90 N.Y.2d 274 (1997)

An insurer is precluded from raising a statutory exclusion defense (such as intoxication) to a no-fault insurance claim if it fails to deny the claim within 30 days of receiving proof of claim and fails to properly seek an extension of time by requesting verification using prescribed forms within 10 days of receiving the completed application.

Summary

Presbyterian Hospital, as assignee of Karen DeGuisto, sued Maryland Casualty Company to recover no-fault medical payments. The core issue was whether Maryland could raise an intoxication defense, given its delay in denying the claim. The Court of Appeals held that Maryland was precluded from raising the intoxication defense because it failed to deny the claim within 30 days of receiving proof of claim and also failed to properly request verification within 10 days of receiving the completed application. The court emphasized that the 30-day rule and the 10-day verification request rule are complementary, and failure to adhere to both precludes the defense.

Facts

Karen DeGuisto was injured in a single-car accident on December 26, 1993. Maryland Casualty Company was her no-fault insurer. Presbyterian Hospital provided treatment to DeGuisto. On August 5, 1994, Presbyterian, as DeGuisto’s assignee, submitted a no-fault claim to Maryland. The police accident report indicated that DeGuisto had alcohol on her breath, and a blood sample was taken. Maryland applied for access to DeGuisto’s blood-alcohol test results on April 19, 1994.

Procedural History

Presbyterian sued Maryland on September 15, 1994, due to the lack of payment or denial of the claim. Maryland answered, claiming the claim was not overdue because they hadn’t received all necessary information. Presbyterian moved for summary judgment, arguing Maryland’s failure to timely deny the claim barred the intoxication defense. The Supreme Court granted summary judgment to Presbyterian. The Appellate Division affirmed. The Court of Appeals granted Maryland leave to appeal and affirmed the lower courts’ decisions.

Issue(s)

Whether an insurer is precluded from raising a defense to a no-fault insurance claim when it fails to deny the claim within 30 days of receiving proof of claim, as required by Insurance Law § 5106(a) and 11 NYCRR 65.15(g)(3), and also fails to properly request verification using prescribed forms within 10 days of receiving the completed application.

Holding

Yes, because an insurer must comply with both the 30-day denial requirement and the 10-day requirement for requesting verification using prescribed forms to preserve its right to raise a statutory exclusion defense. Failure to adhere to both requirements results in preclusion of the defense.

Court’s Reasoning

The Court reasoned that the 30-day rule in 11 NYCRR 65.15(g)(3) and Insurance Law § 5106(a) and the 10-day notification requirement in 11 NYCRR 65.15(g)(5) are complementary. The court emphasized that Maryland had reason to believe DeGuisto was intoxicated when it received Presbyterian’s claim on August 9, 1994. Maryland failed to submit prescribed verification forms to the appropriate parties within 10 days of receiving Presbyterian’s completed application. Instead, Maryland requested verification from Presbyterian via interrogatories on October 13, 1994, which was not timely. The court rejected Maryland’s argument that 11 NYCRR 65.15(g)(5), which addresses the 10-day rule for notifying the applicant of denial based on a statutory exclusion (like intoxication), displaces the 30-day requirement. The court stated the 10-day rule imposes an additional requirement, not a replacement for the 30-day rule. The court noted its prior decisions in liability coverage cases (e.g., Hartford Ins. Co. v County of Nassau and Allstate Ins. Co. v Gross) where insurers were precluded from disclaiming liability after untimely notification of denials, even though the relevant statute (Insurance Law § 3420(d)) doesn’t explicitly authorize preclusion. The court stated that “[t]he purpose for which subdivision 8 of section 167 was enacted was to avoid prejudice to the insured, the injured claimant and the Motor Vehicle Accident Indemnity Corporation, each of whom could be harmed by delay in learning of the carrier’s position.” The court found preclusion to be consistent with the purpose of the Insurance Law and regulations, which is to ensure prompt payment or denial of claims. The court emphasized that allowing insurers to delay action frustrates the goal of speedy payment. The court stated that “[i]nsurers simply have no precedential or statutory recourse to sit on their many procedural rights and requirements and then belatedly deny claims they should have acted upon earlier.” The court acknowledged that 11 NYCRR 65.15(g)(5) excludes preclusion as a remedy for failure to comply with the 10-day notice requirement for statutory exclusions, but considered this to imply that preclusion is available under 11 NYCRR 65.15(g)(3) because the regulation only prohibits preclusion for untimely statutory exclusion notifications, not untimely claim denials. “The interpretive canon of inclusio unius, exclusio alterius helps us to conclude that had the Superintendent or Legislature intended to foreclose preclusion as a remedy in the 30-day time lapse circumstance under the no-fault intoxication regime, they would have done so again—and certainly could have—expressly in order to avoid the anomalies and confusion that would otherwise ensue—as demonstrated in this very case.”