No-fault insurers have increasingly relied on Examinations Under Oath (EUOs) as a tool to investigate claims submitted by medical providers. EUOs were originally intended as a tool for insurers to verify information related to a specific claim and to ensure that treatment billed was related to the underlying accident. In recent years, however, insurers have used EUOs for a far different and far broader purpose: as fishing expeditions to gather information and testimony to support future civil RICO lawsuits against health care practices and physicians. This emerging trend has created substantial disruption for medical providers across New York and represents a significant departure from the regulatory framework governing EUOs.
Large insurers increasingly issue EUO notices covering massive numbers of unrelated claims for medical services provided to a significant number of patients. Rather than focusing on claim-specific issues such as medical necessity, causation, or the propriety of particular bills, these EUOs routinely venture beyond any individual reimbursement request. Insurers now regularly use EUOs to question providers about matters bearing little or no relevance to the claims at issue, including corporate structure, internal financial arrangements, referral sources, marketing practices, management and ownership agreements, and historical business transactions. Likewise, insurers frequently demand expansive document production that mirrors civil discovery, including tax returns, bank records, emails, shareholder agreements, and internal communications.
These demands potentially exceed what is intended under No-Fault Law regulations which allow insurers to request verification only when it is material to the adjustment of a particular claim. They do not permit insurers to conduct unrestricted investigations into a provider’s business operations or to develop theories of liability for use in future litigation. Nonetheless, insurers have increasingly used the EUO process as a pre-RICO investigative mechanism—gathering information under the guise of claim verification and then repurposing that information months later in sweeping federal lawsuits alleging fraud, kickbacks, and improper corporate control. In many cases, the EUO record is the foundation of the insurer’s later complaint.
This misuse of EUOs places providers in an untenable position. Entire practices are often placed on “verification hold,” meaning reimbursements on all claims remain frozen indefinitely while the insurer continues to demand testimony and documents. These delays can stretch for months or longer, causing significant financial strain while the insurer may have no good-faith basis to withhold payment. Moreover, statements made during an EUO—intended to address routine operational questions—are frequently taken out of context and cited in RICO complaints as purported “evidence” of wrongdoing. The result is an administrative process that has drifted far from its regulatory purpose and is now routinely weaponized against providers.
Given the increasing frequency of the use of EUO in this expanded manner and the growing number of RICO suits that follow, providers should treat EUO requests with caution and consult counsel before participating. Insurers’ expanding tactics have significant legal and financial implications, and improperly conducted EUOs risk creating a distorted record that insurers may later try to use in federal court. We expect this issue to continue to develop as additional cases are litigated and as courts scrutinize the propriety of insurers’ investigative methods. We will continue to monitor these trends closely and provide updates as courts address insurers’ use of the EUO process in connection with civil RICO allegations.
Garfunkel Wild’s RICO Defense Group is comprised of a team of litigators with specialized experience in handling RICO cases during all stages of litigation, from requests for verification, including requests for examinations under oath, through trial, appeals, and/or settlement.
If you have any questions about how these developments may affect your practice, please contact the author, the Garfunkel Wild attorney with whom you regularly work, or email us at [email protected].