Decided on September 9, 2022

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Freiberg, Peck & Kang, LLP (Yilo J. Kang of counsel), for appellants. The Rybak Firm, PLLC (Oleg Rybak of counsel), for respondent (no brief filed).

Appeals from orders of the Civil Court of the City of New York, Kings County (Harriet L. Thompson, J.), each entered November 20, 2018. The first order (appeal No. 2020-271 K C) denied a motion to dismiss the complaint insofar as asserted against defendant American Independent Ins. Co. The second order (appeal No. 2022-137 K C), insofar as appealed from, denied the branches of a motion seeking to dismiss so much of the complaint as was asserted against defendants American Independent Insurance Companies, Inc. and Good2Go Auto [*2]Insurance.

ORDERED that the appeals are consolidated for purposes of disposition; and it is further,

ORDERED that the order being appealed under appeal number 2020-271 K C is reversed, with $30 costs, and the motion to dismiss the complaint insofar as asserted against defendant American Independent Ins. Co. is granted; and it is further

ORDERED that the order being appealed under appeal number 2022-137 K C, insofar as appealed from, is reversed, with $30 costs, and the branches of the motion seeking to dismiss so much of the complaint as was asserted against defendants American Independent Insurance Companies, Inc. and Good2Go Auto Insurance are granted.

In this action by a provider to recover assigned first-party no-fault benefits, the affidavit of service alleges that the summons and complaint were served by mail pursuant to CPLR 312-a. However, plaintiff’s papers do not contain an acknowledgment of service. Defendant American Independent Ins. Co. moved to dismiss the complaint insofar as asserted against it on the ground that plaintiff had failed to obtain personal jurisdiction over it. Defendants American Independent Insurance Companies, Inc., Good2Go Auto Insurance and Omni Indemnity Company moved, in a single motion, to dismiss so much of the complaint as was asserted against them on the ground that plaintiff had failed to obtain personal jurisdiction over them. Plaintiff opposed both motions and cross-moved for summary judgment. Defendant American Independent Ins. Co. appeals (appeal No. 2020-271 K C) from an order of the Civil Court entered November 20, 2018 denying the motion to dismiss the complaint insofar as asserted against it. Defendants American Independent Insurance Companies, Inc., and Good2Go Auto Insurance appeal (appeal No. 2022-137 K C) from so much of a separate order of the Civil Court, also entered November 20, 2018, as denied the branches of the motion seeking to dismiss so much of the complaint as was asserted against them.

For the reasons stated in Longevity Med. Supply, Inc. v American Ind. Ins. Co. (69 Misc 3d 127[A], 2020 NY Slip Op 51118[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]), the order being appealed under appeal number 2020-271 K C and the order being appealed under appeal number 2022-137 K C, insofar as appealed from, are reversed. The first motion, by defendant American Independent Ins. Co., is granted, and the branches of the second motion seeking to dismiss so much of the complaint as was asserted against defendants American Independent Insurance Companies, Inc., and Good2Go Auto Insurance are granted.

ALIOTTA, P.J., TOUSSAINT and GOLIA, JJ., concur.

Index No. CV-701018-20/RI

Plaintiff’s Counsel
Joseph Sparacio Attorney At Law PLLC
292 Nelson Avenue
Staten Island, NY 10308
(718) 966-0055

Defendant’s Counsel
Law Offices of Tina Newson-Lee
PO Box 2904
Hartford, CT 06104
(917) 778-6500

MK Healthcare Medical PC (“MK Healthcare”) as assignee of Marleine Sully (“Assignor”) (collectively referred as “Plaintiff”), commenced this action to recover $913.39 in assigned first-party no-fault benefits from Defendant Travelers Insurance Company (“Defendant”).

Plaintiff represents that the Assignor sustained injuries during an accident that occurred on December 31, 2018, in which the Assignor was a front-seat passenger. According to the Plaintiff, Defendant improperly failed to pay for treatment rendered to the Assignor in connection with her alleged injuries in the amount of $913.39. Specifically, Plaintiff alleges that Defendant failed to pay for a “NCV w/f wave lower” (“F Wave”) and “Needle EMG lower” [*2](“EMG”) (collectively “Procedures”) performed on April 22, 2019. The Procedures were electrodiagnostic studies of the Assignor’s lower extremities. While Plaintiff argues that Defendant is responsible for paying for the Procedures, Defendant maintains that it was under no such obligation since the Procedures were not medically necessary.

On August 3, 2022, the Court held a virtual bench trial during which both Plaintiff and Defendant were represented by counsel. Pursuant to a stipulation entered into by the parties, Plaintiff and Defendant stipulated that MK Healthcare met its prima facie burden and consented to the admission of evidence, namely medical records, medical reports, expert witness disclosure, as well as portions of the Referral Guidelines for Electrodiagnostic Medicine Consultations. The parties also stipulated to the expertise of the Defendant’s expert, Ayman Hadhoud, M.D. (“Dr. Hadhoud”). Accordingly, the only matter at issue in the trial was whether Defendant’s denial of the claim on the ground of medical necessity was proper under Insurance Law § 5102[a][1].

Defendant’s sole witness was Dr. Hadhoud, a licensed physician and acupuncturist, who performed a peer review of MK Healthcare’s medical records. Dr. Hadhoud testified that Procedures prescribed by MK Healthcare (Richard A. Gasalberti, M.D.) were not medically necessary. Dr. Hadhoud testified as to his review of the relevant MK Healthcare records, which revealed that MK Healthcare recommended Assignor undergo “EMG/nerve conduction studies of the lower extremities to electrophysiologically document for lumbar radiculopathy.” Dr. Hadhoud testified that based upon his review of the medical records, the EMG was not necessary since the Assignor’s neurological exam was normal and there was no clinical presentation that would necessitate an EMG. Dr. Hadhoud further testified that considering the medical records from MK Healthcare, the F Wave was also not medically necessary because such procedure was not necessary in the context of ruling out radiculopathy in the Assignor.

The Court notes that during the trial, the Plaintiff did not call any witnesses. Furthermore, the only evidence that Plaintiff submitted in support of its claim that the Defendant violated Insurance Law § 5102[a][1] consisted of the documentary evidence that was stipulated into evidence by the parties.

Discussion

Under Insurance Law § 5101, “an insurer must pay first-party benefits of up to $50,000 per person to reimburse a person for covered ‘basic economic loss’ (Insurance Law 5102[a]), subject to the limitations of Insurance Law 5108.” (Govt. Employees Ins. Co. v Avanguard Med. Group, PLLC, 127 AD3d 60, 63 [2d Dept 2015], affd, 27 NY3d 22 [2016]). “The no-fault law defines “basic economic loss” (Insurance Law § 5102[a]) as ‘[a]ll necessary expenses incurred for: (i) medical, hospital … [and] surgical … services’ (id. § 5102[a][1][i]) as well as loss of earnings from work.” (Hernandez v Merchants Mut. Ins. Co., 206 AD3d 978, 979 [2d Dept 2022] (citing Insurance Law 5102[a][1]). See Govt. Employees Ins. Co. v Avanguard Med. Group, PLLC, 127 AD3d 60, 63 [2d Dept 2015], affd, 27 NY3d 22 [2016]; Forrest Chen Acupuncture Services, P.C. v Geico Ins. Co., 15 Misc 3d 137(A) [App Term 2007], affd, 54 AD3d 996 [2d Dept 2008]). As held by the Appellate Division, Second Department, “like the statute, the regulations promulgated thereunder expressly state that reimbursable medical expenses consist of ‘necessary expenses.'” (Hernandez v. Merchants Mut. Ins. Co., 206 AD3d [*3]978, 979 [2d Dept 2022] (citing to Long Is. Radiology v. Allstate Ins. Co., 36 AD3d 763, 764-65 [2d Dept 2007])).

