The Office of General Counsel issued the following opinion on February 11, 2003, representing the position of the New York State Insurance Department.
Re: Failure to Attend a No-Fault IME
Questions Presented
When an eligible injured person for No-Fault benefits fails to attend a medical examination requested by a No-Fault insurer, in order to verify the medical necessity of health services performed and billed for by the provider of services:
1) What is the effect on (a) pending claims for health services rendered submitted to the insurer, (b) the submission of future claims, and (c) any claims previously paid?
2) When issuing a denial of claim based upon the failure of the eligible injured person to attend the requested medical examination, must the insurer also deny the claim based upon a lack of medical necessity for health services performed?
Conclusions
1) (a) When an eligible injured person fails to comply with a No-Fault insurer's reasonable request for a medical examination, that person has failed to meet a condition precedent for No-Fault coverage under the prescribed No-Fault endorsement contained in N.Y. Comp. Codes R. & Regs. tit. 11, § 65-1 (Regulation 68) (2002), and therefore, any pending claim submitted for services rendered may be denied by the insurer due to the policy breach and resulting lack of coverage. However, the insurer should pay all claims for services where it does not dispute the medical necessity of such services.
(b) When an eligible injured person fails to meet the condition precedent for coverage due to that person's failure to comply with a reasonable request for a medical examination, the breach of that policy condition obviates the obligation of the No-Fault insurer to provide coverage for any future claims for health services arising from the same accident provided to that person by any health provider.
(c) When a No-Fault insurer has made payment for claims for health services provided to the eligible injured person, the failure of the eligible injured person to comply with a reasonable request for a medical examination made to verify the medical necessity of claims for subsequent health services performed (arising from the same accident) does not create a right of recovery for the insurer for the benefits previously paid under the New York Insurance Law.
2) When a No-Fault insurer issues a denial of claim based upon the failure of an eligible injured person to submit to a requested medical examination in order to verify the medical necessity of health services performed, the insurer is relieved of any obligation to issue a denial of claim based upon the lack of medical necessity for services rendered.
Facts
The insurer received an application for benefits from the eligible injured person, as well as a bill submitted by the health provider for health services performed. Thereafter, the insurer requested a medical examination in order to verify the medical necessity of those services (i.e. proof of claim). The inquirer presents several questions as to the requirements of the No-Fault regulation as they pertain to different scenarios where the eligible injured person fails to comply with the insurer's request for a medical examination. For purposes of these questions, we are assuming that the eligible injured person has executed an assignment of benefits to its provider of health services.
Analysis
1. (a) Pursuant to N.Y. Ins. Law § 5106(a) (McKinney Supp. 2002), a claimant must provide proof of claim of fact and amount of loss sustained when submitting a No-Fault claim. Those claims must be medically necessary in order to be reimbursable as required by N.Y. Ins. Law § 5102(a) (McKinney Supp. 2002). The claim may take the form of either the prescribed verification form NYS Form N-F 3, Verification of Treatment by Attending Physician or Other Provider of Health Service or, as alternately provided under Section 65-3.5(f), a non-prescribed form submitted in lieu of the N-F 3 Form, which contains substantially the same information as the N-F 3. Under the No-Fault claims procedures established under Regulation 68, N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.5(b), an insurer has the right to request "any additional verification required by the insurer to establish proof of claim", within 15 business days of receipt of the bill for services. Pursuant to Section 65-3.5(d), when the request for additional verification is a medical examination, the insurer shall schedule the examination within 30 calendar days from the date of receipt of the prescribed or equivalent verification form.
The prescribed No-Fault endorsement in New York, N.Y. Comp. Codes R. & Regs. tit. 11, § 65-1 (Regulation 68) (2002) entitled "Conditions" states that "The eligible injured person shall submit to medical examination by physicians selected by, or acceptable to, the Company, when, and as often as, the Company may reasonably require." (emphasis added). The insurer is given the right, as a policy condition, to conduct medical examinations when, and as often as, the Company may reasonably require, so that the insurer has the opportunity to physically examine the patient in order to evaluate the medical necessity of the treatment performed.
In the "Conditions" provision of the No-Fault prescribed endorsement in Section 65-1.1, the section entitled "Action Against Company" states that "No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage." Therefore, since attendance at a medical examination is a condition of coverage, an eligible injured persons failure to comply with the request precludes an action against an insurer in support of payment for the submitted health service claims, and no coverage is available for subsequent health service claims. See Adams v. Allstate, 210 A.D.2d 319 (2d Dep't 1994).
When an eligible injured person fails to attend a scheduled examination, it is a question of fact, to be determined under all the specific circumstances of each case, whether the insurers request was reasonable, and as a corollary, that the injured person's failure to attend was unreasonable, in order to ultimately determine whether the policy condition was met.
Pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.8(b)(1), "An insurer may not interrupt the payment of benefits for any element of basic or extended economic loss pending the administering of a medical examination, unless the applicant or the applicant's attorney is responsible for the delay or inability to schedule the examination." This provision is intended to operate in conjunction with Section 3.8(d), which states that: "Where an insurer denies part of a claim, it shall pay benefits for the undisputed elements of the claim. Such payments shall be made without prejudice to either party." The clear intent of these provisions is to ensure that eligible injured persons receive timely payment for those services provided for which there is no dispute as to the medical necessity of those services (i.e. undisputed claims), even though an insurer may be questioning the necessity of other services in the claim(s) submitted by the same or other providers and is requesting an examination to evaluate the medical necessity of those other services. All claims that are being verified through medical examination are, by definition, in dispute, and there is no obligation to pay or deny such claims while the request for examination is pending.
(b) It, therefore, follows that when the eligible injured person has breached a policy condition of coverage by failing to comply with a reasonable request to submit to a medical examination, the persons right to future No-Fault benefits arising from the same accident is extinguished, since, as referenced above, "no action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage."
(c) The clear intent of the No-Fault regulation as expressed under N.Y. Comp. Codes R. & Reg. tit. 11, § 65-3.8(b)(1) and (d) and discussed above, is that eligible injured persons receive timely payment of undisputed claims, i.e. as mandated by N.Y. Ins. Law § 5106(a) (McKinney 2002), "Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within 30 days after such proof is supplied . . ."
Therefore, given the statutory and regulatory mandates that timely payment of undisputed claims be made by the insurer, the subsequent failure of an eligible injured person to attend a requested examination in order to substantiate the medical necessity of disputed claims, may not be used by the insurer to recover proven payments of claims already made, subsequent breach of policy conditions notwithstanding. Having had the opportunity to request a medical examination in order to evaluate the medical necessity of those claims, the failure of the insurer to exercise that right serves to estop the insurer from subsequently initiating an action for the recovery for those paid claims.
2. As discussed above, Regulation 68 provides that an insurer may reasonably request medical examinations of eligible injured persons in order to verify the medical necessity of services rendered. Therefore, when an insurer cannot make such a determination due to its inability to conduct a medical examination, based upon that policy breach by the eligible injured person, the insurer is relieved of any obligation to issue a denial based upon the lack of medical necessity. Since there is no available reimbursement coverage for the claims being questioned, the question as to their medical necessity is no longer determinative of the denial of claims.
For further information you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.