For the past several years, there has been a dichotomy between the courts and the arbitrators concerning the question of whether an untimely denial precluded a no-fault insurer from arguing that the alleged injuries were not caused by a covered accident. Arbitrators follow the guidance of the New York State Insurance Department, which has taken the position that the defense does survive, but the courts have rejected the Insurance Departments position and have held that the defense does not survive.

Now, in a decision handed down on November 13, the Appellate Term seems to have changed course.

In this action to recover first-party no-fault benefits for medical services provided to its assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted claims, setting forth the facts and the amounts of the losses sustained, and that payment of no-fault benefits was overdue. The deficiencies, if any, with regard to plaintiffs proof of mailing were cured by defendants acknowledgment of receipt on its denial form, which was attached to plaintiffs papers. The denial form, dated December 3, 2003, alleged that defendant issued a verification request on November 17, 2003, 66 days after the claims receipt (September 12, 2003). Even if proof of such verification request had been presented in admissible form, the request was untimely. Under the circumstances, defendants denial was untimely, precluding most defenses.

The untimely denial, however, did not preclude defendant from interposing the defense that the assignors injuries were not causally related to the accident (e.g. Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 18-19 [1999]), that is, that there was no causal nexus between the accident and the injuries for which the assignor was treated. An accident analysis report in the form of a low impact study can be a proper basis for a denial, provided it is in admissible form. However, defendants report was not in admissible form. Recognizing the deficiency, defendant resubmitted the report in admissible form, but only for the first time in sur-reply when plaintiff had no opportunity to respond to its content. The court below declined to consider the affidavit, and matters disregarded below as improperly raised in reply may not be considered on appeal.

Comment: In very undramatic form, the Appellate Term has introduced a dramatic turn of events. If the no proximate cause defense in no-fault litigation survives an untimely denial, that changes the landscape in no-fault practice. I hardly have to elaborate (although in the near future, I undoubtedly will).

Executive MRI Imaging, P.C. a/a/o Floyd Harden v. New York Cent. Mut. Fire Ins. Co., 2006 NYSlipOp 52250(U) (App Term, 2nd Dept)