The Court finds that based upon Defendant’s denial of claim forms and the findings of Dr. Hadhoud, encompassed in his testimony and report, Defendant sufficiently demonstrated that there was no medical necessity for the Procedures. (See Urban Radiology, P.C. v. Tri-State Consumer Ins. Co., 911 N.Y.S.2d 697 [App. Term, 2d Dept., 2010]). The Court found that Dr. Hadhoud’s testimony to be medically sound and credible. Dr. Hadhoud also sufficiently demonstrated that he relied upon his examination as well as his review of the Assignor’s medical records in order to reach his opinion that the Procedures were not medically necessary for the Assignor’s condition. Dr. Hadhoud’s testimony “demonstrated a factual basis and medical rationale for the determination that there was a lack of medical necessity” for the Procedures. (New Horizon Surgical Ctr., L.L.C. v. Allstate Ins. Co., 52 Misc 3d 139(A) [App Term 2016]). Based upon the credible testimony of Dr. Hadhoud and the relevant medical records submitted to the Court during trial, the Court finds that Defendant met its burden and demonstrated its entitlement to judgment in its favor.

The Court further finds that Plaintiff failed to demonstrate its entitlement to judgment or otherwise rebut Defendant’s showing. As noted above, “Plaintiff called no witnesses to rebut the defendant’s showing of a lack of medical necessity.” (See New Horizon Surgical Ctr., L.L.C. v. Allstate Ins. Co., 41 N.Y.S.3d 720 [App. Term 2d Dept., 2016] (holding that the Civil Court should have dismissed the complaint after Plaintiff failed to call a witness to rebut Defendant’s showing of lack of medical necessity.”)). Furthermore, Plaintiff failed to submit any evidence, such as the testimony of the referring physician or of its own medical expert, to establish that the Procedures were medically necessary.

Accordingly, it is hereby

ORDERED that judgment is rendered in favor of Defendant; and it is

ORDERED that the matter is dismissed with prejudice.

The foregoing constitutes the Decision and Order of the Court.

Dated: August 25, 2022
_____________________________
Staten Island, New York
Hon. Brendan T. Lantry
Judge of the Civil Court

Index No. 151954/2022

Rivkin Radler LLP, Uniondale, NY (Vincent J. Pontrello of counsel), for plaintiffs.

No appearance for defendant.

In this action, plaintiffs seek a declaratory judgment relating to no-fault insurance coverage. Unlike the typical no-fault declaratory-judgment action, plaintiffs do not seek relief against a range of medical providers who have each claimed benefits for treatment provided following a particular covered automobile collision. Instead, plaintiffs have brought this action against one provider, addressing benefits claims for treatment provided following dozens of collisions. (See NYSCEF No. 1 at ｶ 1 [verified complaint]; NYSCEF No. 2 [listing claims].)

Plaintiffs allege that they denied each of these claims because defendant failed in each instance to appear for a properly requested examination under oath (EUO). (NYSCEF No. 1 at ｶｶ 26-32.) They allege that these EUOs were aimed at ascertaining whether defendant is ineligible to collect no-fault benefits under 11 NYCRR 65-3.16 (a) (12) due to, among other things, being controlled by nonphysicians in willful violation of New York law. (Id. at ｶｶ 23-24; see Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 33 NY3d 389, 403-405 [2019] [*2][discussing this ground for denying no-fault claims].)

Plaintiffs now move without opposition for default judgment under CPLR 3215. The motion is denied.

DISCUSSION

Plaintiffs’ motion papers establish that defendant was properly served; and defendant has not appeared. The question is thus whether plaintiffs’ verified complaint, standing alone, provides proof of the facts constituting plaintiff’s claim. (See CPLR 3215 [f].) It does not.

A plaintiff denying a provider’s claim for no-fault benefits based on asserted failures to appear for an EUO must demonstrate that the EUO was timely and properly requested. (See Liberty Mut. Ins. Co. v Carranza, 2021 NY Slip Op 50284[U], at *1-2 [Sup Ct, NY County Apr. 7, 2021], citing American Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) Plaintiffs have not satisfied these requirements.

Plaintiffs’ verified complaint alleges only that “[e]ach request was timely made,” that plaintiffs then “issued a timely denial on the prescribed denial on the prescribed NF-10 form,” and that these denials “were timely, proper, and consistent with the No-Fault Laws.” (NYSCEF No. 1 at ｶｶ 27, 31, 32.) Given the dozens of bills, EUO requests and follow-up requests, and denials involved (see NYSCEF No. 2 [list of claims]), these conclusory statements are insufficient. That is particularly true since plaintiffs have not submitted any evidence that the many EUO requests, follow-up requests, and denials in question were not simply generated by plaintiffs, but also correctly addressed and mailed to defendant. Plaintiffs do provide a lengthy, detailed chart of bills and EUO requests, organized by the underlying benefits claim. (See id.) That chart, however, omits the most important date for purposes of assessing timeliness—the date on which plaintiffs received the bills. (See id.; 11 NYCRR 65-3.5 [b] [requiring insurers to request EUO-based verification within 15 business days of receiving a provider bill].)

Additionally, the complaint alleges that defendant has “systematically failed and/or refused to appear for an EUO” on many occasions over the past year. (NYSCEF No. 1 at ｶ 29.) This allegation treats a failure to appear and a refusal to appear as interchangeable. But that is not necessarily so. For example, a provider may properly condition its appearance at an EUO on receiving the insurer’s specific objective justification for requesting the EUO under 11 NYCRR 65-3.5 (e). (See Kemper Independence Ins. Co. v Accurate Monitoring, LLC, 73 Misc 3d 585, 586-587, 589 [Sup Ct, NY County 2021].) Plaintiffs’ motion papers do not address whether defendant ever made that kind of request—or, if it did, what the response was.^[FN1] Similarly, [*3]although plaintiffs allege that each EUO request to defendant “endeavored to select places and times for the EUO that would be convenient to [defendant] and advised that a change of time, date, manner and location would be considered if requested” (NYSCEF No. 1 at ｶ 28), plaintiffs do not say whether defendant ever did request a change of that type for logistical/convenience reasons, and, if so, how plaintiffs responded.

Moreover, plaintiffs have not indicated whether any of defendant’s claims for treatment—or other benefits claims arising out of the numerous collisions underlying defendant’s treatment bills—have given rise to other no-fault proceedings by or against plaintiffs. It would be somewhat curious, given the sheer number of insurance claims appearing in plaintiffs’ EUO-request chart, if this action were the very first time that litigation involving one of those claims has arisen—possible, but curious. And if this action were not the first time that one of the no-fault claims identified in the chart has led to litigation, plaintiffs’ declaratory-judgment claims here would be subject to an obvious claim-preclusion objection.

Claim preclusion, to be sure, is an affirmative defense. (See CPLR 3211 [a] [5].) Plaintiffs thus were not required to rule it out in their complaint. For the same reason, the absence of any allegation addressing claim-preclusion-related issues is not itself grounds to deny plaintiffs’ default-judgment motion. But that absence does underscore the comparative thinness of plaintiffs’ motion papers compared to the typical showing in a no-fault coverage action—particularly given the number of claims and bills involved and the amount of money at stake.

The difficulty in this action is that plaintiffs’ true grievance appears to be their conclusion that defendant is not providing legitimate medical services and is ineligible under 11 NYCRR 65-3.16 (a) (12) to receive no-fault benefits. But this action does not pursue and support that grievance through seeking a declaration that speaks directly to defendant’s putative lack of eligibility. Instead, plaintiffs are seeking, in effect, to achieve that same result by relying on many asserted EUO-nonappearances to obtain a declaratory judgment supporting en masse plaintiffs’ denials of defendant’s treatment bills.

