Another priority of payment?

Understanding No-Fault Priority of Payment Rules in New York

When you’re injured in a car accident in New York, the priority of payment regulations under no-fault insurance determine which medical bills get paid first when insurance coverage is limited. A recent appellate case highlights the ongoing complexity and confusion surrounding these rules, even among courts tasked with interpreting them.

The Advantage Radiology Case: A Judicial Puzzle

Advantage Radiology, P.C. v MVAIC, 2023 NY Slip Op 50139(U)(App. Term 1st Dept. 2023)

“Defendant’s submission on its summary judgment motion revealed the existence of triable issues of fact concerning whether defendant exhausted the coverage limits by payments to other providers and to the assignor for lost wages, and whether such payments were made in compliance with the priority of payment regulations (see 11 NYCRR 65-3.15; see generally New York & Presbyt. Hosp. v Allstate Ins. Co., 12 AD3d 579 ; Harmonic Physical Therapy, P.C. v Praetorian Ins. Co., 47 Misc 3d 137, 2015 NY Slip Op 50525 ; cf. Country-Wide Ins. Co. v Metro Pain Specialists P.C., — AD3d —, 2022 NY Slip Op 06865 ).”

The Legal Inconsistency That Puzzles Practitioners

No matter how many times I read this case, it just does not make sense to me. How can a court apply 65-3.15 and yet cite to Harmonic Physical Therapy? One of life’s great mysteries.

This observation highlights a fundamental problem in New York’s no-fault system: the inconsistent application of priority of payment rules creates uncertainty for accident victims, medical providers, and attorneys alike.

What Are Priority of Payment Rules?

Priority of payment regulations, found in 11 NYCRR 65-3.15, establish the order in which no-fault insurance benefits must be paid when coverage limits are exhausted. These rules were designed to ensure fairness and prevent certain providers or types of expenses from consuming all available benefits while leaving others unpaid.

The Basic Framework

Under New York’s no-fault system, Personal Injury Protection (PIP) coverage provides up to $50,000 per person for:

• Medical expenses
• Lost wages (up to $2,000 per month for three years)
• Essential services expenses
• Death benefits

When claims exceed the $50,000 limit, the priority rules determine which expenses get paid first and which may go unpaid.

How Priority of Payment Works in Practice

The priority system creates a hierarchy of payment obligations that insurance companies must follow. However, the practical application of these rules often leads to disputes between insurance companies, medical providers, and accident victims.

First Priority: Basic Economic Loss

The highest priority typically goes to basic economic loss, which includes essential medical treatment and a portion of lost wages. This ensures that accident victims can access necessary medical care and maintain some level of income replacement.

Subsequent Priorities

After basic economic needs are addressed, the regulations establish additional priority levels for:

• Additional medical expenses
• Remaining wage replacement
• Essential services replacement
• Other covered expenses

The Reality of Limited Coverage

With only $50,000 in total coverage available, serious accidents often result in claims that far exceed this limit. Emergency room treatment, hospital stays, surgery, rehabilitation, and ongoing care can quickly exhaust available benefits, leaving some providers and expenses unpaid.

What This Means For You: Practical Implications

Understanding priority of payment rules is crucial for anyone involved in a serious car accident in New York. These rules can significantly impact which of your medical bills get paid and which may become your personal responsibility.

If You’re an Accident Victim

The priority rules can affect your access to ongoing medical care and your financial responsibility for unpaid bills. If your no-fault coverage is exhausted:

• Medical providers may stop treatment: Providers who know they’re low on the priority list may refuse to continue treatment without payment guarantees.
• You may become personally liable: Unpaid medical bills don’t just disappear when no-fault benefits are exhausted.
• Collection actions may follow: Providers may pursue collection efforts against you personally for unpaid balances.
• Credit impacts are possible: Unpaid medical bills can affect your credit rating.

Strategic Considerations for Medical Treatment

When no-fault coverage may be limited, strategic decisions about medical treatment become important:

• Prioritize essential care: Focus on necessary treatment that qualifies for higher priority payment.
• Document medical necessity: Ensure all treatment is properly documented as medically necessary.
• Consider alternative coverage: Explore whether health insurance or other coverage may apply.
• Understand provider policies: Know which providers will continue treatment when no-fault benefits are exhausted.

Common Disputes and Legal Challenges

Priority of payment disputes frequently arise in no-fault cases, creating complex legal battles that can delay payment to providers and create uncertainty for accident victims.

Exhaustion of Benefits Issues

Insurance companies often claim they’ve properly exhausted benefits according to priority rules, while providers argue that payments were made incorrectly or out of proper sequence. The Advantage Radiology case exemplifies this type of dispute.

Waiver of Priority Defense

Courts have found that insurance companies can waive their right to assert priority of payment defenses if they fail to raise them properly or timely. This creates additional complexity in determining whether priority rules apply in specific cases.

