Kim v State Farm Ins. Co. (2024 NY Slip Op 51364(U))

Denar Balcazar, plaintiff-assignor was involved in a motor vehicle accident on March 10, 2021, and sought medical treatment from Henry Lin Kim (plaintiff). Plaintiff commenced this action against State Farm Insurance Company seeking to recover $2,101.17 representing the balance of alleged first-party no-fault benefits for medical services provided to plaintiff-assignor.

Upon the foregoing papers, defendant moves for summary judgment dismissing the complaint on the grounds that plaintiff failed to appear at an examination under oath (EUO).^[FN1] In [*2]support, defendant submits an attorney affirmation and an affidavit of Richa Sinha, defendant’s claim specialist, which attests to the standard business practices and procedures including processing of claims, the issuances of denials, defendant’s mailing and electronic transmission procedures, and the documents associated with the claims that are the subject of this action.

Plaintiff opposes the motion and cross-moves for summary judgment, arguing the claims were timely submitted and payment is overdue, and that there is a question of fact as to whether the requested examinations before trial were properly scheduled and whether plaintiff’s objection to the examination under oath was reasonable.

The movant on a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence to eliminate any material issues of fact from the case (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). CPLR 3212 provides that a summary judgment motion must be supported by an affidavit of a person with knowledge of the facts, as well as other admissible evidence (see JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 384-386 [2005]). Once such a showing is made, “the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action” (Alvarez v Prospect Hosp.,68 NY2d 320, 324 [1986], citing Zuckerman v City of New York, 49 NY2d at 562).

The no fault insurance scheme is designed to provide a quick resolution of the reimbursement of claims, avoid litigation, and incentivize an insurer to seek verification of a claim, deny it, or pay it in short order (see Viviane Etienne Med. Care, P.C. v Country Wide Ins. Co., 25 NY3d 498, 506-07 [2015]; Matter of Med. Socy. of State v Serio, 100 NY2d 854, 860 [2003]). The procedure to verify, deny, or pay claims is codified and governed by Insurance Law 5106 (a).

“[A]n appearance at an EUO is a condition precedent to the insurer’s liability on the policy” (see Ultimate Health Prods., Inc. v Travelers Ins. Co., 47 Misc 3d 129(A), 2015 NY Slip Op 50377[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dist 2015], citing 11 NYCRR § 65—1.1; see also GLM Med., P.C. v State Farm Mut. Auto. Ins. Co., 30 Misc 3d 137(A), 2011 NY Slip Op 50194 [U] [App Term, 2d Dept, 2nd, 11th & 13th Jud Dists 2011]).

“To establish its prima facie entitlement to summary judgment dismissing a complaint on the ground that a provider had failed to appear for an EUO, an insurer must demonstrate, as a matter of law, that it had twice duly demanded an EUO from the provider, that the provider had twice failed to appear, and that the insurer had issued a timely denial of the claims” (Oleg’s Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 63 Misc 3d 152(A), 2019 NY Slip Op 50760[U] [App Term, 2d Dept, 2nd, 11th & 13th Jud Dists 2019]).

The First Department has also held that the insurer must demonstrate a specific objective justification for the EUO: “11 NYCRR 65-3.5 (e) requires an EUO request be based on application of objective standards, and that the insurer must have a specific objective justification. Summary judgment is premature under CPLR 3212 where an insurer fails to [*3]provide a medical provider with its objective justification for requesting the EUO” (Country-Wide Ins. Co. v Alicea, 214 AD3d 530 [1st Dept 2023], citing Country-Wide Ins. Co. v Delacruz, 205 AD3d 473, 473 [1st Dept 2022]). “When an insurer requires an examination under oath of an applicant to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination” (11 NYCRR 65-3.5). “Th[e] [First Department] has explained that the insurer’s reason for the EUO is essential for medical providers to oppose an insurer’s summary judgment motion, and that information is in the exclusive knowledge and control of the insurer” (Country-Wide Ins. Co. v Alicea, 214 AD3d 530 [1st Dept 2023], citing Am. Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441 [1st Dept 2015]).

In the action at bar, defendant established the timely and proper mailing of the EUO scheduling letters and the denial of claim forms, and that plaintiff did not appear for the EUOs. Several letters were sent attempting to schedule the examination under oath for 4 different dates (see NYSCEF Doc Nos 10-14, consisting of scheduling letters, statement on the record, bills, explanation of review and denial of claim forms, and proof of mailing and affidavits of mailing) (see, e.g., Oleg’s Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 63 Misc 3d 152[A], 2019 NY Slip Op 50760[U] [App Term, 2d Dept, 2nd, 11th & 13th Jud Dists 2019]).