Proceeding in this manner might be simpler and more efficient from plaintiffs’ perspective than bringing many individual declaratory judgment actions, each premised on a particular failure of defendant to appear for an EUO. As reflected in the discussion above, though, the flip side of plaintiffs’ efficiency gains is that this court loses the information and documentation it needs to properly evaluate plaintiffs’ claims about defendant’s repeated EUO-nonappearances. (Cf. Travelers Indemnity Co. v Parisien, 2020 NY Slip Op 51561[U], at *3-4 [Sup Ct, Suffolk County Dec. 29, 2020] [expressing concern in a no-fault declaratory-judgment action about 13 different sets of treatment bills that “[u]ltimately, in the guise of convenience, plaintiffs are, in effect, seeking to circumvent the statutorily prescribed procedures that govern disputes between no-fault insurers and no-fault health services providers over the validity of reimbursement claims and the health services provider’s eligibility”].) In these circumstances, on this record, this court is loath to grant plaintiffs the default judgment that they seek.

At the same time, the court does not rule out the possibility that plaintiffs could still provide the details (and supporting documents) about their EUO requests needed to show that defendant repeatedly failed without justification to appear for timely and properly scheduled EUOs. The court thus sees no basis at this time to dismiss plaintiffs’ action altogether.

Accordingly, it is

ORDERED that plaintiffs’ motion for default judgment under CPLR 3215 is denied [*4]without prejudice; and it is further

ORDERED that if plaintiffs do not bring a renewed default-judgment motion within 60 days of entry of this order, the action will be administratively dismissed; and it is further

ORDERED that plaintiffs serve a copy of this order with notice of its entry on defendant by certified mail, return receipt requested, directed to defendant’s last-known address.

Footnotes

Footnote 1: Although the issue is not squarely presented by the current motion, plaintiff’s complaint does not provide that justification either. It alleges only that “various facts and circumstances . . . called into question” defendant’s eligibility to collect no-fault benefits and the legitimacy of defendant’s treatment and billing, without identifying any of those facts and circumstances. (NYSCEF No. 1 at 24.) That would not be sufficient under 11 NYCRR 65-3.5 (e), were the issue to be contested. (See Kemper Independence, 73 Misc 3d at 589 n 4; Country-Wide Ins. Co. v Delacruz, 71 Misc 3d 247, 251 [Sup Ct, NY County 2021], affd 205 AD3d 473, 473-474 [1st Dept 2022].)

The Rybak Firm, PLLC (Damin J. Toell and Richard Rozhik of counsel), for appellant. Rivkin Radler, LLP (Stuart M. Bodoff of counsel), for respondent.

Appeal from an order of the Civil Court of the City of New York, Kings County (Sandra E. Roper, J.), dated August 6, 2021. The order (1) denied plaintiff’s motion to, in effect, deem its service of process on defendant on April 3, 2018 as having satisfied so much of an order of the Civil Court dated November 14, 2019 as directed plaintiff to serve defendant within 30 days, (2) sua sponte dismissed the complaint with prejudice based on a finding that plaintiff had not complied with that portion of the November 14, 2019 order, and (3) denied as moot defendant’s cross motion to dismiss the complaint based on res judicata.

ORDERED that, on the court’s own motion, so much of the notice of appeal as is from so much of the order as, sua sponte, dismissed the complaint with prejudice is deemed an application for leave to appeal from that portion of the order, and leave to appeal is granted (see CCA 1702 [c]); and it is further,

ORDERED that the order is reversed, with $30 costs, so much of the order as, sua sponte, dismissed the complaint with prejudice based on a finding that plaintiff had not complied with so much of an order of the Civil Court dated November 14, 2019 as directed plaintiff to serve defendant within 30 days is vacated, plaintiff’s motion to, in effect, deem its service of process upon defendant on April 3, 2018 as having satisfied that portion of the November 14, 2019 order is granted, and defendant’s cross motion to dismiss the complaint based on res judicata is granted.

On March 24, 2017, plaintiff commenced this action (see CCA 400) to recover assigned [*2]first-party no-fault benefits. Plaintiff alleged that it served defendant with the summons and complaint on April 6, 2017. Defendant did not appear or answer, and, by order entered November 6, 2017, the Civil Court awarded plaintiff a default judgment. In January 2018, defendant moved to vacate the default judgment. By order dated November 14, 2019, the Civil Court granted defendant’s motion to vacate the default judgment and directed plaintiff to “effectuate proper service” of the summons and complaint within 30 days of the order. Plaintiff then moved by order to show cause, signed on November 26, 2019, to, in effect, deem an alleged April 3, 2018 service of the summons and complaint upon defendant as having satisfied plaintiff’s obligation to “effectuate proper service” within 30 days of the November 14, 2019 order. The November 26, 2019 order to show cause stayed the action pending a final determination of the motion. Defendant opposed plaintiff’s motion, asserting that the April 3, 2018 service attempt was untimely, and cross-moved, in the event plaintiff’s motion was granted, to dismiss the complaint pursuant to CPLR 3211 (a), on the ground that the action is barred by the doctrines of res judicata and collateral estoppel based on a declaratory judgment of the Supreme Court, Nassau County, entered on May 20, 2019. The declaratory judgment, which was attached to defendant’s moving papers, declared that “Shafai Acupuncture [plaintiff herein] has no right to receive payment for [the bills at issue in the instant action, among others] because Shafai Acupuncture failed and/or refused to appear for Examinations Under Oath requested by STATE FARM, and thus breached a condition of coverage and violated its obligations under the New York No-Fault Laws.” By order dated August 6, 2021, the Civil Court denied plaintiff’s motion, sua sponte dismissed the complaint with prejudice upon a finding that “Plaintiff failed to properly effectuate service within thirty days of Decision/Order dated November 14, 2019 as directed,” and denied defendant’s cross motion as moot.

While no appeal as of right lies from the sua sponte portion of the August 6, 2021 order (see CCA 1702 [a] [2]; Sholes v Meagher, 100 NY2d 333 [2003]), we deem the notice of appeal to be an application for leave to appeal from that portion of the order and grant plaintiff’s application (see CCA 1702 [c]). We agree with plaintiff’s argument on appeal that, at the time of the Civil Court’s August 6, 2021 order, the 30-day period that the Civil Court’s November 14, 2019 order gave plaintiff to effectuate service had not yet expired due to the stay contained in plaintiff’s November 26, 2019 order to show cause. Consequently, so much of the August 6, 2021 order as, sua sponte, dismissed the complaint with prejudice for failure to effectuate service within the time frame set forth in the November 14, 2019 order is vacated.

With respect to plaintiff’s motion, it is undisputed that plaintiff commenced this action on March 24, 2017, and that the attempted service on April 3, 2018 occurred after the expiration of the 120-day time period allotted by CPLR 306-b (see CCA 403). However, by giving plaintiff 30 days to effectuate service in the November 14, 2019 order, the Civil Court implicitly found that an extension of time for service was warranted under CPLR 306-b. In our opinion, under the circumstances presented, the Civil Court should have deemed plaintiff’s April 3, 2018 service as satisfying the service that plaintiff had been directed to effectuate in the November 14, 2019 order.

In view of the foregoing, defendant’s cross motion pursuant to CPLR 3211 (a) to dismiss the complaint on the ground that the action is barred by the doctrines of res judicata and collateral estoppel is no longer moot. In lieu of remitting the cross motion to the Civil Court for [*3]a new determination thereof, we review the cross motion in the interest of judicial economy (see S & J Serv. Ctr., Inc. v Commerce Commercial Group, Inc., 178 AD3d 977, 979 [2019]; Bonafede v Bonito, 145 AD3d 842, 843-844 [2016]).

