New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following opinion on October 15, 2002, representing the position of the New York State Insurance Department.

RE: EUO Standards Under No-Fault

Question Presented:

Under the current No-Fault regulation, must an insurer provide to a claimant a copy of their internal guidelines, which they are required to maintain on-site for inspection by the Department, for requiring a claimant for benefits to submit to an examination under oath?

Conclusion:

No. There is no requirement in the regulation that a No-Fault insurer must provide a copy of their internal guidelines for requiring an EUO upon the request of a claimant for benefits.

Facts:

Mr. A describes a situation where a claimant for No-Fault benefits has been asked to submit to an EUO at the request of the No-Fault insurer and the attorney for the claimant asks to review the internal guidelines of the insurer as to when an EUO request will be made. It is Mr. A’s understanding that several carriers have refused to release their guidelines on the grounds that the No-Fault regulation does not require them to do so.

Analysis:

Under N.Y. Comp. Codes R. & Regs. tit. 11, § 65-1.1(d)(2002), which prescribes the No-Fault Mandatory Personal Injury Protection Endorsement which must be included in all owners policies of motor vehicle liability insurance issued in New York, the "Conditions" section of the endorsement contains a "Proof of Claim" provision which states that:

…Upon request by the Company, the eligible injured person or that person’s assignee or representative shall:

…(b) as may reasonably be required submit to examinations under oath by any person named by the Company and subscribe the same;

Under the regulation’s claims practice provisions, Section 65-3.5(e) states that "When an insurer requires an examination under oath of an applicant…to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination. Insurer standards shall be available for review by Department examiners."

The Department’s purpose in adding language as to the right of an insurer to conduct an examination under oath of a claimant, as a specific condition of coverage, was to recognize the importance of EUOs in identifying fraud and violations of New York law in the submission of claims for reimbursement. In so doing, the Department also added the provision in Section 65-3.5(e) to ensure that insurers would not request EUOs on either a routine or arbitrary basis, but would only do so when reasonably warranted, based upon the application of specific facts to objective standards established by the insurer in order to provide a reasonable basis for the request.

The Department’s intent in requiring No-Fault insurers to establish objective standards and to maintain them for Department review is to allow for the Department to perform market conduct examinations of insurers and to evaluate the practices of insurers in requiring EUOs. The regulation contains no requirement for insurers to provide these standards for review by a claimant or claimant’s attorney when an EUO has been requested. After careful review, the Department determined that the interest of the claimant in obtaining a company’s internal standards for EUOs was outweighed by the benefits to an insurer of being able to utilize EUOs as an important tool in combating fraud in the No-Fault system.

For further information, you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City office.