All Boro Psychological Servs., P.C. v Allstate Ins. Co. (2013 NY Slip Op 51124(U))

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

Appeal from an order of the Civil Court of the City of New York, Kings County (Alan L. Lebowitz, J.H.O.), entered June 27, 2011. The order, insofar as appealed from, denied the branch of plaintiff’s motion seeking to compel defendant to produce its Special Investigation Unit file and granted defendant’s cross motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, to compel plaintiff to respond to its discovery demands, to the extent of compelling plaintiff to respond to defendant’s discovery demands and to produce Dr. John Braun and Vladimir Grinberg for depositions.

ORDERED that the order, insofar as appealed from, is modified by providing that the branch of plaintiff’s motion seeking to compel defendant to produce its Special Investigation Unit file is 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, plaintiff appeals from so much of an order of the Civil Court as denied the branch of plaintiff’s motion seeking to compel defendant to produce its Special Investigation Unit (SIU) file and granted defendant’s cross motion to dismiss the complaint pursuant to CPLR 3126 or, in the alternative, [*2]to compel plaintiff to respond to its discovery demands, to the extent of compelling plaintiff to respond to defendant’s discovery demands and to produce Dr. John Braun and Vladimir Grinberg for depositions.

To avoid having to produce its SIU file, defendant had to establish that its SIU file was prepared solely for litigation (Landmark Ins. Co. v Beau Rivage Rest., 121 AD2d 98, 101 [1986]; see also Bombard v Amica Mut. Ins. Co., 11 AD3d 647 [2004]). As defendant failed to demonstrate that it had decided to deny plaintiff’s claims prior to commencing its investigation, the contents of defendant’s SIU file are not privileged and are discoverable (Bombard, 11 AD3d at 648).

With respect to defendant’s cross motion, plaintiff contends that defendant is not entitled to any discovery regarding whether plaintiff is a professional service corporation which fails to comply with applicable state or local licensing laws (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) because defendant previously entered into stipulations, in unrelated actions, which, among other things, stated that, as of the date the stipulations were entered into, plaintiff was “in full compliance with any licensing requirements affecting its right to obtain reimbursement under the applicable No Fault laws and regulations.” However, as the issue was resolved in a stipulation and not after it was actually litigated, the doctrine of collateral estoppel is inapplicable (Kaufman v Eli Lilly & Co., 65 NY2d 449, 456-457 [1985]). Consequently, defendant is not barred from obtaining discovery regarding whether plaintiff is in compliance with applicable state and local licensing laws.

While plaintiff argues that defendant is not entitled to the discovery ordered by the court, inasmuch as plaintiff failed to timely challenge the propriety of defendant’s notice for discovery and inspection (see CPLR 3122 [a]) or timely object to defendant’s “demand for verified written interrogatories” (see CPLR 3133 [a]), plaintiff is obligated to produce the information sought except as to matters which are privileged or palpably improper (see Fausto v City of New York, 17 AD3d 520 [2005]; Marino v County of Nassau, 16 AD3d 628 [2005]; Midborough Acupuncture, P.C. v State Farm Ins. Co., 21 Misc 3d 10 [App Term, 2d & 11th Jud Dists 2008]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U] [App Term, 2d & 11th Jud Dists 2008]; A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d & 11th Jud Dists 2006]). To the extent the discovery demands concern matters relating to defenses which defendant is precluded from raising, they are palpably improper notwithstanding the fact that plaintiff did not specifically object thereto (see Midborough Acupuncture, P.C., 21 Misc 3d 10; Great Wall Acupuncture, 20 Misc 3d 136[A], 2008 NY Slip Op 51529[U]; A.B. Med. Servs. PLLC, 11 Misc 3d 71).

Here, defendant sought discovery related to whether plaintiff may be ineligible to recover assigned first-party no-fault benefits because it is a professional service corporation which fails to comply with applicable state or local licensing laws (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313; see also One Beacon Ins. Group, LLC v Midland Med. Care, P.C., 54 AD3d 738 [2008]; All Boro Psychological Servs., P.C. v Allstate Ins. Co., 36 Misc 3d 157[A], 2012 NY Slip Op 51775[U] [App Term, 2d, 11th & 13th Jud Dists 2012]; All Boro Psychological Servs., P.C. v Auto One Ins. Co., 35 Misc 3d 136[A], 2012 NY Slip Op 50777[U] [App Term, 2d, 11th & 13th Jud Dists 2012]), a defense which is not precluded (Bath Med. Supply, Inc. v Allstate Indem. Co., 27 Misc 3d 92 [App Term, 2d, 11th & 13th Jud Dists [*3]2010]). Since plaintiff failed to establish that the requested discovery is privileged or palpably improper, plaintiff is obligated to produce the information sought. Defendant further established its entitlement to depose Vladimir Grinberg and plaintiff’s owner, Dr. John Braun (see CPLR 3101 [a]; see also RLC Med., P.C. v Allstate Ins. Co., 27 Misc 3d 130[A], 2010 NY Slip Op 50642[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; Sharma Med. Servs., P.C. v Progressive Cas. Ins. Co., 24 Misc 3d 139[A], 2009 NY Slip Op 51591[U] [App Term, 2d, 11th & 13th Jud Dists 2009]).

Accordingly, the order, insofar as appealed from, is modified by providing that the branch of plaintiff’s motion seeking to compel defendant to produce its SIU file is granted.

Pesce, P.J., Rios and Aliotta, JJ., concur.
Decision Date: July 05, 2013