are contradicted by arbitration decisions and the lack of a come to jesus moment when called on it, Trial de novos that are inconsistent with reality , disclaimers not based in fact or reality. Also, make sure you obtain the claims notes in litigation. There is always a treasure trove in those documents. Privilege in NY is narrow – it only comes into play after litigation is commenced. Florida has a claims note privilege by the way – NY does not.
On the SUM side? A bad injury where claim reps refuse to settle for the value of the case. These cases require a back and forth dialogue I believe where the value is understated (prior to suit or arbitration) or the IME that is consistent with the Claimant’s position but disregarded by the carrier. I do believe the first-party bad faith is generally easier to prove, but it is by no means an easy fete. It takes tried and true patience to beat summary judgment.
What I do notice, however, is that the absence of a stringent bad faith law often incentives the conduct that forms the bad faith. For those in a southern state (I use Florida because I practice there also), bad faith is usually proven through a facial submission that the claim is worth more than the policy and the absence to tender within the confines of a time demand letter was negligent. Some states require the filing of something called a “Civil Remedy Notice” (CRN) which is a condition precedent to ascertaining bad faith. But under the modern bad faith structure, the carrier has to look at the liability, the board-able medicals (bills), the non-economic injury (presented) and make a business decision: will this break the policy? Because once the time demand expires, the bad faith train has left the station.
But what is really interesting is that even in bad faith world, it is the rare case that a case qualifies for the green geico check (amounts over policy get a different color check since the funds are drawn from a different account). The reason is that the carriers will usually put up a decent some of money to resolve a case and the Plaintiffs do not want to risk a defense verdict. Or the carrier tenders untimely and the Plaintiff just wants the case done and over with,
Why will a carrier try a “bad faith” case? Liability is always a reason but lets assume a rear end collision and the absence of a liability defense. It is going to be the belief that the Plaintiff attorney is a “pre-suit lawyer” and cannot try a case (not a bad bet) or that the injuries are overstated that will cause the carrier to risk the policy.
And generally, the bad faith cases are within the 10-100 thousand policy zone. Once a policy of $250k and above is on the table, the risk of bad faith diminishes because most successful jury verdicts for standard soft tissue cases are in that ball park.
If New York passed bad faith reform, you would see your $25-$50k policy cases following 6 months of treatment with + MRI and+ EMG + 3 epidurals settle quickly. The risk is too great. Your $100K cases with a scope (the standard surgery here in NY) will most likely resolve because the risk, again, is too great that the case will “hit”. Surgery in metro New York that beats threshold is a 6 figure number.
I also tend to thin “no surgery” cases on a 25-50 will probably settle at or near policy at TAP because at that point, there is real risk. No, I am not talking about the 3 month and living normal life again. The risk of a carrier losing those under current law is minimal. I do not see “rolls of the dice” on slower impact fusions at the $250k level because that surgery is 0 or $1m at trial. Again, the risk is tremendous.
The cases that will get tried will involve lower tiered carriers who will game New York’s slow court system and the one’s where the Plaintiff thinks that s/he got defendant into a bad faith trap and a has a client who is willing to play some roulette.
The causalities of bad faith will be outside defense counsel. More jobs will go in house as the amount of trials diminishes tremendously. Another casualty will be lawyers looking for jobs as most cases settle pre-suit. Combined with post Covid changes to the practices will force “litigation” lawyer to try a different track or field. The court system will lose 50% of its PI cases because the NY model of file first and ask questions later will appropriately change to file only when the carrier is perceived as being unreasonable. The higher policy cases will still involve litigation because bad faith really does not play a factor in the $1M and up policy club.
Is a more robust bad faith law a bad idea? I leave that to you,
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Legal Context
Why This Matters for Your Case
New York's no-fault insurance system, established under Insurance Law Article 51, is one of the most complex insurance frameworks in the country. Every motorist must carry Personal Injury Protection coverage that pays medical expenses and lost wages regardless of fault, up to $50,000 per person.