In light of the May 20, 2019 declaratory judgment, defendant’s cross motion to dismiss the complaint should have been granted based on the doctrine of res judicata (see Wave Med. Servs., P.C. v Farmers New Century Ins. Co., 67 Misc 3d 137[A], 2020 NY Slip Op 50555[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2020]; Healing Art Acupuncture, P.C. v 21st Century Ins. Co., 59 Misc 3d 139[A], 2018 NY Slip Op 50583[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2018]; EBM Med. Health Care, P.C. v Republic W. Ins., 38 Misc 3d 1, 3 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]), as any judgment in favor of plaintiff in the present action would destroy or impair rights or interests established by the judgment in the declaratory judgment action (see Schuylkill Fuel Corp. v Nieberg Realty Corp., 250 NY 304, 306-307 [1929]; Flushing Traditional Acupuncture, P.C. v Kemper Ins. Co., 42 Misc 3d 133[A], 2014 NY Slip Op 50052[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]).

Accordingly, the order is reversed, so much of the order as, sua sponte, dismissed the complaint with prejudice based on a finding that plaintiff had not complied with so much of an order of the Civil Court dated November 14, 2019 as directed plaintiff to serve defendant within 30 days is vacated, plaintiff’s motion to, in effect, deem its service of process upon defendant on April 3, 2018 as having satisfied that portion of the November 14, 2019 order is granted, and defendant’s cross motion to dismiss the complaint based on res judicata is granted.

ALIOTTA, P.J., WESTON and TOUSSAINT, JJ., concur.

Gullo & Associates, LLP (Kristina O’Shea of counsel), for appellant. The Rybak Firm, PLLC (Damin J. Toell and Richard Rozhik of counsel), for respondent.

Appeal from a judgment of the Civil Court of the City of New York, Kings County (Odessa Kennedy, J.), entered January 27, 2020. The judgment, entered upon a decision of that court dated November 8, 2019, after a nonjury trial, awarded plaintiff the principal sum of $3,158.02. The appeal from the judgment brings up for review so much of an order of that court (Louis L. Nock, J.) dated August 16, 2017 as denied defendant’s motion to dismiss the complaint and made implicit CPLR 3212 (g) findings in plaintiff’s favor.

ORDERED that, on the court’s own motion, the notice of appeal from the decision dated November 8, 2019 is deemed a premature notice of appeal from the judgment entered January 27, 2020 (see CPLR 5520 [c]); and it is further,

ORDERED that the judgment is reversed, with $30 costs, so much of the order dated August 16, 2017 as denied defendant’s motion to dismiss the complaint and made implicit CPLR 3212 (g) findings in plaintiff’s favor is vacated, defendant’s motion to dismiss the complaint is granted, and the matter is remitted to the Civil Court for the entry of a judgment in favor of defendant dismissing the complaint.

Adelaida M. Laga, P.T. (Laga) commenced this action against Unitrin Auto and Home Insurance Company to recover first-party no-fault benefits for medical services provided to its assignor, Belle Au Monde Corriolant, as a result of injuries Corriolant allegedly sustained in an automobile accident on August 7, 2011. In its answer, dated August 21, 2015, defendant [*2]identified itself as Kemper Independence Insurance Company (Kemper). Before Laga commenced this action, a declaratory judgment action had been commenced in Supreme Court, Bronx County, by Kemper against Laga, six other providers, and the assignor herein, Corriolant, alleging that Corriolant had breached the terms of the insurance policy in question by failing to appear for duly scheduled independent medical examinations. On August 4, 2016, an order was entered in the Supreme Court declaratory judgment action declaring that Laga and five other providers were “not entitled to no-fault insurance coverage for the motor vehicle accident which occurred on August 7, 2011.”

In September 2016, defendant moved in the Civil Court to dismiss the complaint pursuant to CPLR 3211 (a) (5) and (7), contending that the instant action is barred by virtue of the order in the declaratory judgment action. Plaintiff opposed defendant’s motion, raising no procedural issues, and cross-moved for summary judgment. By order dated August 16, 2017, the Civil Court (Louis L. Nock, J.) denied defendant’s motion, implicitly denied plaintiff’s cross motion, found that plaintiff had established “its prima facie case,” and held that “the sole issue that remains for trial is the privity between Kemper and [defendant].” On the trial date, the Civil Court (Odessa Kennedy, J.), upon denying defense counsel’s request for an adjournment to allow defendant to secure a witness to testify on the issue of privity between Kemper and defendant, ordered that judgment be entered in plaintiff’s favor. A judgment in favor of plaintiff in the principal sum of $3,158.02 was entered on January 27, 2020.

Collateral estoppel, or issue preclusion, precludes a party from relitigating an issue where “the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action” (Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 349 [1999]; see D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659 [1990]; Manko v Gabay, 175 AD3d 484 [2019]). The party seeking to rely on collateral estoppel has the burden of establishing that the issue actually litigated and determined in the prior action is identical to the issue on which preclusion is sought (see Forcino v Miele, 122 AD2d 191, 193 [1986]; Triboro Quality Med. Supply, Inc. v State Farm Mut. Auto. Ins. Co., 36 Misc 3d 131[A], 2012 NY Slip Op 51289[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). The party attempting to defeat the application of collateral estoppel has the burden of establishing the absence of a full and fair opportunity to litigate (see D’Arata, 76 NY2d at 664; Uptodate Med. Servs., P.C. v State Farm Mut. Auto. Ins. Co., 23 Misc 3d 42, 44 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]).

Here, defendant established that the issue of whether plaintiff was entitled to receive no-fault benefits in connection with the August 7, 2011 accident involving Corriolant was identical to the issue previously decided in the declaratory judgment action and plaintiff failed to establish that it had not received a full and fair opportunity to litigate in the declaratory judgment action. Indeed, plaintiff appeared in that action and the order in that action even indicates that plaintiff submitted opposition to the motion giving rise to the order (see Reid v Reid, 198 AD3d 993, 994 [2021]; Miller v Falco, 170 AD3d 707, 709 [2019]; David v State, 157 AD3d 764, 765-766 [2018]; Matter of Abady, 22 AD3d 71, 85 [2005]). Thus, defendant was entitled to dismissal of the complaint on the ground of collateral estoppel.

We note that, while defendant failed to raise the affirmative defense of collateral estoppel in its August 21, 2015 answer, defendant had no basis to assert that defense before August 4, [*3]2016, when the order in the declaratory judgment action was entered (see Metro Health Prods., Inc. v Nationwide Ins., 52 Misc 3d 138[A], 2016 NY Slip Op 51122[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]; Renelique v State-Wide Ins. Co., 50 Misc 3d 137[A], 2016 NY Slip Op 50095[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]). Furthermore, an unpleaded defense may serve as the basis for the dismissal of a complaint in the absence of surprise or prejudice to the opposing party (see Sullivan v American Airlines, Inc., 80 AD3d 600, 602 [2011]; Vixan Cab Corp. v Chelsea Rental Corp., 72 Misc 3d 128[A], 2021 NY Slip Op 50594[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021]).

Accordingly, the judgment is reversed, so much of the order dated August 16, 2017 as denied defendant’s motion to dismiss the complaint and made implicit CPLR 3212 (g) findings in plaintiff’s favor is vacated, defendant’s motion to dismiss the complaint is granted, and the matter is remitted to the Civil Court for the entry of a judgment in favor of defendant dismissing the complaint.

ALIOTTA, P.J., WESTON and TOUSSAINT, JJ., concur.

Freiberg, Peck & Kang, LLP (Yilo J. Kang of counsel), for appellant. The Rybak Firm, PLLC (Damin J. Toell, Esq.), for respondent (no brief filed).

Appeal from an order of the Civil Court of the City of New York, Kings County (Consuelo Mallafre Melendez, J.), entered October 31, 2019. The order, insofar as appealed from, denied the branches of defendants’ joint motion seeking to dismiss so much of the complaint as was asserted against American Independent Ins. Co., American Independent Insurance Companies, Inc., and Good2Go Auto Insurance, respectively.

