By Dint of a One-Day Tardiness -- Richmond Civil Rules that There is No Repercussion for a Late Follow-Up Verification Request

NO-FAULT – FOLLOW-UP VERIFICATION – INSURANCE LAW § 5106(A)
Pine Hollow Med., P.C. a/a/o Jonathan Aurelien v. Global Liberty Ins. Co. of N.Y.
(NYC Civil, Richmond Co., decided 6/18/2009)

There's nothing like a Richmond County NYC Civil Court Judge Katherine Levine decision to restart the blogging after two weeks.  Although it's several weeks old, I didn't see this decision posted on any of the usual corners, so I thought I'd restart here.

In no-fault parlance, additional verification is what must be requested within 15 business days of the no-fault insurer's receipt of prescribed verification forms (N-F 3 thru 7).  So says 11 NYCRR § 65-3.5(b).

Follow-up verification is what must be requested within 10 calendar days after 30 days have elapsed from the insurer's additional verification request and the requested verification has not been supplied.  So says 11 NYCRR § 65-3.6(b).

If the no-fault insurer requests additional verification on the 16th business day after receiving an N-F 3, i.e., one day late, its 30 calendar days to pay or deny the associated billing once the requested verification is received is correspondingly reduced by one day to 29 days.  So says 11 NYCRR § 65-3.8(j). 

But what if the insurer is late in making its follow-up verification request?  Sends the follow-up verification request beyond the 10-day period?  Is there any negative repercussion?  Defense preclusion?  No, says Judge Levine.  Why?  Because of what 11 NYCRR § 65-3.8(j) says:  

(j) For the purposes of counting the 30 calendar days after proof of claim, wherein the claim becomes overdue pursuant to section 5106 of the Insurance Law, with the exception of section 65-3.6 of this subpart, any deviation from the rules set out in this section shall reduce the 30 calendar days allowed (emphasis added).

In acknowledging a "seeming anomaly between precedent and the insurance regulations" (which is a judicially delicate way of saying that a lower court disagrees with a higher court), Judge Levine held:   

Since the regulations only address the repercussion that attaches to an insurer's late submission of an additional verification request and the tenets of statutory construction mandate that different parts of one statute are to be construed together, this court concludes that an insurance carrier should not be subject to greater penalties for submitting a late follow-up verification requests than for submitting a late additional verification request.

This matter involved a follow-up verification request sent one day late.  Plaintiff had not provided the requested verification and sued to collect its $699.34 billing.  Global Liberty moved for summary judgment on the ground that plaintiff's action was premature because it had not provided the requested verification.  Plaintiff did not dispute Global Liberty's assertion that it never provided the requested information, but argued  that Global Liberty's follow-up verification request was late because it was made on the 11th day after 30 days had already transpired since Global Liberty's first (additional) verification request, in violation of 11 NYCRR § 65-3.6(b).

After discussing various case decisions addressing the claim impact of no, early and late follow-up verification requests, Judge Levine ruled:

Based upon the two aforementioned precedent, it is clear that defendant should not be deprived entirely of the opportunity to review and obtain the needed proof by dint of its one day tardiness in submitting its follow up request. 11 NYCRR 65-3.8(j) only addresses the repercussions of an insured's failure to request the additional verification within the set time lines, since it expressly excludes section 65-3.6 which discusses follow up verification requests, and then sets forth that any deviation from the time frame shall reduce the 30 calendar days allowed in which to pay or deny the claim. As such, the regulations do not even contain a punitive provision for an insurer who does not make a follow up verification request within the 10 day period face. A statute or legislative act is to be construed as a whole, and all parts of an act are to be read and construed together to determine the legislative intent. "McKinney's, Statutes § 97.; Frank v. Meadowlakes Dev. Corp., 6 NY3d 687, 691 (2006), and construed so as to harmonize with one another. Anglin v Anglin, 80 NY2d 553, 558 ( 1992 ). In the interpretative context, a court must read the entire law and accord respect to the interlocking and interrelated features of all its parts." Anglin, supra at 558. Furthermore, even apparently conflicting provisions of a statute must be reconciled in a manner most consistent with the overall legislative intent. Statutes § 98; Schulman v. Group Health Inc., 39 AD3d 223 ( 1st Dep't 2007). Finally, the common mandate of statutory construction is to assume that the Legislature "did not intend a patently absurd result. Covington v. Walker, 307 AD2d 908 ( 2d Dep't 2003) See, McKinney's Statutes § 145; In re Adamo, 619 F.2d 216, 219 ( 2d Cir. 1980). 

