COURT UPHOLDS FRAUD RULE:

The New York Court of Appeals has upheld the right of an insurance company to refuse to reimburse fraudulently incorporated medical providers for no-fault auto insurance claims even when the medical care provided is appropriate.

The defendant medical providers argued they were entitled to reimbursement even if they were fraudulently licensed because the actual care that patients received was within the scope of the licenses of those who treated the patients.

But the court disagreed, upholding a state anti-fraud regulation that lets insurers deny payments to fraudulent medical corporations. The court added that insurers may not delay or refuse payment for mere technical violations, such as failure to hold an annual meeting, pay corporate filing fees or submit otherwise acceptable paperwork on time. Those infractions “will not rise to the level of fraud,” the court noted.

The defendants included Valley Physical Medicine and Rehabilitation, P.C., Yonkers Medical Services, P.C., and Astoria Physical Medicine and Rehabilitation, P.C. The case is State Farm Mutual Automobile Insurance Co. v. Robert Mallela, et al.