ORDERED that so much of the appeal as is by Omni Indemnity Company is dismissed, as Omni Indemnity Company is not aggrieved by the order, insofar as appealed from (see CPLR 5511; Rinaldi v Evenflo Co., Inc., 62 AD3d 856 [2009]); and it is further,

ORDERED that the order, insofar as appealed from, is modified by providing that the branches of the motion seeking to dismiss so much of the complaint as was asserted against American Independent Ins. Co. and American Independent Insurance Companies, Inc., respectively, are granted; as so modified, the order, insofar as appealed from, is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendants appeal from so much of an order as denied the branches of defendants’ joint motion seeking to dismiss so much of the complaint as was asserted against defendants American Independent Ins. [*2]Co., American Independent Insurance Companies, Inc., and Good2Go Auto Insurance, respectively.

For the reasons stated in Island Life Chiropractic Pain Care, PLLC, as Assignee of Vernizier, Jean Willy v American Ind. Ins. Co. (— Misc 3d —, 2022 NY Slip Op — [appeal No. 2020-251 K C], decided herewith), the order, insofar as appealed from, is modified by providing that the branches of the motion seeking to dismiss so much of the complaint as was asserted against American Independent Ins. Co. and American Independent Insurance Companies, Inc., respectively, are granted.

ALIOTTA, P.J., TOUSSAINT and GOLIA, JJ., concur.

Decided on August 19, 2022

SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS

Freiberg, Peck & Kang, LLP (Yilo J. Kang of counsel), for appellant. The Rybak Firm, PLLC (Oleg Rybak, Esq.), for respondent (no brief filed).

Appeal from an order of the Civil Court of the City of New York, Kings County (Consuelo Mallafre Melendez, J.), entered November 4, 2019. The order insofar as appealed from, denied the branches of defendants’ joint motion seeking to dismiss so much of the complaint as was asserted against American Independent Ins. Co., American Independent Insurance Companies, Inc., and Good2Go Auto Insurance, respectively.

ORDERED that so much of the appeal as is by Omni Indemnity Company is dismissed, as Omni Indemnity Company is not aggrieved by the order, insofar as appealed from (see CPLR 5511; Rinaldi v Evenflo Co., Inc., 62 AD3d 856 [2009]); and it is further,

ORDERED that the order, insofar as appealed from, is modified by providing that the branches of the motion seeking to dismiss so much of the complaint as was asserted against American Independent Ins. Co. and American Independent Insurance Companies, Inc., respectively, are granted; as so modified, the order, insofar as appealed from, is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendants appeal from so much of an order as denied the branches of defendants’ joint motion seeking to dismiss so much of the complaint as was asserted against defendants American Independent Ins. [*2]Co., American Independent Insurance Companies, Inc., and Good2Go Auto Insurance, respectively.

Defendants based their motion on CPLR 3211 (a) (8). In multiple affidavits in support of the motion, defendant American Independent Ins. Co.’s employees asserted that defendant is a Pennsylvania company, which is not licensed to do business in New York, maintains no offices in New York, has no agents operating out of, or representatives soliciting business in, New York, and does not own, use or possess any real property in New York. Furthermore, defendant American Independent Ins. Co. argued that it had been held in prior cases that the courts in the State of New York cannot exercise personal jurisdiction over it (see e.g. Matter of Eagle Ins. Co. v Gutierrez-Guzman, 21 AD3d 489 [2005]). Plaintiff cross-moved for summary judgment and opposed the motion with an “affirmation” by its counsel, who made unsupported assertions that, among other things, defendant American Independent Ins. Co. had transacted business in New York by knowingly issuing policies to New York drivers, and that American Independent Ins. Co. had established an ongoing relationship with defense counsel in New York, thereby subjecting American Independent Ins. Co. to jurisdiction in New York. For the reasons stated in Excel Prods., Inc. v American Ind. Ins. Co. (65 Misc 3d 157[A], 2019 NY Slip Op 51964[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2019]), the branch of the motion by defendant American Independent Ins. Co. seeking to dismiss the complaint insofar as asserted against it should have been granted. In addition, because the “affirmation” submitted by plaintiff’s counsel is unsigned, the affirmation is of no probative value (see WJJ Acupuncture, P.C. v Liberty Mut. Fire Ins. Co., 26 Misc 3d 135[A], 2010 NY Slip Op 50146[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]) and plaintiff failed to satisfy its burden of making a prima facie showing that there was personal jurisdiction over American Independent Ins. Co. (see Hopstein v Cohen, 143 AD3d 859 [2016]).

Similarly, after defendant American Independent Insurance Companies, Inc. contested jurisdiction, “plaintiff need[ed] only make a prima facie showing that such jurisdiction exists” (Hopstein, 143 AD3d at 860 [internal quotation marks omitted]; see also Lang v Wycoff Hgts. Med. Ctr., 55 AD3d 793 [2008]). In the instant case, the only proof that service of process was made upon American Independent Insurance Companies, Inc. consisted of affidavits of service stating that service was made upon defendant Good2Go Auto Insurance. Consequently, the branch of the motion by defendant American Independent Insurance Companies, Inc. seeking to dismiss the complaint insofar as asserted against it should have been granted.

To the extent defendant Good2Go Auto Insurance moved to dismiss the complaint insofar as asserted against it, plaintiff’s opposition papers contained copies of affidavits of service reflecting that service was made upon Good2Go Auto Insurance. In its reply papers, Good2Go Auto Insurance made no attempt to demonstrate that the person served was not “an officer, director, managing or general agent, or cashier or assistant cashier or to any other agent authorized by appointment or by law to receive service” (CPLR 311 [1]). As a result, Good2Go Auto Insurance failed to demonstrate a basis to disturb so much of the order as denied the branch of the motion by defendant Good2Go Auto Insurance seeking to dismiss the complaint insofar as asserted against it.

Accordingly, the order, insofar as appealed from, is modified by providing that the branches of the motion seeking to dismiss so much of the complaint as was asserted against [*3]American Independent Ins. Co. and American Independent Insurance Companies, Inc., respectively, are granted.

ALIOTTA, P.J., TOUSSAINT and GOLIA, JJ., concur.

Index No. 654090/2020

Correia, Conway & Stiefeld, White Plains, NY (Richard Ahrens of counsel), for plaintiff.

Law Office of Gregory A. Goodman, P.C., Jericho, NY (Gregory Goodman of counsel), for defendant NYC Axis Chiropractic PC.

Gerald Lebovits, J.

In this no-fault insurance coverage action, plaintiffs Liberty Mutual Insurance Company and American States Insurance Company (together, Liberty Mutual) move for default judgment against the eligible injured person, defendant Edwine Brutus; and against non-appearing defendants I Am Supplies Inc., MZY Acupuncture PC, Nexray Medical Imaging PC, Sedation Vacation Perioperative Medicine PLLC and Way to Rehab PT PC, all medical-provider assignees of Brutus.

Appearing defendant NYC Axis Chiropractic PC cross-moves for summary judgment against Liberty Mutual. NYC Axis also cross-moves for sanctions, on the ground that Liberty Mutual erroneously named it in the initial default judgment motion and then failed to withdraw the motion quickly enough as against NYC Axis.

Liberty Mutual’s unopposed motion for default judgment is granted. The branch of NYC Axis’s cross-motion seeking sanctions is denied. The branch of NYC Axis’s cross-motion for summary judgment is granted in part and denied in part.

DISCUSSION

I. Liberty Mutual’s Default-Judgment Motion

To obtain default judgment under CPLR 3215, a movant must establish proper service on the subjects of the motion, defaults by those parties, and the facts constituting movant’s claim. Here, Liberty Mutual has established proper service and defaults. Additionally, Liberty Mutual has established, through affidavits and supporting documentation, the facts constituting its claim.

