Limiting No‑Fault Eligibility Denials to Foundational Licensing Violations: Commentary on Government Employees Ins. Co. v. Mayzenberg

I. Introduction

The New York Court of Appeals’ decision in Government Employees Ins. Co. v. Mayzenberg, 2025 NY Slip Op 06527 (Nov. 24, 2025), answers an important certified question from the United States Court of Appeals for the Second Circuit about the scope of a key no‑fault insurance regulation, 11 NYCRR 65‑3.16(a)(12). The case lies at the intersection of three regimes:

New York’s no‑fault automobile insurance system (Insurance Law art. 51);
DFS’s regulatory framework for combating no‑fault fraud; and
The Education Law’s scheme for licensing and disciplining health professionals through the Board of Regents.

The Second Circuit asked whether an automobile insurer can deny payment of assigned no‑fault benefits to a health care provider when the insurer concludes that the provider engaged in professional misconduct by paying unlawful referral fees (kickbacks), in violation of Education Law § 6530(18) and 8 NYCRR 29.1(b)(3). The answer turns on the meaning of “licensing requirement” in 11 NYCRR 65‑3.16(a)(12) and on how much deference courts owe to the Department of Financial Services (DFS) in interpreting its own no‑fault regulation.

The majority opinion (Rivera, J.) defers to DFS’s interpretation and holds that insurers generally may not deny no‑fault reimbursement based solely on their own determination that a licensed provider has committed professional misconduct, unless the misconduct is of the special sort that effectively cedes control of the professional corporation to unlicensed persons (the Mallela/Carothers line). Chief Judge Wilson dissents, arguing that kickback‑based fee‑splitting arrangements with non‑providers are functionally equivalent to the fraudulent ownership/control schemes previously held to justify denial of payment and that DFS’s new position is an irrational departure from its historical stance.

II. Overview of the Case

A. Factual and Procedural Background

Plaintiffs are Government Employees Insurance Company and three affiliates (collectively, “GEICO”). Defendants include:

Igor Mayzenberg, a New York‑licensed acupuncturist;
His professional service corporation, Mingmen Acupuncture, P.C., and related entities; and
Two non‑licensed individuals, Igor and Tamilla Dovman (who settled and did not pursue the appeal).

GEICO sued in the Eastern District of New York seeking, among other relief, a declaratory judgment that Mingmen was not entitled to reimbursement for pending no‑fault benefit claims because of an alleged kickback scheme:

GEICO asserted that Mayzenberg and his corporations paid the Dovmans and their companies for patient referrals;
Such conduct is professional misconduct under Education Law § 6530(18) and 8 NYCRR 29.1(b)(3) (prohibiting fee‑splitting and referral fees); and
GEICO argued that this misconduct constituted a failure to meet a “licensing requirement” under 11 NYCRR 65‑3.16(a)(12), making Mingmen ineligible for no‑fault reimbursement.

The District Court granted GEICO summary judgment, finding no genuine dispute that Mayzenberg had engaged in a “scheme to defraud GEICO” via unlawful fee‑splitting, and held that this misconduct rendered Mingmen ineligible for reimbursement under 11 NYCRR 65‑3.16(a)(12).

On appeal, the Second Circuit agreed that, on the undisputed facts, referral fees were paid, but was unsure whether that ethical violation triggers ineligibility under 11 NYCRR 65‑3.16(a)(12), particularly in light of the Court of Appeals’ prior decisions in State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313 (2005), and Andrew Carothers, M.D., P.C. v. Progressive Ins. Co., 33 NY3d 389 (2019). The Second Circuit certified the question to the New York Court of Appeals.

B. The Certified Question

If an insurer determines a healthcare provider has improperly paid others for patient referrals, in violation of New York Education Law § 6530(18) and 8 N.Y.C.R.R. § 29.1(b)(3), can the insurer deny payment for no‑fault benefits on the ground that the provider “fail[ed] to meet” a “necessary” State or local licensing requirement under 11 N.Y.C.R.R. § 65‑3.16(a)(12)?

