Appealing, to Infinity and Beyond

Earlier this week, the Appellate Division, 2d Department, granted defendant's leave to appeal from the decision of the Appellate Term in Infinity Health Prods., Ltd. v Eveready Ins. Co., 21 Misc.3d 1 (App. Term, 2d Dep't, 2008).

You'll recall that this decision involved, inter alia, a question as to whether a follow-up verification request done only 27 days after the first request is proper. You'll also further note that the No-Fault Regulations, as per 11 NYCRR § 65-3.6(b), require that a follow-up request be made between 30 to 40 days following the initial request: "At a minimum, if any requested verifications has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested..."

Presumably, the appeal is intended to deal with this issue, and particularly the differing interpretations offered by the majority and the dissent concerning New York & Presbyterian Hosp. v. American Transit Ins. Co., 287 A.D.2d 699 (2d Dep't, 2001). In sum, a majority of the Appellate Term (Pesce and Steinhardt, in particular) in Infinity Health Prods. found that the Am. Transit decision "does not permit defendant to disregard the regulation governing the timing of a follow-up request for verification."

Justice Golia, ever a contrarian, dissented in Infinity Health Prods. and opined that in Am. Transit, the Appellate Division found that an early follow-up verification request (27 days later, not 30-40) was proper.

I think Golia missed the mark this time. It appears to me that the issue of the follow-up request's earliness was simply not litigated. The following sentence makes this clear to me: "Here, the defendant timely requested additional verification of the claim from the respondent by letter dated October 5, 1999, and when such verification was not received within 30 days, it sent a timely follow-up letter dated November 1, 1999." 287 A.D.2d at 700. This sentence makes no sense, as November 1, 1999 is obviously less than 30 days from October 5, 1999. Since 30 days had not elapsed, neither the Court nor American Transit could properly come to the conclusion that the "verification was not received within 30 days."

The only way the Appellate Division can get away with making such illogical statements is that they are limited to what issues are actually being litigated and have been preserved for appeal. The plaintiff in the case may not have ever, either before the Supreme Court or the Appellate Division, raised the issue of the follow-up request being too early. Indeed, Golia's states in his Infinity Health Prods. dissent that the issue was never raised by the parties in Am. Transit. 21 Misc.3d at 5. If so, then the App. Div. really had no place raising this issue sua sponte, and so it is no surprise that they didn't.

In short, the effect of early follow-up verification requests was never litigated in New York & Presbyterian Hosp. v. American Transit Ins. Co. The Appellate Term was thus not bound by this "precedent" in deciding Infinity Health Prods., and, in my opinion, the majority came to the proper conclusion upon doing so. For whatever reason, Justice Golia chose to act as if the Am. Transit is binding, but this is entirely illusory.

There's simply no need to second-guess the fact that the Insurance Department put an explicit timeframe on follow-up verification requests. Under the Regulations, they must be made from 30 to 40 days after the first request, assuming the verification was never received. A failure to abide by the timeframe on the side of lateness should have the same effect as being too early: a waiver of the request. There's no logical reason that a violation in one direction should be treated differently than a violation in the other direction.

Let's hope that the Appellate Division uses this opportunity to give effect to the Regulations as written and clear up a piece of outdated and misunderstood case law.

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P.S. My thanks to David Barshay, Esq., for shaming me into coming out of blogging retirement every once in a while.