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Recent Decisions Clarify Limits of the “30- Day Rule”
By: Brian C. McCarthy, Esq.

FOR THE DEFENSE


Recent Decisions Clarify Limits of the “30- Day Rule”

By: Brian C. McCarthy, Esq.
Bruno, Gerbino & Soriano, LLP
Melville, New York

Recent decisions rendered by the New York City Civil Court, Kings County, and the District Court of Nassau County, Third District, have sought to clarify the distinction between those bases for denial of No-Fault claims to which the “30-day rule” applies and those to which it does not. A.M. Medical Services, P.C. a/a/o Heli Paak v. A.I.U. Ins. Co., Civ. Ct., Kings Co., Sep. 29, 2004, Marber, J., Index No.: 1587/04, Careplus Medical Supply, Inc. v. State Farm Mut. Auto. Ins. Co., Civ. Ct., Kings Co., Sweeney, J., NYLJ (Oct. 14, 2004), and A.B. Medical Services, PLLC v. New York Central Mut. Fire Ins. Co., Dist. Ct., Nassau Co., 3rd Dist., Hinds-Radix, J., NYLJ (Jan 7, 2005) seek to address the sometimes complicated issue of which bases for denial of a No-Fault claim are affected by the time constraints imposed by the rule.

It is well-established that a denial based on lack of medical necessity must be mailed within thirty days of receipt of a proper bill submitted by a medical provider and that an insurance carrier will be precluded from asserting this defense if the denial is untimely. See, A.B. Medical Services, supra, citing Presbyterian Hosp. in the City of New York v. Maryland Cas. Ins. Co., 226 A.D.2d 613 (2nd Dept. 1996), Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 N.Y.2d 195 (1997). However, there has been less clarity with regard to the applicability of the "30-day rule" to other bases for denial.

Where there has been a violation of the requirements of Regulation 68, the applicability of the rule depends on whether or not there was a timely request for additional verification. An insurer is precluded from denying a No-Fault claim after the expiration of the 30-day period, but not if the eligible injured party (EIP) or the EIP's assignee failed to respond to a valid request for additional verification. See, A.B. Medical Services, supra, citing St. Clare's Hosp. v. Allcity Ins. Co., 201 A.D.2d 720 (2nd Dept. 1994). Where there has been a properly made request for additional verification of the claim pursuant to 11 NYCRR 65, in accordance with the strict timelines set forth therein, the 30-day rule is inapplicable.

An insurer may in all cases deny a No-Fault claim when the insurer can prove that the accident was in fact not an accident but a staged loss or, in other words, an intentionally caused accident. The 30-day rule does not apply in such instances. See, Careplus Medical Supply, supra, citing Central General, supra, also see, State Farm Mut. Auto. Ins. Co. v. Laguerre, 759 N.Y.S.2d 531 (2nd Dept. 2003). Further, “absence of a required denial does not prohibit the insurer from raising the defense of lack of coverage based upon the fact or founded belief that the alleged injury did not arise out of an insured incident.“ A.M. Medical Services, supra. However, the insurer bears the burden of proof in demonstrating the lack of coverage and must submit a sworn statement from “someone with knowledge of the facts or with appropriate expertise to render an opinion.” A.B. Medical Services, supra, citing Presbyterian Hosp., supra.

Significantly, although the presence of fraud or material misrepresentation of facts is always a valid basis for denial of a No-Fault claim, some courts have not exempted all fraud-based denials from the 30-day rule. At least one judge has held that if the fraud lay in excessive billing, for example, by intentionally inflating the cost of durable medical equipment, then such an act would not void coverage for the entire claim and therefore the insurer must timely deny the claim within 30 days for the insurer to rely upon the fraud defense. See, Careplus Medical Supply, supra, citing Melbourne Medical, P.C. v. Utica Mut. Ins. Co., 2004 WL 143132, 2, citing Central Gen. Hosp., supra. This issue is likely to be revisited, as there may be serious public policy ramifications inherent in this holding.

Defense counsel are strongly urged not only to familiarize themselves with the distinctions described above, but also to educate their clients about the selective applicability of the 30-day rule for No-Fault denials.


Editor’s Note: Brian C. McCarthy is a graduate of St. Johns University School of Law and an associate at Bruno, Gerbino & Soriano, LLP, located in Melville, New York

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