The Office of General Counsel issued the following opinion on February 6, 2003, representing the position of the New York State Insurance Department.
Effect of a defective assignment on the payment of a No-Fault health service claim
When a health service provider presents a No-Fault insurer with a bill for health services rendered to an eligible injured person which is accompanied by an assignment document signed by the eligible injured person and the health service provider, but which is not a prescribed form as mandated for use under N.Y. Comp. Codes R. & Regs. tit. 11, § 65 (2002) (Regulation 68), what action should the insurer take concerning the defective assignment with respect to the claim submitted?
When an insurer receives a claim for reimbursement for health services provided to an eligible injured person under No-Fault, which is accompanied by an assignment of benefits document which is violative of the prescribed form as mandated for use under Regulation 68, such assignment is defective in that it does not effectuate a proper assignment of benefits. Upon its receipt of the defective assignment, the insurer should commence the claims review process by seeking verification of the claim by sending a verification request letter to the provider, enclosing a blank copy of the prescribed assignment form, asking that the form be executed by the parties and re-submitted to the insurer in order to establish proof of claim. Until such time as the fully executed prescribed assignment form is submitted to the insurer, the claim is considered to be open, pending additional verification, and the 30 day period in which the insurer must pay or deny the No-Fault claim does not commence until it has received the necessary information to establish proof of claim.
No facts were presented.
N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.11 (2002) (Regulation 68), entitled "Direct payments", provides, in pertinent part, as follows: "(a) An insurer shall pay benefits for any elements of loss, other than death benefits, directly to the applicant or, upon assignment by the applicant shall pay benefits directly to providers of health care services ". N.Y. Ins. Law § 5102(a)(1) (McKinney 2000) specifies these benefits. Section 65-3.11(b)(2), (3) and (4) of Regulation 68 mandates that in order to effectuate an assignment to the health care provider, the parties to the assignment must utilize the prescribed assignment language contained on NYS Form N-F 3 (Verification of Treatment by Attending Physician or Other Provider of Service form), Form N-F 4 (prescribed Verification of Hospital Treatment form), Form N-F 5 (prescribed Hospital Facility form), or the stand-alone prescribed No-Fault Assignment of Benefits form (Form NF-AOB). All of the aforementioned forms are contained in Appendix 13 of Regulation 68.
In the circumstance contemplated by the inquirer's question, while there clearly was an intent on the part of the patient to assign his or her right to No-Fault benefits to the health service provider, the assignment document presented was defective as it was not the prescribed form as required by Regulation 68. Given the clear intent of the parties to effectuate the assignment, the insurer should give the eligible injured person and the provider the opportunity to submit a legally effective assignment in lieu of the defective one.
Pursuant to N.Y. Ins. Law § 5106(a) (McKinney 2000), a claimant must provide proof of the fact and amount of loss sustained, as all claims must be medically necessary in order to be reimbursable as required by N.Y. Ins. Law § 5102(a) (McKinney 2000). Under the No-Fault claims procedures established under Section 65-3.5(b) of Regulation 68, 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. The claim for health services rendered 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.
When a defective assignment is submitted to the insurer, with the initial claim for payment, the insurer should seek additional verification of the claim by promptly sending a letter to the provider with a copy of the prescribed assignment form, asking the provider to have the parties execute the prescribed form and re-submit the completed form to the insurer. The insurer is thereby making an additional verification request, giving the claimant and the provider the opportunity to establish the requisite proof of claim. Of course, at this point, if the insurer requires any other information for verification in order to process the claim, it may also include this in its request.
As required by N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.8 (2002) (Regulation 68), entitled "Payment or denial of claim (30 day rule)", Section 65-3.8(a)(1) states that "No-Fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to Section 65-3.5 of this subpart " (which section includes requests for additional verification). Further, Section 65-3.8(b)(3) states that " an insurer shall not issue a denial of claim form (NYS Form N-F 10), prior to its receipt of verification of all of the relevant information requested pursuant to Section 65-3.5 " Therefore, a request from an insurer for additional verification serves to delay the commencement of the 30 day time period available to the insurer in which to pay or deny the claim, until such time as the requested information or documentation is received, at which point the 30 day time period for payment or denial of claim begins. In the instant situation, a failure by the provider to re-submit the prescribed assignment form in response to the additional verification request made by the insurer will render the status of the claim as open, pending receipt of the requested verification. Submission of a legally effective assignment of benefits by use of the prescribed assignment form is necessary for the establishment of proof of the provider's claim. Without it, the claim is not complete and the 30 day period for the payment or denial of the claim by the insurer does not activate until such time as the verification information is received by the insurer. Should the verification information thereafter be received by the insurer, it has 30 days, in which to pay or deny the claim. It should be noted that, pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, § 65-3.8(j), "For the purposes of counting the 30 calendar days after proof of claim, wherein the claim becomes overdue pursuant to section 5106 of the Insurance Law, with the exception of section 65-3.6 of this Subpart, any deviation from the rules set out in this section shall reduce the 30 calendar days allowed." Therefore, in an instance where a No-Fault insurer requests additional verification, the number of days in excess of the 15 days permitted to make the request will serve to reduce the 30 day period for payment or denial of the claim.
If the provider and eligible injured person fail to execute the prescribed assignment form and re-submit it to the No-Fault insurer, the provider should promptly notify the insurer that they will not be re-submitting the assignment form. In this circumstance, the provider may bill its patient (the eligible injured person) directly for the health services provided because the patient has not effectively assigned their benefits to the provider. Upon receipt of such notification from the provider, the 30 day period for payment of the No-Fault claim begins to run and the insurer must make a determination whether to reimburse the eligible injured person directly, or alternately, issue a denial of claim to the eligible injured person. Of course, in the absence of a valid assignment, where the patient's claim for reimbursement is denied, the patient has recourse to seek a remedy for resolution of the claims dispute by requesting No-Fault arbitration, or initiating a legal proceeding against the insurer.
For further information you may contact Associate Attorney Barbara Kluger at the New York City Office.