Not Fraud To Claim Injuries Were From One Car Accident When They Were Really From Another

This entry should be interesting to insurance defense attorneys and insurance adjusters.  It came from Rogak Report Newsletter which I subscribe to.  The full name of the newsletter is:  The Rogak Report: The Most Useful Publication In The Insurance Claims Industry.   The insurance defense attorney who writes it, Lawrence Rogak is based in New York, therefore all the cases come out of New York courts but it is still a very informative free report.    

The following is Rogak’s case analysis including the comment which sums it all up perfectly.

Westchester Medical Center a/a/o Mercedes Diaz; New York University Hospital Rusk Institute a/a/o Mayva Ocasio; St. Vincent’s Hospital of Richmond a/a/o Joseph Briggs v. Auto One Insurance Company, 2007 NY Slip Op 34134(U) (Supreme Court, Nassau County) (Judge: James P. McCormack) (Edited by Lawrence N. Rogak)

The Supreme Court decided three motions for summary judgment in this multi-cause- of-action no-fault suit.

With regard to the New York Hospital claim, Mayva Ocasio was treated at New York University Hospital Rusk Institute from July 14, 2006 through July 16, 2006 for injuries arising out of a automobile accident that occurred on July 14, 2006.  The hospital billed Auto One on August 14, 2006 for $15,183.81 by first class and certified mail which was received on August 16, 2006. On September 8, 2006 a request for further verification was mailed by the defendant to the plaintif hospital requesting complete hospital records. The records were received by defendant on October 3, 2006 and a check was forwarded in the amount of $3,860.94 to plaintiff on October 6, 2006. Defendant claims that plaintif is only entitled to $3,880.94, not the $5,183.11 billed, claiming that plaintiff biled under the DRG Code for the Hospital for Joint Diseases, not New York University Hospital.

The amount payable under the DRG Code for New York University Hospital is $3,860.94.  The Hospital claimed that Auto One’s failure to issue a denial of claim form precludes it from raising a defense that the DRG rate was incorrect and, in any event, the defendant is wrong as they computed payment using DRG Code for the New York University Hospital Tish Institute ($3,860.94) and not the New York Hospital University Hospital Rusk Institute ($5,183.81). 

The Court held, “An insurance carrier’s failure to deny a claim within thirty (30) calendar days is generally precluded from asserting a defense against payment of the claim.  If an insurer seeks additional verification, however, the thirty (30) day window is tolled until it receives the relevant information. Further, case law consistently holds that a carrier’s failure to seek verification or object to the adequacy of claim forms pursuant to 11 NYCRR 65-3.5 precludes it from interposing any defenses based on such deficiencies. Here, defendant failed to timely deny or object to plaintiff claim or the DRG Code used in its form even after the verification was provided.  Further, based upon the proofs submitted by plaintiff, it appears to ths Court’s satisfaction that the amount and codes employed in the billing form corresponds to the correct medical provider. Accordingly, plaintiff’s motion for summary judgment as to this claim is granted in all respects.”

In regard to the St. Vincents Hospital claim, Briggs received treatment from Juy15, 2006 to July 17, 2006 as a result of an auto accident that occurred on July 14, 2006. Plaintiff hospital billed defendant insurance carrier on October 4, 2006 using a Form N-F5 and UB-92 in the amount of $3,274.20.  This bill was received by defendant on October 6, 2006. The defendant denied this bill on December 12, 2006 and on February 28, 2007 claiming fraud was commtted by Briggs. The denial of claim form states, “Injuries are not casually related to the loss of July 14, 2006. A statement taken from Joseph Briggs on November 4, 2006 verified injuries sustained are related to the accident of July 15, 2006. Therefore, all no fault benefits are denied.” 

“Defendant claims that in a sworn statement, the assignor, Joseph Briggs, stated he was in a low impact rear-end collsion on July 14, 2006 with another vehicle wherein he was transported to the hospital and released a short time later. The following day, July 15, 2006, Briggs was alleged to be in a more serious accident when he crashed into a tree after falling asleep at the wheel sustaining more serious injuries for which he failed to notiy the defendant carrier and attibuted the subsequent medical treatment to the July 14, 2006 accident in order to bulk up his personal injury lawsuit.   The defendant carrier disclaimed no-fault coverage based on Briggs’ alleged fraudulent concealment of the second accident and while attributing his injuries to the first accident.”

“As stated previously, an insurer s failure to payor deny a claim withi thrty (30) days will generally result in the insurer being precluded from asserting a defense against payment of the claim. There is, however, a recognzed narrow exception to this preclusion remedy for situations where an insurance company raises a defense of lack of coverage. In those instances, an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create a coverage where it never existed.  Here, there is no dispute that there existed coverage for Briggs whether for injuries sustained in the accident on July 14, 2006 or July 15, 2006. In this Court’ s view, the fact that Briggs may have misrepresented or failed to notify the defendant of his subsequent accident one day later, does not implicate a lack of coverage warranting exemption from the preclusion rule. Indeed, in the defendant’s denial of claim form, the word ‘fraud’ is absent and states simply that the injuries for which treatment was biled was ‘not causally related to the loss of July 14, 2006.’ As the denial was well beyond the thirty (30) days of receipt of the NF-5 and UB-92 form, defendant insurance carrier is precluded from interposing a defense.  Accordingly, as to this third cause of action, plaintiff motion for summary judgment is granted in all respects and defendant’s cross motion to dismiss is denied.”

Comment: It doesn’t constitute fraud to claim that one’s injuries resulted from a different, unreported accident, even when the claimant admits he did so in order to “bulk up” his personal injury suit from the very minor accident that was reported?  That’s not fraud?  Hello?  Is anybody home?

S.P.I. is a full service investigative firm specializing in insurance fraud detection via medical record canvasses and medical record reviews.  If you are an insurance adjuster or insurance defense firm looking to make your medical record process more efficient, or seeking an alternative means to surveillance for insurance fraud detection please contact S.P.I.