III. Summary of the Court’s Answer

A. Holding

The Court of Appeals answers the question in the negative, with an important qualification.

General rule: An insurer may not deny a provider’s no‑fault reimbursement claim based solely on the insurer’s own determination that the provider engaged in professional misconduct (such as paying for referrals) where that misconduct does not amount to surrendering control of the professional corporation to unlicensed persons.
Exception (unchanged by this decision): Under Mallela and Carothers, an insurer may deny reimbursement where there is a “willful and material” violation of foundational licensing or incorporation statutes—e.g., fraudulent incorporation or de facto ceding of control to non‑licensees—because such violations void the corporation’s license ab initio.

The majority adopts DFS’s interpretation of 11 NYCRR 65‑3.16(a)(12): the regulation covers foundational licensing requirements necessary to be legally authorized to perform health care services at all, but it does not include post‑licensure professional conduct rules unless and until the licensing authority imposes disciplinary action that affects the license (e.g., suspension, revocation, annulment) or the misconduct effectively places control with unlicensed persons.

B. Key Rationales

The majority’s answer rests on three principal pillars:

Textual interpretation: “Licensing requirement” in 11 NYCRR 65‑3.16(a)(12) refers to prerequisites for obtaining and maintaining a valid license and corporate authority to operate—not every rule of professional conduct.
Structural harmony with the Education Law: The Board of Regents has statutory “final authority” over professional discipline; allowing insurers to withhold payment based on their own misconduct findings would displace that regime and create parallel, inconsistent disciplinary tracks.
No‑fault policy objectives: The no‑fault system prioritizes swift payment and reduced litigation. Allowing insurers to treat any alleged professional misconduct as a basis for ineligibility under 65‑3.16(a)(12) would invite delays, disputes, and forum‑shopping, undermining the statutory design.

At the same time, the Court emphasizes that insurers retain various tools to combat fraud—medical necessity challenges, civil fraud or unjust enrichment suits, and regulatory reporting that can lead to temporary prohibitions and de‑authorization.

C. The Dissent’s Position

Chief Judge Wilson, dissenting, would answer the certified question yes in a narrow class of cases: insurers should be allowed to deny reimbursement where fee‑splitting or kickback schemes with non‑providers materially shift economic incentives and practical control away from the licensed provider, because such arrangements are functionally equivalent to the ownership/control abuses condemned in Mallela and Carothers.

He contends that DFS has:
(1) abandoned its prior, broader reading of 11 NYCRR 65‑3.16(a)(12) that it urged in earlier cases;
(2) adopted an inconsistent and irrational “form over substance” distinction; and
(3) left insurers and the public exposed to substantial fraud‑driven costs that will be passed on as higher premiums.

IV. Legal and Precedential Framework

A. New York’s No‑Fault System

The Comprehensive Automobile Insurance Reparations Act (L 1973, ch 13), codified largely at Insurance Law §§ 5101–5109, replaced most traditional tort litigation for automobile accidents with a no‑fault system. Key features:

Basic economic loss: Insurers must pay up to $50,000 in “first party benefits,” including “all necessary expenses incurred” for medical and health services (Insurance Law § 5102(a)(1)).
Assignments to providers: Patients typically assign their no‑fault benefit claims to their providers, who then bill the insurer directly (11 NYCRR 65‑3.11).
Prompt payment regime: Insurers must pay or deny claims within 30 days of receiving proof of claim; overdue payments accrue 2% monthly interest and attorney’s fees (Insurance Law § 5106(a); 11 NYCRR 65‑3.8, 65‑3.9).
Limited contestability: Insurers can seek verification and investigation (11 NYCRR 65‑3.5), but only within strict time‑frames designed “to avoid prejudice and red‑tape dilatory practices” (Presbyt. Hosp. v Maryland Cas. Co., 90 NY2d 274, 285 (1997)).

The system reflects a carefully calibrated tradeoff:

“Prompt payment for basic economic loss to injured persons regardless of fault, in exchange for a limitation on litigation to cases involving serious injury” (Pommells v Perez, 4 NY3d 566, 571 (2005), quoting Licari v Elliott, 57 NY2d 230, 236 (1982)).

