Pro-Align Chiropractic, P.C. v Travelers Prop. Cas. Ins. Co. (2017 NY Slip Op 27415)

[*1]

District Court of Suffolk County, Third District, December 19, 2017

APPEARANCES OF COUNSEL

Law Office of Aloy O. Ibuzor, Melville, for defendant.

Gabriel & Shapiro, P.C., Wantagh (Steven F. Palumbo of counsel), for plaintiff.

It is ordered that the motion by defendant seeking an order granting summary judgment for dismissal of the complaint, pursuant to CPLR 3212, is denied; and it is further[*2] ordered that defendant’s uncontested request for partial summary judgment concerning the timely and proper mailing of its verification requests is granted; and it is further ordered that the cross motion by plaintiff seeking an order granting summary judgment for the relief demanded in the complaint is granted.

Defendant moves by summary judgment motion for dismissal of plaintiff’s complaint which seeks reimbursement of assigned first-party no-fault benefits for medical services provided to plaintiff’s assignor from June 4, 2015, through June 16, 2015, in the aggregate sum of $6,396.08, as the result of an automobile accident on March 11, 2015. The grounds for dismissal are the failure of plaintiff’s assignor to fully comply with defendant’s written verification requests, thereby rendering the action premature.

Defendant alternatively seeks partial summary judgment in the event its motion for summary judgment is denied, asserting it has demonstrated a prima facie showing that timely and proper mailing procedures were used to send its verification requests to plaintiff.

In opposition, plaintiff asserts that defendant has failed to demonstrate any “good reasons” to support its verification requests as required by insurance regulation 11 NYCRR 65-3.2 (c). Plaintiff alleges that defendant has made onerous and burdensome “Mallela” type verification requests which plaintiff brought to defendant’s attention in its three responding “objection” letters dated July 28, 2015, September 4, 2015, and October 23, 2015. These letters were timely provided to defendant in response to its verification requests, and plaintiff contends defendant ignored the “objection” letters with its responsive letter dated August 5, 2015, where it refused to narrow the verification requests to the issues of plaintiff’s reimbursement claims and stated it was entitled to all the requested information pursuant to law.{**58 Misc 3d at 859}

Plaintiff also cross-moves for summary judgment for the relief demanded in the complaint. Plaintiff asserts that defendant has failed to properly respond to plaintiff’s “objection” letters and the 30 calendar days to pay or deny the claim has expired, thereby requiring payment by defendant.

A proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; see also Manhattan Med. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 1144[A], 2008 NY Slip Op 51844[U] [Civ Ct, Richmond County 2008]).

A summary judgment motion must be supported by an affidavit of a person having knowledge of the facts and the affidavit shall recite all the material facts and show there is no defense to the cause of action or that the cause of action or defense has no merit (see CPLR 3212 [b]). A conclusory affidavit or an affidavit by an individual who lacks personal knowledge of the facts does not satisfy the proponent’s prima facie burden (see JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373 [2005]).

No-fault regulations mandate that a written proof of claim for health service expenses rendered on or after April 1, 2013 (see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3]), is overdue if not paid or denied by the defendant (or insurer) within 30 calendar days of receipt (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]). An insurer may toll the 30 day period by requesting additional verification of the claim within 15 days from its receipt of the claim (see 11 NYCRR 65-3.5 [b]; New York & Presbyt. Hosp. v Allstate Ins. [*3]Co., 30 AD3d 492, 493 [2d Dept 2006]). If the insurer has not received requested verification from the plaintiff (or applicant) within 30 calendar days of the initial request, the insurer may send a follow-up verification request by phone or mail within 10 calendar days (see 11 NYCRR 65-3.6 [b]). At the same time, the insurer shall inform the applicant and its attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested (see 11 NYCRR 65-3.6 [b]).

