Over a decade ago, in an effort to reduce no-fault insurance fraud involving the improper ownership or licensing of medical providers, the New York State Insurance Department (the precursor to the New York State Department of Financial Services (DFS)), adopted a regulation that declared that a health care services provider was eligible for reimbursement from a no-fault insurance carrier under Section 5102(a)(1) of the New York Insurance Law only if it met all relevant New York State or local licensing requirements.1 Relying in large part on that regulation, the New York Court of Appeals subsequently held, in State Farm Mutual Automobile Ins. v. Mallela, that insurers could bring lawsuits against health care providers alleging that they were not eligible for no-fault law reimbursement if the evidence established that the physicians who allegedly owned the medical practices were not the true owners, in violation of New York’s Business Corporation Law.2
Now, in another decision that is likely to assist in the fight against no-fault insurance fraud, U.S. District Judge Arthur D. Spatt of the Eastern District of New York has decided that Mallela may be extended from the Business Corporation Law context to the Public Health Law context.
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