By: Robyn M. Brilliant and Jonathan Tolpin

The No-Fault Regulations were promulgated in order to provide compensation in the form of basic economic loss to motor vehicle accident victims in a timely fashion, and to alleviate the burden on the Courts by removing such disputes from the court system. (Short & Billy, Chapter 50, citing Montgomery v. Daniels, 38 NY2d 41, 378 N.Y.S.2d 1, 340 N.E.2d 444 [1976]; Governor’s Memorandum New York Legislative Annual, 298 [1973]).

Current Case Load

A review of the current case load in the civil and district courts involving disputes between medical providers and insurers reveals that the courts are more involved in No Fault disputes than ever and, accordingly, the No-Fault Law, intended to diminish disputes, has given rise to judicial review and a series of appellate court decisions affecting the current state of affairs in No-Fault Law and litigation.

While the No-Fault Law provides for mandatory minimum first-party benefits of $50,000 per person for medical benefits, wage loss, and other reasonable and necessary expenses, the benefits are not absolute. The No-Fault Regulations set forth provisions that permit an insurer to deny medical benefits to an applicant on various grounds, among them, on the ground that further medical treatment is no longer medically necessary (i.e., based upon an Independent Medical Examination (IME)). In addition, an insurer has the ability to submit medical bills and reports of a treating provider to an independent medical examiner (or peer reviewer) to evaluate treatment previously rendered and to give an opinion as to whether specific treatment, testing or medical supplies was medically necessary or justified.

The Appellate Term, Second Department has consistently held that where a denial of claim form (NF-10) fails to set forth with sufficient particularity the factual basis and medical rationale for its denial based upon lack of medical necessity, the insurer is precluded from asserting this defense, despite the fact that the denial was issued timely (A.B. Med. Servs. PLLC v. Liberty Mut. Ins. Co., 10 Misc3d 128A, 809 N.Y.S.2d 480, 2005 NY Slip Op 51902U [App Term, 2d & 11th Jud Dists]; Amaze Med. Supply v. Eagle Ins. Co., 2 Misc. 3d 128A, 784 N.Y.S.2d 918, 2003 NY Slip Op 51701U [App Term, 2d & 11th Jud Dists]).

However, Regulation 68 specifically provides that the insurer shall release a copy of the IME or Peer Review report to the applicant or applicant’s representative upon receipt of a written request (see, 11 NYCRR 65-3.8[b][4]). Thus, it can be argued that the recent case law contradicts 11 NYCRR 65-3.8[b][4]. It should be noted that the standard reiterated in A.B. Medical, supra, is not new law, although it appears to be taking the area of No-Fault litigation and arbitration by storm.

The Appellate Term also recently decided the matter of SZ Medical PC v. Clarendon National Insurance Co., 2006 NY Slip Op 51428U; 12 Misc. 3d 144 (2nd Dept. App. Term 2006), wherein it addressed the burden of proof required of insurers when denying a claim for lack of medical necessity based on an IME or Peer Review. The court, in citing AB Medical Services andAmaze, specifically referred to the insurer’s failure to attach a copy of the peer review report or otherwise provide a factual basis or medical rationale in the body of the NF-10 as grounds to preclude the insurer from asserting a defense based on lack of medical necessity. It should be noted that the insurer is permitted to send the report under separate cover as long as it does so within the 30-day claim determination period

In Contempo Med. Care, P.C. v. Travelers Indem. Ins. Co., 12 Misc3d 139A, 2006 N.Y. Misc. LEXIS 1815, 2006 NY Slip Op 51338U (App. Term 2d. & 11th Jud. Dists. 2006), the court held that the denial of claim forms submitted by the defendant were insufficient on their face for its lack of specificity when they merely indicated that the denials were based upon IMEs with no indication that the IME reports were annexed thereto or sent under separate cover within the 30 day claim determination period.

As a result of the holding in SZ Medical, supra, read in conjunction with A.B. Medical and Amaze, supra, in essence insurers have a choice of either attaching a copy of the IME or peer review reports to the NF-10 or stating with sufficient specificity in the body of the NF-10, the factual basis and medical rationale for the denial. In reality, if an insurer chooses not to attach a copy of the IME or peer review, they will be forced to re-type the entire IME/peer review report into the body of the NF-10, or require their claims adjusters, usually lacking a medical background, to determine the relevant factual basis and medical rationale, and explain so with the required specificity necessary to validly deny the claim. Once the denial is deemed to be in compliance with A.B. Medical and SZ Medical, supra, the issue of medical necessity is still one of fact, to be determined by the trier of fact.

