It should come as no surprise to any provider that no-fault insurers use any means they can to withhold or delay payment of no fault claims. One of the most widely misused tactics is the EUO which permits an oral examination of the provider or the provider’s representative, to verify the claim. No fault insurance companies often misuse the EUO as a means to go on a “fishing expedition” to uncover reasons to withhold any outstanding payments to the provider. Often documents are requested that are outside the scope of the EUO. Since the State Farm Mutual Auto Insurance Co. v Malella 2005, 4 NYS 313 decision, insurance companies have had greater leeway, however they still misuse and often intentionally misinterpret the decision. The more recent case of Dynamic Medical Imaging v State Farm Mutual Auto Insurance Co. 2010, 29 Misc 3d 278 restricts no fault insurers with its ruling stating that the EUO is not intended to have the same scope as traditional discovery at trial. Insurance companies tend to ignore these decisions and similar case decisions in hopes that a provider will go along with their fishing expedition and over-reaching document request.
Over-reaching types of documents which are generally asked for by no fault insurance companies typically are:
- Personal and/or corporate tax returns
- Lists of employees
- Lists of independent contractors
- Lists of employees of independent contractors with whom the provider deals
- Provider landlord information and data
- Corporate agreements
- Billing agreements
- Corporate by-laws
- Bank account records and account information
Many providers feel that even if the insurance company is not entitled to it, if they turn over the information, claims will get paid more quickly. In most instances however, the provider is still forced to pursue outstanding claims in arbitration or court before the insurance company will pay. Additionally, the provider needs to be aware and wary of insurers who will immediately pay claims then turn around and files a civil RICO (Racketeer Influence Corrupt Organization Act) action against the provider which carries a penalty of triple (3x) damages in addition to other penalties. A private company’s no fault insurance bottom line is profit, not “fairness”. As such the EUO should be viewed as a proceeding in which the provider is “playing defence” due to the large exposure they could face. While one tactic would be to skip the EUO if an insurance company feels that a provider is not going to contest future claims, then it will simply deny future claims as well. For this reason it is very important to handle an EUO properly to prevent future problems with the insurance companies and claims. Even if a provider is not engaging in any improper conduct, if the insurance company can create a plausible argument that says they are, the provider can still face potential exposure and have to pay legal fees to defend. The provider will most likely settle such a lawsuit.
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