In particular, Liberty Mutual has shown that it timely asked Brutus to appear for an examination under oath (EUO) about whether he had been truthful and accurate on his application for insurance (see NYSCEF No. 24 [EUO scheduling letters]). Liberty Mutual has also demonstrated that Brutus appeared for his EUO but failed to respond fully to timely served post-EUO document requests. (See NYSCEF No. 27 [EUO transcript]; NYSCEF No. 28 [post-[*2]EUO document requests].) Liberty Mutual has provided an affidavit from one of its investigators representing that her investigation, coupled with Brutus’s EUO testimony, indicated he lived at a different address from the one he had used on his application. (NYSCEF No. 23.) And Liberty Mutual has provided an affidavit from one of its underwriters representing that had Brutus provided his true home address on the insurance application, the premium would have been almost double what he was charged. (NYSCEF No. 29.)

These facts, taken together, suffice to establish a prima facie case that Brutus committed a material misrepresentation in applying for insurance from Liberty Mutual. (See Starr Indem. & Liab. Co. v Monte Carlo, LLC, 190 AD3d 441, 441-442 [1st Dept 2021] [“A misrepresentation in an insurance application is material . . . if, had the true facts been known, either the insurer would not have issued the policy or would have charged a higher premium.”]; cf. Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999] [noting that the “affidavit of facts” supporting a default-judgment motion for default judgment must “establish a prima facie case” for relief].) This material misrepresentation, in turn, is a proper basis to deny claims for benefits brought by Brutus or his assignees. (See Matter of Insurance Co. of N. Am. v Kaplun, 274 AD2d 293, 298-299 [2d Dept 2000].)

Liberty Mutual’s motion for default judgment is granted.

II. NYC Axis’s Cross-Motion

A. The Branch of the Cross-Motion Seeking Sanctions

Liberty Mutual’s default-judgment motion initially sought judgment against NYC Axis, in addition to the other defendants named in the motion. (See NYSCEF No. 14 at 2 [notice of motion].) The attorney affirmation submitted in support of the motion stated that NYC Axis was in default because it did not timely answer. (See NYSCEF No. 15 at 4 ¶ 18.) But although NYC Axis’s answer was untimely, Liberty Mutual did not reject that answer when it was filed, thereby waiving Liberty Mutual’s right to act on the default. (See U.S. Bank N.A. v Lopez, 192 AD3d 849, 850 [2d Dept 2021].)

Liberty Mutual filed its motion on Friday, December 3, 2021. (NYSCEF No. 14.) The motion was returnable on January 4, 2022; it required under CPLR 2214 (b) that opposition papers be filed by December 28, 2021. (Id. at 1-2.) On Saturday, December 4, NYC Axis filed a letter to demand that Liberty Mutual withdraw its motion as against NYC Axis within five days or face a sanctions motion. (NYSCEF No. 37.) On Thursday, December 9, NYC Axis filed this cross-motion for summary judgment under CPLR 3212 and for sanctions under 22 NYCRR 130-1.1. (NYSCEF No. 39 [notice of cross-motion].) On December 16—less than two weeks after the motion was filed—Liberty Mutual withdrew the motion as against NYC Axis, conceding that seeking judgment against NYC Axis was an error. (NYSCEF No. 48.)

NYC Axis argues at length on reply that it should be awarded sanctions against Liberty [*3]Mutual anyway. (See NYSCEF No. 53 at 3-8.) This argument is groundless. Liberty Mutual did not, as NYC Axis asserts, act with “obstinacy” in “refus[ing] to withdraw its motion” (id. at ¶¶ 19, 25)—it merely did not withdraw the motion as rapidly as NYC Axis would have preferred. Additionally, given the timing, NYC Axis was not, as it suggests, “compelled . . . to seek judicial intervention to protect [its] client’s rights” against Liberty Mutual’s motion (id. at ¶ 14). Instead, NYC Axis chose to resort to motion practice only four business days after Liberty Mutual filed its default-judgment motion, and nearly three weeks before NYC Axis’s opposition papers would have been due. No basis for § 130-1.1 sanctions against Liberty Mutual exists on these facts.

NYC Axis also cross-moves for summary judgment on the merits, contending that it is entitled to payment on 10 bills for treatment (plus attorney fees) because Liberty Mutual did not timely deny them, and because the assertedly untimely denials were improper in any event.

The cross-motion is granted in part and denied in part. This court concludes that Liberty Mutual was required to pay or deny these 10 bills within 30 days of receiving the necessary verification. (See subsection II.B.1, infra.) Eight of the 10 bills were undisputedly denied. With respect to those eight bills, NYC Axis has not shown as a matter of law that the bills were untimely denied, or that the denials were substantively improper (See paragraph II.B.2.a, infra). With respect to the remaining two bills, NYC Axis has shown that Liberty Mutual failed to timely deny one of them, for $26.41. (See paragraph II.B.2.b, infra.) NYC Axis is thus entitled to summary judgment only on that one bill. It is not entitled to attorney fees as the prevailing party.

NYC Axis argues that it is entitled as a matter of law to payment on the treatment bills it submitted to Liberty Mutual because those bills were not denied (or paid) within 30 days after Liberty Mutual received proof of NYC Axis’s claim, as required by 11 NYCRR 65-3.8 (a) and (c). The first issue this court must address, therefore, is whether the timeliness requirements of § 65-3.8 governed Liberty Mutual’s denial of these bills to begin with.

A no-fault insurer “that fails to deny a claim within the 30—day period is generally precluded from asserting a defense against payment of the claim.” (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008] [internal quotation marks omitted].) A narrow but important exception to this preclusion rule exists where the ground for denying the claim (or the defense to a later claim for payment) is a lack of coverage: If “the insurance policy does not contemplate coverage in the first instance . . . requiring payment of a claim upon failure [*4]to timely disclaim” would improperly “create coverage where it never existed.”^[FN1] (Id. [internal quotation marks omitted].)

The ground for Liberty Mutual’s denial of NYC Axis’s claims is that Brutus, NYC Axis’s assignor, made material misrepresentations in his application for no-fault insurance. Such material misrepresentations ordinarily will “void[] the policy ab initio,” thereby retroactively eliminating coverage altogether. (Starr Indem., 190 AD3d at 442.) A different rule applies, however, in the specific context of automotive insurance, including no-fault.

In that context, Vehicle and Traffic Law (VTL) § 313 is understood to “supplant an insurance carrier’s common-law right to cancel a contract of insurance retroactively on the grounds of fraud or misrepresentation,” mandating instead “that the cancellation of a contract pursuant to its provisions may only be effected prospectively.” (Liberty Mut. Ins. Co. v McClellan, 127 AD2d 767, 769 [2d Dept 1987].) This rule derives from the principle that “compulsory automobile liability insurance is not the concern solely of the insured and . . . insurer,” but “exists also for the protection of the public.” (Id. at 769-770.) Preventing an auto insurer from retroactively canceling a policy “protects innocent third parties who may be injured due to the insured’s negligence” and might otherwise struggle to obtain compensation for their injuries—contrary to the core purpose of compulsory auto insurance. (Kaplun, 274 AD2d at 298.)

Courts applying this rule against rescission have stressed that the rule does not leave an auto insurer “without means of redress” should it conclude that a policy was fraudulently obtained. (Id.) An insurer may argue that “the insured’s misrepresentations and/or fraud in obtaining the policy precludes any recovery by the insured.” (Id. at 298-299.) For that matter, the insurer may raise the same argument with respect to a claim under the policy by an insured’s medical provider assignees, which stand in the insured’s shoes and “deal[] with the assignor-insured at [their] peril in accepting an assignment of the insured’s no-fault benefits.” (AB Med. Servs. PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8, 11 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists]; accord Central Radiology Services v. Commerce Ins Co., 2011 NY Slip Op 50948[U], at *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists May 23, 2011] [holding that when the insurer established that the insured-assignor was ineligible for coverage for having misrepresented his state of residence in obtaining insurance, the provider-assignee, standing in the insured’s shoes, could not recover from the insurer either].)

