Several weeks ago, New York County Civil Court Judge Arthur F. Engoron issued a decision in Quality Psychological Services PC v. GEICO Ins. Co.,1 a case involving multiple actions filed by a medical provider seeking payment of bills it had sent to an insurance carrier for psychological services allegedly rendered to the plaintiff’s assignors, who were covered by “no-fault” insurance issued by the insurer. The carrier sought to amend its answers to assert counterclaims for fraud and unjust enrichment. In opposition, the plaintiff asserted that the insurer’s failure to allege fraudulent billing in a timely claim denial acted to preclude that as a defense or as counterclaims in the litigation.

The court acknowledged the existence of the 30-day preclusion rule referenced by the plaintiff, but it nevertheless granted the insurance carrier’s motions. The court declared that, based solely on its “very limited review of its billing practices,” the plaintiff “may be a criminal enterprise, whose primary purpose is to generate fraudulent no-fault billing.” In the court’s view, the law “does not provide the same privileges and immunities to fraudulent and criminal activity as to lawful and legitimate activity.” It concluded that, “[i]n the final analysis, assuming (without deciding) a persistent pattern of fraud, the following ancient legal doctrine applies here: ‘We are not going to let them get away with this.’”

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