B. DFS’s Regulatory Role and 11 NYCRR 65‑3.16(a)(12)

DFS (and its predecessor, the Insurance Department) administers the no‑fault statute and issues implementing regulations under Insurance Law § 301. In response to widespread “medical mill” fraud, DFS overhauled the no‑fault regulations in 2001. One central provision is 11 NYCRR 65‑3.16(a)(12), which provides:

“A provider of health care services is not eligible for reimbursement under [the no‑fault statute] if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.”

The intended function of this provision, as originally explained by the Insurance Department, was to prevent unlicensed or improperly organized entities from accessing no‑fault dollars and to disrupt the corporate forms through which medical mills channeled fraudulent billing.

C. Professional Licensing and Discipline: The Board of Regents

The Education Law governs admission to and discipline within the licensed professions:

Licensing requirements: Each profession (e.g., acupuncturists, physicians) has statutory prerequisites to “qualify for a license” (see e.g. Education Law § 8214 (acupuncturists); § 6524 (physicians); § 6501 (licensing)).
Professional misconduct: Separate provisions, notably Education Law § 6530 (for physicians and related professions), list various forms of professional misconduct, including:
- § 6530(18): directly or indirectly offering or giving any fee to a third party for the referral of a patient.
Disciplinary authority: The Board of Regents has “final authority” on professional discipline (see David v Biondo, 92 NY2d 318 (1998); Matter of Nehorayoff v Mills, 95 NY2d 671 (2001)). Sanctions can range from censure and fines to suspension, revocation, or annulment of licenses (Education Law § 6511).
Judicial review: Limited to whether the Board’s determination is arbitrary, capricious, affected by error of law, or contrary to lawful procedure (CPLR 7803(3)).

This structure centralizes professional discipline in a specialized administrative body, distinct from private actors or generalist courts.

V. Precedents Cited and Their Influence

A. State Farm Mut. Auto. Ins. Co. v. Mallela (2005)

In Mallela, insurers alleged that unlicensed individuals paid licensed physicians to “rent” their licenses, using them to create professional corporations that were in fact controlled by non‑physicians. These corporations then billed no‑fault insurers. The issue was whether insurers could deny reimbursement based on such fraudulent incorporation under 11 NYCRR 65‑3.16(a)(12).

The Court held:

New York’s licensing and incorporation statutes (Business Corporation Law §§ 1507–1508; Education Law § 6507(4)(c)) prohibit non‑physicians from owning or controlling professional medical corporations.
A professional corporation that is owned or controlled in violation of those statutes is never lawfully licensed to provide medical services; thus, its billing is ineligible for no‑fault reimbursement under 65‑3.16(a)(12).
Insurers may look behind facially valid incorporation and licensing documents to uncover “willful and material” violations of foundational licensing requirements, but not merely “technical” violations.

Mallela therefore establishes that:

11 NYCRR 65‑3.16(a)(12) applies where the provider has never been validly licensed or authorized to operate in the first place;
Such foundational defects void the corporation’s eligibility for no‑fault reimbursement ab initio; and
Insurers can use this as a potent anti‑fraud tool, but must confine themselves to “willful and material” violations.

B. Andrew Carothers, M.D., P.C. v. Progressive Ins. Co. (2019)

Carothers extended Mallela to scenarios where, although a professional corporation was initially formed properly, the licensed physician subsequently ceded control to non‑physicians.

The Court held:

“Control” by unlicensed individuals—through management, economic rights, and decision‑making—violates the same licensing and corporate statutes that forbid lay ownership and control of medical corporations.
Even post‑incorporation ceding of control can be a “willful and material” violation sufficient to render the corporation ineligible under 65‑3.16(a)(12), without requiring proof of common‑law fraud.
The focus is on foundational structural violations—who truly owns and controls the entity that is billing insurers— not on the medical appropriateness of individual services.

