On Feb. 24, 2021, the Appellate Division, Second Department issued a long-awaited decision in Alleviation Med. Svcs. v. Allstate Ins. Co., 2021 N.Y. Slip Op. 08159 (2d Dept. Feb. 24, 2021). Carriers, providers, and legal practitioners, alike, hoped the court would provide clarity on a carrier's obligations once a policy becomes exhausted, but the recent decision did not squarely address that issue. Instead, the court focused on the lack of carrier documentation in its underlying motion papers, and stated "there are issues of fact remaining as to when the claim was denied, and the basis and efficacy of the denial," despite confirming the carrier had proved policy exhaustion. See id. 

Thus, albeit not articulated, the Second Department makes clear that proof of policy exhaustion, alone, is insufficient to dismiss a personal injury protection (PIP) lawsuit. That is, it is still necessary to scrutinize the timeliness and propriety of a denial. The logical conclusion is that a claim will be awarded if the denial or defense is not sustained regardless of policy exhaustion.

Pursuant to New York state no-fault law, an automobile insurance policy has a statutory mandatory minimum to include $50,000 in PIP. New York insurance law provides "first party benefits" coverage for "basic economic loss," which includes all necessary expenses incurred for medical treatment and loss of earnings from work. See N.Y. Ins. Law §5102(a)-(b). Insurance carriers are required to process each bill upon receipt. Therefore, the benefits are to be paid as the loss is incurred, prior to the exhaustion of the policy. See N.Y. Ins. Law §5106(a); see also Matter of Medical Socy. of State of N.Y. v. Serio, 100 N.Y.2d 854, 860 (2003). Absent additional PIP coverage purchased by the insured, a policy will exhaust at $50,000.