Arbiters of NY No-Fault

The Absence of one Word in Reg 68 Doesn’t Void a Policy Endorsement’s Exclusion

Bethany Mazur — Fri, 03 Sep 2010 16:00:23 +0000

Applicant and Geico Insurance Company

AAA Case No. 412010016107, Michelle C. Entin (awarded July 28, 2010)

The applicant was involved in an accident when he was riding a motorcycle, and sought lost wage benefits from his motorcycle insurer. The respondent denied the claim on the pretty clear grounds that occupants of a motorcycle are excluded from No Fault Benefits. In support of its denial, the respondent submitted copies of the insurance policy’s Mandatory Pedestrian Personal Injury Protection Endorsement, Section I, which stated in the Exclusions that: “this coverage does not apply to personal injury sustained by, ‘any person while occupying a motorcycle.’”

The applicant nevertheless alleged that the New York State Regulations read differently than the subject policy language, arguing that the Regulations do not indicate that coverage is only for pedestrians. 11 NYCRR 65-1.1‘s “motorcycle” exclusion (under both the Mandatory PIP and the Mandatory PIP – Motorcycles) states:

This coverage does not apply to personal injury sustained by:
(e) any person while occupying a motorcycle[.]

Furthermore, the policy form also noted that PIP-Motorcycles applied only to pedestrians injured by the insured motorcycles, and that occupants of motorcycles were not covered by No-Fault.

Upon the Arbitrator’s review of the Reg, she found, as it was uncontroverted that the applicant was “riding on and an occupant of a motorcycle” at the time of the accident, that there was no coverage for the Applicant’s claim for lost wages, irrespective of whether the word “pedestrian” is indicated in the Regulation or not.

AAA Arbitration Decisions – August 2010

Bethany Mazur — Fri, 03 Sep 2010 14:37:10 +0000

Finally, a drop in the number of decisions. When I started the research for August and saw that, after counting only the 1st through the 12th of August, there were already 878 decisions – I thought we were on pace for a record month. I guess summer vacations kicked in, with only 265 decisions for the rest of the month. 1140 total decisions makes this the lowest month since January (after we saw an influx of decisions in December).

Apparently or local arbitrators (Benziger, McCorry, and O’Connor) are still working just as hard though – 61 decisions for them in August.

No Preclusion for Failure to Provide Scheduling Letters to Applicant

Scott Mancuso — Thu, 02 Sep 2010 21:25:48 +0000

Dr. Parks/Comprehensive Pain/Applicant_1 and Geico Insurance Company

AAA Case No. 412010018524, Arbitrator Victor Moritz (08/16/10)
Amount in Dispute: $1,626.29
Award: Denied

The insurer issued a denial for all physical therapy services based on the assignor’s failure to attend an Independent Medical Examination.

The insurer sent out an original notice for an IME, scheduling it 18 days later. After the assignor failed to appear, the insurer sent out another notice for an IME two days later, scheduling it 14 days later. The insurer provided invoices indicating that the assignor failed to attend both of these sessions. The insurer also submitted the assignor’s NF-2, which showed that the insurer had sent both of the notices to the assignor’s last known address.

The provider attempted to argue that it had requested the letters scheduling the examinations from the insurer and that the insurer had failed to provide them. Thus, the Applicant argued that the insurer violated 11 NYCRR 65-3.2, which should lead to a preclusion of the letters and ultimately the defense put forth by the insurer.

The Applicant was referring to the part of the regulation, which states that an insurer must:

f- Respond promptly, when a response is indicated, to all communications from insured’s, applicants, attorneys and any other interested persons…

The arbitrator stated that while he “sympathized with applicant’s counsel’s plight” and “found it disheartening that respondent failed to provide applicant’s counsel with the requested letters,” he did not believe the regulations would allow him to preclude the letters, as “nothing in the regulations specifically addresses this issue.

The arbitrator, thus, held that the denials were proper and denied the Applicant’s claim in its entirety.

