A.B. Med. Servs. PLLC v State-Wide Ins. Co. (2005 NYSlipOp 50785(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal by plaintiffs from an order of the Civil Court, Kings County (S. Krauss, J.), entered on April 8, 2004, which denied their motion for summary judgment and dismissed the complaint with leave to replead.

Order reversed without costs, complaint reinstated, plaintiffs’ motion for summary judgment granted and matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees; entry of judgment stayed for 45 days from the date of the order entered hereon, with leave to defendant to renew upon submission of proper papers within said period.

In this action to recover first-party no-fault benefits for medical services rendered to their assignor, plaintiffs established a prima facie entitlement to summary judgment by proof that they submitted their claims, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was overdue (see Insurance Law
§ 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). While the claims of the three plaintiffs were pleaded under one cause of action in the [*2]complaint, the specific claims and amounts sought to be recovered by the individual plaintiffs were stated separately as to each of the plaintiffs. Under the circumstances, and in the absence of any showing of prejudice to defendant, we find there was no basis to deny the plaintiffs’ motion for summary judgment and to dismiss the complaint with leave to replead (see CPLR 3014).

Defendant’s denial of plaintiffs’ claims, in essence, asserted misrepresentation and/or fraud by plaintiffs and the plaintiffs’ assignor. Since the defendant failed to pay or deny the claim within the 30-day statutory period (11 NYCRR 65-3.8 [c]), it is precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]), including its defense of provider fraud (id. at 285; Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]).

Defendant, however, is not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite the untimely denial of the claim (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). In opposition to plaintiffs’ motion for summary judgment, and in support of its defense of fraud, defendant submitted the affirmation of its attorney who lacked personal knowledge of the investigation (Melbourne Med., P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92, supra), and unsworn investigative reports which did not constitute competent proof in admissible form (S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists]). While hearsay evidence may be admissible in opposing a motion for summary judgment, there must be an acceptable excuse for failure to tender the proof in admissible form (see Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1068 [1979]; Allstate Ins. Co. v Keil, 268 AD2d 545 [2000]), which defendant has failed to proffer. Accordingly, plaintiffs’ motion for summary judgment should have been granted.

Inasmuch as the issues raised herein involve an alleged staged collision in furtherance of an insurance fraud scheme, and in consideration of the strong public policy to stem the perpetration of no-fault insurance fraud underlying the revisions to the insurance regulations (see Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 861-862 [2003]), defendant is granted leave to renew upon
submission of proper papers in opposition to plaintiffs’ motion for summary judgment (see CPLR 2221), to demonstrate that the defense was based upon a “founded belief that the alleged injur[ies] do[]not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]).

Accordingly, the complaint is reinstated, plaintiffs’ motion for summary judgment granted, and matter remanded to the court below for a calculation of statutory interest and an assessment of attorney’s fees; entry of judgment is stayed for 45 days from the date of the order entered hereon, with leave to defendant to renew upon submission of proper papers within said period.

Patterson, J.P., and Rios, J., concur.

Golia, J., dissents in a separate memorandum.

Golia, J., dissents and votes to modify the order and deny plaintiffs’ motion for summary judgment in the following memorandum:

Contrary to the holding of the majority, I find that the papers submitted by the defendant in opposition to the plaintiffs’ motion for summary judgment were sufficient to raise an issue of fact as to whether the defense of fraud was based upon a “founded belief that the alleged injur[ies] do[] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]).

For the reasons stated in my dissent in Ocean Diagnostic Imaging v Lancer Ins. Co. (6 Misc 3d 62 [App Term, 2d & 11th Jud Dists 2004]), I find that the unsworn reports when submitted in opposition to a motion for summary judgment and accompanied by an affidavit or affirmation of an attorney which makes reference to such report, are sufficient for the purpose of raising a triable issue of fact. This Court must, when deciding a motion for summary judgment, interpret the evidence in the light most favorable to the non-movant (see Weiss v Garfield, 21 AD2d 156 [1964]). This is especially true where there is an allegation of fraud.

Accordingly, I would modify the order of the lower court and would deny the plaintiffs’ motion for summary judgment.
Decision Date: May 23, 2005