Country-Wide Ins. Co. v Delacruz (2021 NY Slip Op 21019)

[*1]

Supreme Court, New York County, February 4, 2021

APPEARANCES OF COUNSEL

[*2]Jaffe & Velazquez, LLP, New York City (Carl J. Gedeon of counsel), for plaintiff.

The Rybak Firm, PLLC, Brooklyn (Oleg Rybak of counsel), for Healthway Medical Care P.C. and others, defendants.

This motion concerns plaintiff Country-Wide Insurance Company’s potential obligation to pay no-fault insurance benefits. Defendant Jeffrey Delacruz was the driver of a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by Country-Wide. Delacruz assigned the right to collect no-fault benefits under that policy to various treating medical providers. Those providers applied for no-fault benefits from Country-Wide but were denied.

Country-Wide then brought this action for a declaratory judgment that it is not required to pay no-fault benefits to Delacruz or to the other defendants (all medical-provider assignees of Delacruz). Country-Wide moved for, and was granted, a default judgment under CPLR 3215 against Delacruz and several non-appearing medical providers.

Country-Wide now moves for summary judgment under CPLR 3212 against the remaining medical-provider defendants: Healthway Medical Care P.C., Acupuncture Now P.C., SB Chiropractic, P.C., and Dr. Jules Francois Parisien. The motion is denied.

Discussion

Country-Wide argues that it is entitled to summary judgment because Delacruz’s failure to appear for scheduled examinations under oath (EUOs) defeats coverage under the no-fault policy, and thus forecloses the remaining medical providers’ claim to benefits.

A no-fault insurer seeking a declaration of no coverage due to asserted violations of the terms of the policy must first demonstrate that it complied with each of the procedural and timeliness requirements of 11 NYCRR 65-3.5, governing the handling of no-fault claims. (See American Tr. Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) A no-fault-benefits claimant must appear for an EUO when reasonably requested to do so by the insurer. (See 11 NYCRR 65-1.1.) And a claimant’s failure without reasonable cause to appear for a timely and properly scheduled EUO is grounds to deny coverage. An EUO request, though, “must be based upon the application of objective standards so that there is specific{**71 Misc 3d at 249} objective justification supporting the use of such examination.” (Id. § 65-[*3]3.5 [e].) And the request must be made within 15 days of the insurer’s receipt of the forms that it requires to verify no-fault claims (such as the standard NF-3 form). (See id. § 65-3.5 [a]-[b].)

This court agrees that Country-Wide has demonstrated that its EUO request was timely made and properly transmitted to Delacruz, and that Delacruz nonetheless failed twice to appear for his EUO. Defendants have, however, questioned whether Country-Wide had sufficient justification to have made that EUO request in the first place. Defendants also have shown that they requested—but have not yet received—material discovery from Country-Wide on this issue. This court concludes, therefore, that Country-Wide’s motion for summary judgment must be denied as premature under CPLR 3212 (f).

I. Whether Country-Wide Has Established That it Timely Requested Delacruz’s Appearance at an EUO

Here, the documents submitted by Country-Wide in support of summary judgment do not include any NF-3 forms submitted by Dr. Parisien. Country-Wide thus has not shown that it satisfied section 65-3.5’s 15-business-day time frame with respect to defendant Dr. Parisien. The motion for summary judgment is denied as to Dr. Parisien.

The absence of evidence as to Dr. Parisien, however, does not alone foreclose Country-Wide from obtaining the requested declaratory judgment as to the other medical providers. (See Unitrin Advantage Ins. Co. v Dowd, 67 Misc 3d 1219[A], 2020 NY Slip Op 50594[U], *3 [Sup Ct, NY County, May 21, 2020] [holding that where an “insurer’s EUO request is timely as to some (benefits) claims and untimely as to others, the insurer is entitled to deny coverage . . . as to those claims for which it timely requested verification”].)