Peer of Peer Reviewing Doctor Assists in Denial

Scott Mancuso — Fri, 27 Aug 2010 21:01:18 +0000

Buffalo Neurosurgery Group and Geico Insurance Company

AAA Case No. 412010021147, Arbitrator Veronica K. O’Connor (08/26/10)
Amount in Dispute: $12,316.72
Award: Denied

Here, the Applicant/provider’s assignor was involved in a motor vehicle accident and the provider performed a thoracotomy at T6-T7, a diskectomy at T7-T8, a decompression of dura at T7-T8, and a fusion at T6-T7 and T7-T8.

The insurer requested a peer review for the medical necessity of these procedures and whether they were casually related to the MVA.

The peer reviewing doctor reviewed an MRI scan of the assignor’s T6-T8 disks. He stated that the radiologist who performed the scan made no mention at all of even a small herniated disc. The provider’s orthopedic surgeon, however, stated that there was a “large” disc herniation at T7-T8. In his report, the provider’s orthopedic surgeon specifically stated that he disagreed with the radiologist’s report.

Based on this difference of opinion over the MRI, the peer reviewing doctor requested an independent opinion from yet another doctor, presumably someone more qualified to form an opinion as to the content of the MRI.

The peer of the peer reviewing doctor reviewed the MRI scans and opined that they revealed pre-existing degenerative changes and were not post-traumatic to the MVA. He stated there were no abnormalities causally related to any injury suffered in the MVA.

The peer reviewing doctor then used his peer’s opinion to also state that the surgery was not medically necessary and was not casually related to the subject MVA.

The arbitrator held that the peer reviewing doctor’s opinion was adequately supported and that the evidence submitted by the Applicant/provider failed to refute findings set forth in the peer review. The Applicant’s claim was, thus, denied in its entirety.

Intoxication and No-Fault

Bethany Mazur — Wed, 25 Aug 2010 15:20:34 +0000

Medihealth Medical PC and The Travelers Indemnity Company

AAA Case No. 412010018127, Stacey E. Charkey (awarded August 9, 2010)

We haven’t covered an intoxication decision on the blog – so here’s a recent one with an overview of the issue.

Applicant provided medical services to the assignor in the amount of $182.18 following an automobile accident wherein it was alleged that assignor was operating his motor vehicle in an intoxicate condition at the timed the accident occurred.

Following the accident, the Assignor was taken to Stony Brook University Medical Center where he was treated and released with a left collarbone fracture. According to the hospital records provided for the arbitrator’s review, the Assignor’s ETOH (ethanol or “beverage alcohol”) level was 0.319 determined based upon laboratory blood work performed at the hospital. However, the copy of the hospital record submitted to AAA by Respondent was not certified.

On July 24, 2009, Assignor came under the care of Dr. Ahmed Elfiky where he underwent an initial examination. Dr. Elfiky, the applicant herein, submitted his bill to Respondent who issued a blanket denial upon the grounds that Assignor was operating the motor vehicle in an intoxicated condition. Accordingly, Respondent issued a timely denial on the grounds that No-Fault benefits were excluded to operators under the influence of drugs and/or alcohol. 11 NYCRR 65-1.1, Exclusions, (g), states:

This coverage does not apply to personal injury sustained by… any person as a result of operating a motor vehicle while in an intoxicated condition or while his ability to operate such vehicle is impaired by the use of a drug.

Furthermore, 11 NYCRR 65-3.14 (b)(1) states:

An insurer shall pay benefits to an applicant for losses arising our of an accident in the following situations: where coverage has been excluded for an applicant operating a vehicle while in an intoxicated condition or while the applicant’s ability is impaired by the use of a drug, if such intoxicated or drugged condition was not a contributing cause of the accident causing the injuries.

The arbitrator stated, therefore, that the Respondent had to prove that the Assignor was intoxicated and that the intoxicated condition was the contributing cause of the accident (citing Westchester Medical Center v State Farm Automobile Insurance Company, 44 AD3d 750 [NYAD 2nd Dept, 2007]).

