OGC Opinion No. 07-11-11

The Office of General Counsel issued the following opinion on November 21, 2007, representing the position of the New York State Insurance Department.

RE: No-Fault Documentation and Social Security Numbers

Question Presented:

1. May a No-Fault insurer require a social security number from an applicant for No-Fault benefits (“applicant”) in order to pay or deny a claim?

2. Must a health care provider (“provider”) continue to treat an applicant when the insurer will not pay or deny claims due to the applicant’s failure to provide requested verification?

Conclusion:

1. Yes. Section 65-3.4(c)(3) of NYCRR, Title 11, Sub-Part 65-3 (Regulation 68-C) references the NF-2 form,¹ which requires an applicant for No-Fault benefits to provide a social security number. There is no federal or state law that prohibits insurers, as private entities, from requesting social security numbers. If an applicant fails to include a social security number on the NF-2, an insurer may request it as timely verification pursuant to provisions in 11 NYCRR § 65-3.5. In fact, pursuant to 11 NYCRR § 65-3.8 (b)(3), the insurer is prohibited from payment or denial of a claim prior to receiving all of the verification requested.

Neither the Insurance Law nor the regulations promulgated thereunder address this issue. The Insurance Department does not regulate providers, and offers no opinion as to whether there is a requirement that springs from any other law.

Facts:

It is reported that a provider is treating an applicant for No-Fault benefits for injuries arising from the use of a motor vehicle. The provider has submitted NF-3 claim forms² to the No-Fault insurer with an assignment of benefits from the applicant-assignor, which has resulted in the receipt of a notice from the insurer stating that the social security number of the applicant-assignor is necessary to process the claim. As a result, the insurer has not paid or denied the claim.

Analysis:

11 NYCRR § 65-3.4(c) is relevant to the first inquiry. That regulatory provision references various claim forms that “must be used by all insurers, and shall not be altered unless approved by the superintendent.” These forms include the NF-2, which requires inclusion of the social security number of the applicant. See 11 NYCRR § 65-3.4(c)(3). A copy of the NF-2 form is set forth in Appendix 13 of the regulations.

11 NYCRR 65-3.5(c) states that 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 prescribed verification forms.” If the requested verification is not provided within 30 calendar days after the original request, the insurer must send a second request to the party from whom the verification was requested within 10 calendar days. See 11 NYCRR § 65-3.6(b). Pursuant to 11 NYCRR § 65-3.8 (b)(3), the insurer is prohibited from payment or denial of a claim prior to receiving all of the verification requested.

The Insurance Department has previously considered whether an insurer may require an applicant for No-Fault benefits to provide a social security number on insurance applications, and has concluded that such requirement does not violate federal or state law. See Office of General Counsel (“O.G.C”) Opinion No. 06-01-10 (January 9, 2006); O.G.C. Opinion No. 04-08-04 (August 17, 2004).³

It is unclear, based on the fact pattern presented here, whether the insurer requested timely verification for the social security number from the applicant-assignor. If so, then the provider-assignee is not entitled to payment or denial of the claim until such time as the applicant-assignor provides the requested verification, because an assignee never stands in a better position than its assignor, and is subject to all the same equities and burdens as the assignor. See International Ribbon Mills, Ltd. v. Arjan Ribbons, Inc., 36 N.Y.2d 121, 365 N.Y.S.2d 808 (1975). Therefore, an assignee may not collect No-Fault benefits if the assignor is not also able to collect the same benefits. However, the provider-assignee must receive timely notification from the insurer about the verification sought after the provider forwards the NF-3 to the insurer. See Doshi Diagnostic Imaging Servs. v. State Farm Ins. Co., 16 Misc.3d 42, 842 N.Y.S.2d 153 (N.Y. App. Term 2007).

In short, an insurer may deny a claim or delay payment until such time as it receives the requested verification, or a response as to why it can not be provided, so long as the insurer forwarded verification in a timely manner to the applicant-assignor upon receipt of the NF-2, and notice to the provider-assignee upon receipt of the NF-3.

The second question asks whether a provider must continue the treatment of an applicant who has assigned her benefits to a provider that has not provided requested verification to the insurer to permit the insurer to pay or deny the claims for the services incurred by the applicant. Neither the Insurance Law nor the regulations promulgated thereunder address this issue. The Insurance Department does not regulate providers, and offers no opinion as to whether there is such a requirement under any other law. To that end, it would be appropriate to consult the New York State Department of Health.

For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.

¹ The NF-2 form is the “Application for Motor Vehicle no-fault benefits.”

² The NF-3 form is the “Verification of treatment by attending physician or other provider of health service.”

³ While the federal Social Security Act limits the circumstances under which a state may require an individual to provide their social security number, 42 U.S.C.A. § 405(c)(2)(C)(i) (West 2003), there is no such prohibition directed at private entities like insurers. Furthermore, insurers, as licensees of the Department, are subject to the provisions of the Department’s privacy regulations. See 11 NYCRR, Part 420 (Regulation 169); 11 NYCRR, Part 421 (Regulation 173). Under those provisions, an insurer must send out a yearly statement that is clear and concise, and which explains the company’s privacy practices and policies. See 11 NYCRR § 420.5. The regulations also establish limitations on what an insurer may disclose to third parties. However, in light of privacy concerns that have come to the fore since the promulgation of the No-Fault system in 1974, the Department may examine the social security number requirement established by the NF-2 and other claim forms to determine if such information still should be required.