An insurer may not issue a denial of claim form (NF-10) prior to its receipt of verification of all relevant information requested by the insurer (see Insurance Law § 5106 [a]; 11{**58 Misc 3d at 860} NYCRR 65-3.8 [b] [3]; 65-3.5 [c]). A verification demand by an insurer will extend the 30 day period until such time as the requested verification is received (see 11 NYCRR 65-3.8 [a] [1]; Hospital for Joint Diseases v ELRAC, Inc., 11 AD3d 432 [2d Dept 2004]). Where a requested verification is not provided an insurer is not required to pay or deny the claim (see 11 NYCRR 65-3.8 [b] [3]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]; St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338 [2d Dept 2002]).

However, an insurer may issue a denial of claim for health service expenses rendered on or after April 1, 2013, if more than 120 calendar days have transpired after the initial request for verification, and the applicant has not submitted the verification requested under the applicant’s control or possession or written proof providing reasonable justification for the failure to comply, provided the verification request so advised the applicant as required in section 65-3.5 (o) (see 11 NYCRR 65-3.8 [b] [3]).

A plaintiff applicant has a duty to respond to a proper and timely verification request from a defendant insurer, even where a plaintiff anticipates it will be unable to fully satisfy the insurer’s request or the request is unintelligible (see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [2d Dept 1999]). Also, any additional verification sought from plaintiff’s assignor can be sought from plaintiff’s assignee, as an assignee stands in the shoes of the assignor (see Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489 [2d Dept 2001]).

A defendant also has a duty to act, by payment or denial of the claim or request for further verification, upon receipt of plaintiff’s response to defendant’s verification request, so long as plaintiff’s documentation is arguably responsive to defendant’s verification request (see All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907 [Civ Ct, Queens County 2004]; 11 NYCRR 65-3.8 [a]). Where a defendant remains silent in the face of plaintiff’s verification response, this inaction constitutes a waiver of all defenses (id.).

Though an insurer is entitled to request and receive information necessary to the processing and verifying of the applicant’s claim (see 11 NYCRR 65-3.5 [c]), the scope of the requested materials is not unlimited (see generally 11 NYCRR 65-3.6 [b]). Insurance regulations require the existence of “good {**58 Misc 3d at 861}reasons” to demand verification (see 11 NYCRR 65-3.2 [c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 2d Dept, 9th & 10th Jud Dists 2007]). Also, insurance regulations require an insurer to clearly inform an applicant of the insurer’s position concerning any disputed matter (see 11 NYCRR 65-3.2 [e]). In addition, the insurance regulations require insurers to follow the basic principle of providing prompt and fair payment (see 11 NYCRR 65-3.2 [a]). In this regard, the insurance regulations provide that an insurer is to assist an applicant in the processing of a claim (see 11 NYCRR 65-3.2 [b]) and insurers are directed to not treat the applicant as an adversary (see 11 NYCRR 65-3.2 [b]).

Insurance carriers are entitled to withhold reimbursement of no-fault claims “provided by fraudulently incorporated enterprises to which patients have assigned their claims” (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, 319 [2005]). Consequently, a medical provider which is not wholly owned and controlled by physicians (see Business Corporation Law §§ 1507 [a]; 1508 [a]) is ineligible to collect no-fault reimbursements and insurers can examine how a medical practice is owned and controlled to determine whether unlicensed individuals were violating state and local laws (Mallela at 321). However, insurers cannot delay payments of no-fault claims to pursue investigations unless they have “good cause” (id. at 322; see also 11 NYCRR 65-3.2 [c] [for “good reasons”]).

Here, the court determines that defendant has failed to demonstrate a prima facie entitlement to summary judgment for dismissal, with proof in admissible form sufficient to establish there are no material issues of fact (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Hempstead Gen. Hosp. v New York Cent. Mut. Fire Ins. Co., 232 AD2d 454 [2d Dept 1996]).

It is uncontested that defendant has demonstrated it timely requested verification of facts on July 22, 2015 (first request), and on August 26, 2015 (second request), from plaintiff, with mailings in accordance with defendant’s standard office practices and procedures, as shown by the supporting affidavits of Joyce Mooney and Patricia S. Pierce, which is uncontradicted by plaintiff (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2d Dept 2008]; Elmont Open MRI & Diagnostic Radiology, P.C. v Travelers Indem. Co., 30 Misc 3d 126[A], 2010 NY Slip Op 52223[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2010]). Therefore, defendant’s request for partial summary judgment concerning the timely and proper{**58 Misc 3d at 862} mailing of the verification requests is granted. Defendant has demonstrated a prima facie showing that timely and proper mailing procedures were used to send its verification requests to plaintiff.