Arbitrator Charkey also took notice of the Appellate Division’s decision in In the Matter of Nyack Hospital v Geico, 139 AD2d 515 (NYAD, 2d Dept, 1988). There, the hospital brought an action to recover costs incurred in treating the injured driver. A lower No-Fault arbitrator ruled that the insurer was not liable for the injured driver’s medical expenses because he was intoxicated based on a report of the driver’s blood alcohol level. On appeal, the hospital contended that the report was inadmissible to show that the driver was intoxicated and the 2d Department affirmed the order vacating the arbitration award and held that the arbitrator exceeded his authority because the insurer did not establish the proper foundation for admitting the driver’s blood alcohol results. The Appellate Division held that “[s]ince Geico made no showing of authenticity and satisfactory care in the collection of the blood sample and its analysis, the blood alcohol test result was technically inadmissible in a court of law for lack of a proper foundation.” (id. at 515-516)

The Nyack court classified a No-Fault arbitration as compulsory arbitration and found that due process considerations require the courts to exercise a broader scope of review than in cases of consensual arbitration. In authorizing review of whether the arbitrator had exceeded his power, the court found that in cases of compulsory arbitration, it should looked to whether the Award was supported by evidence or other basis in reason appearing in the record. “[T]he erroneous admission of the blood alcohol test result, without a proper foundation, was prejudicial, since it represented the only evidence proffered at the hearing to show the insured was intoxicated at the time of the accident… no other evidence or basis in reason appears in the record to support the arbitrator’s finding of intoxication upon which the Award upholding Geico’s disclaimer of coverage is predicated.” (id. at 516)

In this arbitration, other than the hospital record, there was no evidence which would have supported a finding of intoxication. In order for the hospital record to be admissible under Nyack Hospital, either a foundation witness would have had to testify, or a certified copy of the hospital record would have to have been submitted. Here, the only evidence regarding the Assignor’s intoxication was the Stony Brook University Medical Center chart. This document indicates in several areas that the Assignor was under the influence of alcohol.

No other evidence was produced to support the Respondent’s contention that the Assignor was intoxicated, legally or otherwise. Similarly no evidence was provided to show or indicate that the Assignor’s ability to operate a motor vehicle was impaired. Arbitrator Charkey held that:

[T]he Respondent failed to offer any comment regarding the contributing cause of the accident. They must show that the Assignor was intoxicated and/or that her ability to operate a motor vehicle was impaired, and, that the intoxicated/impaired condition was the contributing cause of the accident. The Respondent did not offer evidence to meet the aforedescribed requirements. With respect to the cause of the accident, there is no proof in the record as no police report was provided. Such a dearth of evidence does not place the cause of the accident on Assignor’s intoxication. Respondent did not produce a foundation witness, and the hospital record was not certified. Moreover, Respondent failed to establish that Assignor’s alleged intoxication was the proximate cause of the accident. Accordingly, it would be an abuse of this arbitrator’s discretion to make a finding of intoxication where the only evidence proffered at the hearing to establish intoxication was an inadmissible blood alcohol test result. Moreover, Respondent has failed to establish intoxication as the proximate cause of the accident. Accordingly, Respondent’s denials based upon Assignor’s alleged intoxication cannot be sustained.

As you can see (although it’s not often that we see intoxication denials arbitrated), those denials based on intoxication require a higher standard of proof than your average denial. Not only do the records proving intoxication need to be certified, but the insurer must also prove that the intoxication was the proximate cause of the accident. In the absence of a police report, as was the case here, an EUO or other form of proof would be required to establish proximate cause.

As an aside, it’s possible that the revised no-fault intoxication exclusion cut-back bill (passed by the New York State Senate on June 18th and the Assembly on July 1st), which limits the above-referenced exception to the PIP endorsement’s intoxication exclusion to the payment of “necessary emergency health services rendered in a general hospital…including ambulance services attendant thereto and related medical screening” might in fact more easily provide insurers with the certified records they’d need to deny claims based on intoxication. Without any concern that their bills will not be paid, hospitals will likely be a little more willing to cooperate in providing certified records relative to the BAC/ETOH of an injured person. Coverage Counsel and Arbiters of NY No-Fault will continue to watch this bill and keep you updated on any developments.

