Source: http://www.lkesq.com/euo-justification-request
Timestamp: 2019-04-21 22:20:39+00:00

Document:
Although a civil court case, this case has some good dicta with respect to provider EUO’s and the duty on the part of the carrier to supply the Plaintiff with a good faith basis for having requested the EUO.
The court felt compelled to grant re-argument reasoning that there was no controlling appellate authority, is whether a no-fault insurer which notices an Examination Under Oath (“EUO”) of a medical professional provider, as to which the provider timely objects and requests explanation as to the reason for the EUO, is obligated to provide such a reason as a prerequisite to the EUO.
GEICO timely notified the medical provider to appear for an EUO and Plaintiff’s counsel objected prior to the EUO, requesting that GEICO provide good faith reasons, based upon the application of objective standards that serves as justification for demanding Plaintiff to appear for an EUO. In response, GEICO’s counsel declined to provide any reason, but instead asserted that GEICO is not required to provide the objective basis and/or good faith reason for its request for an EUO, citing 11 NYCRR 65.3.5(c). GEICO’s attorneys added that in relation to the requirement that EUOs to be supported by specific objective justification, insurer standards shall be available for review by State Insurance Department examiners. Plaintiff did not appear for the EUO.
After careful analysis of the case law cited by each party, and the applicable regulations, the Court stands by its prior decision that upon receipt of a timely request (that is, sufficiently prior to the date for which the EUO is scheduled to allow for a response), the insurer is required to provide some good faith basis for the EUO, and the requirement that insurer standards for scheduling EUOs are available for review by the Insurance Department does not relieve the insurer from the need to respond, in the manner set forth below, to a timely request on behalf of the provider.
The Comprehensive Motor Vehicle Insurance Reparations Act (Insurance Law §5101 et seq.) and the No-fault Regulations (11 NYCRR 65.1.1, et seq.) provide the no-fault insurer with the right to require an EUO of the assignor of the claim, as well as the provider of medical services or supplies. While the right to an EUO of an assignor, that is, an individual who suffered injury as the result of an automobile accident, is virtually automatic, the EUO of a provider stands on different grounds. The reason for this is that there is obvious potential to abuse the EUO of a provider, typically a medical doctor or chiropractor, although it may also be a provider of durable medical equipment. The claims at issue in no-fault cases are ordinarily no more than a few thousand dollars, and frequently less than even $1000. To require a doctor to leave his or her practice for at least half a day, between the time to travel to and from an EUO, and the time actually spent under examination, will often result in a loss of income to the doctor disproportionate, if not in excess, of the amount of the claim, although here GEICO specifically offered to reimburse American for lost earnings and transportation expenses, as required by the regulations. Equally important, an EUO takes the doctor away from time that would otherwise be spent providing health care to patients. (In this regard, there is no provision to reimburse the provider for the time spent in preparation for the examination, including that necessary to compile and review the numerous documents requested by GEICO in advance of the EUO). The public interest requires that such disruption of medical professionals not be undertaken lightly or on the proverbial fishing expedition in the hope that some basis, perhaps the provider’s non-appearance, may be developed to deny an otherwise legitimate claim.
This Court recognizes, and indeed endorses, the right of an insurer, acting in good faith, to require an EUO of a provider. Such EUOs are an important tool in rooting out fraud, which many believe to be all too prevalent in the medical treatment of no-fault patients. Thus, a balance must be struck between the policy of rooting out and preventing fraud, and not unnecessarily disrupting the practice of a medical professional without a good faith basis for so doing.
On reargument, both Plaintiff and GEICO have provided case law supporting their respective [*3]positions. The Court notes that virtually all of the cases cited emanate from trial courts or arbitrators, so that there is little, if any appellate authority on this issue.
GEICO relies on the following cases: City Chiropractic v. State Farm (Civil Court Kings County index no.37182/14, decision /order dated Feb. 24, 2016, Judge Thompson) (relying on Dept. Of Insurance opinion letters dated 10/15/02 and 12/22/06); Gotham Massage Therapy v. State Farm (Civil Court Bronx County index no. 30502/09, decision dated Dec. 20, 2010, Judge Taylor); Karina K. Acupuncture v. State Farm (Civil Court Kings County index no. 1702/11, decision dated January 3, 2012, Judge Garson) as well as various arbitration awards and judgments entered thereon, all holding that the insurer has no obligation to state any reason for an EUO of the provider. (The court opinions and orders are annexed as Exhibit 5 to GEICO’s moving papers, and the arbitration awards are annexed as exhibit 6).
Thus [provider’s] request for the objective reason in response to the first EUO request triggered an obligation on the part of the insurer to respond by providing the specific objective justification for the EUO request. The insurer’s response in this case to the effect that it was not required to do so is plainly wrong.
