New York Ruling Clarifies Insurer Claim Denial Criteria under No-Fault Statute

In a notable decision impacting the insurance industry, the New York Court of Appeals in Government Employees Insurance Co. v. Mayzenberg clarified the criteria under which insurers may deny healthcare claims under the state's no-fault insurance statute. The ruling permits insurers to reject claims if providers fail to meet licensing conditions or obtain licenses fraudulently. However, claims cannot be denied solely on the grounds of professional misconduct, such as paying for patient referrals, even if these actions could lead to the loss of a license.

The decision underscores the interpretation by the New York Department of Financial Services (DFS) that insurer compliance requirements hinge on licensing standards violations. Misconduct, while significant, does not in itself justify claim denial. The court's deliberations align with the regulatory framework, akin to the federal Chevron doctrine, ensuring that insurers adhere to agency interpretations.

For insurers, this ruling highlights the importance of stringent compliance checks on licensure status during claims processing. It emphasizes refining operational protocols to ensure alignment with clarified legal standards, impacting both risk management strategies and claim processing. The decision also reinforces the internal affairs doctrine, affirming that corporate governance adheres to the laws of the state of incorporation, a point of note for insurers offering corporate governance liability coverage.