The Office of General Counsel issued the following informal opinion on January 11, 2000, representing the position of the New York State Insurance Department.
No-Fault Burden of Proof
Question Presented:
What burden of proof must a claimant meet in arbitration or court in order to support payment of a disputed claim for payment of No-Fault benefits where an insurer has failed to deny the claim within 30 days of receipt of the claimants proof of claim?
Conclusion:
The claimant must make a prima facie case of entitlement to such benefits. The quantum of proof necessary to meet that burden is a question of fact to be determined by an arbitrator or court on a case-by-case basis.
Facts:
Important questions have arisen subsequent to the issuance of two companion decisions by the New York Court of Appeals in Presbyterian Hospital v. Maryland Casualty Co., 90 N.Y.2d 274, 660 N.Y.S.2d 536 (1997) and Central General Hospital v. Chubb Group of Insurance Cos., 90 N.Y.2d 195, 659 N.YS.2d 246 (1997). In brief summary, those cases held that an insurer which fails to respond to the submission of a No-Fault reimbursement claim by either a timely request for proof of claim (i.e. a verification request) from the claimant or by issuing a denial within 30 days after the receipt of proof of claim, is thereafter precluded from denying or asserting a defense against payment of the claim, unless the denial is based upon a lack of coverage, where no contractual relationship exists between the claimant and the insurer. Assuming that an insurer has failed to deny a claim on a timely basis as described above, and that a claimant has initiated either arbitration or a court proceeding to compel the insurer to pay the claim, the question arises as to what is then required for an arbitrator or court to find in favor of the claimant and order reimbursement of the disputed claim.
Analysis:
A line of cases from the New York Court of Appeals indicates that the courts have recognized that N.Y. Ins. Law §201 and §301 (McKinney 1985) vest the Superintendent of Insurance with broad power to interpret, clarify and implement legislative policy. Ostrer v. Schenck, 41 N.Y.2d 782, 396 N.Y.S.2d 335 (1977); Breen v. Cunard Lines Steam Ship Company, 33 N.Y.2d 508, 355 N.Y.S.2d 333 (1974); New York Public Interest Research Group, Inc. (NYPIRG) v. New York State Department of Insurance, 66 N.Y.2d 444, 497 N.Y.S.2d 645 (1985)] In the NYPIRG case, the Court held that the Superintendent is vested with the power, under Section 301, to prescribe regulations provided only that his regulations are not inconsistent with some specific provision of the law. Moreover, he is granted "broad power to interpret, clarify and implement the legislative policy and his interpretation, if not irrational or unreasonable, will be upheld in deference to his special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision". In reaching this conclusion, the NYPIRG court relied on the decision in Ostrer v Schenck. There the court, in upholding a Departmental regulation, noted the "broad power" of the Superintendent "to interpret, clarify and implement the legislative policy .including any powers that the statute reasonably implies".
The Legislature has delegated to the Superintendent the responsibility and authority to protect the integrity and maintain the efficacy of the No-Fault reparations system through enforcement of the No-Fault law. In the absence of definitive decisions by the Court of Appeals interpreting the Insurance Law and/or its implementing regulations, the Superintendent has both the responsibility and obligation to issue interpretive opinions when required.
Under N.Y. Ins. Law §5102 (McKinney 1985), No-Fault first party benefits are reimbursement for all medically necessary expenses on account of personal injuries arising out of the use or operation of a motor vehicle. The requirements that all reimbursable expenses must arise out of a motor vehicle accident and be medically necessary to treat the injuries arising from the accident are fundamental to the financial integrity and viability of this social reparations system as established by the Legislature.
Though an insurers defense to payment of claim may be precluded under the Presbyterian and Central General cases, there is nothing in those decisions that either negates or vitiates the above-requirements. In order to prevail, the claimant must still meet the statutory requisite and make out a prima facie case of entitlement to benefits, whether in court or arbitration. In a motion for summary judgment, the movant must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in an admissible form sufficient to establish the existence of any material issues of fact. The failure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. (Alvarez v. Prospect Hospital, 68 N.Y.2d 330, 508 N.Y.S.2d 923 (1986). Therefore, even in the absence of any evidence or argument by the insurer, a claimant must show "sufficient" evidence to be deemed reimbursable under the No-Fault law.
What constitutes sufficient evidence in each case is a question of fact to be determined by the trier of fact in each individual instance. Given the number of differences inherent in the vast myriad of factual circumstance within the No-Fault universe, the Superintendent has chosen not to establish a single standard in the No-Fault regulation which specifies what type or what amount of documentation or testimony is necessary for the claimant to meet that burden. Rather, the Superintendent has recognized that discretion that must be accorded the finder of fact, in arbitration or court, to make that determination. It should be noted that in determining whether the claimant has established a prima facie case for reimbursement based upon the evidence submitted by the claimant, the mere submission of a bill for services without additional proof of necessity and causation may be insufficient to meet the requirements of Section 5102.
Additionally, in determining whether a claimant has met their burden, it is appropriate for an arbitrator or court to determine, as a matter of standing, whether the claimant is lawfully authorized to bill for No-Fault services under New York State law. In addition to interpreting and enforcing the No-Fault law, it is always within the purview of an arbitrator or court to take judicial notice of other New York State laws that relate to the lawful authority of an entity to bill for reimbursement. The authority of an arbitrator or court to review issues of standing exists independently and is not dependent on whether or not such issue has been raised by the No-Fault insurer. Whether an insurer has been precluded from asserting a defense under Presbyterian or Central General, or failed to raise a defense at all, does not relieve an arbitrator or court of its jurisdiction to address these questions.
For further information you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.