With respect to the remaining three providers, Country-Wide has met its prima facie burden to establish its compliance with sections 65-3.5 (b) and 65-3.6 (b). Country-Wide has provided documentary evidence that (i) Country-Wide received verification forms from the medical providers on May 8, 2018 (see generally NY St Cts Elec Filing [NYSCEF] Doc No. 61 [NF-3 forms with date stamps indicating receipt]); (ii) Country-Wide first mailed its EUO request to Delacruz on May 16, 2018 (see NYSCEF Doc No. 53); and (iii) Country-Wide mailed the request to the address appearing on Delacruz’s NF-2 benefits-application form (compare NYSCEF Doc No. 19 [NF-2 form], with NYSCEF{**71 Misc 3d at 250} Doc No. 53 [first EUO letter]).^[FN1] Country-Wide also has provided documentary evidence that after the EUO was initially rescheduled, Delacruz twice failed to appear for his EUO despite receiving proper advance notice of the rescheduled EUO dates. (See NYSCEF Doc Nos. 54-57, 59.)

In opposing summary judgment, defendants argue that Country-Wide’s submissions are [*4]insufficient because those submissions do not demonstrate that the NF-3 forms relied on by Country-Wide were the earliest such forms that Country-Wide received in this case. (See NYSCEF Doc No. 63 ¶ 27.) This court disagrees. The forms Country-Wide submitted reflect billing by each defendant for treatments provided within a week of the underlying collision, and in some cases as early as one or two days after the collision. (See e.g. NYSCEF Doc No. 61 at 3, 6, 10.) On the record before the court, therefore, it is difficult to see how defendants could have (i) provided earlier treatments that were (ii) included in separate earlier NF-3 forms submitted to Country-Wide, and which (iii) Country-Wide would have received more than 15 business days before it mailed its first EUO request. At the very least Country-Wide has submitted sufficient evidence to meet its initial prima facie burden to show that the first EUO request was timely.^[FN2]

II. Whether Country-Wide Still Owes Defendants Material Discovery on Whether Country-Wide’s EUO Request was Reasonable

Defendants’ opposition papers do not provide countervailing evidence that would create a dispute of fact about whether Country-Wide timely asked Delacruz to appear for an EUO; or whether Delacruz failed to appear despite timely notice having been properly mailed to him. Instead, defendants argue that material discovery remains outstanding, rendering Country-Wide’s summary-judgment motion premature. (See NYSCEF Doc No. 63 at 20-23.) This court agrees.{**71 Misc 3d at 251}

A. Whether Country-Wide Has Sufficiently Established That its EUO Request was Reasonable Even Absent Discovery

As noted above, an insurer’s request that a no-fault applicant appear for an EUO must be reasonable and have a specific objective justification. The EUO notices that Country-Wide provided here to Delacruz did not include that justification on their face—they stated only that Country-Wide “would like to clarify some of the facts and circumstances surrounding this claim.” (E.g. NYSCEF Doc No. 53 at 2.) The defendants served a request for Country-Wide’s investigative file in the case (among other discovery) to learn the basis for the EUO request made to Delacruz. That request undisputedly remained pending when Country-Wide moved for summary judgment. (See NYSCEF Doc No. 63 ¶ 81.) The motion is therefore premature under CPLR 3212 (f). (See Kemper Independence Ins. Co. v AB Med. Supply, Inc., 187 AD3d 671, 671 [1st Dept 2020] [affirming denial of summary judgment as premature because plaintiff insurer had not yet provided defendant providers with the justification for its EUO request]; American Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441, 441 [1st Dept 2015] [reversing grant of summary judgment because “(t)he reason for the EUO request is a fact essential to justify [*5]opposition to plaintiff’s summary judgment motion . . . and such fact is exclusively within the knowledge and control of the movant”].)

Country-Wide makes several arguments for why summary judgment may properly be granted even absent this discovery. None are persuasive.