Carothers thus confirms that the 65‑3.16(a)(12) ineligibility doctrine is concerned with foundational licensing and corporation law compliance, whether the violation occurs at formation (Mallela) or arises later by surrendering control (Carothers).

C. Other Relevant Authorities

Matter of Medical Society of the State of N.Y. v. Serio, 100 NY2d 854 (2003): Describes the legislative purposes of no‑fault (prompt compensation, reduced litigation, premium savings) and upholds DFS’s broad power to regulate to combat fraud.
Matter of Belmonte v. Snashall, 2 NY3d 560 (2004): Uses “licensing requirements” in a context that the majority reads as referring to prerequisites to lawful practice.
Presbyterian Hospital, Pommells, Licari: Emphasize prompt payment and limiting litigation in the no‑fault scheme.
Matter of Nehorayoff v. Mills, 95 NY2d 671 (2001); David v. Biondo, 92 NY2d 318 (1998): Reinforce the Board of Regents’ broad discretion and final authority in professional discipline.
Matter of Peckham v. Calogero, 12 NY3d 424 (2009); Andryeyeva v. New York Health Care, Inc., 33 NY3d 152 (2019): Articulate the New York standard for judicial deference to agency interpretations of their own regulations.
Allstate Prop. & Cas. Ins. Co. v. New Way Massage Therapy P.C., 134 AD3d 495 (1st Dept 2015): A billing‑service “fee splitting” case distinguished by the dissent as substantively harmless (a small percentage for billing/collection services post‑treatment) as opposed to referral‑based kickbacks that influence who receives treatment.

Both the majority and dissent deploy these precedents, but they emphasize different aspects:

The majority stresses the foundational vs. technical violation distinction and the primacy of the licensing authorities (Board of Regents), using Mallela and Carothers to cabin 65‑3.16(a)(12) to ownership/control‑type violations.
The dissent stresses the substantive economic function of arrangements that channel profits to non‑providers, arguing that fee‑splitting kickbacks are simply another variant of the same evil targeted in Mallela and Carothers.

VI. The Court’s Legal Reasoning

A. DFS’s Interpretation and Judicial Deference

DFS, as amicus, took the position that:

11 NYCRR 65‑3.16(a)(12) covers only pre‑conditions to licensure and continuing foundational requirements (e.g., prohibition of lay ownership/control) that determine whether an entity is legally authorized to perform services.
Professional misconduct rules (such as kickbacks under Education Law § 6530(18)) fall within the disciplinary jurisdiction of the Board of Regents and do not themselves constitute “licensing requirements” for purposes of 65‑3.16(a)(12), unless and until discipline is imposed that affects the license.
DFS does not claim this interpretation precludes insurers from arguing, in an appropriate case, that a kickback scheme was so pervasive that it effectively transferred control of a professional corporation to unlicensed persons, thereby triggering Mallela/Carothers-type ineligibility.

The majority applies the familiar New York deference rule:

“As a general rule, courts must defer to an administrative agency’s rational interpretation of its own regulations in its area of expertise” (Andryeyeva, 33 NY3d at 174, quoting Peckham, 12 NY3d at 431).

Because DFS’s reading is:

Consistent with the regulation’s text and ordinary use of “licensing requirement,”
Harmonizes with the Education Law’s disciplinary framework, and
Serves the no‑fault system’s goals of prompt payment and reduced litigation,

the majority holds it is rational and entitled to deference.

B. Textual Analysis: What Is a “Licensing Requirement”?

Key textual points in the majority’s reasoning:

The term “licensing requirement” commonly refers to prerequisites or conditions for obtaining/holding a license to operate (citing Belmonte and Black’s Law Dictionary).
The Education Law uses “requirements” to describe conditions for licensure (§§ 6501, 6524, 8214, etc.), but describes professional conduct rules in separate provisions (§ 6530) without labeling them “licensing requirements.”
11 NYCRR 65‑3.16(a)(12) speaks of “licensing requirement[s] necessary to perform such service,” suggesting core threshold conditions for lawful practice. Violating a professional misconduct rule does not automatically prevent a provider from lawfully rendering services; discipline is discretionary and graduated.

