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

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on April 8, 2008, representing the position of the New York State Insurance Department.

Re: Provider Billing Patient Directly Where the Patient Executed an Assignment of No-Fault Benefits Form

Question Presented:

May a provider bill a patient directly for health services rendered where the patient executed an assignment of no-fault benefits form granting the provider all of her rights, privileges and remedies, and the insurer denied the patient's claim on the ground that the claimed injuries were not medically ascertainable within one year of the motor vehicle accident?

Conclusion:

Yes. Because the injuries were not medically ascertainable within one year of the motor vehicle accident, there is no coverage under the No-Fault Law under the circumstances. Consequently, the provider may revoke the assignment of no-fault benefits and bill the patient directly.

Facts:

The inquirer reports that his client was involved in a motor vehicle accident and suffered various physical injuries. Shortly after one year following the accident, his client experienced symptoms associated with a Temporomandibular Joint (TMJ) disorder. She went to a dentist, who x-rayed her teeth, and placed some hardware in her mouth. She signed an assignment of no-fault benefits form with all of her TMJ doctors granting them all of her rights and remedies. The no-fault carrier denied her claim on the ground that the claimed injury was not medically ascertainable within one year after the accident.

The inquirer states that he has reviewed past Opinions of the Department's Office of General Counsel, which state that a provider may not bill a patient directly where the patient executed an assignment and the insurer denied the claim on the ground that treatment was not medically necessary.1 The inquirer asks whether the Department's analysis would be different where the insurer denied the claim on the ground that the claimed injury was not medically ascertainable within one year after the accident.

Analysis:

At the outset, it is important to explore what is meant by an injury being "medically ascertainable" within one year of the motor vehicle accident. New York's Comprehensive Motor Vehicle Insurance Reparations Act, the "No-Fault Law", provides a means for compensating victims of automobile accidents for their basic economic losses, irrespective of fault or negligence. N.Y. Ins. Law § 5102(a) (McKinney Supp. 2008) defines the term “basic economic loss” as follows:

(a) up to fifty thousand dollars per person of the following combined items, subject to the limitations of section five thousand one hundred eight of this article:

(1) All necessary expenses incurred for: (i) medical, hospital . . . surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical and occupational therapy and rehabilitation; (iii) any non-medical remedial care and treatment rendered in accordance with a religious method of healing recognized by the laws of this state; and (iv) any other professional health services; all without limitation as to time, provided that within one year after the date of the accident causing the injury it is ascertainable that further expenses may be incurred as a result of this injury.2 For the purpose of determining basic economic loss, the expenses incurred under this paragraph shall be in accordance with the limitations of section five thousand one hundred eight of this article.

Because the central purpose of the No-Fault Law is to ensure that individuals who sustain injuries that arise out of automobile accidents are compensated for their basic economic loss, a no-fault insurer is not required to provide coverage for injuries that are not causally related to such accidents. The apparent purpose behind the ascertainability limitation is to enable the insurer to verify that an injury is causally related to an accident. See Stanavich v. General Acc. Ins. Co. of America, 229 A.D.2d 872, 645 N.Y.S.2d 657 (3rd Dept. 1996); see also Barki v. Employers Mut. Liability Ins. Co. of Wisconsin, 87 Misc. 2d 912, 386 N.Y.S.2d 531 (N.Y. City Ct. 1976).

In Stanavich, the Third Department, construing Insurance Law § 5102(a)(1), concluded that an injury is not medically ascertainable if no evidence of it is submitted to the insurer within one year of the accident. See 229 A.D.2d at 873. For example, where an insured submits expenses for a cervical injury within the one-year period, and then three years later submits expenses for a knee injury, the knee injury would not be ascertainable within the meaning of Insurance Law § 5102(a)(1). Id. However, if the subsequent treatment was for a cervical injury, that injury would be ascertainable, since expenses for treatment for that injury had been submitted to the insurer within the one-year period. Id.

The inquirer asks whether a provider may bill a patient directly where the patient executed an assignment of benefits form granting the provider all of her rights, privileges and remedies, and the insurer denied the patient's claim on the ground that the claimed injuries were not medically ascertainable within one year of the motor vehicle accident.

N.Y. Comp. Codes R. & Regs. tit. 11, Part 65 (Regulation 68) governs no-fault transactions, and is relevant to the inquiry. 11 NYCRR § 65-3.11, entitled "Direct Payments" states, in relevant part, that:

(b) In order for a health care provider/hospital to receive direct payment from the insurer, the health care provider or hospital must submit to the insurer:

(1) a properly executed Authorization to Pay Benefits as contained on NYS forms NF-3, NF-4 or NF-5 or other claim form acceptable to the insurer. Execution of an authorization to pay benefits shall not constitute or operate as a transfer of all rights from the eligible injured person to the provider; or

(2) a properly executed assignment on:

(i) the prescribed Verification of Treatment by Attending Physician or Other Provider of Service form (NYS Form NF-3); or . . .

