No-Fault Carrier Precluded from Contesting Assignment for Failure to Timely Request Verification
The hospital sought recovery of no-fault benefits for services rendered to a patient injured in an auto accident. An assignment of benefits and other required forms were provided to Travelers, which did not reject the forms or request verification of the assignment. This action was commenced after Travelers failed to pay or deny the claim within 30 days of receipt, as required by New York’s No-Fault Law and implementing regulations (N.Y. Ins. Law § 5106 [a]; 11 NYCRR 65-3.8 [c]).
The regulations require that an accident victim submit notice of claim to its no-fault insurer no later than 30 days after an accident, and that the victim or her assignee submit proof of claim for medical treatment no later than 45 days after services are rendered. Insurers then have 15 business days within which to request additional verification and/or the original assignment to pay benefits form to establish proof of claim. Insurers must pay or deny the claim within 30 calendar days after receipt of proofs of claim.
The court held that a carrier that fails to deny a claim within the 30-day period is precluded from asserting a defense to payment of the claim. In doing so, the court declined to apply a narrow exception to the preclusion rule that applies to defenses based on a lack of coverage. In the court’s view, “any defect or deficiency in the assignment between [the insured] and the hospital simply does not implicate a lack of coverage warranting exemption from the preclusion rule.” The court reasoned that to hold otherwise would frustrate the purpose of New York’s no-fault laws, “to provide a tightly timed process of claim, disputation and payment.”
In a dissenting opinion, Justice Pigott considered the defense as one of standing—without an assignment from the patient, the hospital lacked standing to sue the no-fault insurer to collect payment for services. He reasoned that standing could not be artificially created by a carrier’s failure to object within the time periods set forth in the regulations. In this respect, he would not permit standing by estoppel. Justice Pigott also concluded that the invalid assignment equated to a lack of coverage within the narrow exception to the preclusion rule, since the hospital had no legal right to collect payment under the policy until a valid assignment was obtained. Instead, he would require that the hospital affirmatively prove standing as part of its prima facie case, which the hospital could have done by producing proper documentary evidence.
