Court Sides With Hereford in No-Fault Coverage Dispute
New York's Appellate Division dismissed a medical provider's claims against Hereford Insurance Company over a prior default judgment on coverage.
Updated on Nov. 6, 2026 in Insurance
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New York's Appellate Division, First Department, unanimously reversed a lower court and dismissed coverage claims brought by Orthopaedics, Spine & Sports Medicine LLP against Hereford Insurance Company. The provider had won a no-fault arbitration award of more than $14,000 that was affirmed on July 8, 2022, but Hereford had already obtained a default judgment declaring it owed no coverage.
Why it matters
The ruling shows that a default judgment in a coverage lawsuit can bar later no-fault claims arising from the same dispute, even when the provider held an arbitration award. For medical providers and insurers handling no-fault claims in New York, the decision highlights how the timing of filings can determine which claims survive.
The provider won an arbitration award of over $14,000, affirmed July 8, 2022, but Hereford obtained a default judgment in October 2022 declaring it had no coverage obligations. The provider had not appeared in Hereford's suit and did not appeal the default judgment, and the court's ruling rested on the sequence of filings rather than the merits of the injury claims.
The players
Orthopaedics, Spine & Sports Medicine LLP
A medical provider that won a no-fault arbitration award and sought to pursue coverage claims against Hereford after a default judgment had been entered against it.
Hereford Insurance Company
An insurer that sued to obtain a declaration it owed no coverage for injuries arising from a collision involving its insured vehicle.
The details
Hereford denied coverage on two grounds: that the injuries were unrelated to the covered collision and that the treated individuals did not sign examination-under-oath transcripts as the policy required. The Appellate Division applied a transactional test asking whether the claims were or should have been raised in the earlier suit, finding both cases involved the same coverage dispute and reversing the lower court's issue-preclusion analysis.
Timeline
July 8, 2022: arbitration award of over $14,000 affirmed
October 2022: court declared Hereford had no coverage obligations by default
November 6, 2026: Appellate Division reversed the lower court and dismissed the provider's claims
Legal Context
The decision operates within New York's no-fault auto insurance system, under which medical providers pursue claims through arbitration after insurers deny payment. The court's transactional test for claim preclusion shapes how providers and insurers sequence their filings in that system.
Medical providers in New York who hold no-fault arbitration awards may need to check whether an insurer has already obtained a default coverage judgment before pursuing payment. Drivers and policyholders may see disputes over injury claims resolved through court sequencing rather than the underlying medical facts.
The takeaway
Filing timing can decide coverage disputes in New York no-fault claims, so providers should monitor whether an insurer has already sought a declaratory judgment before arbitrating. Insurers and providers both benefit from tracking all pending filings tied to the same collision.
Further reading
For related coverage of auto and liability policies, see Insurance in our personal finance section.
Source note: This article includes information reported by Insurance Business.
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