Post-EUO Verification Demands and the 120-Day Rule: State Farm v Burke Physical Therapy

State Farm Mut. Auto. Ins. Co. v Burke Physical Therapy, P.C., 2022 NY Slip Op 30580(U)(Sup. Ct. Nassau Co. 2022)

Key Takeaways

• State Farm followed a provider’s EUO with sweeping post-EUO document demands; the provider objected, 120 days passed, and the carrier disclaimed.
• The court held the validity of that disclaimer cannot be resolved on summary judgment — the law on the permissible scope of post-EUO verification is unsettled.
• What controls is the reasonableness of the provider’s justification for refusing to produce the documents, a fact question on this record.
• The decision squarely raises whether expansive verification demands are better cast as discovery devices in litigation or arbitration.

The provider goes to the EUO and gets bombarded with post EUO demands that are the functional equivalent of a proctology examination. Provider objects, 120-days pass and the disclaimer is issued. Is that disclaimer valid?

The Court struggled with this one and said this cannot be answered at the summary judgment stage.

The Decision

“In this Court’s view, only one conclusion can be drawn-that on the precise question at issue here, the law is unsettled. To the extent that the Court finds one position more persuasive than the other, the Court is of the opinion that for purposes of the determination herein, it is of no import. What matters is the reasonableness of BURKE’s justification{or refusing to provide the documents sought.

In the absence of a clear answer as to whether or not STATE FARM was entitled to obtain the numerous documents sought at the verification stage of the claims, the Court cannot find, as a matter of law, that BURKE’s justification was unreasonable. ” The Court thus finds that, on the record presented, STATE FARM has failed to meet its burden to establish a right to disclaim coverage. See TAM Medical Supply Corp. v Tri State Consumers Ins. Ith & 13th Jud. Dists.

Do not ask me for an opinion. I understand what the carrier is trying to do, and it falls within the literal context of the regulations. Yet, are these demands better propounded as discovery demands in the context of litigation or arbitration? At what point is the verification protocol abused or do the equities fall in favor of casting the verification demands as discovery devices better suited during the dispute resolution phase of the claim?

The Legal Framework: Verification and the 120-Day Rule

The no-fault regulation, 11 NYCRR 65, builds claims processing around verification. After a claim form arrives, the carrier may request “any additional verification required … to establish proof of claim,” and the examination under oath is itself a form of verification the carrier may demand. While verification is outstanding, the carrier’s 30-day clock to pay or deny is tolled — which is precisely why the scope of permissible verification matters so much.

The 120-day rule supplies the enforcement mechanism. Under 11 NYCRR 65-3.5(o), an applicant must provide all requested verification, or supply reasonable justification for not providing it, within 120 calendar days of the initial request. If it does neither, the carrier may deny the claim on that basis. The “reasonable justification” clause is the safety valve — and it is the clause on which Burke turns.

Burke presents the collision case: the carrier demands a large universe of post-EUO documents (the kind of financial, corporate, and treatment records that probe a provider’s structure and billing), the provider objects rather than produce, and the carrier disclaims when the 120 days run. If the carrier was entitled to the documents, the objection looks like non-compliance. If the demands overshot what verification permits, the objection looks like reasonable justification. Because the appellate courts had not clearly resolved the entitlement question, the Nassau County court held that reasonableness could not be decided as a matter of law — and the carrier, as the summary judgment movant, lost the motion.

Why This Matters for Carriers and Providers

For carriers, Burke is a warning that the 120-day rule is not self-executing. A disclaimer built on unanswered verification demands is only as strong as the carrier’s entitlement to the underlying material. The broader and more investigative the demand package, the more room a court has to find the provider’s refusal reasonable — and the more likely the carrier ends up in a plenary trial on its declaratory judgment claim instead of a clean summary judgment win.

For medical providers, the decision shows that objections are not futile, but they must be articulated. The 120-day rule expressly accommodates “reasonable justification.” A provider that responds in writing, explains why specific demands exceed the verification stage, and produces what is fairly claim-related builds the record that defeats the disclaimer. Silence, by contrast, hands the carrier its 65-3.5(o) denial. The interplay between objections, follow-up, and the carrier’s own obligations is developed further in the firm’s verification and 120-day rule cluster hub.

The unresolved policy question is the one posed above: at what point does claims-stage verification become a substitute for the discovery a carrier would otherwise have to pursue — with judicial supervision and proportionality limits — in litigation or arbitration? Burke does not answer it; it certifies that the answer is genuinely open.

Practice Pointers

• Carriers: tailor post-EUO demands to the specific claims and testimony. A demand package that reads like omnibus discovery invites a reasonableness fight you cannot win on papers.
• Carriers: paper the file with follow-up requests and responses to objections; a record of dialogue beats a record of stonewalling on both sides.
• Providers: never let 120 days lapse in silence. Serve written objections stating the justification for each category withheld, and produce the uncontroversial items.
• Both sides: preserve the entitlement question for appellate review — Burke itself observes the law is unsettled, which means the issue will keep recurring until the Appellate Division speaks definitively.

Frequently Asked Questions

What is the 120-day rule in New York no-fault insurance?

Under 11 NYCRR 65-3.5(o), an applicant for no-fault benefits must provide all requested verification — or reasonable justification for not providing it — within 120 calendar days of the initial verification request. A carrier may deny a claim where the applicant does neither.

Can a medical provider object to a no-fault carrier’s verification demands?

Yes. The regulation’s “reasonable justification” language contemplates objections. State Farm v Burke Physical Therapy holds that where the carrier’s entitlement to the demanded documents is unsettled, a court cannot find the provider’s refusal unreasonable as a matter of law — defeating the carrier’s summary judgment motion on its disclaimer.

Does an EUO request toll the carrier’s time to pay or deny a claim?

Generally yes. An examination under oath is a form of verification, and properly issued verification requests toll the carrier’s 30-day determination period until the verification is provided. That tolling effect is why disputes over the scope of verification demands carry such high stakes.

Related Resources

• Verification, the 120-day rule, and Chapa — cluster hub
• The CPLR 3212(g) paradigm
• Understanding CPLR 3212(a): Critical Timing Rules for Summary Judgment Motions in New York
• No-Fault Verification Requirements: When Partial Compliance Isn’t Enough
• Understanding IME No-Shows in New York No-Fault Insurance: Rights, Consequences, and Strategic Considerations
• New York No-Fault Insurance Law
• Browse the firm’s Legal Encyclopedia for foundational no-fault doctrine
• No-Fault Defense