Policy Cancellation Under Pennsylvania Law Fails in a NY No-Fault Case: Act 68 Strict Compliance

Key Takeaways

• In New Way Med. Supply Corp. v Infinity Group (App. Term 2d Dept. 2015), a carrier’s cancellation-for-nonpayment defense governed by Pennsylvania law failed on a documentary omission.
• Pennsylvania’s Act 68 (40 P.S. § 991.2006) requires cancellation notice mailed to the insured “at the address shown in the policy” — strict compliance, not substantial compliance.
• The carrier never attached the policy or declarations page, so the court could not confirm the notice went to the policy address — and the cancellation failed as a matter of law.
• Out-of-state cancellation defenses live or die on the foreign statute’s checklist; the exhibits must prove every element.

A carrier asserting that a Pennsylvania policy was cancelled before the accident must establish cancellation under Pennsylvania’s rules, which demand strict compliance. New Way Med. Supply Corp. v Infinity Group shows how a cancellation defense that may well have been factually sound died on motion practice because one exhibit was missing.

The Decision

New Way Med. Supply Corp. v Infinity Group, 2015 NY Slip Op 51880(U)(App. Term 2d Dept. 2015)

“In Pennsylvania, in order for an insurance policy to be cancelled due to the nonpayment of premiums, the “notice of cancellation must be in strict accordance with the provisions of Act 68. An insurance policy may be cancelled by mailing to the named insured, at the address shown in the policy, a written notice of cancellation. If the notice sets forth a time period in which intervening action may negate the cancellation, the cancellation shall not become effective until the expiration of the time period” (Nationwide Ins. Co. v Pennsylvania Ins. Dept., 779 A2d 14, 17; see Donegal Mut. Ins. Co. v Pennsylvania Dept. of Ins., 694 A2d 391; see also 40 P.S. § 991.2006). Inasmuch as defendant failed to attach a copy of the insurance policy, or the declaration page of the policy, to its motion papers, it is impossible to determine whether the notice of cancellation was mailed to the insured “at the address shown in the policy” (40 P.S. § 991.2006). Consequently, defendant failed to establish as a matter of law that the insurance policy had been properly cancelled as of May 12, 2011 in accordance with [*2]Pennsylvania law and that, therefore, no coverage existed when the accident in question occurred on May 19, 2011.”

Does defense counsel have to refund the carrier when they make this type of mistake?

The Legal Framework: Choice of Law and Cancellation Defenses

Lack of coverage on the date of loss is among the strongest defenses in no-fault litigation — it is not subject to preclusion the way most claim-handling defenses are. But where the policy was issued in another state, New York courts ordinarily measure the validity of a cancellation against the law of the state where the policy was written. Our discussion of Pennsylvania insurance law in New York courts covers the choice-of-law analysis in more depth.

That framework means the New York litigator inherits a foreign statute’s checklist. Under Act 68, a Pennsylvania automobile policy may be cancelled for nonpayment of premium only by written notice mailed to the named insured at the address shown in the policy, and where the notice gives the insured a window to cure, cancellation is not effective until the window closes. Pennsylvania case law demands strict accordance with the statute. Close enough is not enough.

Why the Defense Failed: The Missing Declarations Page

The carrier’s problem in New Way was not that the notice was defective or that the mailing was unproven in the usual sense. The problem was structural: the statute’s touchstone is the “address shown in the policy.” Without the policy or its declarations page in the motion record, no court can compare the address on the cancellation notice against the address the statute makes controlling.

The proof gap is a familiar species in no-fault practice — the same genus as the mailing-affidavit failures collected in our mailing and proof of service cluster. Summary judgment is a paper trial. Every element of the defense must be established by admissible exhibits, and the element here had a document attached to it by statute. The accident occurred May 19, 2011 — one week after the claimed May 12 cancellation — yet for purposes of the motion, coverage existed.

Why This Matters for Carriers and Providers

For carriers and defense counsel, the case is a one-line audit rule: a cancellation motion under any state’s law must attach the policy or declarations page, the cancellation notice, and mailing proof, and the addresses must match on the face of the exhibits. When the governing law is foreign, brief it — and hand the court everything the statute references.

For medical providers, out-of-state cancellation defenses deserve aggressive scrutiny. Demand the policy. Compare addresses. Check whether the notice contained a cure period and whether the effective date accounts for it. A cancellation defense that fails leaves the carrier facing the claim — and, as the original post wryly asks, perhaps a hard conversation between carrier and counsel about who absorbs the cost of the miss.

Practice Pointers

• Attach the policy or dec page — always. If the statute keys the notice to “the address shown in the policy,” the policy is an element of proof.
• Run the foreign statute as a checklist. Notice content, mailing method, cure periods, and effective-date mechanics vary by state.
• Mind the timeline. A cure window that postpones effectiveness can move the cancellation date past the accident date.
• Providers: plead and press non-compliance. Strict-compliance regimes make technical gaps outcome-determinative.

Frequently Asked Questions

Which state’s law governs whether an insurance policy was validly cancelled?

In New York no-fault litigation, the validity of a cancellation is generally measured under the law of the state where the policy was issued. A Pennsylvania policy is tested against Pennsylvania’s Act 68 even when suit is brought in a New York court.

What does Pennsylvania’s Act 68 require for cancellation due to nonpayment?

Written notice of cancellation mailed to the named insured at the address shown in the policy, in strict accordance with 40 P.S. § 991.2006. If the notice provides a period in which the insured can act to negate the cancellation, the cancellation is not effective until that period expires.

Why did the insurer lose if the policy really was cancelled before the accident?

Because summary judgment depends on the motion record. Without the policy or declarations page attached, the court could not verify the notice was mailed to “the address shown in the policy,” so the carrier failed to establish the cancellation as a matter of law.

Related Resources

• Mailing and proof of service in no-fault cases — the firm’s cluster hub
• The firm’s Legal Encyclopedia
• Our no-fault defense practice
• Pennsylvania Insurance Law in New York Courts: Navigating Choice of Law and the Innocent Third Party Doctrine
• Mailing affidavit requirements for insurance policy cancellation
• Understanding Choice of Law in Multi-State Personal Injury Cases
• When NY and NJ Insurance Laws Collide: Understanding Cross-State Claims