On that reading, adherence to every professional misconduct rule cannot itself be a “necessary” licensing requirement for purposes of 65‑3.16(a)(12). Rather, the regulation targets those legal conditions without which the provider is not authorized to operate.

C. Structural and Institutional Considerations: Role of the Board of Regents

The majority gives significant weight to the structure of New York’s licensing regime:

The Board of Regents has “considerable discretion concerning matters of professional misconduct,” including whether to revoke or not revoke a license for a given violation (Nehorayoff, 95 NY2d at 674).
Allowing insurers to unilaterally determine that a particular act constitutes professional misconduct and to deny reimbursement on that basis would:
- Effectively convert insurers into de facto disciplinary authorities;
- Risk inconsistent determinations across insurers and courts; and
- Undermine the Regents’ statutorily centralized, expert oversight.

DFS’s interpretation, and the majority’s acceptance of it, preserves the primacy of the Board of Regents: only once the licensing authority has taken concrete action (suspension, revocation, annulment, or de‑authorization), or the misconduct amounts to a structural foundational violation (e.g., unlicensed control), does 65‑3.16(a)(12) bar reimbursement.

D. No‑Fault System Purposes: Prompt Payment vs. Fraud Policing

The majority emphasizes that expanding 65‑3.16(a)(12) to encompass all alleged professional misconduct would:

Encourage insurers to withhold payment based on unproven allegations of ethical breaches;
Create incentives to probe for violations among the 50+ categories of professional misconduct in § 6530—even trivial ones like failure to wear an ID badge or belated completion of reimbursement forms;
Lead to widespread litigation and delays contrary to the core purposes of no‑fault: swift payment and reduced court burdens.

This concern aligns with prior admonitions that “mere technical violations” of licensing laws are insufficient to justify delaying payment (Mallela, 4 NY3d at 322; Carothers, 33 NY3d at 406).

The majority notes that:

Insurers may still deny claims as medically unnecessary (Insurance Law § 5102(a)(1));
They may sue for fraud or unjust enrichment; and
They are required to report patterns of overcharging or improper conduct to DFS (Insurance Law § 5108(c)), which can lead to:
- Temporary prohibition from billing for up to 90 days (11 NYCRR 65‑5.5(a)); and
- Permanent de‑authorization (Insurance Law § 5109(b)(1)) if the Board of Regents finds misconduct.

Thus, DFS and the Legislature have chosen mechanisms other than insurer‑initiated benefit denials under 65‑3.16(a)(12) to address post‑licensure professional misconduct.

E. Treatment of DFS’s Prior Statements and the Dissent’s Critique

Chief Judge Wilson’s dissent argues that DFS’s current stance is inconsistent with its prior amicus briefs in Mallela and Carothers, which strongly emphasized:

DFS’s use of 65‑3.16(a)(12) to combat no‑fault fraud;
That laws prohibiting fee‑splitting are “no mere technical” rules but crucial to preventing fraud; and
That insurers should have “fraud‑fighting tools” to deny reimbursement to entities funneling profits to non‑providers.

The dissent sees DFS’s new, narrower reading as an unprincipled, post‑hoc litigation tactic that fails to satisfy the “fair and considered judgment” standard articulated in Kisor v. Wilkie, 588 US 558 (2019) for federal Auer deference. He therefore would decline to defer to DFS’s current interpretation.

The majority responds that:

DFS has long taken the position, at least in principle, that professional misconduct only affects eligibility “unless and until” the licensing authority acts (citing language from the DFS amicus in Mallela about child support arrears and other technical violations); and
In any event, the DFS interpretation here is fully consistent with ordinary textual and structural analysis, and is therefore entitled to deference without resort to any more restrictive federal doctrines like Kisor.

The disagreement thus turns not only on the scope of 65‑3.16(a)(12), but also on how New York courts should treat agency “course corrections” in interpretation delivered through litigation briefs versus formal rulemaking.