Holdings of Cases

The current standard, as enumerated in the holdings of the cases cited herein, have a retroactive effect, and have been a windfall for applicants where the claims were denied for lack of medical necessity and where the NF-10s lack factual specificity and do not specifically state that the IME/peer review reports have been attached to the Denial of Claim forms. In order for an insurer to attempt to overcome the burden of a proper denial on claims previously denied, it is necessary to submit an Affidavit from a person with personal knowledge setting forth the insurer’s mailing procedures and indicating that the IME/peer review was in fact attached to the NF-10, although it was not specifically stated therein. The issue is one of fact to be determined by the arbitrator, judge, or jury.

In addition, it is insufficient for one (1) denial to satisfy the above requirements while subsequent denials fall short of this standard. It has been held that each and every denial contain the requisite language or peer review/IME report as each bill is considered its own claim and therefore each and every denial must stand alone. This issue is extremely important for the insurer when denying all future claims based upon the results of a single independent medical examination, or when several bills, each denied based upon the results of a separate peer review, become the subject of an action or arbitration.

There is also an abundance of case law and arbitration decisions recently concerning the content of peer reviews. The courts have recently been holding peer review reports “under a microscope” to assess their validity. It is well-settled that a health care provider establishes its prima facie entitlement to first party no-fault benefits under Article 51 of the Insurance Law by proof that it submitted a valid assignment of benefits and a claim setting forth the fact and amount of the loss.

A.B. Medical, supra, or Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742, 774 N.Y.S.2d 564, 2004 N.Y. App. Div. LEXIS 3597 (N.Y. App. Div. 2d Dept. 2004). It is also well-settled that the burden is on the insurer to prove lack of medical necessity. CityWide Social Work & Psychological Services PLLC v. Travelers Indemnity Co., 3 Misc3d 608; 777 N.Y.S.2d 241 (Civ Ct., Kings Cty, 2004).

Seminal Case

Although the appellate courts have not addressed the content of peer reviews, the seminal case on this issue is Nir v. Allstate Insurance Co., 2005 NY Slip Op 25090; 7 Misc. 3d 544; 796 N.Y.S.2d 857; 2005 N.Y. Misc. LEXIS 419 (Civ. Ct. Kings Cty. 2005). The court in Nir held that in order to rely upon a peer review to disallow previously rendered treatment, the insurer’s peer reviewer must establish a factual basis and medical rationale for the lack of medical necessity of the applicant’s services.

A peer reviewer’s medical rationale is insufficient if it is unsupported by or lacks evidence of medical standards in the community, enabling the peer reviewer to arrive at the conclusions rendered. The court stated that the medical rationale may be insufficient if not supported by evidence of the “generally accepted medical/professional practice.” Citing Citywide, supra, the court defined generally accepted practice as “that range of practice that the profession will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling.”

In Proscan Radiology of Buffalo v. Progressive Cas. Ins. Co., 12 Misc3d 1176A, 820 N.Y.S.2d 845, 2006 N.Y. Misc. LEXIS 1671, 2006 NY Slip Op 51242U (2006), the court held that it will not second guess a treating physician when the only support for an insurer’s denial is a peer review performed by a doctor who did not examine the patient.

The court further stated that “[p]utting weight on the treating physician’s prescription serves the reasonable expectations of the insured. An insured expects coverage for treatment recommended by a physician because he trusts that the physician has recommended a reasonable treatment consistent with good medical practice.” See Proscan, supra.

The insured’s expectations can best be fulfilled by construing the policy liberally so that uncertainties about the reasonableness of treatment will be resolved in favor of coverage. Oceanside Medical Healthcare v Progressive, 2002 NYMisc LEXIS 502, 2002 WL 1013008, 2002 NY Slip Op 50188U (2002).

However, the insurer is faced with the plight of rising costs and insurance fraud. The courts have acknowledged that requiring insurers to make reimbursements without regard to medical necessity would inflate costs and encourage fraud. In fact, until recently, the courts have been denying claims based upon the results of peer reviews without the necessity of the peer reviewer basing its opinion upon medical standards.

Furthermore, the courts have rejected the argument of the insurer that it cannot be required to retroactively comply with newly established principles that are being espoused by the courts today. In Gurnee v. Aetna Life and Casualty Co., 55 NY2d 184; 433 N.E.2d 128; 448 N.Y.S.2d 145; 1982 N.Y. LEXIS 3087 (Ct. of Appeals 1982), the Court held that a decision interpreting the Insurance Law should be given full retroactive effect since no new principle of law was established and the decision merely construed the language of the statute that was already in existence.


As the No-Fault law is constantly evolving, with new issues continuously emerging, it is important for a practitioner in the No-Fault area to keep abreast of the changing court and arbitration decisions.

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Robyn M. Brilliant and Jonathan Tolpin are both solo practitioners, each practicing in the areas of no-fault law and personal injury.

Adrienne Traubenik, legal assistant for Robyn Brilliant, helped prepare this artic

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