(iii) the prescribed No-Fault Assignment of Benefits form (NYS Form NF-AOB) contained in Appendix 13 or an equivalent form containing non-substantive enhancements, but no changes may be made to the assignment language itself.

There is a distinction between an assignment of no-fault benefits from a patient to a provider and an authorization by the patient to a no-fault insurer to pay benefits directly to the provider. An authorization is no more than a direction from a patient to the no-fault insurer to pay benefits directly to the provider. There is no transfer of rights, privileges and remedies from the patient to the provider.

3 The effect of an authorization is that the provider retains the right to bill the patient directly in the event that the no-fault insurer denies the claim. In contrast, an assignment transfers all of the patient's rights, privileges and remedies to the provider. The provider, therefore, stands in the shoes of the patient, and may pursue all of the remedies that would have been available to the patient.

The decision to use either an assignment or authorization always is voluntary on part of the provider and the patient. However, if the provider and the patient agree to an assignment of benefits or an authorization to pay benefits, they must use the form prescribed by Regulation 68. The language of the prescribed assignment of benefits forms generally preclude the provider from billing the patient directly, except where the insurer denies the no-fault claim because there is a lack of coverage, or the patient violates a policy condition.4

Here, consistent with the Stanavich holding, the patient did not present the insurer with any evidence of a TMJ dental disorder within the one-year period after the accident, and the insurer concluded that the injuries were not medically ascertainable within one year of the accident. Consequently, there is no coverage under the No-Fault Law under the circumstances, and the provider may revoke the assignment of no-fault benefits and bill the patient directly. The patient may, however, obtain reimbursement from her health insurer, provided that there is coverage under her health insurance policy.

For further information you may contact Associate Attorney Pascale Jean-Baptiste at the New York City Office.

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1  See Office of General Counsel Opinion Nos. 02-09-02 (September 4, 2002); 3-01-26 (January 13, 2003); 03-04-36 (April 30, 2003); 06-05-07 (May 12, 2006).

2  See Section 65-1.1 of N.Y. Comp. Codes R. & Regs. tit. 11 (Regulation 68), entitled "Mandatory Personal Injury Protection Endorsement."

3  The relevant authorization language of NYS Form NF-3, 11 NYCRR, Appendix 13 states:

AUTHORIZATION TO PAY BENEFITS:

I AUTHORIZE PAYMENT OF HEALTH BENEFITS TO THE UNDERSIGNED HEALTH CARE PROVIDER OR SUPPLIER OF SERVICES DESCRIBED BELOW. I RETAIN ALL RIGHTS, PRIVILEGES AND REMEDIES TO WHICH I AM ENTITLED UNDER ARTICLE 51 (THE NO-FAULT PROVISION) OF THE INSURANCE LAW. (See also 11 NYCRR, Appendix 13, NYS Forms NF-4, NF-5 and AOB (containing the same language.))

4  The relevant assignment language of NYS Form NF-3, 11 NYCRR, Appendix 13, reads as follows:

ASSIGNMENT OF BENEFITS:

I HEREBY ASSIGN TO THE HEALTH CARE PROVIDER INDICATED BELOW ALL RIGHTS, PRIVILEGES AND REMEDIES TO PAYMENT FOR HEALTH CARE SERVICES PROVIDED BY THE ASSIGNEE TO WHICH I AM ENTITLED UNDER ARTICLE 51 (THE NO-FAULT STATUTE) OF THE INSURANCE LAW. THE ASSIGNEE HEREBY CERTIFIES THAT THEY HAVE NOT RECEIVED ANY PAYMENT FROM OR ON BEHALF OF THE ASSIGNOR AND SHALL NOT PURSUE PAYMENT DIRECTLY FROM THE ASSIGNOR FOR SERVICES PROVIDED BY SAID ASSIGNEE FOR INJURIES SUSTAINED DUE TO THE MOTOR VEHICLE ACCIDENT, NOTWITHSTANDING ANY OTHER AGREEMENT TO THE CONTRARY. THIS AGREEMENT MAY BE REVOKED BY THE ASSIGNEE WHEN BENEFITS ARE NOT PAYABLE BASED UPON THE ASSIGNOR'S LACK OF COVERAGE AND/OR VIOLATION OF A POLICY CONDITION DUE TO THE ACTIONS OR CONDUCT OF THE ASSIGNOR. (See also 11 NYCRR, Appendix 13, NYS Forms NF-4, NF-5 and AOB (containing the same language.))