Priority of Payment & Policy Exhaustion
Case notes on the priority of payment regulation (11 NYCRR 65-3.15), which sets the order in which no-fault claims are paid as the coverage limit is reached, and on policy exhaustion as a defense. The start-here article traces the rule from the 2002 regulation through the Harmonic and Alleviation lines to Lam Quan (2024) and Fill Rx (2025), which confirmed exhaustion awards without addressing the regulation.
8 articles from 2010–2018 · 1 current · 0 reviewed case notes · by Jason Tenenbaum
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The explainer for this topic. Read it first; the articles below go deeper on single issues.
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Case notes as they were written at the time. They have not been re-checked against later decisions, so treat them as history and confirm the current rule before relying on one.
2018 (2)
Frequently asked questions
What is priority of payment in no-fault insurance?
Priority of payment is the rule for paying claims when they aggregate to more than the $50,000 basic economic loss limit. Payments are made in the order in which each service was rendered or each expense was incurred, provided the claims were made before the $50,000 was exhausted; if the insurer pays out the limit before receiving claims for earlier services, it is not liable for those late claims; claims received at the same time are paid in the order of rendition of services (11 NYCRR 65-3.15). Insurers may keep paying verified claims while verification of another is pending (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 (2007)).
Can I challenge the order of payment under a no-fault policy?
Yes. A provider whose claim was submitted before exhaustion, for services rendered earlier than services the insurer paid, can assert that 11 NYCRR 65-3.15 required payment of its claim first. In Nyack Hospital, once the hospital's verification arrived and verified claims exceeded $50,000, the insurer was required to pay the hospital ahead of unpaid claims for later services, and the Court of Appeals remitted for that computation (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 (2007)). The proof is documentary: dates of service and receipt, verification correspondence, and the insurer's payment log. The dispute goes to arbitration or court (Insurance Law § 5106(b)).
What happens when multiple providers claim the same policy funds?
The insurer must apply 11 NYCRR 65-3.15: among claims made before exhaustion, pay in the order in which each service was rendered or expense was incurred; among claims received at the same time, pay in order of rendition of services; and do not pay a claim for earlier services that arrives after the $50,000 is gone. While one claim awaits verification, the insurer may pay other verified claims, but when the verification arrives it must pay the earlier-rendered services ahead of later ones within the remaining limit (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 (2007)). Bill within 45 days (11 NYCRR 65-1.1) and answer verification promptly.