Regulatory Interpretation Conflicts

As demonstrated by the judicial inconsistency in citing both current regulations and conflicting precedents, courts sometimes struggle with the proper interpretation and application of priority rules.

The Provider’s Perspective

Medical providers face significant challenges under the priority of payment system, which can impact their willingness to treat accident victims and the quality of care available.

Financial Risks for Providers

Providers must often make treatment decisions without knowing whether they’ll ultimately be paid, as priority determinations may not be clear until all claims are submitted and reviewed.

Assignment of Benefits Issues

Many providers accept assignment of benefits from patients, meaning they agree to bill the insurance company directly rather than requiring payment from the patient. However, priority rules can leave assigned providers unpaid even when they’ve provided necessary care.

Legal Precedents and Regulatory Framework

Understanding the legal landscape surrounding priority of payment requires familiarity with key cases and regulations that shape how these rules are applied.

Key Regulations

11 NYCRR 65-3.15 provides the detailed framework for priority of payment, but its interaction with other regulations and case law creates complexity that even experienced practitioners find challenging.

Significant Case Law

Cases like New York & Presbyterian Hospital v. Allstate Insurance Co. and Harmonic Physical Therapy v. Praetorian Insurance Co. have shaped how courts interpret priority rules, though as the Advantage Radiology case demonstrates, consistent application remains elusive.

Protecting Your Rights and Interests

Whether you’re an accident victim or a medical provider, understanding your rights under priority of payment rules is essential for protecting your interests.

For Accident Victims

If you’re involved in a serious accident that may exhaust your no-fault coverage:

• Seek legal advice early: Understanding priority implications can help guide treatment decisions.
• Maintain detailed records: Keep comprehensive records of all medical treatment and expenses.
• Understand your insurance coverage: Know what coverage you have beyond no-fault benefits.
• Consider third-party claims: If another driver was at fault, you may have claims beyond no-fault benefits.

For Medical Providers

Providers should:

• Understand assignment risks: Know the financial risks of accepting assignment of benefits.
• Monitor coverage limits: Track patients’ remaining no-fault coverage.
• Document medical necessity: Ensure treatment meets regulatory requirements for coverage.
• Consider payment arrangements: Establish clear policies for patients whose no-fault coverage is exhausted.

Frequently Asked Questions

What happens if my no-fault coverage is exhausted before all my medical bills are paid?

Unpaid medical bills may become your personal responsibility, though you may have other insurance coverage or legal claims that could help. It’s important to consult with an attorney to understand your options.

Can insurance companies choose which bills to pay when coverage is limited?

No, insurance companies must follow the priority of payment regulations. They cannot arbitrarily choose which bills to pay. However, disputes often arise about whether the proper priorities were followed.

How can I tell if my insurance company is following priority of payment rules correctly?

This requires detailed analysis of your claims, payments made, and applicable regulations. An experienced no-fault attorney can review your case to determine whether proper priorities were followed.

What should I do if my medical provider says they won’t continue treatment because my no-fault coverage is exhausted?

First, verify that coverage is actually exhausted and that payments were made in proper priority order. Consider whether other insurance coverage might apply. If you have potential third-party claims, discuss options with an attorney.

Can priority of payment rules be waived?

Yes, courts have found that insurance companies can waive their right to assert priority defenses if they fail to raise them properly. However, this is a complex legal issue that requires professional analysis.

The Importance of Experienced Legal Representation

Priority of payment disputes represent some of the most complex issues in New York’s no-fault system. The judicial confusion demonstrated in the Advantage Radiology case shows that even courts struggle with consistent application of these rules.

At the Law Office of Jason Tenenbaum, we have extensive experience handling priority of payment disputes for both accident victims and medical providers. We understand the intricate interplay between regulations, case law, and practical application that makes these cases so challenging.

Our Approach to Priority Cases

Our no-fault insurance attorneys provide comprehensive analysis of:

• Whether proper payment priorities were followed
• Available coverage beyond no-fault benefits
• Potential third-party liability claims
• Strategies to maximize recovery for unpaid expenses

We work closely with our personal injury team to ensure that all potential sources of recovery are explored and pursued.

Don’t Navigate Priority Disputes Alone

The complexity and inconsistency in priority of payment law means that having experienced legal representation is essential. Whether you’re facing unpaid medical bills due to exhausted no-fault coverage, or you’re a provider seeking payment for services rendered, we can help you understand your rights and options.

Priority of payment disputes can have significant financial implications and may affect your ability to access necessary medical care. Don’t let insurance companies take advantage of the system’s complexity to avoid their payment obligations.

Call 516-750-0595 for a free consultation to discuss your priority of payment issue. We’ll review your case, explain your rights, and develop a strategy to protect your interests. We work on a contingency fee basis for personal injury claims, so you don’t pay attorney fees unless we recover compensation for you.