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APPELLATE DIVISION IMPLEMENTS PLAIN-MEANING INTERPRETATION OF NO-FAULT REGULATION
By: Michael A. Callinan

FOR THE DEFENSE


APPELLATE DIVISION IMPLEMENTS PLAIN-MEANING
INTERPRETATION OF NO-FAULT REGULATION

By: Michael A. Callinan, Esq.
Bruno, Gerbino & Soriano, LLP
Melville, New York


In three cases decided together on April 24, 2007, the Appellate Division, Second Department, has resurrected a plain-meaning interpretation of the No-Fault Regulation and brought a semblance of normalcy back to the realm of first-party No-Fault disputes.

The cases, New York University Hospital Rusk Institute v. Government Employees Insurance Company, 832 N.Y.S.2d 824 (N.Y. App. Div. 2nd Dept. 2007), A.B. Medical Services, PLLC, v. Liberty Mutual Insurance Company, 2007 NY Slip Op 3636 (N.Y. App. Div. 2nd Dept. 2007) and A.B. Medical Services, PLLC, v. GEICO, 2007 NY Slip Op 3635 (N.Y. App. Div. 2nd Dept. 2007), have reinstated a No-Fault carriers ability to deny a claim based upon an independent peer review or medical examination that found that the treatment at issue was not medically necessary.

Prior to the Appellate Division’s holdings, the Appellate Term of the Second Department held that in order to sustain a denial of a No-Fault claim premised on a lack of medical necessity, the denial must “set forth with sufficient particularity the factual basis and medical rationale upon which” the denial is based. If the denial did not contain such language or affirmatively state that the peer review or medical examination report was attached to the denial, the Appellate Term found such denials to be invalid and rendered the carrier unable to defend its denial. See A.B. Medical Services. PLLC v. GEICO, 816 N.Y.S.2d 821 (N.Y. App. Term 2nd Dept. 2006).

The Appellate Term’s interpretation of the No-Fault Regulation was admittedly contrary to the plain-meaning of the Regulation. Id. at 823. The No-Fault Regulation clearly states at 11 NYCRR § 65-3.8(b) (4) that:

If the specific reason for a denial of a no-fault claim, or any element thereof, is a medical examination or peer review report requested by the insurer, the insurer shall release a copy of that report to the applicant for benefits, the applicant\'s attorney, or the applicant\'s treating physician, upon the written request of any of these parties.

Even though there is no language in the No-Fault Regulation setting forth that an insurer must include the factual basis and medical rationale for a denial premised upon a finding of a lack of medical necessity, the Appellate Term previously held that denials lacking such information were fatally defective and left the insurer without a defense to the claim. The Appellate Term’s holding also imposed a requirement on the insurer’s claim representative to interpret the medical rationale that justified the denial in order for same to be included on a denial of claim form.

The trio of cases decided on April 24, 2007, affirmatively states that the No-Fault Regulation does not require a No-Fault carrier to set forth with sufficient particularity the factual basis and medical rationale upon which the denial is based. In fact, the Court held that the “applicable regulations provide that if a no-fault claim is denied in whole or in part based on a medical examination or peer review report requested by the insurer, then the insurer shall release a copy of that report to, among others, the applicant or its attorney, upon written request.” A.B. Medical Services, PLLC, v. GEICO, 2007 NY Slip Op 3635 at *2. The Court further held that if it had been the intent of the Department of Insurance to require the No-Fault carrier to set forth a medical rationale in the prescribed denial of claim for, it would have affirmatively stated such. A.B. Medical Services, PLLC, v. GEICO, 2007 NY Slip Op 3635 at *2.

Michael A. Callinan, Esq., is a 2002 graduate of Hofstra University School of Law and an associate at Bruno, Gerbino & Soriano, LLP, located in Melville, New York.

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