That an insurer may raise the insured’s material misrepresentations as a ground for denying claims by the insured or the insured’s assignees presents the question whether the insurer may do so outside 30-day regulatory window for paying or denying the claims set by 11 NYCRR 65-3.8. This is permissible only if denying a claim on material-misrepresentation grounds—but without rescinding the policy outright—is, in substance, raising a lack-of-coverage defense to the claim, rendering untimely-denial preclusion inapplicable.

There are strong arguments that a material-misrepresentations denial should be treated as being based on a lack-of-coverage defense. In raising the insured’s material misrepresentations as a ground for denial, the insurer is contending that the insured (or its assignee) is claiming the benefit of coverage that the insured should not have at the price it paid. This is the same basic contention that underlies an insurer’s argument that it should be permitted to vitiate coverage by rescinding a policy as fraudulently obtained. True, particular policy considerations in the automotive-insurance context foreclose outright rescission. Those considerations, though, are particular to the interests of third parties (and the public at large); they do not affect the relationship between insurer and insured, nor the arguments against denying the insured the benefit of a fraudulently obtained policy.

Put differently, a material-misrepresentation defense is not based on a breach of a policy condition, does not challenge the validity of the claimed charges, and does not call into doubt the right of an assignee to bring the claim. Thus, without speaking in coverage-related terms, it is difficult to explain why the material-misrepresentation defense should defeat a claim for a non-excluded loss within the scope of the policy. (See Fair Price Med. Supply, 10 NY3d at 565 [explaining that the preclusion analysis “entails a judgment” whether “the defense [is] more like a ‘normal’ exception from coverage (e.g., a policy exclusion), or a lack of coverage in the first instance (i.e., a defense ‘implicating a coverage matter'”] [alteration omitted].^[FN2] )

Nonetheless, the Appellate Division, Second Department, has held, without elaborating, that an insurer is precluded from denying a claim on the basis of a material misrepresentation if the denial does not comply with the time limits set by 11 NYCRR 65-3.8. (See Westchester Med. Ctr. v GMAC Ins. Co. Online, Inc., 80 AD3d 603, 604-605 [2d Dept 2011].) Liberty Mutual has provided no contrary precedents of the Appellate Division, First Department, and this court’s research has not uncovered any. This court is therefore bound by the Second Department’s decision in GMAC Insurance Company Online. (See D’Alessandro v Carro, 123 AD3d 1, 6 [1st Dept 2014].) The timeliness requirements of § 65-3.8 apply to Liberty Mutual’s denial here of [*5]NYC Axis’s bills.

Because the pay-or-deny deadlines of 11 NYCRR 65-3.8 apply here, this court must go on to determine whether Liberty Mutual met that deadline with respect to the 10 treatment bills at issue on NYC Axis’s cross-motion for summary judgment.

It is undisputed that eight of the 10 bills were denied by Liberty Mutual. NYC Axis argues that those eight denials were untimely. Liberty Mutual contends that the denials were timely, taking into account the tolling effect of Liberty Mutual’s verification requests to Brutus. This court agrees with Liberty Mutual about these bills. NYC Axis also argues that Liberty Mutual has not provided sufficient support for its proffered material-misrepresentation ground for denying the first eight bills. This court finds NYC Axis’s argument unpersuasive.

As for the two remaining bills, NYC Axis contends that those bills were never denied at all. Liberty Mutual argues both that they were denied, and that the denials were timely. This court agrees with Liberty Mutual about one of the bills, and with NYC Axis about the other.

Title 11 NYCRR 65-3.8 (a) (1) provides that “[n]o-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to [11 NYCRR] 65-3.5.” Section 65-3.8 (c) provides that “[w]ithin 30 calendar days after proof of claim is received, the insurer shall either pay or deny the claim in whole or in part.” Timely verification requests may therefore toll the insurer’s deadline to pay or deny a treatment bill submitted by a medical-provider-assignee. (See Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903, 903-904 [2d Dept 2007].) For purposes of that deadline, a denial is deemed to have been made when mailed by the insurer, not when received by the provider. (See Westchester Med. Ctr. v A Cent. Ins. Co., 114 AD3d 937, 937 [2d Dept 2014].)

Liberty Mutual first asked Brutus for garaging-related verification information in the beginning of August 2019, and its verification efforts continued through October 2019—thereby encompassing the period in which NYC Axis submitted the bills at issue. (See NYSCEF No. 24 at 1 [EUO scheduling letters]; NYSCEF No. 57 at 1 [verification correspondence from Brutus to Liberty Mutual]; NYSCEF No. 40 at 11 [NYC Axis affirmation in support of cross-motion, charting all the relevant dates for each bill at issue.)

As a result, the question is whether Liberty Mutual’s verification requests to Party A (injured-assignor Brutus) between August and October 2019 tolled the time for it to pay or deny the bills submitted by Party B (provider-assignee NYC Axis) during that period. NYC Axis [*6]argues that verification requests to A may not toll the time to pay or deny B’s claims (see NYSCEF No. 40 at ¶¶ 38, 47); Liberty Mutual argues that they may do so (see NYSCEF No. 49 at ¶¶ 35-37). This court has not been provided with, and has not itself found, Appellate Division precedent discussing this particular question. Considering the matter for itself, this court agrees with Liberty Mutual.

Liberty Mutual’s verification requests to Brutus were aimed at uncovering whether he had materially misrepresented facts in his insurance application—a ground for denying Brutus’s claims that would apply equally to claims submitted by NYC Axis as Brutus’s assignee.^[FN3] (See Long Is. Radiology v Allstate Ins. Co., 36 AD3d 763, 765 [2d Dept 2007] [explaining that because an “assignee stands in the shoes of an assignor . . . and thus acquires no greater rights than its assignor,” a lack-of-medical-necessity defense to a claim that may be raised by the insurer against the assignor is also available against provider assignees] [internal quotation marks omitted]; accord American States Ins. Co. v Huff 119 AD3d 478, 479 [1st Dept 2014] [same, in context of EUO-nonappearance defense].) Because Liberty Mutual’s verification requests to Brutus also related to whether Liberty Mutual could (or could not) deny NYC Axis’s claims, the requests tolled Liberty Mutual’s deadline to respond to NYC Axis’s claims under § 65-3.8. The alternative rule, under which Liberty Mutual would have to pay NYC Axis’s claims even as Liberty Mutual was formally seeking information that might support denial of those claims, makes little sense.

NYC Axis also argues that Liberty Mutuals’ pay-or-deny deadline for NYC Axis’s bills was not tolled by letters Liberty Mutual sent to NYC Axis advising that its decisions on those bills would be delayed due to the need to verify the claims. (See NYSCEF No. 40 at ¶¶ 36-39.) True, but irrelevant. The letters advising of Liberty Mutual’s verification efforts may not have tolled the time to pay or deny—but the verification efforts themselves did under § 65-3.8.

Liberty Mutual sent four verification requests to Brutus. The initial EUO request, sent on August 2, 2019, was made before Liberty Mutual received any bills for treatment, making it proper under Mapfre Ins. Co. of NY v Manoo (140 AD3d 468, 469 [1st Dept 2016]). (See NYSCEF No. 24 [EUO requests]; NYSCEF Nos. 25-26 [provider bills].) The EUO was adjourned, and a later EUO scheduled, by letter sent on August 13. (NYSCEF No. 24 at 12.) The EUO was held on September 5 (see NYSCEF No. 27 at 4 [EUO transcript]); and Liberty Mutual sent Brutus a post-EUO document request four days later on September 9. (See NYSCEF No. 28 at 1.) After Brutus failed to respond, Liberty Mutual sent a follow-up request within 40 calendar days of the initial document request, as required by 11 NYCRR 65-3.6 (b).

