An insurer may require that an applicant for no-fault benefits, be it the injured person or his/her medical provider, appear for an examination under oath (EUO) to answer questions pertaining to his/her eligibility to collect benefits. See 11 NYCRR 65-1.1, Proof of Claim (”Upon request by the company, the eligible injured person or that person’s assignee or representative shall … (b) as may reasonably be required submit to examinations under oath by any person named by the company and subscribe the same”). Similarly, an insurer may require the injured person “submit to medical examination [IME] by physicians selected by, or acceptable to, the company, when, and as often as, the company may reasonably require.”
If the applicant fails to comply with the insurer’s EUO or IME request, the insurer may deny the claim. To prevail on its defense in litigation or arbitration, the insurer must prove that it properly noticed the claimant for two EUOs/IMEs and that the claimant failed to appear as scheduled, see Stephen Fogel Psychological v. Progressive Casualty Insurance (35 AD3d 720 [2d Dept. 2006]); Goldstar Equipment v. Mercury Casualty (59 Misc 3d 138(A) [App Term 2d, 11th & 13th Jud Dists 2018]; Metro Health Products v. State Farm Mutual Automobile Insurance (49 Misc 3d 130(A) [App Term 2d, 11th & 13th Jud Dists. 2015]); Interboro Insuance. v Clennon (113 AD3d 596 [2d Dept. 2014]).
Historically, in order to preserve an IME or EUO no-show defense to a claim for no-fault benefits, an insurer was required to prove that it timely denied the claim on that basis. See, Westchester Medical Center v. Lincoln General Insurance (60 AD3d 1045 [2d Dept. 2009]) (Untimely denial based on assignor’s failure to appear for an EUO is subject to the preclusion remedy.)
In 2011, the Appellate Division, First Department ruled otherwise, in the case of Unitrin Advantage Insurance v. Bayshore Physical Therapy (82 AD3d 559 [1st Dept. 2011]) lv denied 17 NY3d 705 ). The court held:
The failure to appear for IMEs requested by the insurer “when, and as often as, it may reasonably require” (Insurance Department Regulations [11 NYCRR] § 65-1.1) is a breach of a condition precedent to coverage under the no-fault policy, and therefore fits squarely within the exception to the preclusion doctrine, as set forth in Central General Hospital v Chubb Group of Insurance Companies (90 NY2d 195 ). Accordingly, when defendants’ assignors failed to appear for the requested IMEs, plaintiff had the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued (see Insurance Department Regulations [11 NYCRR] § 65-3.8 [c]; Stephen Fogel Psychological, 35 AD3d at 721-722).
Since the Unitrin decision, the First Department has consistently ruled that an IME or EUO no-show defense is akin to a coverage defense, which need not be preserved in a timely denial of claim form, see Allstate Insurance v. Pierre (123 A.D. 3d 618 [1st Dept. 2014]) (the holding in Unitrin applies equally to an EUO no-show defense); American Transit Insurance v. Lucas (111 A.D.3d 423 [1st Dept. 2013]) (“There is no requirement to demonstrate that the claims were timely disclaimed since the failure to attend medical exams was an absolute coverage defense.”); MDJ Medical v. New York Central Mutual Insurance (41 Misc. 3d 133(A) [App. Term 1st Dept. 2013]); Hereford Insurance v. Lida’s Medical Supply (161 A.D. 3d 442 (1st Dept. 2018]).
Subsequent to the Unitrin decision, the Second Department continued to rule, sometimes implicitly, sometimes explicitly, that a timely denial of claim form is required to preserve an IME or EUO no-show defense. See, All County v. Unitrin Advantage Insurance (2011 NY Slip Op 50621(U)) [App. Term 9th & 10th Jud. Dists. 2011]) (defendant’s summary judgment motion granted where the court found, inter alia, “defendant sufficiently established that the denial of claim forms were timely mailed in accordance with defendant’s standard office practices and procedures.”); Fiutek v Clarendon National Insurance (33 Misc 3d 127(A) [App. Term 2d, 11th & 13th Jud. Dists. 2011]) (defendant’s summary judgment motion granted only as to those bills that were timely denied); Rainbow Supply of NY v. Clarendon National Insurance (36 Misc 3d 140(A)] [App. Term 2d, 11th & 13th Jud. Dists. 2012]) (defendant’s motion for summary judgment based on IME no-show properly denied. The defendant failed to establish that it timely denied the claim and therefore failed to establish that it is not precluded from raising this defense.); Compas Medical v. Praetorian Insurance (49 Misc 3d 145(A) [App. Term 2d, 11th & 13th Jud. Dists. 2015]).
