Country-Wide Ins. Co. v Hackensack Surgery Ctr., LLC (2023 NY Slip Op 50207(U))

Index No. CV-710117-21/NY

Roman Kravchenko, Melville, for defendant.

Jaffe & Velazquez, LLP, New York City, (David J. Slaney, of counsel), for plaintiff.

In this action, plaintiff Country-Wide Insurance Company seeks de novo adjudication of a dispute involving first-party no-fault benefits, following a master arbitrator’s award in excess of $5,000 in favor of defendant Hackensack Surgery Center, LLC a/a/o Jessica Bae. Defendant now moves for an order compelling plaintiff to comply with defendant’s discovery requests for, among other things, production of the entire claim file and SIU file (Motion Seq. No. 001). Plaintiff opposes the motion.

BACKGROUND

Prior to commencement of this action, defendant Hackensack Surgery Center LLC demanded a no-fault arbitration for services provided to defendant’s assignor, Jessica Bae, for facility fees related to a shoulder surgery performed on February 8, 2019, which plaintiff Country-Wide Insurance Company had denied based upon a peer review report (see NY St Cts Elec Filing [NYSCEF] Doc No. 1, complaint ¶ 7 and Exhibit A to complaint [No Fault Arbitration Award], at 1).

The no-fault arbitrator ruled in defendant’s favor and awarded no-fault benefits in the amount of $21,330.00 (id.). The no-fault arbitrator found that plaintiff had not overcome the presumption of medical necessity, and reasoned that another no-fault arbitrator had rejected the same peer review report (id., at 2).

By a decision dated October 27, 2021, a master arbitrator affirmed the award of the no-fault arbitrator (NYSCEF Doc. No. 2, Master Arbitration Award).

Pursuant to Insurance Law § 5106 (c), plaintiff commenced this action seeking de novo adjudication of the dispute. Issue was joined on or about March 21, 2022 (see NYSCEF Doc. No. 2, answer).

On or about May 5, 2022, defendant served discovery demands upon plaintiff (see NYSCEF Doc. No. 3). On July 6, 2022, plaintiff brought the instant motion to compel defendant to comply with its discovery demands (see NYSCEF Doc. No. 4).

On or about October 5, 2022, plaintiff opposed the motion and served its discovery response (see NYSCEF Doc. No. 8, affidavit of service). In reply, defendant argued that the responses were deficient (see NYSCEF Doc. No. 11, reply affirmation of plaintiff’s counsel ¶ 12).

On November 28, 2022, plaintiff served supplemental discovery responses (NYSCEF Doc Nos. 14-19).

Without any prior court approval, on January 18, 2023, plaintiff served a supplemental affirmation in opposition, with additional exhibits (NYSCEF Doc. Nos. 20-22). Similarly also without prior court approval, on January 18, 2023, defendant served supplemental reply papers (NYSCEF Doc. Nos. 23-24).

On January 20, 2023, defendant’s motion to compel was marked fully submitted and assigned to this court.

On February 8, 2023, this court held oral argument. At oral argument, defendant’s counsel clarified that defendant’s motion to compel was narrowed to items No.2 and #14 of defendant’s demand for discovery and inspection dated May 5, 2022.

DISCUSSION

CPLR 3101 (a) directs that there shall be “full disclosure of all evidence material and necessary in the prosecution or defense of an action” (id.). “The test is one of usefulness and reason” (Allen v. Crowell-Collier Publ. Co., 21 NY2d 403, 407 [1968]). CPLR 3101 “embodies the policy determination that liberal discovery encourages fair and effective resolution of disputes on the merits, minimizing the possibility for ambush and unfair surprise” (Spectrum Sys. Intern. Corp. v Chem. Bank, 78 NY2d 371, 376 [1991]).

“Liberal discovery is favored and pretrial disclosure extends not only to proof that is admissible but also to matters that may lead to the disclosure of admissible proof” (Twenty Four Hour Fuel Oil Corp. v Hunter Ambulance, 226 AD2d 175-176 [1st Dept 1996]). “[T]he acid test [*2]for disclosure of information is not whether the party can make out a prima facie case without the evidence, but whether he or she can make out a more persuasive case with it.” (6 Weinstein-Korn-Miller, NY Civ Prac CPLR ¶ 3101.08). However, “[u]nder our discovery statutes and case law, competing interests must always be balanced; the need for discovery must be weighed against any special burden to be borne by the opposing party” (Kavanagh v Ogden Allied Maintenance Corp., 92 NY2d 952, 954 [1998][quotation marks and citation omitted]).

“A motion court is afforded broad discretion in supervising disclosure and its determinations will not be disturbed unless that discretion has been clearly abused” (Youwanes v Steinbrech, 193 AD3d 492 [1st Dept 2021] [internal quotation marks and citation omitted]).

As a threshold matter, this court accepts the parties’ supplemental submissions (NYSCEF Doc. Nos. 14-25), given the absence of prejudice to either side.

Item 14 of defendant’s demand for discovery and inspection dated May 5, 2022 requests “A full copy of ‘s [sic] claim file(s) and SIU file(s) and reports relating to this matter” (see NYSCEF Doc. No. 3).