Defendant’s State Farm EUO scheduling letters of May 4, 2021 (relating to treatment dated March 22, 2021 and March 29, 2021) and May 19, 2021 (relating to treatment date of April 5, 2021) reference several stated reasons for additional verification by EUO: pattern in nature and frequency of services rendered; medical justification for the services; whether the manner and performance of services was medically necessary; whether provider is billing for services not provided; and whether provider is operating in violation of licensing laws (NYSCEF Doc No. 10). Defendant sent these letters to provider in connection with 6 other injured parties in addition to the treatment of the assignor of the instant claim (Denar Balcazar) and did not reference any facts or circumstances specific to the Balcazar claim. Accordingly, the Court finds that defendant State Farm’s scheduling letters failed to state a “specific objective justification” for an EUO with respect to the instant claim (see Country-Wide Ins. Co. v Alicea, 214 AD3d 530 [1st Dept 2023]).

By letters dated June 15, 2021, June 30, 2021, July 12, 2021, July 28, 2021 and August 9, 2021 State Farm’s attorneys also sent EUO scheduling letters and in addition a list of documents to produce at the EUO. Many of the documents sought by State Farm in these letters are of similar nature to the EUO letter sent by State Farm in the action Dynamic Med. Imaging, P.C., as Assignee of Staffa Pasqualino v State Farm Mut. Auto. Ins. Co. (29 Misc 3d 278 [NY Dist Ct, Nassau County, 2010]) that was held by that Court to be essentially an inappropriate pre-action discovery demand regarding a potential Mallela fraudulent incorporation defense and beyond the scope and purpose of a no-fault EUO (see State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313 [2005]). For instance, the documents sought here include those which “evidence ownership of Henry Lin Kim, M.D. and HLK Medical, P.C.,” “original and amended articles of incorporation, corporate by-laws, documentation of the names and addresses of shareholders, stock certificates, and stock ledgers,” “professional credentials for each individual who is an owner, shareholder or member of Henry Lin Kim, M.D. and HLK Medical, P.C.,” “writings relating to the relationship between Henry Lin Kim, M.D. and HLK Medical, P.C. and all entities or individuals from which it leases space and/or obtains patient referrals,” and “writings regarding all entities and/or individuals that provided management, consulting, administrative, billing services or patient [*4]referrals to Henry Lin Kim, M.D. and HLK Medical, P.C. and any payments made to persons or entities that rendered such services” (NYSCEF Doc No. 10).

In the action at bar, plaintiff through counsel by letter dated May 12, 2021 ^[FN2] objected to the EUO request raising specifically the concern that the request appears to be of improper scope addressed towards establishing a Mallela defense, and also raised concerns as to the extent and scope, location and date, and reimbursement for lost wages and transportation costs (NYSCEF Doc No. 19).

The Court agrees that many of the documents sought by defendant in the EUO document request appear directed at pre-action discovery into the provider’s business operations rather than prompt resolution of no-fault benefits to the injured party Denar Balcazar in accordance with the insurance regulations (cf. Repwest Ins. Co. v Advantage Radiology, P.C., 42 Misc 3d 1210[A] [Sup Ct, NY County 2014] [where the EUO request held to be proper included a request for insurance policies, documents related to bodily injuries and photographs of the collision at issue, and not corporate organizational and financial documents]).

In the absence of a specific objection justification for the EUO, a party fails to establish, as a matter of law, that it complied with the governing regulations, and a motion for summary judgment is properly denied (see Country-Wide Ins. Co. v Delacruz, 205 AD3d 473, 474 [1st Dept 2022]). Accordingly, defendant’s motion for summary judgment on the basis that plaintiff failed to appear for the EUO is accordingly denied.

“[A] plaintiff demonstrates prima facie entitlement to summary judgment by submitting evidence that payment of no-fault benefits are overdue, and proof of its claim, using the statutory billing form, was mailed to and received by the defendant insurer” (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 501 [2015]). The Court finds that the cross-motion should be denied on the grounds that it fails to include a party affidavit someone with personal knowledge of the facts constituting its claim as required by CPLR 3212. Accordingly, plaintiff has not met its burden of proof for an award of summary judgment.

Accordingly, it is hereby

ORDERED, defendant’s motion for summary judgment (mot. seq. 001) is denied; and it is further

ORDERED, that plaintiff’s cross-motion for summary judgment (mot. seq. 002) is denied; and it is further

ORDERED, that the parties shall appear for a pre-trial conference in Part 41 at 9:30 a.m. on July 25, 2024.

This constitutes the decision and order of the Court.