Does ‘Alleviation’ Alleviate Insurance Carrier Fears?

Carriers, providers, and legal practitioners, alike, hoped the court would provide clarity on a carrier’s obligations once a policy becomes exhausted, but the recent decision did not squarely address that issue.

Thus, albeit not articulated, the Second Department makes clear that proof of policy exhaustion, alone, is insufficient to dismiss a personal injury protection (PIP) lawsuit. That is, it is still necessary to scrutinize the timeliness and propriety of a denial. The logical conclusion is that a claim will be awarded if the denial or defense is not sustained regardless of policy exhaustion.

Pursuant to New York state no-fault law, an automobile insurance policy has a statutory mandatory minimum to include $50,000 in PIP. New York insurance law provides “first party benefits” coverage for “basic economic loss,” which includes all necessary expenses incurred for medical treatment and loss of earnings from work. See N.Y. Ins. Law §5102(a)-(b). Insurance carriers are required to process each bill upon receipt. Therefore, the benefits are to be paid as the loss is incurred, prior to the exhaustion of the policy. See N.Y. Ins. Law §5106(a); see also Matter of Medical Socy. of State of N.Y. v. Serio, 100 N.Y.2d 854, 860 (2003). Absent additional PIP coverage purchased by the insured, a policy will exhaust at $50,000.

In Nyack Hosp. v. General Motors Acceptance, the New York Court of Appeals held that fully verified claims are payable in the order they are received. See Nyack Hosp. v. General Motors Acceptance, 8 N.Y.3d 294 (2007). Four years after Nyack, Alleviation Med. Svcs. v. Allstate Ins. Co. commenced in the Civil Court of New York, Queens County. See Alleviation Med. Svcs., 2021 N.Y. Slip Op. 08159. In Alleviation, the plaintiff-provider alleged that the defendant-carrier “failed to properly deny the claim or request additional verification in compliance with no-fault regulation” for treatment rendered. See id. Thereafter, the defendant moved for summary judgment due to policy exhaustion. See id. The motion was denied on the basis that the defendant’s evidence, while proving exhaustion of the policy, did not speak to the basis of the denial of the subject claim. See id. Subsequent appeals ensued.

By Danielle Corbisiero and Nadia F. Rahman [Law]