Understanding New York No Fault

New York No-Fault Law: Understanding New York's No-Fault System Paul D. McCormick, Esq. Goldberg Segalla LLP 665 Main Street / Suite 400 Buffalo, New York 14203-1425 716.566.5466 Fax: 716.566.5401 Email: [email_address] Website: www.goldbergsegalla.com

A. Background Purpose of the No-Fault Law To remove the vast majority of MVA claims from the tort litigation and establish a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of such accidents. Understanding New York’s No-Fault System

Eligible Injured Person Only an eligible injured person is entitled to first-party no-fault benefits. Coverage endorsement definition. The named insured and any relative ( i.e. , spouse, child or blood relative regularly residing in the insured’s household). Any other person injured while not occupying another motor vehicle where the accident occurs in New York. A New York resident injured while not occupying another motor vehicle where the accident occurs outside New York.

Accidents outside New York State: coverage generally follows the vehicle. Accidents inside New York State: coverage generally follows the person.

Basic Economic Loss To reimburse a person for “basic economic loss” on account of personal injury. Minimum BEL limits: $50,000. Insurance Law § 5102(a)(1) defines “basic economic loss” as including:

1. All necessary medical expenses What does it include? What are the restrictions?

2. Loss of earnings from work which the person would have performed had he/she not been injured What does it include? What are the restrictions?

3. All other reasonable and necessary expenses incurred What does it include? What are the restrictions?

B. Coverage The No-Fault Law provides no-fault benefits for: economic loss … arising out of … the use or operation … of a motor vehicle … in New York State.

Scope of Coverage A no-fault carrier is only liable for the payment of benefits for losses caused by the accident , including those caused by the aggravation of preexisting conditions. Regulatory caveats ( i.e. , circumstances that force a carrier to pay benefits where it otherwise wouldn’t).

C. Exclusions Occupant of another motor vehicle. Owned vehicle without the required financial security. Intentional injury. Intoxication by alcohol or impairment by drugs. Race or speed test. Injury while committing a felony or avoiding lawful apprehension. Injury while operating or occupying a stolen vehicle. Injury while repairing, servicing or maintaining a motor vehicle within the course of a business of repairing, servicing or otherwise maintaining a motor vehicle and the injury occurs on the business premises.

Mandatory Personal Injury Protection (PIP) Every motor vehicle policy must contain a PIP Endorsement. Definitions. Exclusions. Conditions of coverage. D. Benefits

Additional Personal Injury Protection (APIP) What is it? Right to receive more than the mandatory $2,000.00 in lost wage benefits. Higher overall policy limits. Unless expressly modified, APIP benefits are subject to all of the provisions, exclusions and conditions of the Mandatory PIP Endorsement.

Optional Basic Economic Loss (OBEL) Coverage of up to $25,000, which will be triggered after the $50,000 of BEL under the Mandatory PIP Endorsement is consumed. Once an eligible injured person makes an OBEL election, he/she cannot change the election during duration of the claim.

E. Notice To Carrier and Proof of Claim 1. Notice To Carrier One of the conditions set forth in the Mandatory PIP Endorsement states that within 30 days after an accident, the eligible injured person, or someone on his/her behalf, must provide written notice to the no-fault carrier. What qualifies?

Revision effective April 4, 2002 Reduced the time limit for filing written notice of claim from 90 to 30 days and lessened burden of proof to excuse the failure to comply with the deadline. Relaxation of the standard for accepting late filings Pre-April 4, 2002 : Late filings permitted only when written proof showed that compliance with a deadline was “impossible”. Post-April 4, 2002 : Late filings permitted when there is a “clear and reasonable justification” for the delay.

Acknowledgment of Receipt Prescribed application for motor vehicle no-fault benefits accompanied by a prescribed cover letter. Prescribed No-Fault Claim Forms http://www.ins.state.ny.us/r_finala/2004/pdf/rf68ca2f.pdf ): NYS Form NF 1A (Cover Letter) NYS Form NF 2 (Application) NYS Form NF 3 (Verification of Treatment by Attending Physician or Other Provider of Health Service) NYS Form NF 4 (Verification of Hospital Treatment) NYS Form NF 6 (Employer’s Wage Verification Form) NYS Form NF 7 (Verification of Self-Employment) NYS Form NF 10 (Denial of Claim Form)

2. Proof of Claim Condition in the Mandatory PIP Endorsement. Pre-April 4, 2002 vs. Post-April 4, 2002. Same reduced time limit and burden of proof to excuse failure to meet the deadline as the notice requirement. Applicant has the responsibility to submit claims in order to be eligible for the payment of benefits, even after receiving a denial of all future benefits. See , 9/2/04 Opinion Letter of the Insurance Department's General Counsel, located at: http://www.ins.state.ny.us/ogco2004/rg040903.htm .

