S & M Supply, Inc. v Nationwide Mut. Ins. Co. (2004 NY Slip Op 50557(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM : 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiff from so much of an order of the Civil Court, Kings County

(B. Bayne, J.), entered April 7, 2003, as denied its motion for summary judgment.

Order unanimously modified by granting plaintiff’s motion for summary judgment and matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees; as so modified, affirmed without costs.

Plaintiff, a medical supply house, commenced this action to recover first-party no-fault benefits for medical supplies provided to its assignor. Thereafter, it moved for summary judgment on the ground that defendant delayed more than 30 days in denying its claim, in violation of Insurance Law § 5106 (a) (see also former 11 NYCRR 65.15 [g] [3] [now 11 NYCRR 65-3.8 (c)]). Defendant cross-moved for summary judgment seeking dismissal based upon the failure of plaintiff’s assignor to submit to
examinations under oath. Both motions were denied and this appeal by plaintiff ensued.

A review of the record indicates that plaintiff established its prima facie entitlement to summary judgment by the submission of a complete proof of claim and the amount of the loss, which defendant did not pay or deny within 30 days (see Insurance Law § 5106 [a]; 11 NYCRR 65.15 [d], [g]; Amaze Med. Supply Inc. v Eagle Ins. Co., NYLJ, Dec. 29, 2003 [App Term, 2d & 11th Jud Dists]). The burden then shifted to defendant to show the existence of a triable issue of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]).

In the instant case, within 10 days of receipt of the proof of claim (see 11 NYCRR 65.15 [*2][d] [1]) defendant sent a verification letter to plaintiff advising it that it was investigating the facts of the loss inasmuch as the policyholder had notified defendant that her vehicle had not been involved in an accident. Further letters sent to plaintiff’s assignor directed him to appear for an examination under oath (EUO) and a follow-up EUO. Plaintiff’s claim was ultimately denied based upon plaintiff’s assignor’s failure to appear for the EUOs.

Inasmuch as the insurance regulation in effect when the claim was submitted contained no provision requiring the injured person to submit to an EUO (see King’s Med. Supply Inc. v Kemper Auto & Home Ins. Co., NYLJ, Mar. 2, 2004 [App Term, 2d & 11th Jud Dists]; cf. 11 NYCRR 65-3.5 [e], eff. April 5, 2002), the time period within which defendant had to pay or deny the claim was not tolled (see King’s Med. Supply Inc. v Geico Ins., NYLJ, Mar. 23, 2004 [App Term, 2d & 11th Jud Dists]) and the denial was therefore untimely.

While generally the failure to timely deny a claim will preclude the insurer from interposing most defenses based upon the propriety of a claim (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]), a defense based upon lack of coverage “premised on the fact or founded belief that the alleged injury does not arise out of an insured incident,” will not be precluded and therefore may still be asserted by the insurer in opposition to summary judgment (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). Thus defendant herein was not precluded from raising a defense based on lack of coverage. However, in opposition to the motion, defendant relied upon hearsay statements allegedly uttered by its insured in an attempt to establish its defense. Inasmuch as defendant did not provide an acceptable excuse for its failure to tender such evidence in admissible form, said statements were insufficient to demonstrate the existence of a material issue of fact (see Zuckerman v City of New York, 49 NY2d 557 [1980]; Maniscalco v Liro Eng’g Constr. Mgt., 305 AD2d 378, 380 [2003]; Allstate Ins. Co. v Keil, 268 AD2d 545 [2000]).

It is further noted that defendant’s contention that the assignment executed by plaintiff’s assignor was inadequate lacks merit (see Hamilton Med. Healthcare v Travelers Ins. Co., NYLJ, Feb. 11, 2002 [App Term, 2d & 11th Jud Dists]; Skymed Med., P.C. v New York Cent. Mut. Fire Ins. Co., NYLJ, Jan. 28, 2002 [App Term, 2d & 11th Jud Dists]; Rehab. Med. Care of N. Y. v Travelers Ins. Co., 188 Misc 2d 176 [2001]).

Accordingly, plaintiff’s motion for summary judgment is granted, and the matter is remanded for the calculation of statutory interest and attorney’s fees pursuant to Insurance Law § 5106 (a) and the regulations promulgated thereunder.
Decision Date: June 03, 2004