Country-Wide suggests that the Mena-Sibrian affidavit included in its motion papers sufficiently explained the “factors that raised questions as to the legitimacy of the claim” (thereby prompting the underlying EUO request). (NYSCEF Doc No. 79 ¶ 28; see also id. ¶ 37.) Country-Wide does not, however, explain why it should be sufficient only to provide selected documents supporting the reasonableness of its EUO request at the time of the motion itself. Ordinarily, one would expect Country-Wide instead to have to turn over all relevant and responsive documents on the issue to defendants in discovery before moving for summary judgment.

Additionally, the Mena-Sibrian affidavit relied upon by Country-Wide states only that “material facts surrounding the accident required clarification.” (NYSCEF Doc No. 58 ¶ 10.) It does not identify what facts required clarification, or why. Although that paragraph of the affidavit refers also to “objective {**71 Misc 3d at 252}criteria stated herein” for making EUO requests (id.), no such criteria are in fact stated.^[FN3] Thus, even assuming Country-Wide could satisfy its burden to show a proper objective basis for its EUO request merely through its summary-judgment papers, Country-Wide has not done so here. (Cf. State Farm Mut. Auto. Ins. Co. v Sweetwater Chiropractic, P.C., 60 Misc 3d 1219[A], 2018 NY Slip Op 51177[U], *3 [Sup Ct, NY County, Aug. 6, 2018] [denying summary judgment as premature where an affidavit submitted by the insurer at summary judgment was not sufficiently specific about why the insurer requested an EUO in the case]; Unitrin Advantage Ins. Co. v Better Health Care Chiropractic, P.C., 2016 NY Slip Op 30837[U], *9 [Sup Ct, NY County, May 4, 2016] [adhering to denial of medical providers’ motion to compel discovery about the insurer’s EUO request in light of a detailed affidavit from the insurer’s claim representative about the basis to suspect that the collision was staged].)

B. Whether Any Challenge to the Justification for Country-Wide’s EUO Request Has Been Waived

Country-Wide also contends that defendants’ present challenge to the justification for the EUO request was waived because neither Delacruz nor his medical-provider assignees questioned the need for the EUO when it was first requested. (See NYSCEF Doc No. 79 ¶ 26, [*6]citing Longevity Med. Supply, Inc. v IDS Prop. & Cas. Ins. Co., 44 Misc 3d 137[A], 2014 NY Slip Op 51244[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists, July 28, 2014].) The cited Longevity Med. Supply decision, though—and indeed, nearly all of the cases that it cites in turn^[FN4]—was issued by the Appellate Term of Supreme Court, rather than by the Appellate Division. These cases are therefore at most persuasive authority.^[FN5] (See Kattan v 119 Christopher LLC, 69 Misc 3d 1223[A], 2020 NY Slip Op {**71 Misc 3d at 253}51469[U], *3-4 [Sup Ct, NY County, Dec. 11, 2020] [collecting cases].)

This court sees no basis to impose what would be in effect an exhaustion requirement on challenges to the basis for an insurer’s EUO request. The court reaches this conclusion for several reasons. The governing no-fault regulations give significant weight to the insurer’s obligation to limit EUO requests only to those cases where they are actually warranted. That is, the regulations require not merely that the insurer have a specific, objective justification for requesting an EUO in a given case, but also that the justification stems from applying preexisting objective standards prepared by the insurer, and that these standards be made “available for review by [Insurance Department] examiners.”^[FN6] (11 NYCRR 65-3.5 [e].) Imposing an exhaustion requirement on challenges to the basis for an EUO request would run contrary to the Insurance Department’s evident policy aim of policing insurers’ use of EUO requests.

Nor is there an offsetting policy interest here that favors exhaustion. Requiring a no-fault claimant to seek more information about the basis for an EUO request when made would not ward off disputes about whether a given EUO request was justified. Nor would it enable a specialist expert to resolve such disputes at the outset. Instead, it would simply mean that the issue of EUO justification could potentially arise twice—first at the time of the request itself, [*7]then later during any coverage{**71 Misc 3d at 254} litigation should the claimant not appear for the requested EUO.^[FN7]

Further, an exhaustion requirement would be particularly anomalous in the no-fault context. That is, the party required in the first instance to object to the lack of a basis for the EUO request would be no-fault claimants themselves. But the party foreclosed later from raising the challenge in litigation absent an objection often would be not claimants, but their medical-provider assignees. Those assignees likely would be unable to ensure that the claimant raised the issue at the time of the EUO request; yet they would be bound anyway by the absence of such a request. Such a result would be neither fair nor efficient.

