Loading ...
Sorry, an error occurred while loading the content.

The Rogak Report: 10 May 2006 ** No Fault - Buses - Coverage **

Expand Messages
  • Lawrence Rogak
    BUS COMPANY MUST ISSUE TIMELY AND PROPER DENIAL TO NO-FAULT BILLS; PRIORITY OF PAYMENT IS NOT A COVERAGE DEFENSE A Khodadadi Radiology P.C. a/a/o Helen Boddie
    Message 1 of 1 , May 10, 2006
    • 0 Attachment
      BUS COMPANY MUST ISSUE TIMELY AND PROPER DENIAL TO NO-FAULT BILLS;
      PRIORITY OF PAYMENT IS NOT A COVERAGE DEFENSE

      A Khodadadi Radiology P.C. a/a/o Helen Boddie Khan v NYCTA, Index no.
      106407/2004, 2006 NY Slip Op 50832(U) (Civil Court, Kings County)
      (Baily-Schiffman, j)

      In this no-fault benefits suit, both sides moved for summary
      judgment. Plaintiff claimed that the defendant's denials were
      untimely; defendant alleged that because the assignor was a passenger
      in a bus at the time of the accident and had an insured vehicle in
      her household, she was required to submit her claim to the company
      insuring her household vehicle. The failure to submit the claim to
      the appropriate insurance company, defendant argued, is a coverage
      defense which permits the defense to be asserted beyond the thirty
      (30) day period after receipt of the claim without preclusion.
      Defendant also asserts that plaintiff has not made out its prima
      facie case because it has not proven that the assignor was injured on
      a bus.

      Defendant Transit Authority asserted that it was entitled to summary
      judgment on the basis that the assignor was injured while a passenger
      in a bus and was the owner of an insured vehicle at the time of the
      accident. Defendant relied on Insurance Law §5103(a)(1) which states:

      "In the case of occupants of a bus other than operators, owners, and
      employees of the owner or operator of the bus, the coverage for first
      party benefits shall be afforded under the policy or policies, if
      any, providing first party benefits to the injured person and members
      of his household for loss arising out of the use or operation of any
      motor vehicle of such household. In the event there is no such
      policy, first party benefits shall be provided by the insurer of such
      bus."

      NYCTA argued that this defense impacts insurance coverage for the
      submitted claim and, therefore, it need not deny the claim within
      thirty (30) days after receipt. NYCTA also argued that plaintiff was
      required to prove in its claim that the assignor was involved in the
      alleged accident and the failure to do so warrants summary judgment
      in defendant's favor. Defendant submits the Affidavit of a bus driver
      that he was driving a bus on September 1, 2000 that was involved in
      an accident, but he has no "record or recollection" of a passenger on
      his bus named Helen Boddie Khan at the time of the accident.

      The Court held that "the defense asserted by defendant is not
      a 'coverage' defense that prevents preclusion if not submitted within
      thirty (30) days of receipt of the claim. The Court is most persuaded
      by plaintiff's argument concerning the interplay of Insurance
      Regulations establishing a procedure to be followed when a dispute
      arises regarding priority of payment among insurers otherwise liable
      for the payment of first-party benefits. The applicable regulations
      read as follows:"

      "§65-3.12b. If a dispute regarding priority of payment arises among
      insurers who otherwise are liable for the payment of first-party
      benefits, then the first insurer to whom notice of claim is given
      pursuant to section 65-3.3 or subdivision 65-3.4(a) of this subpart,
      by or on behalf of an eligible injured person, shall be responsible
      for payment to such person. Any such dispute shall be resolved in
      accordance with the arbitration procedures established pursuant to
      section 5105 of the Insurance Law and section 65-4.11 of this Part.
      §65-3.12c. If the source of first-party benefits is at issue because
      the status of the injured person as a pedestrian or an occupant of a
      motor vehicle is in dispute, the insurer to whom notice of claim was
      given or if such notice was given to more than one insurer, the first
      insurer to whom notice was given shall, within 15 calendar days after
      receipt of notice, obtain an agreement with the other insurer or
      insurers as to which insurer will furnish no-fault benefits. If such
      an agreement is not reached within the aforementioned 15 days, then
      the insurer to whom such notice was first given shall process the
      claim and pay first-party benefits and resolve the dispute in
      accordance with the arbitration procedures established pursuant to
      section 5105 of the Insurance Law and section 65-4.11 of this Part."

      "It is clear to the Court that the procedures established by the
      above quoted regulations are to prevent exactly what has occurred in
      this case: denial of the claim because one insurer believes another
      insurer is liable to the provider. Defendant believes that it is not
      responsible for payment of the subject claim because another
      insurance company is liable. Rather than follow the procedures set
      forth in the above regulations, defendant denied the claim, putting
      the burden on the provider or the assignor."

      "What the regulations require defendant to do is either pay the claim
      and then work it out with the other insurance company, by arbitration
      if necessary, or notify the other insurance company and obtain
      agreement as to which company will pay the claim and resolve the
      dispute by arbitration, if necessary. What the regulations do not
      permit is the denial of the claim on the basis that another insurance
      company is responsible: the procedure followed by defendant regarding
      the subject claim."

      Judgment was granted to plaintiff.

      Comment: In priority of payment disputes, many insurers and self-
      insureds make the mistake of denying the claim on the basis that
      another insurer is primary. This violates the regulations. As the
      Court points out here, the proper procedure is to pay (or deny) the
      claim (if denied, then deny it timely and for a valid reason), and
      then seek reimbursement from the correct insurer through intercompany
      arbitration.

      Larry Rogak
    Your message has been successfully submitted and would be delivered to recipients shortly.