In Country-Wide Ins Co v Gotham Medical PC, the New York Appellate Division held that the insurer had no coverage obligations to its insured based on its principal’s failure to answer questions at an examination under oath.

Gotham Medical submitted no fault benefit claims for 31 individuals to Country-Wide Insurance for patients that had sought medical treatment following auto accidents.  Country-Wide noted that the claims were generally suspicious: many were identical, and potential and systematic  “upcoding” of claims was noted because the level of care often exceeded that which would be necessary for the injury reported.  Country-Wide launched an investigation that revealed Gotham Medical’s principal, Dr. Scheer, had been the subject of a disciplinary hearing by the Office of Professional Medical Conduct (OPMC).

At his EUO, Dr. Scheer’s counsel repeatedly instructed him not to answer questions regarding the OPMC hearing and resulting consent order, stating that the issues were not relevant.  Based on this refusal, Country-Wide denied all coverage and sought a declaratory judgment.  The Court agreed, stating that compliance with the EUO is a condition precedent to coverage under the policy.

While Defendants argued that the OPMC disciplinary hearing was confidential, the Court refused to split hairs, stating that the effect and outcome of the hearing were not confidential, and that “Dr. Scheer’s refusal to answer all relevant questions at the EUO, as required by the provisions of the applicable insurance policies, constitutes a material breach of contract, and precludes recovery by defendant.”

This decision provides additional support for any insurer in New York disclaiming coverage based upon its insured’s refusal to answer pertinent questions during EUOs, and as reminder to insureds that simply submitting to an EUO in no way constitutes compliance with the policy requirements.

Thanks to Vivian Turetsky for her contribution to this post.