This court therefore concludes that the provider defendants may still raise an argument that Country-Wide’s EUO request lacked the required specific and objective justification, and that defendants are entitled to obtain discovery from Country-Wide on that issue.

Accordingly, it is hereby ordered that the branch of Country-Wide’s motion under CPLR 3212 seeking summary judgment in its favor as to defendant Dr. Parisien is denied; and it is further ordered that the branch of Country-Wide’s motion under CPLR 3212 seeking summary judgment in its favor as to defendants Healthway Medical Care, Acupuncture Now, and SB Chiropractic is denied without prejudice as premature under CPLR 3212 (f); and it is further ordered that the parties shall appear for a telephonic status conference on February 17, 2021, to discuss an appropriate discovery schedule in this action going forward.

Footnotes

Footnote 1:The NF-2 form included in Country-Wide’s summary-judgment papers appears to have been taken inadvertently from a different, unrelated benefits claim. (See NYSCEF Doc No. 52.) But Country-Wide’s default-judgment motion papers attached the correct NF-2 form submitted by Delacruz. (See NYSCEF Doc No. 19.)

Footnote 2:To the extent defendants are arguing that even the forms submitted by Country-Wide do not “demonstrate the dates when Plaintiff received Provider Defendants’ verification forms” (see NYSCEF Doc No. 63 ¶¶ 40, 42), that argument is refuted not only by the affidavit of Jessica Mena-Sibrian (see NYSCEF Doc No. 58 ¶ 9), but also by date stamps evidencing receipt that appear on the forms themselves (see generally NYSCEF Doc No. 61).

Footnote 3:Similarly, Country-Wide’s reply references certain facts that might call into question the legitimacy of a no-fault claim—and suggests that those facts are set forth in the Mena-Sibrian affidavit submitted in support of summary judgment. (See NYSCEF Doc No. 79 ¶ 37.) They are not. (See NYSCEF Doc No. 58.) Nor does any other document submitted by Country-Wide establish that it believed the referenced facts to be present in this case, or that this belief prompted Country-Wide’s EUO request.

Footnote 4:The lone exception, Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., addresses a different issue not presented here—whether two demands by an insurer for further verification of a no-fault claim sufficed to toll the insurer’s time to pay or deny the claim. (See 262 AD2d 553, 555 [2d Dept 1999].)

Footnote 5:Additionally, Longevity Med. Supply v IDS Prop. & Cas., and the cases it cites, are decisions of the Appellate Term, Second Department, which in turn is bound by precedent of the Appellate Division, Second Department. And that precedent has imposed a greater burden on medical-provider assignees challenging the basis for an insurer’s EUO request than exists in the Appellate Division, First Department. (Compare Interboro Ins. Co. v Clennon, 113 AD3d 596, 597 [2d Dept 2014] [rejecting medical providers’ argument that the insurer’s summary-judgment motion was premature absent discovery into the specific justifications for the insurer’s EUO request], with Jaga Med. Servs., 128 AD3d at 441 [accepting this argument], and AB Med. Supply, 187 AD3d at 671 [same].)

Footnote 6:It also appears relevant, if perhaps not dispositive, that the requirement that an insurer have a specific justification for its EUO requests appears in section 65-3.5: With respect to several other requirements governing EUO requests in section 65-3.5, the First Department has held that an insurer moving for summary judgment must affirmatively establish its compliance with those requirements. (See e.g. Hertz Vehicles, LLC v Best Touch PT, P.C., 162 AD3d 617, 617-618 [1st Dept 2018].)

Footnote 7:Indeed, given the possibility of no-fault arbitration and ensuing de novo litigation (see Insurance Law § 5106), the issue might in fact come up three different times in a single case.