Failure to Reschedule Assignor's Pre-Claim EUO to Within 30 Days of Receipt of DME Bill Precludes Non-Appearance Defense

NO-FAULT – JUDICIAL PRESUMPTION OF REVISED PIP ENDORSEMENT – RIGHT TO REQUEST PRE-CLAIM EUO – EUO RESCHEDULING – VERIFICATION
All-Boro Med. Supplies, Inc. a/a/o Tony Stringer v. Progressive Northeastern Ins. Co.
(NYC Civil, Kings Co., decided 5/27/2008)

Under the First Amendment to Regulation 68-C (January 9, 2003), 11 NYCRR § 65-3.5(d) provides:

(d) If the additional verification required by the insurer is a medical examination, the insurer shall schedule the examination to be held within 30 calendar days from the date of receipt of the prescribed verification forms.

With grateful appreciation to the first commenter to the original version of this posting, notice that the Insurance Department deleted the EUO reference in that section. That hasn't stopped some courts, including this one, from overlaying the same 30-day requirement on the scheduling of EUOs.

Claim Chronology:

1/5/05 -- MVA.
1/28/05 -- Progressive sends assignor Stringer a letter scheduling his EUO for 4/21/05.
2/14/05 -- Progressive receives All-Boro's DME bill for $442.50.
4/21/05 -- Stringer no-shows for his EUO.
4/22/05 -- Progressive sends Stringer a letter rescheduling his EUO for 5/3/05.
5/3/05 -- Stringer again no-shows for his EUO.
5/18/05 -- Progressive issues denial of All-Boro's claim.

After a trial on stipulated facts and exhibits, Kings Civil Judge Peter Sweeney first concluded, presumably over the objection of All-Boro's counsel, that "[i]nasmuch as the policy period for newly issued and renewed automobile insurance policies is one year (Insurance Law § 3425[a][8]), it can be assumed that the automobile insurance policy applicable in this case contained the [revised Personal Injury Protection] Endorsement [that contains an examination under oath condition] since the underlying motor vehicle accident occurred after April 2003 (see, Eagle Chiropractic, P.C. v. Chubb Indem. Ins. Co., 2008 NY Slip Op. 50525(U), Slip Copy, 2008 WL 712036 [App. Term, 9th & 10th Jud Dists] )."

Citing Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720 (2nd Dept. 2006), in which the court endorsed pre-claim IMEs, Judge Sweeney next held that Progressive "acted within its rights under the Endorsement in scheduling an EUO of Mr. Stringer before it had received the claim. Indeed, had the defendant not received the claim form on February 14, 2005, Mr. Stringer's failure to appear for the EUO would have constituted a valid ground for denying the claim 'retroactively to the date of loss' (35 AD3d at 722)."

Judge Sweeney continued:

While this Court agrees that when an EUO is requested as additional verification of a claim, the insurer is required to schedule the EUO within the same time period as medical examinations, to wit, within 30 calendar days from the date of receipt of the prescribed verification form While this Court agrees that when an EUO is requested as additional verification of a claim, the insurer is required to schedule the EUO within the same time period as medical examinations, to wit, within 30 calendar days from the date of receipt of the prescribed verification form (see, All-Boro Medical Supplies, Inc. v. Progressive Northeastern Ins. Co., 17 Misc.3d 950, 952 [Civ.Ct., Kings Co., 2007, Edwards, J.]; see, also, S & M Supply Inc. v. State Farm Mut. Auto. Ins. Co. 4 Misc 3d 130(A), 2004 NY Slip Op. 50693(U) [App. Term, 9th & 10th Jud. Dists.]), there is no such requirement for the scheduling of pre-claim EUOs.

While defendant acted within its rights under the Endorsement in scheduling Mr. Stringer for a pre-claim EUO for April 21, 2005, once defendant received the claim from the plaintiff, the defendant was required to adhere to statutory and regulatory scheme for the processing of no-fault claims. Thus, defendant was required to pay or deny the claim within 30 calendar days of its receipt (citations omitted) or request additional verification of the claim (11 NYCRR 65-3.5). Generally, a request for addition [sic] verification of a claim must be made within 15 business days of receipt of one of the prescribed verification forms (see 11 N.Y.C.R.R. § 65-3.5(b)). Where an insurer makes a timely and proper request for additional verification, the 30 day period in which it has to either pay or deny a claim does not begin to run until all demanded verification has been provided (11 NYCRR 65-3.8(a)(1)).

Here, while defendant had already scheduled Mr. Stringer's EUO for April 21, 2005 before it had received the claim, if defendant insisted upon conducting the EUO before deciding whether to pay or deny the claim, it had no choice but to re-schedule the EUO to a date within 30 calendar days from February 14, 2005, the date it received the claim (citations omitted). As a matter of law by failing to re-schedule the EUO, defendant could not assert Mr. Stringer's failure to appear for the EUO as its basis to deny the claim[.]

Judgment for All-Boro for $442.50, plus interest, attorneys' fees, costs and disbursements.

65-3.5(d) requires that IMEs be scheduled "to be held within 30 calendar days from the date of receipt of the prescribed verification forms." It says nothing about receipt of bills, and this decision says nothing about whether Progressive requested that All-Boro complete and submit any prescribed verification form (most likely it did not since an NF-3 would not be applicable to All-Boro). Although Regulation 68 does not define or enumerate what forms constitute the "prescribed verification forms", presumably they are the NF-3, -4, -5, -6, and -7.

No-fault insurers and their counsel should take notice of this decision and, unless it is upset on appeal or by another decision from a higher court, attempt whenever possible to abide by its rule: schedule EUOs to be conducted within 30 calendar days of receipt of either: (1) any bills for which the insurer has not otherwise sought verification; or (2) completed and signed prescribed verification forms from the parties required to complete and submit them.

Let's add a fact to the above claim chronology and say that Progressive had also requested an NF-3 from Mr. Stringer's treating physician on February 1st but not received it until April 15th, less than 30 days before the May 5th rescheduled EUO date. Since an NF-3 is clearly a prescribed verification form, would Judge Sweeney have found Progressive's EUO requests to be timely and non-appearance-based defense to be valid? Or would he have concluded that the receipt of each "claim" -- such as All-Boro's DME bill -- is what triggers the 30-day EUO scheduling requirement? In cases where there may be legitimate questions of an EIP's entitlement to LOE benefits, for example, wouldn't it be unfair to require no-fault insurers to schedule and proceed with an EUO before it received a completed NF-6 or NF-7? I don't think that was the intention of 65-3.5(d), even with the removal of its EUO reference.