Rolling the dice: does “relief” alleviate the fears of insurers?

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On February 24, 2021, the Appeal Division, Second Department, issued a long-awaited decision in Med relief. Svcs. v. Allstate Ins. Co., 2021 NY Slip op. 08159 (2nd department February 24, 2021). Carriers, suppliers and legal practitioners had hoped the court would clarify a carrier’s obligations once the policy was exhausted, but the recent ruling has not resolved that issue. Instead, the court focused on the carrier’s lack of documentation in its underlying petition documents, and said that “questions of fact remain as to when the claim was denied, and the basis and effectiveness of the denial ”, despite confirmation that the carrier had proven exhaustion of policies. See id.

So, while unarticulated, the Second Department makes it clear that evidence of policy exhaustion, on its own, is insufficient to dismiss a personal injury protection (PIP) lawsuit. In other words, it is still necessary to scrutinize the desirability and desirability of a refusal. The logical conclusion is that a claim will be granted if the denial or defense is not sustained regardless of the exhaustion of the policy.

Under New York State no-fault law, an auto insurance policy has a mandatory minimum requirement to include $ 50,000 in PIP. New York’s insurance law provides “first party” coverage for “basic economic loss,” which includes all necessary expenses incurred for medical treatment and loss of work income. See NY Ins. Law §5102 (a) – (b). Insurers are required to process each invoice upon receipt. Therefore, benefits must be paid as the loss occurs, before the policy is exhausted. See NY Ins. Law §5106 (a); see also Question from Medical Socy. New York State vs. Serio, 100 NY2d 854, 860 (2003). In the absence of additional PIP coverage purchased by the insured, a policy runs out at $ 50,000.

In Nyack Hosp. v. General Motors acceptance, the New York Court of Appeals held that fully verified claims are payable in the order they are received. See Nyack Hosp. v. General Motors acceptance, 8 NY3d 294 (2007). Four years later Nyack, Med relief. Svcs. v. Allstate Ins. Co. started in New York City Court, Queens County. See Med relief. Svcs., 2021 NY Slip op. 08159. In Relief, the plaintiff-supplier alleged that the defendant-carrier “did not properly reject the claim or request further verification in accordance with no-fault regulations” for the treatment rendered. See id. Subsequently, the defendant sought summary judgment due to the exhaustion of the policy. See id. The motion was dismissed on the grounds that the defendant’s evidence, while proving police exhaustion, did not speak to the basis for the dismissal of the claim in question. See id. Subsequent appeals followed.

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