However, the court finds that defendant has failed to establish an objective, reasonable basis for the contents of the verification demands mailed to plaintiff, for the four contested bills totaling $6,396.08, for medical services rendered from June 4, 2015, through June 16, 2015 (see 11 NYCRR 65-3.2 [c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [App Term, 2d Dept, 9th & 10th Jud Dists 2007]).

The evidence shows that the verification requests from defendant for each bill were identical, and contained 34 unnumbered or unlettered bullet point demands, for the short time span of the medical reimbursement requests of June 4, 2015, through June 16, 2015. The court notes that if plaintiff wished to respond to specific verification requests, it had no method by which to refer to a specific request, since the voluminous requests were not numbered or lettered or presented in any cogent way with specificity. It is difficult to imagine this was not by deliberate design, adding further difficulty to an already voluminous verification list.

Plaintiff asserts it tried to have defendant narrow the voluminous items of information demanded, by mailing “objection” letters which challenged the requested verifications as being “unduly burdensome and abusive” and seeking further clarification, but was rebuffed by defendant who stated it was entitled to each item as a matter of law.

The court finds that plaintiff provided reasonable justification for the failure to comply with defendant’s verification requests (see 11 NYCRR 65-3.5 [o]), by providing its “objection” letters dated July 28, 2015, September 4, 2015, and October 23, 2015.

This occurred despite defendant’s failure, under the insurance regulations, to advise the applicant in the same verification requests that “the insurer may deny the claim if the applicant does not provide within 120 calendar days from the date of the initial request either all such verification under the applicant’s control or possession or written proof providing reasonable justification for the failure to comply” (see 11 NYCRR 65-3.5 [o]; 65-3.8 [b] [3]).

Plaintiff contends in its opposition papers that the delay verification demands from defendant were sensitive “Mallela” {**58 Misc 3d at 863}type corporate information, which were imposed without any explanation or reason. Plaintiff points to defendant’s verification demands, where it requests

“a copy of the lease, sublease and/or financial agreement between Joseph Quashie MD and Devonshire Surgical Facility LLC . . . verification of employment of Dipti Patel DC (W-2 or 1099 and/or current paystub) by Pro-Align Chiropractic . . . copy of lease, sublease and or financial agreement between Pro-Align Chiropractic and Devonshire Surgical Facility . . . copy of the lease, sublease and/or financial agreement between Total Chiropractic PC and NYS Diagnostic Medicine PC . . . copy of the lease, sublease and/or financial agreement between Total Chiropractic PC and Life Circles Healthcare Medical PC . . . copy of the lease, sublease and/or financial agreement between Pro-Align Chiropractic PC and NYS Diagnostic Medicine PC . . . verification of employment (W-2 or 1099 and/or current paystub) for Sarl Ramzan DC with Total Chiropractic PC.”

Plaintiff asserts these verification requests failed to show a link with plaintiff, are abusive discovery demands absent any explanation or reasons, and are part of an improper “fishing expedition” by defendant.

Plaintiff also points to the lack of any SIU^[FN*] affidavit from defendant in support of its verification demands, or in answer to plaintiff’s “objection” letters, which it implies would link an ongoing insurance investigation with a plaintiff medical provider which is a fraudulently incorporated enterprise (see State Farm Mut. Auto. Ins. Co. v Mallela at 319).

The court notes that defendant does not address plaintiff’s claims of “Mallela” type verification requests in any responsive letters to plaintiff, or in any opposition papers. Therefore, the court accepts these circumstances as an admission by defendant.

