Thursday, August 27, 2009

Bronx Civil Holds that No-Fault Insurer Is Not Obligated to Offer Policy On Motion to Prove EUO Requirement & Certified Mail Creates Same Presumption of Receipt as Regular Mail

Hastava & Aleman Assoc., P.C. v. State Farm Mut. Auto Ins. Co.
(NYC Civil Ct., Bronx Co., decided 7/2/2009)

State Farm moved in lieu of answering to dismiss the plaintiff health care provider's action on the ground that plaintiff had violated policy conditions by failing to appear for a twice-scheduled examination under oath (EUO).   Plaintiff opposed State Farm's motion, asserting that State Farm had failed to submit a copy of the subject insurance policy in its motion papers, and had failed to demonstrate that EUO letters were sent.

New York City Civil Court Judge Fernando Tapia granted State Farm's motion and dismissed the complaint. On the question of whether State Farm was required to submit a copy of the policy in its motion papers to prove that plaintiff was subject to an EUO requirement, Judge Tapia held:
Revisiting 11 NYCRR § 65-1.1, that section is part of the revised no-fault regulations which took effect on April 5, 2002, and adopted the mandatory Personal Injury Protection ["PIP"] endorsement authorizing EUOs to be incorporated into insurance policies. In other words, compliance to a scheduled EUO is read into the written policy, and the insurer is not required to offer it as evidence to prove its claim.[FN1] Likewise, in the case at hand, Defendant is not required to include its written policy as part of the record because its defense [of the EUO "no-show"] is found in the Endorsement. Thus, the mandatory Endorsement applies whether or not the written insurance policy actually contains it. Based on the moving papers, the date of accident was on August 27, 2008. According to NY Insurance Law § 3425 (a)(8), "With respect to auto insurance, 'required policy period' means a period of one year from the date as of which a covered policy becomes effective after first issuance or voluntary renewal." Furthermore, under SZ Medical P.C. v. State Farm Mutual Auto Ins. Co., 9 Misc 3d 139(A) (App Term 1st Dept 2005), the date of the written policy's issuance determines if the Endorsement is applicable, and not the date when the plaintiff submits a claim. Applying the above to the instant action, the subject insurance policy contract could be deemed to have been issued/renewed well after April 5, 2002, given that the date of accident occurred well over six years after the effective Endorsement date. It would therefore be duplicative to submit a copy of the policy because its legislative intent was to read the Endorsement into all policies [post-April 5, 2002].[FN2] As such, Defendant does not need to submit the policy contract because the insurance contact in effect incorporates the Endorsement that authorizes EUOs under 11 NYCRR § 65-1.1.

Plaintiff in the case at bar is therefore in violation of the policy condition requiring submission of EUOs for verification purposes in order to make a determination of first-party benefits because Plaintiff did not appear at the two scheduled EUOs as required by the Endorsement. Accordingly, Plaintiff failed to submit valid proof of claim.
Although it did not "explicitly or implicitly deny [in its pleadings] that it never received the EUO letters", plaintiff also argued that State Farm's motion should be denied because it had not proven in evidentiary form that the two EUO scheduling letters were actually mailed.  On its motion, State Farm submitted affidavits from the calendar clerk of the law firm of State Farm's attorneys and  a State Farm claim representative, who attested her personal knowledge of State Farm's mailing procedures of EUO letters via certified mail.  Plaintiff Plaintiff countered that State Farm had failed to meet its prima facie burden of proving that the two EUO letters were actually mailed because the submitted affidavits were not from individuals who had personally mailed the EUO letters.

In finding that State Farm had sufficiently proven mailing, Judge Tapia found that mailing a certified letter with a return receipt was entitled to the same presumption of receipt as regular first-class mail, even in the absence of the signed returned receipt:
Mailing procedures' technological developments, today, ensure that items are mailed and received so that presumptions can be eliminated. In fact, the USPS has the capacity to reproduce the image of the green return receipt card as a PDF attachment when certified mail is procured via the internet, or else when the sender did not receive the green card back and instead goes to the USPS to follow up on the status of the card. See FN. 9.

As footnoted earlier, the regulation is not specific about the means in which to send substantially equivalent written notices to the required parties; it merely instructs the insurer to "forward" them. See NYCRR § 65-3.5 (a).  In fact, it may very well have been the legislative intent of the NY Insurance Department to be vague in order to avoid enforcement of a particular form of mailing in the event it becomes outdated, which would breed any problems regarding receipt. Until the no-fault regulations streamline its mailing requirement, it is presumed that a properly addressed letter that was mailed was duly delivered to the intended individual when using any method of mailing that the USPS offers, however basic or sophisticated that form of mailing is.

Satisfying no-fault policy conditions does not have to be compromised at the expense of challenging mailing procedures because proof of mailing of verification letters via regular USPS is enough to create a presumption of receipt. In addition, use of certified mail does not create a more demanding presumption of mailing and receipt beyond that of a letter that was properly mailed. The regulations make no distinction between sending a letter via regular mail or via certified mail. 
I get the whole presumption of receipt from a sufficiently proven mailing thing, but using certified mail requires a recipient's signature for delivery, regardless of whether the sender requests a return receipt.  I just learned that this week, after having tried regular, certified return receipt, certified no return receipt, overnight and handwritten envelope with no return address mailing methods to ensure that an insured received my insurer client's EUO letter and notice. All but the handwritten envelope with no return address had been rejected and returned, even the UPS mailing (which required the insured to go to the effort of driving the unopened mailer back to UPS's nearest shipping depot for returning to me).

I don't take issue with the court's ruling in this case, especially since plaintiff apparently did not deny having received the EUO letters (although there is also no mention of State Farm having received the signed return receipts, in which case presumably those would have been submitted on its motion, as well), but when a party uses certified mail with or without return receipt, tracking and confirming delivery is as easy sitting down as a computer with Internet access.  Sending something via certified mail return receipt guarantees either: (1) delivery to the letter's address, as confirmed by the signed return receipt; or (2) non-delivery, as confirmed by the envelope eventually coming back marked either "unclaimed" or "rejected".  A certified envelope coming back is a pretty good clue that there was no receipt, if the letter or item was not also sent or mailed by some other method.

Is there a USPS mailing method in which delivery can be confirmed without requiring the recipient's signature?  Yes, Delivery Confirmation™. I'll be using that method now for sending EUO letters/notices to recalcitrant recipients.  Presumption of receipt is good.  Confirmation of receipt is better.  Acknowledgment of receipt (via a signed receipt) is best.

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