New York’s no-fault insurance system promises swift payments for medical bills and lost wages after car accidents, no matter who’s at fault. Yet a thorny issue has cropped up, throwing a wrench into this smooth-running machine: the “right of verification demands.” Insurers often ask for additional documents or Examinations Under Oath (EUOs) before cutting checks. Courts across the state’s judicial departments, however, can’t agree on how much scrutiny these requests deserve, stirring up litigation and casting doubt on the system’s ability to deliver fair, timely results.
A Judiciary at Odds
The heart of the debate lies in whether insurers need to prove their verification demands hold water. In the Second Department, the answer is a firm no. Courts there give insurers wide latitude. Take Burke Physical Therapy v. State Farm (2025): the Appellate Term backed State Farm’s call for W-2s, bank records, and lease agreements without demanding any rationale. A Queens County Civil Court judge took a similar tack in Flatbush Acupuncture P.C. v. Repwest Ins. Co. (2025), siding with the insurer when a medical provider balked at EUO requests. This hands-off stance has become a hallmark of the Second Department.
Contrast that with the First Department, where courts draw a harder line. In Liberty Mut. Ins. Co. v. Mercado (2025), the Appellate Division ruled that insurers must show their demands aren’t just fishing expeditions. The court let a verification request stand, but only because the insurer offered a solid reason. This approach aims to curb excessive or groundless demands that might bog down claimants and providers.
Then there’s the Fourth Department, which muddies the waters further. In Nationwide Affinity Ins. Co. of Am. v. Gepp (2025), the court sidestepped the issue entirely, leaving observers guessing about its position. The lack of clarity only deepens the statewide divide.
Ripple Effects Across the System
This judicial tug-of-war shakes up New York’s no-fault framework in ways that hit claimants, providers, and insurers alike.
- Claim Processing Slowdowns
The Second Department’s leniency lets insurers pile on verification requests without much pushback. That can bottleneck payments, even for legitimate claims. Medical providers often find themselves drowning in paperwork, and failure to keep up risks leaving them empty-handed.
Over in the First Department, the push for reasonable demands might grease the wheels for faster payouts. But it could also mean fraudulent claims sneak through if insurers shy away from digging deeper. - A Litigation Boom
With standards varying by region, disagreements over what counts as a fair request spark more lawsuits. Parties duke it out in court to define the boundaries, clogging dockets and dragging out resolutions for people counting on quick funds. - Strategic Maneuvering
The split opens the door to forum shopping. Insurers might steer cases toward the Second Department’s loose rules, while claimants and providers angle for the First Department’s tighter oversight. Geography starts to dictate outcomes, chipping away at the system’s even-handedness. - Confusion for All Involved
Insurers grapple with shifting rules for sniffing out fraud. Meanwhile, providers and claimants face a hodgepodge of obstacles to getting paid. The unpredictability makes planning tougher and could nudge insurers to hike premiums to cover their bases.
A System Stretched Thin
What emerges is a patchwork setup where results hinge on location rather than a consistent playbook. That’s a far cry from the efficiency and fairness the no-fault system set out to deliver. If the Second Department’s relaxed approach takes hold statewide, insurers might lean too heavily on verification demands, gumming up the works with delays and red tape. Flip the script, and the First Department’s stricter standard could speed things along—though at the cost of letting more fraud slip by, possibly jacking up costs for everyone.
Will the Second Department cling to its permissive roots, as seen in cases like Clennon and IDS? Or will the First Department’s focus on reason win out? The jury’s still out. One thing’s clear, though: the Appellate Division needs to step up and settle this mess. Without a single, clear standard, New Yorkers face a system riddled with holdups, courtroom battles, and uneven treatment—hardly the safety net the no-fault law intended.
For now, everyone touched by this system—insurers, providers, claimants—has little choice but to muddle through the chaos, waiting for a fix that brings back some order and reliability to a process meant to shield them from hardship.