The court further finds that plaintiff properly fulfilled its duty to respond to defendant’s timely verification requests, by mailing its “objection” letters dated July 28, 2015, September 4, 2015, and October 23, 2015, even though plaintiff anticipated{**58 Misc 3d at 864} in the letters it would be unable to fully satisfy the insurer’s request (see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co.).

However, the court also finds that though defendant properly fulfilled its duty to act upon plaintiff’s responsive “objection” letters with its responsive letter dated August 5, 2015 (see All Health Med. Care v Government Empls. Ins. Co.), it remained silent in the face of plaintiff’s “Mallela” type verification responses, which inaction constituted a waiver of all defenses (id.).

Plaintiff’s correspondence also invited further discussion if defendant disagreed with the position taken by plaintiff. Plaintiff’s three “objection” letters of July 28, 2015, September 4, 2015, and October 23, 2015, ended with the last letter stating defendant had ignored its prior letters and did not address plaintiff’s concerns, and that payment or denial was overdue.

The court’s review of the evidence finds the closest statement by defendant which provides an explanation for its verification demands is through the affidavit of Joyce Mooney, [*5]the claim litigation representative for defendant, who simply states: “the claim was directed to a claims representative for processing. The claims representative determined additional information was needed to process the claim and therefore, sent a request for additional information to PRO-ALIGN CHIROPRACTIC, PC dated 7/22/2015″ (see para 10 [emphasis added]).

The court’s review of the affidavit of Patricia S. Pierce, unit manager of the mail service center for defendant, shows it does not address any explanation for the basis of the verification requests.

The court’s review of the affirmation of defendant’s counsel reveals defendant received bills from plaintiff on July 2, 2015, in the amount of $78.20 for medical services on June 4, 2015; on July 13, 2015, in the amount of $2,105.96 for medical services on June 9, 2015; on July 8, 2015, in the amount of $2,105.96 for medical services on June 11, 2015; and on July 14, 2015, in the amount of $2,105.96 for medical services on June 16, 2015. Counsel then states: “Upon receipt, a determination was made to request further verification in order to process the bills in dispute as additional information was needed” (see para 11 [emphasis added]).

Counsel for defendant further states: “Travelers mailed timely verification requests respective to the bill as stated{**58 Misc 3d at 865} above. Such an event effectively tolled the time within which Defendant had to either pay or deny the claims” (see para 14).

Defendant’s responding letter dated August 5, 2015, to plaintiff’s “objection” letters which protested the verification requests stated the following:

“We are in receipt of your 7 letters dated 7/28/2015 that contained none of the requested verification. Please note the following:

“Please be advised that we are in receipt of your 7 letters dated 7/28/15. In your letter, you state that our letter is improper and asks for a ‘large amount of information of all kinds’ which you find ‘unduly burdensome and abusive.’ In addition, you request that we resubmit a request that is narrowly tailored to the specific provider and dates of service at issue.

“To the contrary, we disagree that our letter is ‘improper or unduly burdensome and abusive.’ The letter is specific to a particular claim and provider, as is referenced in the letter. The information is necessary in order to verify this claim. Furthermore, we only seek information that is necessary to verify the claim. As such, the letter is already as ‘narrowly tailored’ as possible.

“Are you aware, pursuant to 11 NYCRR 65-3.5[c] an insurer is entitled to receive all items necessary to verify the claim. Thus, please forward such information so that the claim can be reviewed” (emphasis added).

Defendant asserts that no responsive verification was provided by plaintiff. In support, the affidavit of Joyce Mooney states that “no notations were found in the computer indicating that any response or the remaining requested documents had been received from Pro-Align Chiropractic P.C.” (see para 32). In addition, “a search of the physical file was also conducted. No documents and/or correspondence of any kind were found in response to Travelers requests for additional verification” (see para 32).

However, the court notes that her sworn statement is contradicted by the affirmation of defendant’s counsel, who admits receipt from plaintiff of:

a partial response on July 31, 2015, to defendant’s verification requested on July 22, 2015 (see para 17);{**58 Misc 3d at 866}

a partial response on August 5, 2015, to defendant’s verification requested on July 28, 2015 (see para 19);

a partial response on September 9, 2015, to defendant’s verification, responded to by defendant on September 18, 2015 (see paras 22, 24), and responded to by defendant on November 18, 2015 (see para 29);

a partial response on September 18, 2015, to defendant’s verification requested on September 9, 2015 (see para 24); and

a partial response on October 27, 2015, to defendant’s verification (see para 27).

