Carepluss Med. Supply Inc. v State Farm Mut. Auto. Ins. Co. (2004 NY Slip Op 51373(U))

Civil Court of the City of New York, Kings County

41116/2004

Peter P. Sweeney, J.

In this action pursuant to Insurance Law § 5101 et seq to recover first-party no-fault benefits, plaintiff moves to strike defendant’s seventh, eighth and tenth affirmative defenses on the ground that they were not pleaded with the specificity required by CPLR 3016(b). For the reasons stated below, the motion is denied in part and granted in part.

Factual Background

Plaintiff Carepluss Medical Supply Inc. a/a/o Edme Aenor commenced this action by the service of a summons and complaint, alleging that the defendant State Farm Mutual Automobile Insurance Company wrongfully denied a claim for first-party no-fault benefits. The claim was in [*2]the amount of $757.00 for medical supplies provided to its assignor Edme Aenor in connection with injuries arising out of a September 2, 2002 motor vehicle accident. In its denial dated April 9, 2003, the defendant acknowledged receipt of the clain on December 4, 2002 and denied the claim solely on the ground that Mr. Aenor failed to appear for two scheduled examinations under oath.

In its answer, defendant denied all the material allegations alleged in plaintiff’s complaint and asserted twelve affirmative defenses. Defendant’s seventh, eighth and tenth affirmative defenses provide as follows:

SEVENTH: That Plaintiff has engaged in fraudulent conduct in connection with the operation of its business and the submission of the claim to State Farm by intentionally paying substantially more for the items at issue for which reimbursement is sought, than the price that is readily available in the relevant marketplace, with the intent to deceive State Farm, and to inflate the charges that were submitted to State Farm.

EIGHTH: That Plaintiff has fraudulently and materially misrepresented to State Farm that the cost that was incurred and upon which the charges for the items at issue were based, were necessary and/or required costs, when In fact, the Plaintiff intentionally paid more for the items at issue than the price that is readily available in the relevant marketplace, with the intent to deceive State Farm and to inflate the charges that were submitted to State Farm.

TENTH: That the medical supplies fo which reimbursement is sought were not related to the accident in question and/or were never actually provided.

Plaintiff maintains that since these defenses are premised upon allegations of fraud and misrepresentation, they must be dismissed because they were not pleaded with the specificity required by CPLR 3016(b), which in pertinent part, provides: “[w]here a * * * defense is based upon misrepresentation [or] fraud * * * the circumstances constituting the wrong shall be stated in detail.”

Discussion

Plaintiff’s motion is granted, but only to the extent that defendant’s seventh and eighth affirmative defenses and that portion of defendant’s tenth affirmative defense alleging that “the medical supplies fo which reimbursement is sought were * * * were never actually provided” are stricken. These defenses are being stricken, not because of defendant’s non-compliance with CPLR 3016(b), but because defendant’s admitted failure to pay or reject the claims within 30 days of receipt precluded it from raising them (see Presbyterian Hosp. in City of NY v. Maryland Cas. Co., 90 NY2d 274; Central General Hosp. v. Chubb Group of Ins. Companies, 90 NY2d 195).

In the court’s view, the defendant complied with CPLR 3016(b) which “requires only that [*3]the misconduct complained of be set forth in sufficient detail to clearly inform a [plaintiff] with respect to the incidents complained of and is not to be interpreted so strictly as to prevent an otherwise valid cause of action in situations where it may be ‘impossible to state in detail the circumstances constituting a fraud'” (Lanzi v. Brooks, 43 NY2d 778, 780, quoting Jered Contr. Corp. v. New York City Tr. Auth., 22 NY2d 187, 194). Defendant’s seventh, eighth and tenth affirmative defenses pass muster under this analysis, especially since the facts and circumstances underlying these defenses are most likely within the exclusive knowledge of the plaintiff. It would seem to be impossible for the defendant to be any more specific at this stage of the proceedings.

The court is cognizant that in some instances, a defense premised upon fraud may be asserted even when a denial is issued beyond the 30 day period set forth in Insurance law § 5106[a]. Such instances, however, are limited to situations were the fraud, if proven, would establish that there was no coverage at all for the claim (Central General Hosp., 90 NY2d at 199). Thus, where a fraud defense is premised upon allegations that the collision underlying the claim was a staged event in furtherance of an insurance fraud scheme, the defense survives an untimely denial since a fabricated accident does not trigger coverage under the no-fault endorsement (see e.g. Mount Sinai Hospital v. Triboro Coach Inc ., 263 AD2d 11,19, citing Central General Hospital, supra ., Inwood Hill Medical P.C. v. Allstate Insurance Company, 2004 WL 1381082).

On the other hand, where fraud defenses are premised upon allegations of excessive or fraudulent billing, as is the case here, the defenses do not survive an untimely denial since the defenses, even if established, would not result in a finding that there was ” no coverage at all” for the claim (Melbourne Medical, P.C. v. Utica Mut. Ins. Co., 2004 WL 1431320, 2, citing Central Gen. Hosp., 90 NY2d at 199, 659 NYS2d 246, 681 NE2d 413; Presbyterian Hosp. in City of NY, 90 NY2d at 285).

Finally, plaintiff has not established a basis for striking that portion of defendant’s tenth affirmative defense which alleges that “the medical supplies for which reimbursement is sought were not related to the accident.” Even where there is an untimely denial, an insurer may raise a lack of coverage defense “premised on the fact or founded belief that an alleged injury does not arise out of an insured incident.” (Central General Hospital , 90 NY2d at 199). Such a defense does not necessarily have to be premised upon fraud and may be raised in situations where the insurer is claiming that the injuries at issue arose out of an uninsured accident (see e.g. Central General Hosp. , supra [allegation that injuries arose out of a separate work-related accident and not a motor vehicle accident]. In such circumstances, the specificity requirements of CPLR 3016(b) do not apply.

This constitutes the decision and order of the court.

Dated: September 29, 2004

_____________________________

PETER P. SWEENEY [*4]

Civil Court Judge