A.M. Med. Servs., P.C. v Nationwide Mut. Ins. Co. (2006 NY Slip Op 51425(U))

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE TERM: 2nd and 11th JUDICIAL DISTRICTS

Appeal from an order of the Civil Court of the City of New York, Kings County (George J. Silver, J.), entered July 12, 2005. The order denied plaintiff’s motion for summary judgment and granted defendant’s cross motion for summary judgment.

Order modified by denying defendant’s cross motion for summary judgment; as so modified, affirmed without costs.

On the court’s own motion, counsel for the respective parties are directed to show cause why an order should or should not be made and entered imposing such sanctions and costs, if any, against Alden Banniettis, counsel for the plaintiff, pursuant to Rules of the Chief Administrator (22 NYCRR) § 130-1.1 (c) as this court may deem appropriate, by appearing before this court, at 141 Livingston Street, 15th Floor, in the County of Kings, on September 5, 2006, at 2:00 P.M., for a hearing at which Mr. Banniettis is directed to personally appear. The Acting Chief Clerk of the court, or her designee, is directed to serve counsel for the respective parties with a copy of this decision and the order entered hereon by regular mail.

In this action to recover first-party no-fault benefits for medical services rendered to plaintiff’s assignor, plaintiff established a prima facie entitlement to summary judgment by proof that it submitted claims, setting forth the fact and the amounts of the losses 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]). Defendant’s request for an examination under oath (EUO) did not toll the 30-day period within which defendant was required to pay or deny the claims (11 NYCRR 65-3.8 [c]) since the insurance regulations in effect prior to April 5, 2002 did not provide for EUOs as a form of verification (Melbourne Med. P.C. v Utica Mut. Ins. Co., 4 Misc 3d 92 [App Term, 2d & 11th Jud Dists 2004]). Inasmuch as [*2]defendant failed to pay or deny the claims within the 30-day prescribed period, it was precluded from raising most defenses (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]).

However, defendant was not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme (see Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751 [2002]). In opposition to plaintiff’s motion for summary judgment and in support of defendant’s cross motion for summary judgment, defendant’s attorney submitted the EUO transcripts of plaintiff’s assignor, a passenger in the vehicle involved in the collision, as well as that of the driver of this vehicle. These transcripts reveal that the driver of the vehicle “withdrew” his claim with prejudice when confronted at his EUO with suspicious facts concerning the five or six accidents that he and members of his family had within the past year. At the EUO of the assignor herein, which commenced immediately after the driver’s EUO, plaintiff’s assignor likewise “withdrew” her claim after consulting with the driver.

While we note that, pursuant to Insurance Regulation § 65-3.11 (d), an assignor may “not unilaterally revoke the assignment after the services” have been rendered, nevertheless, the foregoing facts were sufficient to demonstrate that defendant’s refusal to pay the claim 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]; GPM Chiropractic, P.C. v State Farm Mut. Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op 50861[U] [App Term, 2d & 11th Jud Dists]). This presented an issue of fact as to whether there was a lack of coverage. Consequently, plaintiff’s motion for summary judgment was properly denied and defendant’s cross motion for summary judgment should have been denied.

As noted above, in support of its cross motion for summary judgment, the defendant submitted evidence of the “withdrawals” by both the host driver and the assignor of their claims in this case. Despite being advised of this development, and being provided with the background information which led to the “withdrawals,” plaintiff’s counsel submitted a reply affirmation wherein he continued to seek summary judgment in favor of his client. After having been unsuccessful in his efforts to obtain summary judgment in favor of his client, and despite being faced with facts which clearly support a founded belief of fraud, plaintiff’s counsel took an appeal from that portion of the order which denied the plaintiff’s motion and on appeal continued to contend that his client was entitled to summary judgment.

In Matter of Wecker v D’Ambrosio (6 AD3d 452, 453 [2004]), the Appellate Division, Second Department, stated the following:

“Conduct during a litigation, including on an appeal, is frivolous and subject to sanction and/or the award of costs when it is completely without merit in law or fact and cannot be supported by a reasonable argument for the extension, modification, or reversal of existing law; it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another, or it asserts material factual statements that are false (see 22 NYCRR 130-1.1). At the least, it must have a good faith basis (see Kamruddin v Desmond, 293 AD2d 714 [2002]; see also 22 NYCRR 130.1.1a [b]; Matter of Laing v Laing, 261 AD2d 622 [1999]; Levy v Carol Mgt. Corp., 260 AD2d 27 [1999]).”

Accordingly, counsel is directed to appear before this court for a hearing to address whether the prosecution of so much of the appeal as sought summary judgment in favor of plaintiff constituted “conduct [which] was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel …” (Rules of the Chief Administrator [22 NYCRR] § 130-1.1[c]; see also Matter of Wecker v D’Ambrosio, 6 AD3d 452, supra).

Pesce, P.J., Rios and Belen, JJ., concur.
Decision Date: July 14, 2006