Accident in PA = PA Law Applies = No NY No-Fault Benefits for NY Resident

Scott Mancuso — Tue, 24 Aug 2010 20:04:28 +0000

All Care PT/Applicant_1 and Greyhound Bus Lines

AAA Case No. 412010009043, Arbitrator Kent L. Benziger (08/23/10)
Amount in Dispute: $668.88
Award: Denied

The Applicant/provider’s assignor was a New York resident. He purchased a bus ticket in Buffalo, New York and while travelling through Pennsylvania the bus lost control and rolled over. The assignor was injured in the accident and he received physical therapy treatment in New York as a result.

The assignor filed a law suit against the bus company in Pennsylvania, which the bus company removed to federal court based on diversity jurisdiction. The removal papers stated that the plaintiff was a resident of New York and the bus company was a resident of Texas, that did business in Pennsylvania.

The Applicant/provider brought arbitration in New York against the bus company for physical therapy treatment rendered to the assignor in New York. The bus company argued that Pennsylvania law applied to the accident and thus, the bus company did not owe no-fault benefits to the provider as the assignor was not an “Eligible Injured Person” under New York no-fault law.

The arbitrator stated that, historically, choice of law conflicts have been decided by applying the law of the “place of the wrong.” He then cited to a New York case that applied Pennsylvania law when a New York resident was driving a vehicle registered in Connecticut through Pennsylvania and was injured in a one-car accident. Roper v. Team Fleet Financing Corp., 10 Misc.3d 1080A (2006). The arbitrator stated “as a finding of fact and law, Pennsylvania law applies.”

Under Pennsylvania’s laws the bus company was not obligated to pay first-party benefits.

In Pennsylvania, both the Public Utility Commission regulations (52 PA. Code §1.1 et seq.) and the Federal Transportation Code (49 U.S.C.A. §10101 et seq.) require that the issue of first-party benefits be deferred to the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”). Pursuant to the MVFRL, commercial vehicles registered outside of Pennsylvania are exempt from complying with financial requirements so long as reciprocity exists between Pennsylvania and the state of registration.

The arbitrator, thus, held that, under Pennsylvania law, the bus company, which departed from New York, was not obligated to pay first party no-fault benefits to a New York provider that rendered treatment to a New York resident in New York.

Unreasonable Reasonableness

Bethany Mazur — Mon, 23 Aug 2010 14:28:26 +0000

Shawn A Sosnik DC PC and State Farm Mutual Automobile Insurance Company

AAA Case. No. 412010020419, Jonathan J. Hill (awarded July 29, 2010)

Applicant sought payment for forty-four chiropractic treatments in the amount of $1482.80, which the Respondent denied based on the Applicant’s (not the Applicant’s assignor’s) failure to appear for scheduled and rescheduled EUOs.

Respondent’s scheduling letters were found to have been sent to the correct address and contain the appropriate language concerning reimbursement for any lost earnings and travel expenses. There was no dispute that Dr. Sosnik failed to appear for his scheduled/re-scheduled EUOs, instead, Applicant contended that the request for an EUO of the Applicant was unreasonable and therefore the denials of claim were invalid.

In support of its position, the Respondent submitted a written brief detailing why it believed an EUO of the Applicant was necessary and an Affidavit by an employee concerning her investigation of the Applicant.

