May 2026
TO: ALL INTERESTED PHYSICIANS
In a recent matter before the New York Court of Appeals, Gov’t Emps. Ins. Co. v. Mayzenberg, 2025 WL 3259882 (N.Y. Nov. 24, 2025), the issue at hand addressed whether an insurer may deny no-fault insurance reimbursement to a licensed health care provider based solely on the insurer’s determination that the provider engaged in professional misconduct – here, paying illegal referral fees in violation of Education Law § 6530(18).
For background, the carrier – GEICO – refused to reimburse a licensed acupuncturist’s professional corporation for assigned no-fault benefits. GEICO asserted that the provider’s alleged kickback scheme rendered the P.C. ineligible for reimbursement under 11 N.Y.C.R.R. 65–3.16(a) (12), which bars payment to providers who fail to meet “any applicable… licensing requirement.”
The New York Court of Appeals held that insurers may not deny reimbursement on that basis.
Based on an interpretation of the regulations of the New York State Department of Financial Services, (the agency charged with oversight of no-fault), the court concluded that the regulation applies only to formational licensing requirements – prerequisites necessary to obtain and maintain a professional license – not to allegations of professional misconduct, that have not resulted in license suspension, revocation, or annulment by state regulators.
Finding the phrase “licensing requirement” refers to threshold qualifications for practicing a profession, such as proper incorporation or compliance with statutory ownership requirements, rather than post-licensure standards of professional conduct.
The oversight of professional discipline was at issue. Under the Education Law, the Board of Regents has exclusive authority to determine whether a licensed professional has committed misconduct and what penalty, if any, should be imposed.
A finding of misconduct does not automatically void a license – and may result in discipline short of suspension or revocation – the court found that alleged misconduct does not constitute a failure to meet a “necessary” licensing requirement. Concluding that to allow insurers to deny claims based on their unilateral determinations of misconduct would effectively displace the Board of Regents’ disciplinary authority and create the risk of inconsistent outcomes between insurers and state regulators.
Permitting insurers to withhold payment based on unproven allegations of any of the numerous categories of professional misconduct enumerated in Education Law § 6530 would delay payments and incentivize litigation, undermining the no-fault statutory scheme’s efficiency goals.
Importantly, the court distinguished from prior precedent, explaining that in State Farm Mut. Auto. Ins. Co. v. Mallela¸4 N.Y.3d 313 (2005) and Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 33 N.Y.3d 389 (2019) insurers were permitted to deny reimbursement where providers violated fundamental licensing or incorporation statutes – such as fraudulently incorporating professional corporations or ceding control to unlicensed individuals – defects that rendered the providers ineligible to practice from the outset.
By contrast, paying referral fees, while potentially constituting professional misconduct, does not automatically invalidate a provider’s license absent disciplinary action by the state. Accordingly, the court answered the certified question in the negative, holding that an insurer may not deny no-fault reimbursement based solely on alleged professional misconduct unless that conduct amounts to a foundational licensing defect, such as surrendering control of a professional corporation to unlicensed individuals, which was not alleged here.[1]
Respectfully Submitted,
Schaum Law
[1] Danya Tann, NY Health Law Journal