In an another example of “no good deed goes unpunished,” a New York auto insurer has been penalized for allowing a claimant to reschedule his EUO (Examination Under Oath) four times, even though he failed to show for any of them.
In Ezra Supply Inc v Nationwide Affinity Ins. Co., 222 NYSlipOp 22406, a NY PIP suit by a medical provider, the first EUO was scheduled for April 9, 2018. Neither the assignor nor her counsel appeared. On April 12, 2018, the insurer sent a letter scheduling the “final date” for the EUO for May 8, 2018. Claimant no-showed on that date too. On May 10, 2018, Nationwide sent a letter scheduling an EUO for June 6, 2018. The assignor did not appear, but apparently on that day, defendant received a call from the assignor’s counsel, asking for the EUO to be scheduled for June 13, 2018. On June 7, 2018, defendant sent a letter scheduling an EUO for June 13, 2018. On June 13, 2018, the assignor again did not appear.
For each of these four scheduled dates, defendant’s counsel put a statement on the record documenting the nonappearance. On June 23, 2018, defendant issued a denial of the relevant claims, which denial states “The claimant failed to attend an [EUO] scheduled on 4/9/18, 5/8/18, 6/6/18 and 6/13/18, which is a breach of the above policy condition . . . .”
Nationwide argued on this appeal that this denial was timely because it was issued within 30 days of the June 13, 2018 failure to appear.
Both the Civil Court and the Appellate Term disagreed. “Where, as here, no other verification request is outstanding, the 30-day period for an insurer to pay or deny a claim based upon a failure to appear for an EUO begins to run on the date of the second EUO nonappearance, when an insurer is permitted to conclude that there was a failure to comply with a condition precedent to coverage. (citing Quality Health Supply Corp. v Nationwide Ins., 69 Misc 3d 133 [A], 2020 NY Slip Op 51226[U], [App Term, 2d Dept 2020]. In view of the foregoing, once the assignor failed to appear on May 8, 2018, defendant’s 30-day time period to pay or deny the claims at issue began to run, making defendant’s deadline to pay or deny those claims June 7, 2018.”
“While we agree that there is nothing in the no-fault regulations preventing an insurer from offering a claimant more than two opportunities to appear for an EUO,” held the Court, “that issue is distinct from whether an insurer has properly continued a toll of its time to pay or deny a particular claim. For example, had the assignor appeared on June 6, 2018, the third scheduled date, or June 13, 2018, the fourth scheduled date, defendant could have properly conducted the EUO. However, the toll of defendant’s time to pay or deny the claims at issue ended on May 8, 2018, when the assignor failed to appear for the second scheduled EUO, and any denial based upon a precludable defense—like the defense that the assignor failed to appear for duly scheduled EUOs—would have had to have been issued by June 7, 2018 in order to be timely.”
“Neither the May 10, 2018 letter scheduling the EUO for June 6, 2018 nor the June 7, 2018 letter scheduling the EUO for June 13, 2018 continued the toll because the no-fault regulations only contemplate one follow-up request for verification and that follow-up request was made on April 12, 2018, in a letter that scheduled a “final date” for the EUO for May 8, 2018. Once the assignor’s second and “final” opportunity to appear for an EUO was scheduled for May 8, 2018, to further toll defendant’s time to pay or deny the claims past June 7, 2018, the parties could have rescheduled that examination for a later date. However, rather than claiming that there was a rescheduling of a scheduled EUO that would have continued the toll past June 7, 2018, defendant clearly treated each of the four scheduled EUOs as a nonappearance, choosing to deny the claim after the fourth one. The no-fault regulations do not permit an insurer to indefinitely extend the toll to pay or deny a claim beyond a second nonappearance by scheduling successive additional EUOs and then arbitrarily choosing when to end its toll.”
As a result, the denial is late and defective and Nationwide has to pay the claim.
Comment: Nationwide asserted that it acted in good faith in giving the claimant two additional chances to appear at an EUO. This argument was rejected. It seems like an unfair technicality that the Court draws a distinction between a “rescheduled” EUO and a “no show” followed by a new EUO date.
For insurers who find themselves in this position, they should either refuse a third EUO date and issue a denial, or deem the third (and any subsequent EUO dates) as “rescheduled” dates in order to preserve the tolling of the 30 day limit for issuing denials.
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