But insurers routinely deny valid claims using peer reviews, EUO scheduling tactics, fee schedule reductions, and coverage defenses. The Law Office of Jason Tenenbaum has handled over 100,000 no-fault cases since 2002 — from initial claim submissions through arbitration before the American Arbitration Association, trials in Civil Court and Supreme Court, and appeals to the Appellate Term and Appellate Division. Jason Tenenbaum is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
His 2,353+ published legal articles on no-fault practice are cited by attorneys throughout New York. Whether you are dealing with a medical necessity denial, an EUO no-show defense, a fee schedule dispute, or a coverage question, this article provides the kind of detailed case-law analysis that helps practitioners and claimants understand exactly where the law stands.
About This Topic
New York No-Fault Insurance Law
New York's no-fault insurance system requires every driver to carry Personal Injury Protection (PIP) coverage that pays medical expenses and lost wages regardless of who caused the accident. But insurers routinely deny, delay, and underpay valid claims — using peer reviews, IME no-shows, and fee schedule defenses to avoid paying providers and injured claimants. Attorney Jason Tenenbaum has litigated thousands of no-fault arbitrations and court cases since 2002.
271 published articles in No-Fault
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Frequently Asked Questions
What is New York's no-fault insurance system?
New York's no-fault insurance system, codified in Insurance Law Article 51, requires all drivers to carry Personal Injury Protection (PIP) coverage. This pays for medical expenses, lost wages (up to $2,000/month), and other basic economic loss regardless of who caused the accident, up to $50,000 per person. However, to sue for pain and suffering, you must meet the 'serious injury' threshold under Insurance Law §5102(d).
How do I fight a no-fault insurance claim denial?
When a no-fault claim is denied, you can challenge it through mandatory arbitration under the American Arbitration Association's no-fault rules, or by filing a lawsuit in court. Common defenses to denials include challenging the timeliness of the denial, the adequacy of the peer review report, or the insurer's compliance with regulatory requirements. An experienced no-fault attorney can evaluate which strategy gives you the best chance of overturning the denial.
What is the deadline to file a no-fault claim in New York?
Under 11 NYCRR §65-1.1, you must submit a no-fault application (NF-2 form) within 30 days of the accident. Medical providers must submit claims within 45 days of treatment. Missing these deadlines can result in claim denial, though there are limited exceptions for late notice if the claimant can demonstrate a reasonable justification.
What no-fault benefits am I entitled to after a car accident in New York?
Under Insurance Law §5102(b), no-fault PIP covers necessary medical expenses, 80% of lost earnings up to $2,000/month, up to $25/day for other reasonable expenses, and a $2,000 death benefit. These benefits are available regardless of fault, up to the $50,000 policy limit. Claims are paid by your own insurer — not the at-fault driver's.
Can I choose my own doctor for no-fault treatment in New York?
Yes. Under New York's no-fault regulations, you have the right to choose your own physician, chiropractor, physical therapist, or other licensed healthcare provider. The insurer cannot dictate which providers you see. However, the insurer can request an IME with their chosen doctor and may challenge the medical necessity of your treatment through peer review.
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About the Author
Jason Tenenbaum, Esq.
Jason Tenenbaum is the founding attorney of the Law Office of Jason Tenenbaum, P.C., headquartered at 326 Walt Whitman Road, Suite C, Huntington Station, New York 11746. With over 24 years of experience since founding the firm in 2002, Jason has written more than 1,000 appeals, handled over 100,000 no-fault insurance cases, and recovered over $100 million for clients across Long Island, Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, the Bronx, and Staten Island. He is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
Jason is admitted to practice in New York, New Jersey, Florida, Texas, Georgia, and Michigan state courts, as well as multiple federal courts. His 2,353+ published legal articles analyzing New York case law, procedural developments, and litigation strategy make him one of the most prolific legal commentators in the state. He earned his Juris Doctor from Syracuse University College of Law.
Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
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