According to the initial scheduling letter, Respondent requested an examination of Dr. Sosnik as his medical facility “consistently submit bills for chiropractic services purportedly rendered to patients who receive acupuncture and physical therapy treatments for the same condition, at the same location, during the same period. This, combined with the pattern in the nature, frequency and duration of the chiropractic services that you purport to render to these patients, raises issues regarding the circumstances under which you are rendering these services, the necessity of these services and your entitlement to benefits under the Fee Schedule.” Apparently, however, the Respondent failed to include bills which would indicate that the Assignor in this matter received acupuncture and physical therapy treatments on the same days he was treated by Dr. Sosnik. Respondent also purportedly failed to submit any bills concerning other patients on the same issue. (As a side note, I find it hard to believe that an Arbitrator would accept such proof – rather consistently Arbitrators will require that the proof submitted relate only the instant assignor. It is possible that an exception might have been made here, though.)

Also included in the Respondent’s submission was a written brief which noted that the EUO of Dr. Sosnik was warranted as the Respondent suspected that the Applicant had an improper corporate structure in that it was actually owned by someone other than the Applicant. In support, Respondent submitted its employee’s affidavit, documents concerning Dr. Richard Yaldizian, documents concerning the ownership of property used by Dr. Sosnik to treat patients, and documents concerning management companies that may have been employed by the Applicant.

Respondent had also submitted proof that Applicant referred patients to physicians who, in the Arbitrator’s words, “ran afoul of the authorities” (ie Dr. Yaldizian) and that Applicant denied the Respondent a premises inspection (purportedly “unannounced” and “uninvited” though – although I do not know why such an inspection would be “invited”).

The arbitrator found, after reviewing all of the documents, that he was not persuaded that Applicant consistently submits bills for patients receiving chiropractic care, acupuncture treatment and physical therapy at the same time and the same location, nor that there was a “reasonable basis” for respondent to suspect that the Applicant was not owned by Dr. Sosnik. The arbitrator, in support of his decision, then goes on to state several sentences starting with “if” (ie, “if a realty company which may be owned by Dr. Sosnik either owns or leases the premises where Dr. Sosnik treats his patients seems to me to be a prudent business decision”) (emphasis added), but by the documents submitted, it does not appear that there was actually any proof that this was the case – instead it appears that was merely conjecture.

It seems as though the “reasonable” standard just keeps getting harder and harder for insurance companies to meet. 11 NYCRR 65-1.1 states:

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[.]

Arbitrator Hill’s holding was that he found “that there was no reasonable basis for the request of an Examination under Oath of Dr. Sosnik.” His decision, however, makes several assumptions about the business practices of Dr. Sosnik almost as if it were a criminal proceeding and he was “innocent until proven guilty.” There is no probable cause standard in No-Fault. If an insurer has legitimate questions about the ownership, practices, or possibly even the questionable regular colleagues of a provider, then the insurer should have the opportunity to ask those questions. We all know that the Regulation was drafted, in large part, to help prevent fraudulent applicants from obtaining no-fault benefits. An insurer need not prove their entire case prior to an EUO – considering the EUO is actually part of the investigation of the claim. State Farm arguably could have attempted to submit even more proof that the EUO was necessary (i.e. proof of concurrent care with other patients) but I can understand their probable belief that such evidence would not be admissible.

Furthermore, State Farm apparently had multiple reasons to investigate this claim – and although this arbitrator found that none of them could stand individually as a basis of investigation, viewed together they did and certainly should have raised a few eyebrows.

The Regulation states a provider must appear for an EUO “as may reasonably be required,” not “upon a reasonable basis.” You might argue that I’m splitting hairs, but I believe the language was meant to prevent insurers from requesting multiple EUOs of a party within a short period of time, or from simply requesting an EUO as a way to deter the claimant from treating. I do not believe the point was to require the insurer to have all the proof it needs to deny a claim before conducting an EUO to do the same.

Trend Continues: Negative IME Denial Arbs Continue to Favor Providers

Scott Mancuso — Fri, 20 Aug 2010 20:21:34 +0000

Over this past week, there were 30 arbitrations tagged as dealing with a denial premised on a negative Independent Medical Examination. In the past we have seen the majority of these arbitrations decided in favor of providers. This continues to be the case.

Of the 30 arbitrations decided this week:

15, half of these, gave full awards to the providers.