In response, Jessica Mena-Sibrian, a No-Fault Litigation/Arbitration Supervisor employed by plaintiff, averred, “there is no SIU file for this matter” (NYSCEF Co. No. 18, aff of Jessica Mena-Sibrian ¶ 4). Mena-Sibrian explained,

“In the ordinary course of business, a SIU file would be created on a claim if an examiner makes a request for it or for a signed statement. The claims file for this matter does not contain any such request and, therefore, no SIU file was created. There is no existing SIU file or reports regarding any type of insurance investigation to provide to Defendant”

(id. ¶ 5). Because defendant’s representative stated under oath that no SIU file exists, so much of plaintiff’s motion which seeks to compel production of the SIU file is denied.

As to the full copy of plaintiff’s claim file, plaintiff stated in its supplemental responses to defendant’s demands for discovery and inspection,

“ANSWER: As to 1-17, the Plaintiff objects to this interrogatory to the extent that it seeks information that is irrelevant, overly broad, privileged and unrelated to the issue in this case. Copies of any document relevant to this claim is hereto annexed, if any”

First, as defendant points out, plaintiff’s initial response to defendant’s discovery demands were untimely served on or about October 5, 2022, well after 20 days of service of those demands on May 5, 2022 (see CPLR 3122). “Accordingly, plaintiff waived objection[s] based on any ground other than privilege or palpable impropriety” (Khatskevich v Victor, 184 AD3d 504, 505 [1st Dept 2020]; see also Accent Collections, Inc. v Cappelli Enter., 84 AD3d 1283, 1284 [2d Dept 2011]; Duhe v Midence, 1 AD3d 279, 280 [1st Dept 2003]).

Here, in opposition to defendant’s motion, plaintiff does not assert any specific privilege against production of the claim file. As defendant points out,

“The payment or rejection of claims is a part of the regular business of an insurance [*3]company. Consequently, reports which aid it in the process of deciding whether to pay or reject a claim are made in the regular course of its business. Reports prepared by insurance investigators, adjusters, or attorneys before the decision is made to pay or reject a claim are not privileged and are discoverable, even when those reports are mixed/multi-purpose reports, motivated in part by the potential for litigation with the insured”

(Advanced Chimney, Inc. v Graziano, 153 AD3d 478, 480 [2d Dept 2017] [internal citations, quotation marks, and emendation omitted]; see also Venture v Preferred Mut. Ins. Co., 153 AD3d 1155, 1159 [1st Dept 2017]). Therefore, plaintiff demonstrated entitlement to production of the entire claim file, which must be provided to defendant within 60 days.

Contrary to plaintiff’s contention, plaintiff’s supplemental response to item 14 did not render defendant’s motion academic.

Plaintiff’s response to item 14 was insufficient. “Whenever a person is required pursuant to such notice or order to produce documents for inspection, that person shall produce them as they are kept in the regular course of business or shall organize and label them to correspond to the categories in the request” (CPLR 3122). Here, plaintiff did not label which items attached to its discovery response were part of the claim file. Thus, it is not possible for the court to determine that plaintiff had, in fact, turn over the entire claim file.

Turning to item 2, defendant demanded,

“If any other action or arbitration has been filed by or on behalf of Defendant or EIP with respect to the accident underlying the within dispute, a copy of the pleadings in such court action(s) or, if arbitration was commenced, a copy of the arbitration request form(s) (AR-1) and of any letter scheduling conciliation filings and deadlines. Also provide copy of any Decision, Order, Stipulation, Arbitration Award, Consent Agreement, and/or any other determination, however named and whether final or non-final, issued in the court action or arbitration proceedings”

At oral argument, defendant’s counsel explained that the information was sought for the purpose of discovering a determination on the issue of medical necessity from any actions or arbitrations that could be used as collateral estoppel against plaintiff in this action.

In the court’s view, the demand is overly broad on its face (see Country-Wide Ins. Co. v Long Is. Spine Specialists PC, 2021 NY Slip Op 30115[U], *3 [Sup Ct, NY County 2021]). The scope of the demand covers documents about any actions or arbitrations “with respect to the underlying accident,” which could therefore include the universe of services provided to the assignor that might not implicate the issue of the medical necessity of the shoulder surgery—such as services provided to the assignor which either predated the shoulder surgery, or services that were not ancillary to the shoulder surgery, such as physical therapy or pharmaceuticals provided for pain management. While the demand could be narrowed, “it is not the court’s obligation to prune those pre-litigation devices” (Kimmel v Paul, Weiss, Rifkind, Wharton & Garrison, 214 AD2d 453, 453-454 [1st Dept 1995]).

Additionally, the expense and burden upon plaintiff to produce these documents is [*4]disproportionate to likelihood that the information sought could lead to a determination that could be used as collateral estoppel in this action. Defendant is already aware of another adverse determination of medical necessity from another arbitration, which was referenced in the award of the no-fault arbitrator.

Having weighed the need for discovery against the burden to plaintiff (Kavanagh, 92 NY2d at 954), an order compelling plaintiff to comply with item 2 of defendant’s demand for discovery and inspection dated May 5, 2022 is denied.

CONCLUSION

Upon the foregoing cited papers, it is hereby ORDERED that defendant’s motion to compel (Motion Seq. No. 001) is GRANTED TO THE EXTENT that plaintiff is directed to produce the entire claim file to defendant within 60 days, and plaintiff’s motion is otherwise denied.

This constitutes the decision and order of the court.

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RICHARD TSAI, J.
Judge of the Civil Court