52 Misc 3d at 838.
In Rutland Medical, P.C. v State Farm Ins. Co., 45 Misc 3d 1033, 995 N.Y.S.2d 465 (Civ. Ct. Kings Co. 2014), the court denied the insurer’s motion for summary judgment, finding triable issues where the provider timely objected to appearing for an EUO, as to whether if the insurer failed to respond, the provider’s failure to appear for the EUO was reasonable. In Dynamic Medical Imaging, P.C. v. State Farm Fire & Cas. Co., 32 Misc 3d 600 (Dist, Ct. Nassau Co. 2011), the court noted, albeit in what is arguably dicta, that the insurer “would also have to establish that it had an objective justification for requesting the EUO. Such proof requires affidavits.” 32 Misc 3d 600, 604. In Victory Med. Diagnostics, P.C. v. Nationwide Prop. & Cas. Co., 36 Misc 3d 568, 949 N.Y.S.2d 855 (Dist. Ct. Nassau Co. 2012), the court held that “before a claimant provider should be required to produce Mallela [FN2] material, the insurer must have and articulate a good faith and [*4]factual basis for seeking the information.” 36 Misc. 3d568, 574. Plaintiff cites other trial court cases and arbitration awards with similar holdings.
While Plaintiff cites several Appellate Term cases, they are not controlling, as they dealt with the situation where the respective plaintiff-providers, unlike American, did not timely object to the EUO request, but sought to raise objections only in response to the insurer’s subsequent summary judgment motion, following the provider’s non-appearance. While American asserts that those cases provide authority that the Appellate Term would have upheld a timely objection lacking an explanatory response by the insurer, we decline to so read those cases. (See Natural Therapy Acupuncture, P.C. v. State Farm Mutual Automobile Ins. Co., 42 Misc 3d 137(A) (App. Term 2nd Dept 2012); Natural Therapy Acupuncture, P.C. v. State Farm Mutual Automobile Ins. Co., 44 Misc 3d 141(A) 997 N.Y.S. 2d 669 (App. Term 2nd Dept. 2014); Metro Health Products, Inc. V. State Farm Mutual Automobile Ins. Co., 47 Misc 3d 127(A) (App. Term 2nd Dept 2015).
GEICO asserts that the requirement that its standards for scheduling EUOs of providers be made available to the Insurance Department precludes any request by the provider for a pre-examination explanation for an EUO. The Court disagrees. First, that requirement neither explicitly nor implicitly provides that Insurance Department oversight is in lieu of or preempts the provider’s right to timely seek an explanation for the EUO. We note that even were the Insurance Department to find an insurer to have abused the EUO process, that would be of little solace to a provider who duly appeared for examination. Moreover, the Insurance Department’s oversight of the standards employed by an insurer is necessarily a different analysis than whether those standards were properly applied with regard to a particular provider.
In balancing the need for insurers to conduct EUOs of providers to root out and prevent fraud against the burden on the insurer to respond to a timely request for explanation from the provider as to the reason for an EUO, and the burden on a medical professional to appear for examination, we find the burden on the insurer to respond to be slight. In support of GEICO’s underlying motion, GEICO submitted the affidavit of its special investigator, Victor Hernandez, who set forth in great detail the matters supporting GEICO’s need for an EUO of American. From a review of the Hernandez affidavit, it appears that all of these matters were known to GEICO at the time it noticed the EUO of American. This court sees no reason why GEICO could not have easily responded to American’s request for explanation by setting forth some of the matters now contained in the Hernandez affidavit, rather than by stonewalling and asserting that it did not have to provide any explanation to American.
We do not mean to suggest that GEICO should have responded by setting forth all of the information at its disposal with regard to American, or that it needed to set forth anything under oath. But, in this court’s view, GEICO needed to set forth some explanation, even in the form of a letter from counsel, which might have contained a highly-edited version of the matters set forth in Mr. Hernandez’s subsequent affidavit, to demonstrate a good faith basis for the EUO. The burden on the insurer to make some prima facie showing of good faith is far less than the burden that would be imposed on a provider to appear for examination when there is no good faith basis to request an EUO.
There is another benefit to a rule requiring the insurer to provide a substantive response to a timely objection by a provide to an EUO. A substantive response will allow the provider, with the advice of counsel, to make an intelligent decision whether to appear for the EUO and to be adequately prepared so that the examination may be expeditiously concluded. The good faith, or lack thereof, would be established by the insurer’s substantive response. A provider who fails to appear [*5]for its properly noticed EUO, as to which a substantive response was made to any timely objection, would be subject to summary dismissal of its case. And, as the statute and regulations only require a good faith application of objective standards, it would be extremely difficult, at the least, for the provider to challenge a substantive explanation by the insurer for the EUO, so long as that explanation was made in good faith.

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