7, gave partial awards to the providers.

8, only about 25% of these, upheld the insurer’s denial.

This continues to reinforce the difficulty in denying a claim based on a negative IME, as only about a quarter of these that were brought to arbitration were ultimately successful. This likely has as much to do with the prevailing trends in no-fault law (ie, the disdain for “maximum medical improvement” type language) as it does with the general favoritism arbitrators tend to show for the opinion of treating physicians over independent examining physicians.

Great Wall Acupuncture Continues to Control Fees Charged by Licensed Acupuncturists

Scott Mancuso — Tue, 17 Aug 2010 20:46:41 +0000

Yesterday, two arbitrators confirmed what has been the trend in arbitrations regarding fees charged by licensed acupuncturists. The arbitrators both deferred to Great Wall Acupuncture, P.C. v. Geico Ins. Co., 26 Misc.3d 23 (Sup. Ct., App. Term 2d Dept. 2009), which allows insurers to reduce alleged “prevailing geographic rates” charged by licensed acupuncturists to the rates allowed for acupuncture performed by a chiropractor.

The court in Great Wall held that ”as a matter of law… an insurer may use the workers’ compensation fee schedule for acupuncture services performed by chiropractors to determine the amount which a licensed acupuncturist is entitled to receive for such acupuncture services. Where it is undisputed that a respondent reimburses an applicant pursuant to the fee schedule for acupuncture services performed by a chiropractor, plaintiff is not entitled to any additional reimbursement.”

MBL Acupuncture PC and Allstate Insurance Company

AAA Case No. 412010020486, Arbitrator John J. O’Grady (08/16/10)
Amount in Dispute: $1,182.45
Award: $1,007.13

Arbitrator O’Grady stated that ”any claim by a licensed acupuncturist for an amount in excess of the amounts payable under Workers Compensation Fee Schedule to a chiropractor performing acupuncture is denied.”

Mind and Body Acupuncture PC and Geico Insurance Company

AAA Case No. 412010011359, Arbitrator Richard W. Kokel (08/16/10)
Amount in Dispute: $215.73
Award: Denied

Arbitrator Kokel at least entertained the Applicant’s argument and stated that the Applicant’s evidence consisted of arbitration decisions they contended supported their view that they were entitled to the amounts they billed for the services rendered. However, as they did not offer any evidence of the prevailing fee for similar acupuncture services in the geographic area where they did business, the Arbitrator held that there was no basis to contravene the finding noted in Great Wall Acupuncture.

Peer Reviews Must be Signed to Have “Probative Value”

Scott Mancuso — Tue, 10 Aug 2010 19:24:35 +0000

Buffalo Diagnostic Imaging/Applicant_1 and Geico Insurance Company

AAA Case No. 412010011499, Arbitrator Thomas J. McCorry (08/09/10)
Amount in Dispute: $2,725.54
Award: $1,236.81

The EIP was referred for 4 MRIs 11 days after a motor vehicle accident. The insurer referred 2 of the MRIs, one of the brain and one of the Circle of Willis, to a neurologist for peer review. The insurer referred the other 2 MRIs, one of the cervical spine and one of the left shoulder, to an orthopedic surgeon.

The neurologist stated that the referring physician did not substantiate how the MRIs would clarify any diagnosis or alter any treatment for injuries sustained in the MVA. The medical records did not suggest deterioration of the EIP’s condition to warrant a pre-surgical imaging procedure.

Arbitrator McCorry was persuaded by the insurer’s argument that these 2 MRIs, performed only 11 days after the MVA, were premature and unnecessary.

The other 2 MRIs, peer reviewed by the orthopedic surgeon, were apparently denied based on a peer review that was both “unsigned” and “undated.” Arbitrator McCorry did not go into the merits of this peer review, as he stated that the fact that the peer review was not signed meant it had “no probative value on the issue on medical necessity.” The arbitrator thus, held these two denials improper and granted the Applicant/provider an award for these two bills.