Liberty Mut. Ins. Co. v Anderson (2023 NY Slip Op 50746(U))

Index No. 650571/2022

Correia, Conway & Stiefeld, White Plains, NY (Melissa D. Broder of counsel), for plaintiffs.

No appearances for defendants.

This is a no-fault-insurance coverage action. Plaintiffs, Liberty Mutual Insurance Company and LM General Insurance Company (Liberty Mutual), denied the no-fault-benefits claims of the alleged injured person, defendant Nordigay Anderson, and the other defendants, medical-provider-assignees of Anderson’s, on the ground that Anderson had materially misrepresented the insured vehicle’s garaging address and the identity of the vehicle’s operators. Liberty Mutual has brought this action for a judgment declaring, in essence, that it has no duty to pay those claims.

Liberty Mutual now moves without opposition for default judgment under CPLR 3215 against non-answering defendants Anderson, ADV Diagnostic Inc., Aztec Medical PA, Citimed [*2]Surgery Center, LLC, Good Samaritan Hospital Medical Center, and Laxmidhar Diwan MD. The motion is denied.

No-fault benefits claims must be paid or denied “[w]ithin 30 calendar days after proof of claim is received.” (11 NYCRR 65-3.8 [c].) Proof of claim “shall include verification of all of the relevant information requested pursuant to section 65-3.5 of this Subpart,” such as requests that an injured person or medical-provider-assignee appear for an examination under oath (EUO). (Id. § 65-3.8 [a] [1].) an insurer’s failure to deny a claim within that 30-day period will generally preclude the insurer from asserting a defense against payment of the claim. (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008].)

An exception to this preclusion rule exists where the ground for denying the claim (or defending against a claim to payment) is a lack of coverage in the first instance. (Id.) But the denial of a no-fault claim on the ground that the policyholder made material misrepresentations in obtaining the policy does not come within this preclusion exception. (See Liberty Mutual Ins. Co. v Brutus, 2022 NY Slip Op 50799[U], at *4 [Sup Ct, NY County Aug. 16, 2022], citing Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603, 604-605 [2d Dept 2011].)

In short, Liberty Mutual may not raise material misrepresentations as a defense to the no-fault claims at issue in this action unless it denied those claims within 30 days after receiving proof of claim.

Liberty Mutual first sought verification from Anderson, in the form of an EUO, by letter dated June 29, 2021. (See NYSCEF No. 25.) Liberty Mutual conducted that EUO on July 12, 2021. (See NYSCEF No. 26 [EUO transcript].) Liberty Mutual later interviewed Anderson’s father (the vehicle operator named on the policy) on August 3, 2021 (see NYSCEF No. 27 [interview transcript]); and issued claim denials two days later, on August 5 (see NYSCEF No. 28.)

Thus, it appears on this record that Liberty Mutual denied the claims at issue within two days after obtaining the additional verification that it sought from Anderson and her father. That chronology, though, does not resolve the crucial question whether the 30-day period to pay or deny ran before Liberty Mutual first sought that verification on June 29. That is, if Liberty Mutual received benefits claims more than 28 calendar days before issuing the EUO request letter on June 29, 2021, the August 5, 2021, denial would be untimely with respect to those claims.^[FN1]

Liberty Mutual has not established on this motion that its denials were timely with respect to each of the defendants against whom it seeks default judgment. At most, Liberty Mutual has submitted a delay letter that it sent on June 4, 2021, to defendant Good Samaritan Hospital Medical Center (see NYSCEF No. 24 at 3-4); and Liberty Mutual’s counsel represents in an affirmation that delay letters were also sent “to the medical provider defendants who had submitted NF-3s or bills” as of early June 2021 (NYSCEF No. 13 at ¶ 29). But a delay letter that does not itself request verification from the recipient will not toll the 30-day pay-or-deny period. [*3](Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045, 1046 [2d Dept 2009]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535, 536 [2d Dept 2005].)

On this record, therefore, Liberty Mutual has not established the facts constituting its claims against the non-appearing defendants.

Accordingly, it is

ORDERED that Liberty Mutual’s motion for default judgment is denied; and it is further

ORDERED that if Liberty Mutual does not file a renewed default-judgment motion against the defaulting defendants within 30 days of entry of this order, the action will be dismissed as against those defendants; and it is further

ORDERED that Liberty Mutual serve a copy of this order with notice of its entry on all appearing parties by e-filing on NYSCEF; and on all non-appearing parties by certified mail, return receipt requested, directed to their respective last-known addresses.

Footnotes

Footnote 1:This calculation adds together the days elapsed before Liberty Mutual sought additional verification of the claim with the two days elapsed after Liberty Mutual obtained that verification upon interviewing Anderson’s father. (See 11 NYCRR 65-3.8 [a] [1] [“In the case of an examination under oath . . . the verification is deemed to have been received by the insurer on the day the examination was performed.”].)