Split in Departments
Thus, there has been a split in the judicial departments regarding whether an insurer must raise an IME or EUO no-show defense in a timely denial or else be precluded from raising that defense.
Recently, the Appellate Division, First Department issued an interesting decision in Unitrin Advantage Insurance v. All of NY (158 AD3d 449 [1st Dept. 2018]). In that case, the insurer commenced a declaratory action, seeking a declaration that it owed no duty to pay no-fault benefits because the defendant medical provider failed to appear for scheduled EUOs. The insurer moved for summary judgment and the lower court granted the motion. On appeal, the court partially reversed summary judgment as to certain bills, holding:
Although the EUO scheduling letters for the third and fourth dates of medical services, both of which reflected services rendered on May 31, 2013, were timely, the reasons for denial on the NF-10 denial of claim form were stated solely as a failure to appear for an EUO scheduled on July 29, 2013. The second examination date, Aug. 12, 2013, is not mentioned, and therefore did not sufficiently apprise the provider as to the reason for denial (see Nyack Hospital v. State Farm Mutual Automobile Insurance, 11 AD3d 664, 664-665 [2d Dept 2004]).
Backing Down From ‘Unitrin?’
Thus, although the court in this case did not specifically state that a timely denial was required to preserve an IME or EUO no-show defense, it does require that a denial be issued, whether timely or not, and that it apprise the claimant of the basis for denying the claim, including the dates of the missed EUOs. Does the decision in this case represent a chipping away or partial backing down from the 2011 decision in Unitrin Advantage Insurance v. Bayshore Physical Therapy, supra? Some might answer yes to that question, because if, as the First Department previously held, an EUO or IME no-show is the equivalent of a coverage defense, then arguably, the insurer should never be precluded from raising that defense, whether or not it ever issued a denial. Therefore, if the insurer is required to issue a denial, whether timely or not, to preserve an EUO or IME no-show defense, then the argument that it is an absolute coverage defense may not be entirely correct.
Moreover, the court in Unitrin Advantage Insurance v. All of NY, based its decision on Nyack Hospital v. State Farm Mutual Automobile Insurance, (11 AD3d 664 [2d Dept 2004]), a Second Department case that held that the insurer was required to issue a timely denial of claim form that “promptly apprise[s] the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated” [citing General Accident Insurance Group v. Cirucci, 46 NY2d 862, 864 (1979)], and further held, “The defendant’s contention that it supplied the missing information [on the denial] on June 13, 2003, is without merit, as the defective [denial of] claim form could not be corrected, nunc pro tunc, through information supplied after the regulatory 30-day period expired.” Additionally, the court in Unitrin Advantage Insurance v. All of NY, further noted that at least one of the bills that were properly dismissed on summary judgment “was timely and properly denied.” Why would it be necessary to note that a bill that was properly dismissed because of failure to appear for an EUO was timely and properly denied if such a denial was not necessary to preserve that defense?
Alternatively, if, as the First Department previously held in American Transit Insurance v. Lucas, supra, an IME or EUO no-show defense is “an absolute coverage defense,” then based on Unitrin Advantage Insurance v. All of NY, supra, even a coverage defense must be specifically communicated to the claimant in a denial of claim form, even if “the insurer is not precluded, despite its untimely disclaimer, from raising” a coverage defense. (Central General Hospital v. Chubb Group of Insurance Companies, 90 N.Y.2d 195, 201 (1997).
Interestingly, while the Second Department requires a timely denial to preserve an IME or EUO no-show defense, it does not require that the denial specifically list the dates of the missed IME or EUO. See, Quality Psychological Services v. Avis Rent-A-Car Systems, (47 Misc 3d 129(A) [App. Term 2d, 11th & 13th Jud. Dists. 2015]); Actual Chiropractic v Mercury Casualty (53 Misc 3d 135(A) [App. Term 2d, 11th & 13th Jud. Dists. 2016]) (“the failure to set forth the dates of the scheduled examinations in the denial of claim form did not render the denial conclusory, vague or without merit as a matter of law.”). The First Department, on the other hand, based on the above decisions, may not necessarily require that the denial be timely, but it does require that a denial be issued that specifically sets forth the dates of the missed EUOs (or IMEs).
David M. Barshay is a member of Sanders Barshay Grossman in Garden City. Steven J. Neuwirth, a member of the firm, assisted in the preparation of this article.