Liberty Mut. Ins. Co. v Martin (2020 NY Slip Op 50511(U))

654605/2019

Burke, Conway & Stiefeld, White Plains, NY (Michelle Dunleavy of counsel), for plaintiffs.

The Rybak Firm, PLLC, Brooklyn, NY (Oleg Rybak of counsel), for defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC.

Kopelevich & Feldsherova, P.C., Brooklyn, NY (David Landfair of counsel), for defendant M & M Supplies Group, Inc.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 47, 48, 49, 50, 51, 52, 53, 54 were read on this motion to/for DEFAULT JUDGMENT

This motion concerns the potential obligation to pay no-fault insurance benefits of plaintiffs Liberty Mutual Insurance Company and LM General Insurance Company (Liberty Mutual). Defendants Trevohn Martin, Dwayne Bailey, and Damell Jackson were in a vehicle that was involved in a collision. The vehicle was covered by a no-fault insurance policy issued by Liberty Mutual. Martin, Bailey, and Jackson (and various medical providers acting as their assignees) applied for no-fault benefits, which Liberty Mutual denied.

In this action, Liberty Mutual is seeking a declaratory judgment that it is not required to pay no-fault benefits to Martin, Bailey, Jackson, or the various medical provider defendants. Liberty Mutual now moves for a default judgment under CPLR 3215 (and other related relief) against defendants. Defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC, and defendant M & M Supplies Group, Inc., separately cross-move under CPLR 3012 (d) to extend defendants’ time to answer, and to compel acceptance of defendant’s late answer, respectively.

Liberty Mutual’s motion for default judgment is denied; defendants’ cross-motions are [*2]granted.

DISCUSSION

I. Liberty Mutual’s Motion for Default Judgment

To obtain a default judgment, a plaintiff must among other things submit nonhearsay proof of all the facts necessary to establish its prima facie entitlement to relief. (See CPLR 3215 [f]; Joosten v Gale, 129 AD2d 531, 535 [1st Dept 1987]; Matter of Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999].) This court concludes that Liberty Mutual has not met that burden here.

Liberty Mutual’s request for declaratory relief rests on two different grounds. As to defendant Jackson (and his medical-provider assignees), Liberty Mutual contends that he failed to appear for a properly scheduled examination under oath (EUO), thereby breaching a condition precedent to coverage. As to defendants Martin and Bailey (and their medical-provider assignees), Liberty Mutual contends, in essence, that it has good reason to believe that Martin and Bailey helped stage the collision that putatively gave rise to their need for medical treatment, which is a proper ground for denying coverage.

A. Liberty Mutual’s Denial of Coverage as to Defendant Jackson and His Assignees

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 Transit Ins. Co. v Longevity Med. Supply, Inc., 131 AD3d 841, 841 [1st Dept 2015].) Liberty Mutual has not satisfied that requirement here. Among other things, § 65-3.5 provides that once an insurer receives a claim for benefits, the insurer has 10 business days to provide the claimant with the forms necessary to verify the claim. (See 11 NYCRR § 65-3.5 [a].) Once the insurer receives the completed verification forms, it then has 15 business days to seek further verification, for example through requesting a claimant to appear for an EUO. (See id. § 65-3.5 [b].) A claimant’s failure without reasonable cause to appear for a properly scheduled EUO is grounds to deny coverage.

As to Jackson, Liberty Mutual has not submitted evidence establishing when it first received a claim for benefits from him or from one of his treating providers, when it provided the necessary verification forms, or when it first received one of those forms back. Absent this evidence, Liberty Mutual cannot show that it timely complied with the procedural requirements of § 65-3.5. At most, Liberty Mutual submits an affidavit of a claims manager, stating in relevant part that based on her knowledge of Liberty Mutual’s procedures and review of Jackson’s claim file, “[a]ll verification requests and denials were timely mailed.”^[FN1] This brief and conclusory statement is not sufficient.

Additionally, Liberty Mutual fails to show that Jackson was properly notified of the scheduled EUOs. Liberty Mutual submits copies of two scheduling letters together with affidavits of service attesting to their mailing. Neither affidavit, however, is signed or dated; and the notarization blank on each affidavit is not filled in. (See NYSCEF No. 11 at 4, 8.) The [*3]affidavits, therefore, are defective.^[FN2] They cannot establish that the scheduling letters were properly mailed. (See Levine v Health First, 147 AD3d 1193, 1195 [3d Dept 2017].) Nor does Liberty Mutual provide any other evidence (in affidavit form or otherwise) that might remedy this deficiency.

