Fraud Accusation (Corporate Structure)

- “The regulatory scheme, however, does not permit abuse of the truth-seeking opportunity that 11 NYCCR §65-3.16(a)(12) authorizes. Indeed, the Superintendent’s regulations themselves provide for agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause (see 11 NYCRR §65-3.2[c]). In the licensing context, carriers will be unable to show a “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do. For example, a failure to hold an annual meeting, pay corporate filing fees or submit otherwise acceptable paperwork on time will not rise the level of fraud. We expect, and the Legislature surely intended, vigorous enforcement action by the Superintendent against any carrier that uses the licensing requirement regulation to withhold or obstruct reimbursements to non-fraudulent healthcare providers.” State Farm Mutual Automobile Insurance Co. v. Robert Mallela 2005 WL 705972 (N.Y.); 2005 N.Y. Slip Op. 02416