F. Limiting the Decision: No Ruling on “Control via Kickbacks”

Notably, the majority carefully confines its answer to the certified question:

GEICO did not argue in this litigation that the kickback scheme itself amounted to a de facto transfer of control of Mingmen to the Dovmans;
The District Court did not analyze the issue in Mallela/Carothers terms; and
The provider therefore had no chance to litigate whether he ceded control.

Accordingly, the Court expressly does not decide:

When, if ever, a kickback scheme itself crosses the line into a prohibited “abdication of control” to unlicensed individuals.

That question remains open for future cases where insurers clearly frame and prove a Mallela/Carothers-type control transfer theory, rather than merely invoking professional misconduct.

VII. Complex Concepts Simplified

A. “No‑Fault Benefits” and Provider Assignments

After a car accident, your own insurer pays your basic economic loss (medical bills, some lost wages) regardless of who caused the crash.
You usually sign a form assigning your right to payment to your doctor or clinic, so they can bill the insurer directly.
The insurer must quickly pay or formally deny; if it doesn’t, it pays interest and the provider’s attorney’s fees.

B. “Foundational Licensing Requirement” vs. “Professional Misconduct”

A foundational licensing requirement is something you must satisfy just to be legally allowed to practice (education, exams, proper corporate form, prohibition on lay control of professional corporations).
Professional misconduct rules govern how you behave after you are licensed (no kickbacks, proper recordkeeping, informed consent, etc.).
Violating a foundational requirement often means you never had a valid license (or lost it automatically); violating a misconduct rule may or may not lead to discipline, depending on what the Board of Regents decides.

C. “Fraudulent Incorporation” and “Ceding Control”

Fraudulent incorporation (Mallela): when unlicensed people use a doctor’s name and license to set up a professional corporation, but they really run the business and profit from it.
Ceding control (Carothers): even if formed properly, later giving effective control—through contracts, finances, or management—to non‑professionals, who then direct treatment and billing.
In both cases, insurers can refuse to pay because the “provider” is, in substance, an unlicensed entity.

D. “Kickbacks” and Fee‑Splitting

A kickback in this context is paying a non‑medical marketer, runner, or company for sending you patients, often tied to the volume or value of the referrals.
Fee‑splitting is sharing your professional fees with non‑providers, which is forbidden because it can distort medical judgment: the non‑provider has financial incentive to push patients toward more services, needed or not.
Under Education Law § 6530(18), offering any fee or benefit to a third party for patient referrals is professional misconduct.

E. “Agency Deference” in New York

Agencies like DFS write and enforce regulations. Courts often defer to their reasonable interpretations of ambiguous regulations, especially in technical areas where the agency has expertise.
Deference is not automatic; the interpretation must be rational and consistent with the statute and the regulation’s text and purpose.
The dissent here argues DFS’s interpretation is not deserving of deference because it is a litigation‑driven shift from its earlier position and undermines the regulation’s anti‑fraud purpose.

F. Certified Question Procedure

Federal courts sometimes must apply state law that is unsettled. Rather than guess, they can “certify” a legal question to the state’s highest court.
Here, the Second Circuit asked the New York Court of Appeals to interpret 11 NYCRR 65‑3.16(a)(12).
The state court’s answer binds the federal court on that point of state law when it resumes the case.

VIII. Likely Impact on Future Cases and the No‑Fault System

A. For Insurers

Insurers operating in New York’s no‑fault system will need to recalibrate their anti‑fraud strategies:

They cannot deny reimbursement under 11 NYCRR 65‑3.16(a)(12) solely because they believe a provider engaged in professional misconduct (e.g., kickbacks), unless they can:
- Show a foundational licensing/corporate violation of the Mallela/Carothers type (fraudulent incorporation or ceding control); or
- Point to actual disciplinary action that removes or suspends the license or to DFS de‑authorization.
They will need to rely more heavily on:
- Denials based on lack of medical necessity;
- Post‑payment fraud and unjust enrichment suits;
- Robust reporting under Insurance Law § 5108(c) to trigger DFS/Regents action.
Declaratory judgment actions seeking broad findings of “ineligibility” based solely on referral‑fee misconduct are now much riskier and more constrained.