Liberty Mutual thus has failed on this motion to provide facts establish a prima facie case that defendant Jackson failed to appear for timely and properly scheduled EUOs, as required to support Liberty Mutual’s request for a declaration of no coverage. Liberty Mutual’s motion for default judgment against Jackson and his assignees is denied.

B. Liberty Mutual’s Denial of Coverage as to Defendants Martin and Bailey and Their Assignees

A no-fault insurer seeking a declaration of no coverage on default based on a conclusion that the underlying collision was staged must establish prima facie the “fact or founded belief that the alleged injury does not arise out of an insured incident.” (Central Gen. Hosp. v Chubb Grp. of Ins. Cos., 90 NY2d 195, 199 [1997].)

Here, Liberty Mutual submits an affidavit from a claims investigator familiar with the case to support its conclusion that the collision was not genuine. That affidavit, in turn, relies heavily on the transcripts from the EUOs of Martin and Bailey. But Liberty Mutual fails to show that those transcripts are admissible. In particular, the transcripts are not signed; and Liberty Mutual does not attempt to establish that it ever provided them to Martin and Bailey to review and sign, as required by CPLR 3116 (a). (See Ramirez v Willow Ridge Country Club, 84 AD3d 452, 453 [1st Dept 2011] [noting that the proponent of a deposition transcript bears the burden to show compliance with CPLR 3116 (a)].)

At least for purposes of this motion, therefore, key portions of the affidavit of Liberty Mutual’s claims investigator are based only on hearsay, and are thus insufficient to support the entry of a default judgment. (See Martinez v Reiner, 104 AD3d 477, 478 [1st Dept 2013]; Zelnik v Bidermann Indus. U.S.A., Inc., 242 AD2d 227, 228 [1st Dept 1997].) The claim by Liberty Mutual’s claims investigator in her affidavit that “the facts and circumstances surrounding the accident are indicative of no-fault fraud patterns, specifically a staged accident” is merely conclusory. To be sure, the affidavit does state that Martin and Bailey had previously been in similar accidents together before, which might be probative on the question of whether the collision here was fake. But the affidavit neither provides any details to support this statement nor identifies the basis of this statement beyond it having been “revealed” by an “investigation.”

On this record, therefore, Liberty Mutual has not established prima facie a founded belief that Martin and Bailey were engaged in no-fault insurance fraud rather than being genuine victims of a car accident. Liberty Mutual’s motion for default judgment against Martin and Bailey (and their respective assignees) is denied.

II. Defendants’ Cross-Motions Regarding Their Answers

In addition to opposing Liberty Mutual’s default-judgment motion, defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC, and defendant M & M Supplies Group, Inc., separately cross-move under CPLR 3012 (d) to, in [*4]effect, permit them to answer Liberty Mutual’s complaint. The cross-motions are granted.

The moving defendants’ cross-motions are based on CPLR 317, which permits a defendant to appear and defend the action if “he did not personally receive notice of the summons in time to defend and has a meritorious defense.” These defendants provide affidavits attesting to their lack of receipt of Liberty Mutual’s summons and complaint. For the reasons described above, the moving defendants have a potentially meritorious defense. And although the question is a close one in the circumstances of this case, this court concludes that moving defendants’ affidavits sufficiently establish that they did not personally receive timely notice of the summons.

Accordingly, it is hereby

ORDERED that Liberty Mutual’s motion for default judgment under CPLR 3215 is denied; and it is further

ORDERED that the cross-motion of defendants Agyal Physical Therapy PLLC, Alford A. Smith MD, PC, and Metro Pain Specialists, PC, under CPLR 3012 (d) to extend their time to answer is granted nunc pro tunc, and the answer dated December 6, 2019 is deemed timely served and filed; and it is further

ORDERED that the cross-motion of defendant M & M Supplies Group, Inc., under CPLR 3012 (d) to compel Liberty Mutual to accept its proposed answer dated January 6, 2020, is granted.

Dated: May 4, 2020

Hon. Gerald Lebovits, J.S.C.

Footnotes

Footnote 1:Liberty Mutual’s reply affirmation also attaches what appears to be an NF-3 verification form from one of Jackson’s treating providers. But the affirmation does not offer any information or representations to authenticate the attached verification form. Nor does the affirmation indicate whether this was the first verification form received back by Liberty Mutual.

Footnote 2:By contrast, the affidavit of additional mailing in support of Liberty Mutual’s motion for default judgment—completed by the same person who prepared the affidavits of service for the the EUO scheduling letters—is properly signed, dated, and notarized. (See NYSCEF No. 8 at 2.)