Liberty Mutual’s counsel has represented, in correspondence with the court (copied to all [*7]parties), that Liberty Mutual received Brutus’s response to the follow-up document request (dated October 23, 2019) on November 1, 2019. (NYSCEF No. 57 [document response]; NYSCEF No. 58 [representation about timing of receipt].) Liberty Mutual’s motion papers indicate (albeit without saying expressly) that it did not then request further supplementation from Brutus of that document response. (See NYSCEF No. 15 at ¶ 29 [affirmation in support of default judgment].) As a result, under 11 NYCRR 65-3.8 (a) (1) and (c), Liberty Mutual had 30 calendar days from November 1 to pay or deny NYC Axis’s claims. The 30th day of that period fell on a Sunday, so Liberty Mutual’s deadline to mail the denials was December 2, 2019. (See General Construction Law § 25-a.)

Liberty Mutual has not provided denial-by-denial proof of when it mailed each denial to NYC Axis. But as NYC Axis itself acknowledges, the denial letters are dated either November 21, 2019, or November 22, 2019—at least 10 days prior to the denial deadline. (See NYSCEF No. 40 at 11.) Liberty Mutual has also submitted a detailed affidavit of one of its claims managers, representing that Liberty Mutual’s mailing procedures ensure that claim-denial letters are mailed out no later than the next business day after the date on the letter. (See NYSCEF No. 33 at ¶¶ 7, 11-13.) If the denial letters here were mailed consistent with this procedure—and NYC Axis has not provided reason to believe otherwise—the denials were timely. At a minimum, on this record NYC Axis has not shown as a matter of law that the denials were untimely.

In the alternative, NYC Axis asserts that Liberty Mutual has not adequately supported the material-misrepresentation justification on which these denials relied. (See NYSCEF No. 40 at 13-14.) This assertion misconstrues the governing legal standard. NYC Axis is correct that Liberty Mutual’s showing (affidavits from an underwriter and an investigator) would be insufficient to establish materiality as a matter of law on a motion by Liberty Mutual for summary judgment. But Liberty Mutual has not moved for summary judgment—NYC Axis has. Liberty Mutual’s evidence is sufficient at least to raise a dispute of fact about materiality. (See Carpinone v Mutual of Omaha Ins. Co., 265 AD2d 752, 754 [3d Dept 1999] [explaining that the “materiality of an applicant’s misrepresentation is ordinarily a factual question unless the insurer proffers clear and substantially uncontradicted evidence concerning materiality”].)

The remaining two bills pertain to treatment rendered on July 8, 2019, and August 13, 2019. (See id.) NYC Axis asserts that Liberty Mutual never denied two bills. (See id.) Liberty Mutual contends that it sent denials of the bills (see NYSCEF No. 49 at ¶ 31), providing a supplemental affidavit from its claims manager to that effect. (See NYSCEF No. 52 at ¶¶ 8-10.)

A denial of the bill for the July 8 treatment does appear in the record, explaining that the bill was denied because a peer review concluded that the services billed for were not medically necessary. (See NYSCEF No. 30 at 266-275.) But this court has not found a denial of the bill for treatment on August 13 (or, for that matter, a delay letter pertaining to that bill) in Liberty Mutual’s voluminous motion papers. Therefore, NYC Axis is entitled to summary judgment [*8]solely with respect to the August 13 bill—a $26.41 invoice for a follow-up outpatient visit (NYSCEF No. 26 at 15-17).

NYC Axis contends that it should also be entitled to attorney fees incurred in defending this action. This court disagrees. To be sure, an insured that prevails in a declaratory-judgment coverage action brought against it by the insurer may recover attorney fees. (See U.S. Underwriters Ins. co. v City Club Hotel, LLC, 3 NY3d 592, 597-598 [2004].) And it is immaterial that NYC Axis is an assignee of the insured: As assignee NYC Axis stands in the shoes of the assignor.^[FN4] The court is not persuaded, though, that NYC Axis is, in fact, the prevailing party.

To be a prevailing party for attorney-fee purposes, one must “prevail on the central claims advanced, and receive substantial relief in consequence thereof.” (Sykes v RFD Third Ave. I Assoc., LLC, 39 AD3d 279, 279 [1st Dept 2007].) The dispute between Liberty Mutual and NYC Axis on this motion involves 10 bills. This court has concluded that NYC Axis is entitled to payment on only one of those 10—and for an amount, $26.41, that is a miniscule fraction of the total sum sought by NYC Axis. That is not substantial relief.

Accordingly, for the foregoing reasons it is

ORDERED that Liberty Mutual’s motion for default judgment against the nonappearing defendants named in the motion is granted, and Liberty Mutual is directed to settle order with respect to judgment against those defendants; and it is further

ORDERED that the branch of NYC Axis’s cross-motion seeking sanctions against Liberty Mutual is denied; and it is further

ORDERED that the branch of NYC Axis’s cross-motion seeking summary judgment on the question whether NYC Axis is entitled to payment on ten bills for treatment rendered to the alleged injured person, defendant Brutus, is granted only to the extent that this court declares that NYC Axis is entitled to payment from Liberty Mutual in the amount of $26.41 for treatment rendered to Brutus on August 13, 2019, and otherwise denied; and it is further

ORDERED that the branch of NYC Axis’s cross-motion seeking summary judgment on its claim for attorney fees arising from its defense of this action is denied.

Footnotes

Footnote 1:In the Appellate Division, First Department, this exception is most frequently invoked with respect to claim-denials based on the alleged injured person’s having failed twice to appear for examinations under oath (EUOs) or independent medical examinations (IMEs). (See e.g. Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC, 82 AD3d 559, 560 [1st Dept 2011] [holding that an injured person’s “failure to appear for IMEs” properly requested “by the insurer . . . is a breach of a condition precedent to coverage under the no-fault policy, and therefore fits squarely within the [lack-of-coverage] exception to the preclusion doctrine”]; Allstate Ins. Co. v Pierre, 123 AD3d 618, 618 [1st Dept 2014] [same, with respect to EUOs].)

Footnote 2:Compare e.g. Bayshore Physical Therapy, 82 AD3d at 560 (holding that denial of a claim based on the injured person’s failure to appear for a properly requested IME is not subject to untimeliness preclusion because that failure breached a condition precedent to the injured person’s coverage under the policy), with Nationwide Affinity Ins. Co. of Am. v Jamaica Wellness Med., P.C., 167 AD3d 192, 196-197 (4th Dept 2018) (holding instead that denial of a claim for failure to appear at an IME is subject to untimeliness preclusion because that failure breached only a condition precedent to payment under the policy for a covered loss, not a condition precedent to the existence of coverage itself).

Footnote 3:This scenario thus differs from one in which the verification sought by an insurer from Provider-Assignee C (information going, for example, to the validity of C’s billing for treatments it provided to Injured-Assignor A) would not affect whether Provider-Assignee D was entitled to payment for different treatments that D provided to A. In that circumstance, the insurer’s verification requests to C would not toll the insurer’s time to pay or deny D’s bills.

Footnote 4:Because Brutus, the injured assignor in this case, is the insured under the underlying no-fault policy, this case is not controlled by Fiduciary Ins. Co. of Am. v Medical Diagnostic Servs., P.C. (150 AD3d 498, 498-499 [1st Dept 2017]) and Hertz Vehs., LLC v Cepeda (156 AD3d 440, 441 [1st Dept 2017]). In those cases, the injured assignors were merely passengers in an insured vehicle, rather than being the insureds themselves. As a result, the insurers there did not owe the injured assignors (or their medical-provider assignees) a duty to defend—or a corollary duty under City Club Hotel to pay attorney fees arising from an unsuccessful declaratory-judgment coverage action brought by the insurers. Not so here.