Handling a No-Fault Claim Rules to be followed by carriers for the settlement of all claims for first-party benefits. Prompt and fair payment; Don’t treat applicant as an adversary; When/how to demand verification; Disputed matters; and Prompt response. 1. Claims Practice Principles

2. Conducting an EUO Upon request, the EIP must cooperate in the processing of the claim by submitting to EUOs as may reasonably be required. Refusal to either appear or answer questions could provide the no-fault carrier with the basis to deny all pending claims, retroactive to the date of loss, for failure to meet a condition for coverage. The regulation is silent on the number of times the EIP can fail to show before the carrier can issue a denial, but the courts have imposed a "2 no-show" rule. It is incumbent upon a carrier to exhaust the follow-up verification protocol by re-scheduling an IME following a first no-show in order to meet its heavy burden of demonstrating that the examinee engaged in a pattern of unreasonable and willful noncooperation so as to warrant denial of the claim.

3. Conducting an Effective IME/Peer Review If the report is the basis of denying payment of the service/procedure as not “medically necessary,” it must at least show that the service/procedure was inconsistent with generally accepted medical/professional practices. At trial, the expert’s testimony must be able to back-up the report with sufficient factual evidence or proof or medical rationale. If an IME is used as a means of obtaining additional verification, it must be held within 30 calendar days from the date of the receipt of the prescribed verification forms. As with EUOs, IMEs must be held at a place and time reasonably convenient to the no-fault applicant.

4. Denying a Claim The “30-Day Rule”. Once the EIP returns the application or a claim ( i.e. , medical bill or lost wage claim) is submitted, the carrier has 30 calendar days to pay or deny a claim (NF-10 Form). Delay of the initial onset of the 30 days. Further delay of the onset of the 30 days.

Follow-Up Requirements Under the regulation’s follow-up requirements, if the completed no-fault application (NF-2) or requested verification ( e.g. , NF-6 or NF-7 wage/employment verifications) are not received within 30 calendar days , a 2nd request must be sent within 10 calendar days . When a carrier requests additional verification from a claimant after the initial receipt of a claim submission and the request is made later than 10 days after receipt of the claim submission but less than 30 days after receipt of that submission, the carrier does not have to pay or deny the claim within the 30 days after receipt of the initial claim. The carrier is not obligated to pay or deny a claim until it has received verification of all relevant information requested.

Delay Letters and NF-10s Do not confuse a delay letter with a request for additional verification. They are not the same. Only a request for verification will operate to delay issuing a denial while the investigation is ongoing. A delay letter does not suspend the time frames, but only serves to inform the claimant and the claimant's attorney that as a result of noncompliance with the insurer's request for verification, the processing of the submitted application for benefits is being delayed pending receipt of all requested verification. Accrual of interest. Do not modify the proscribed NF-10 form.

Defenses (“Bases” For Denial) Effect of failure to comply with the 30-Day Rule. Include, but are not limited to: Lack of Medical Necessity Proximate Cause* Use or Operation 45-Day Rule Injury Not Ascertainable Within 1 Year Disqualification of Medical Provider Defective No-Fault Assignment Fraud*

Medical Necessity Further care is not medically necessary. Maximum Medical Improvement vs. Maximum Therapeutic Benefit. Hobby v. CNA Ins. Co. (4th Dept. 1999). Diagnostic Testing. Long Island Radiology v. Allstate Ins. Co. (2d Dept. 2007). Chiropractic Care. Morehouse and General Accident Fire and Life (NF 2720).

Proximate Cause The accident must be a “substantial cause” or “substantial factor” of the events that produced the injury. 1st-party no-fault benefits may properly be denied where the accident does not arise from the intrinsic nature of the vehicle and where the vehicle is neither the proximate cause of the accident nor the actual instrumentality which produces the injury. Complete defense.

45-Day Rule Bills for reimbursement of medical services must be submitted within 45 days from date of service. Proof of mailing. Burden of proof on failure to comply with the deadline - “clear and reasonable justification”. Those who can demonstrate a reasonable basis for non-compliance with the time requirements would be held to an “as soon as reasonably possible” standard.

4. Dealing With the Claimant Upon request, the EIP must cooperate in the processing of the claim by: Executing a written proof of claim under oath. Submitting to EUOs, as may reasonably be required. Providing authorization. Providing any other pertinent information that may assist the carrier in determining the amount due and payable. Submitting to an IME by physicians selected by, or acceptable to, the carrier, when, and as often as , the carrier may reasonably require. Refusal by the EIP to accept reasonable rehabilitative treatment may be the basis for denial of future payment of benefits for loss of earnings from work and may be used as evidence to dispute the reasonableness or necessity of any further expense or loss.

5. Priority of Claims and Fee-Schedule Issues 11 NYCRR § 65-3.12(a)(2). Insurance Law §§ 5105(a), 5103(a) and 5105(b). GEICO v. Home Mut. Ins. Co. (4th Dept. 1980) Collins v. Travelers Ins. Co. (Sup. Ct., Erie Co. 1980) Arbitration Forums, Inc. Who pays when a pedestrian’s injuries are caused by more than one vehicle?

Priority of payments by a no-fault carrier. Fair claims settlement practices. Insurance Law §§ 5106(a). 11 NYCRR § 65-3.15. Opinion Letter of the Office of General Counsel of the Insurance Department, dated December 24, 2002.

Understanding New York No-Fault Paul D. McCormick, Esq. Goldberg Segalla LLP 665 Main Street / Suite 400 Buffalo, New York 14203-1425 716.566.5466 Fax: 716.566.5401 Email: [email_address] Website: www.goldbergsegalla.com

Understanding New York No Fault

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