B. For Health Care Providers

Legitimate providers receive clearer protection from unilateral insurer attempts to weaponize the misconduct code:

As long as they remain properly licensed and have not ceded control to non‑licensees, insurers cannot unilaterally transform alleged ethical violations into categorical ineligibility for all no‑fault reimbursements.
However, providers should not view this as a license to engage in questionable arrangements:
- DFS and the Board of Regents retain disciplinary and de‑authorization power, including temporary billing bans and permanent de‑listing from no‑fault.
- In egregious cases, insurers may still try to characterize a referral scheme as de facto ceding of control, potentially fitting within the Mallela/Carothers framework.

C. For Patients and the Public

From the patient perspective:

The decision promotes the core promise of no‑fault: that providers will be paid promptly, reducing disruptions in care.
However, if the dissent’s concerns are borne out, fraud costs might rise and be passed through as higher premiums, at least unless DFS and the Regents more aggressively use their de‑authorization tools.

D. For DFS, the Board of Regents, and the Legislature

This decision places renewed pressure on DFS and the licensing authorities:

They are now explicitly central to dealing with professional misconduct that impacts no‑fault reimbursement;
The Court signals that if the current anti‑fraud tools are inadequate, the remedy lies in policy changes by DFS and legislative amendment, not judicial expansion of 65‑3.16(a)(12).
Increased use of:
- Temporary prohibition orders under 11 NYCRR 65‑5.5; and
- Formal de‑authorization under Insurance Law § 5109,
is foreseeable if DFS heeds the dissent’s concern that its enforcement record is sparse relative to reported fraud volume.

E. Unresolved and Future Litigation Questions

Several issues remain open and likely to generate future litigation:

What constitutes “ceding control” via kickbacks?
When, if ever, does a referral fee arrangement become so pervasive that it effectively grants a non‑provider control over patient flow and revenue, transforming the provider into a mere “front” in Mallela/Carothers terms?
Line‑drawing between misconduct and foundational violations:
Complex contractual arrangements (management agreements, marketing contracts, MSO structures) may blur the line between legitimate outsourcing and improper control. Courts will have to evaluate substance over form.
Scope of agency deference in future regulatory reinterpretations:
The tension between the majority and dissent foreshadows ongoing debate about how much weight to give DFS’s (or other agencies’) evolving positions, particularly when expressed only in litigation briefs.

IX. Conclusion: The Significance of Mayzenberg in New York Law

Government Employees Ins. Co. v. Mayzenberg establishes a clear and consequential principle:

Insurers may not invoke 11 NYCRR 65‑3.16(a)(12) to deny no‑fault reimbursement solely because they believe a properly licensed provider has engaged in professional misconduct, such as paying unlawful referral fees, unless that misconduct either results in disciplinary action affecting the license or effectively cedes control of the professional corporation to unlicensed persons within the Mallela/Carothers framework.

By deferring to DFS’s interpretation, the Court:

Narrows the use of “ineligibility” as a blanket anti‑fraud weapon to cases involving foundational licensing and corporate compliance;
Reinforces the Board of Regents’ primacy in adjudicating professional misconduct and determining its consequences;
Reaffirms no‑fault’s primary goals of prompt payment and reduced litigation, even at some potential cost to insurer‑led fraud policing.

The dissent underscores real tensions in this balance: the risk that sophisticated fraud schemes will outpace sluggish administrative enforcement, that DFS’s own historical stance on 65‑3.16(a)(12) has shifted, and that costs of fraud are ultimately borne by policyholders. These concerns may well serve as a catalyst for legislative or regulatory reform.

For now, the precedent in Mayzenberg clarifies the boundaries of insurer authority under the no‑fault regulations and insists that questions of professional misconduct remain, in the first instance, within the expertise and jurisdiction of the State’s licensing authorities. It thus marks an important re‑balancing of roles among insurers, regulators, disciplinary bodies, and courts in New York’s enduring effort to maintain both the efficiency and integrity of the no‑fault system.