The court finds that there is no sworn statement from anyone with knowledge, which provides a reasonable basis for the verification demands. The affirmation of Joyce Mooney, the claim litigation representative for defendant, states in pertinent part, “The claims representative determined additional information was needed to process the claim.” This statement is hearsay and conclusory, and does not satisfy the proponent’s prima facie burden for summary judgment (see JMD Holding Corp. v Congress Fin. Corp.). There is also no statement from the claims representative.

The court notes that the affirmation of defendant’s counsel also states in pertinent part, “a determination was made to request further verification in order to process the bills in dispute.” This statement is also hearsay and conclusory and does not satisfy the proponent’s prima facie burden for summary judgment (id.).

In addition, the statement of defendant’s counsel is not based upon personal knowledge, and is therefore without probative value or evidentiary significance (see Warrington v Ryder Truck Rental, Inc., 35 AD3d 455, 456 [2d Dept 2006]; see also Wesh v Laidlaw, 59 AD3d 534 [2d Dept 2009]).

Finally, the court notes that defendant’s responsive letter dated August 5, 2015, to plaintiff’s “objection” letters, which states “the information is necessary in order to verify this claim” and “we only seek information that is necessary to verify the claim,” is a replay of the same statements provided by Joyce Mooney and defendant’s counsel. The statements are conclusory, provide no information used as the basis for the verification requests and do not satisfy the proponent’s prima facie burden for summary judgment (see JMD Holding Corp. v Congress Fin. Corp.).

Moreover, the court determines that all the pertinent statements do not satisfy the insurance regulation which requires{**58 Misc 3d at 867} an insurer to provide “good reasons” to demand verification (see 11 NYCRR 65-3.2 [c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co.). Consequently, without the required “good reasons” to demand verification, an insurer cannot delay payments of no-fault claims to pursue investigations (see State Farm Mut. Auto. Ins. Co. v Mallela at 322).

Furthermore, though defendant correctly states in its letter of August 5, 2015, to plaintiff that “an insurer is entitled to receive all items necessary to verify the claim” pursuant to 11 NYCRR 65-3.5 (c), there are other duties which defendant failed to follow.

The court finds that defendant failed to satisfy its obligation to clearly inform applicant of the insurer’s position concerning any disputed matter (see 11 NYCRR 65-3.2 [e]); failed to satisfy the regulation to follow the basic principle of providing prompt and fair payment (see 11 NYCRR 65-3.2 [a]); failed to assist applicant in the processing of the claim (see 11 NYCRR 65-3.2 [b]); and failed to not treat the applicant as an adversary (see 11 NYCRR 65-3.2 [b]).

Moreover, defendant’s verification demands seek certain documents from plaintiff, but reject in advance certain documents which do not meet its criteria. On point, defendant’s demand states that “initials, electronic signatures, and/or stamped signatures are not acceptable.” This raises issues of fact for the reasonableness of the verification demands, since the requested documents speak for themselves and cannot be changed by plaintiff to meet the criteria of defendant’s demands.

Therefore, the court determines defendant has failed to establish a prima facie showing of entitlement to summary judgment dismissing the complaint as a matter of law.

Accordingly, the motion for summary judgment by defendant dismissing plaintiff’s complaint pursuant to CPLR 3212 is denied.

Defendant’s motion for partial summary judgment concerning that timely and proper mailing procedures were used to send its verification requests to plaintiff is granted.

Plaintiff’s cross motion for summary judgment seeking an order granting summary judgment for the relief demanded in the complaint is granted.

Footnotes

Footnote *:Plaintiff does not provide a definition of its use of the term SIU; however, the court assumes it to be a reference to an investigative unit since this relates to the subject matter plaintiff speaks about.