It would be patently absurd and contravene the meaning of the 11 NYCRR 65-3.8(j) to impose a more draconian punishment on an insurer who is one day late in requesting follow-up verification than on an insurer who is one day late in requesting additional verification. Since in the latter situation, the only repercussion to the insurer's tardiness is the diminution in the time it has to issue a denial or pay the claim, it begs all credulity to impose the more drastic remedy of precluding the insurer from even issuing a denial because of its tardiness in requesting follow up verification. If anything, the aforementioned regulation imposes no repercussion upon the insurer who is tardy in requesting follow up.

Since defendant has yet to receive any response to its verification requests, its 30 day period in which to deny or pay the claim has not yet commenced and the instant action is premature. In light of the above, it is not necessary for this court to determine whether the defendant's time to deny or pay the claim, once it does receive the requested information, is diminished by one day.

Absent from Judge Levine's decision is any mention of the Second Department Appellate Term's decisions in Alur Med. Supply, Inc. v Progressive Ins. Co. , 23 Misc3d 130(A) (App Term, 2d & 11th Jud Dists 2009) and Infinity Health Prods., Ltd. v Eveready Ins. Co., 21 Misc3d 1 (App Term, 2d & 11th Jud Dists 2008), in which that court held that an early follow-up verification request voids the tolling of the 30-day pay/deny rule that stems from a timely additional verification request. Of course, Richmond County is the 13th Judicial District and does not fall within the jurisdiction of the Second Department, Appellate Term for the 2nd & 11th Judicial Districts.  [P.S. 2:45 p.m. -- See comments to this post.]

One certainly could argue that this decision runs contrary to the Second Department's 1996 decision in Presbyterian Hosp., City of NY v. Aetna Cas. & Surety Co., 233 AD2d 431 (2d Dept. 1996), lv. denied, 90 802 (1997), in which the court held where the insurer issued no follow-up verification request, its time either to pay or deny the claim had run even before the verification was received.  The distinction of there having been no follow-up verification request in that case, as opposed to a late request, may or may not be the classic one without a difference.

Judge Levine's logic seems simple enough, though -- if the "punishment" to a no-fault insurer for a late additional verification request is "only" a corresponding reduction in the 30-day pay/deny period, the "with the exception of section 65-3.6 of this subpart" language of 65-3.8(j) must mean that there should be no greater, and possibly a lesser or no punishment for a late follow-up verification request.  Otherwise, that exception would have no meaning, right?

Notably, having found that plaintiff's action was premature because it had not provided the requested verification, Judge Levine did not address the question of whether the insurer's time to deny or pay the claim is diminished by a late follow-up verification request.  One could argue that the potential usefulness of this decision, therefore, is limited to situations in which there has been no response to the insurer's follow-up verification requests, timely or not. 

So what if instead of no follow-up verification request (Presbyterian Hosp.), the follow-up verification request was really late by, let's say, 31 days?  Would the 65-3.8(j) exception still apply or would the 30-day pay/deny period be deemed to have run?  If there is no negative repercussion for a late follow-up verification request, doesn't the exception of 65-3.8(j) swallow up the rule of 65-3.6(b)?

Question for my friends over at BSBGFM&N -- appeal or leave this one alone?  The greater good/greater harm question.