New York’s Court of Appeals ruled that automobile insurers must still pay no-fault benefits to health care providers even when those providers paid for patient referrals.
The decision shuts down insurers’ attempts to treat referral-fee misconduct as grounds for denying payment, unless the conduct effectively hands control of the practice to someone who isn’t licensed.
Geico had argued that New York’s Department of Financial Services lets carriers block no-fault claims when a provider commits professional misconduct.
In this case, the provider took part in a fee-splitting and kickback setup involving unlicensed individuals. A district court found the defendants had attempted to defraud Geico, and the Second Circuit affirmed that finding.
But the appellate panel wasn’t convinced the misconduct automatically rendered the provider ineligible for no-fault benefits, so it asked New York’s highest court for clarity.
The Court of Appeals said DFS regulations allow denials only when a provider fails a foundational licensing requirement essential to performing medical services.
Insurers cannot simply rule that a fully licensed provider committed misconduct and use that conclusion to deny payment. Doing so would let insurers decide, on their own terms, when licensed providers lose eligibility.
In this case, the conduct didn’t amount to turning control over to an unlicensed party.
Because the licensing foundation remained intact, the court said the no-fault payments must be made, even if the underlying behaviour violates professional ethics.
