Metro Med. Diagnostics, P.C. v Allstate Ins. Co. (2005 NY Slip Op 50327(U))

Civil Court, Kings County

046215/02

Loren Baily-Schiffman, J.

This is an action to recover benefits pursuant to the no-fault provisions of Insurance Law §5106 and regulations promulgated thereunder, 11 NYCRR §65-1.1 and for attorneys fees pursuant to 65 NYCRR §65.17 (b)(6)(v). Plaintiff provider, as assignee of Kate Boglio, Julia DeJesus, Lillia Galicia, Fred Korets, Bertha Louis, Nelson Neton, Mozeik Perkins, Shawn Perkins, Maxim Savelyev, and Alexander Yakhshibekov moves this Court for summary judgment. Plaintiff asserts that it is entitled to judgment as defendant has not paid or denied the subject claims within thirty (30) days of receipt and where denials have been made, has not asserted a basis for the denial that is cognizable under the No-Fault Law. Defendant opposes the motion for summary judgment on the following bases: that the motion is premature in that the Court has not yet ruled on defendant’s motion to extend their time to comply with this Court’s [*2]prior discovery Order; the claims concerning Fred Korets, Maxim Savelyn and Alexander Yakhshibekov have been paid; plaintiff lacks standing to recover for its services billed from July 7, 2000 to July 6, 2001 as Michael M. Katz was suspended from practicing medicine during this time; plaintiff lacks standing to recover for its services because it is in violation of Article 15 BCL; a question of fraud exists as to allegedly negligent or fraudulent services provided by plaintiffs, and; plaintiff has failed to establish its prima facie case because the assignments of benefits submitted as part of the claims are not authenticated.

MOTION FOR SUMMARY JUDGMENT

In a motion for summary judgment, the moving party must make out a prima facie case of entitlement to judgment as a matter of law, offering sufficient evidence to establish the absence of any material issues of fact. Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). After making out a prima facie case, the burden shifts to the party opposing the motion to present sufficient evidence to show that there are material issues of fact in controversy which require a trial. Id. In a claim for no-fault benefits by a provider, the Plaintiff’s prima facie case is established by “the submission of a complete proof of claim and the amount of the loss. (See Insurance Law §5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701{App Term, 2d & 11th Jud Dists])”. Ocean Diagnostic Imaging PC v. State Farm Mutual Automobile Insurance Company, NYLJ, Sept 24, 2004, p. 28, col. 5 (App Term 2d & 11th Jud Dists, 2004).

Pursuant to the Insurance Law and regulation, an insurer must either pay or deny a claim for no-fault benefits within thirty (30) days of receipt. The thirty (30) day period may be extended by an insurer’s request for verification of the claim within ten (10) business days for claims covered by the regulations in effect prior to April 5, 2002 and fifteen (15) business days for claims covered by the regulations that came into effect on April 5, 2002. 11 NYCRR 65.15 (e)(old regs); 11 NYCRR 65-3.5(b)(new regs). If any insurer fails to timely deny a claim, the insurer is precluded from raising any defenses to the claim other than lack of coverage and fraud by the assignor. Presbyterian Hosp. v. Maryland Cas. Co., 90 NY2d 274, 278 (1997); Presbyterian Hosp. v. Aetna Cas. & Sur. Co., 233 AD2d 433 (2d Dept, 1996); Central Hospital v. Chubb, 90 NY2d 195 (1997); Mt. Sinai v. Triboro Coach, 263 AD2d 11 (2d Dept 1999). An insurer’s failure to raise objections within the ten (10) or fifteen (15) day verification period constitutes a waiver of any defenses based thereon. Id.

Plaintiff asserts that it submitted the following proofs of claim for the aforementioned assignors:

AssignorDate of Date Claim Date of Reason for

ServiceReceivedDenialDenial

[*3]Boglio9/8/002/14/017/27/01Investigation Pending

DeJesus2/10/003/23/004/13/00Investigation Pending

Galicia2/10/003/21/004/26/00Investigation Pending

Korets2/2/00unknownNo denial received

Louis9/14/9910/28/9911/2/99Investigation Pending

9/21/9910/28/9911/2/99Investigation Pending

Neton2/10/004/3/005/2/00Investigation Pending

M.Perkins8/11/004/10/016/6/01Investigation Pending

8/18/004/10/016/6/01Investigation Pending

9/6/004/10/016/6/01Investigation Pending

S. Perkins4/30/997/25/9911/19/99Investigation Pending

5/11/997/25/9911/19/99Investigation Pending

5/28/998/3/9911/19/99Investigation Pending

Savelyn2/1/00unknownNo denial received

Yakhshibekov10/3/005/14/015/21/01Investigation Pending

10/26/005/14/015/21/01Investigation Pending

A.Claims Previously Paid

Defendant asserts that the claim for services provided to Fred Korets was settled and payment made. In support its assertion of payment, defendant submits a copy of a cancelled check in the amount of $1488.40, dated April 22, 2003, payable to plaintiff. The check indicates the name of the claimant as Fred Korets and the claim number listed on the check is the same as on the claim form annexed to plaintiff’s motion. The amount of the check is in excess of the amount of the claim listed on the claim form. However, Plaintiff’s reply papers do not in any way challenge defendant’s assertion that this claim was paid. Accordingly, the Court rules that defendant has submitted sufficient support for its assertion that the claim for services provided to Fred Korets has been paid.

Defendant asserts that the claims for services provided to Maxim Savelyn and Alexander Yakhshibekov also have been paid. In support of this assertion, defendant submits copies of cancelled checks issued to plaintiff which have the name of the claimant and the claim number that corresponds to the information provided by plaintiff in its papers. The Court notes that as to the claim for services provided to Maxim Savelyn, the amount of the check and the claim number are the same as for the claim concerning Fred Korets. The Court also notes that the amount of the check issued for services provided to Alexander Yakhshibekov is in excess of the amount of the claim. Plaintiff’s reply does not challenge defendant’s assertion that the claims for services provided to Maxim Savelyn and Alexander Yakhshibekov have been paid. Accordingly, the Court rules that defendant has submitted sufficient support for its assertion that the claims for services provided to Maxim Savelyn and Alexander Yakhshibekov have been paid.

B.Timeliness of the Denials [*4]

The Affirmation of Gilbert Lee, Esq., defendant’s counsel, acknowledges that “defendant issued untimely and/or defective denials with respect to seven of the ten claims identified in Plaintiff’s suit”. Lee Affirmation at ¶7. Neither Mr. Lee nor the Affidavits of Sandra DiSanto or Dietra Tripp in opposition to plaintiff’s motion indicates which claims they admit to having untimely denied, however reference to the above chart of claims leads the Court to the conclusion that the denials of claims concerning services provided to the following assignors were beyond the 30 day period provided for in 11 NYCRR §65.15: Boglio, Galicia, M. Perkins and S. Perkins.

Defendant takes the position that despite the untimeliness of its denials, it should not be precluded from raising its defenses to these claims because its defense is based on a lack of coverage. Defendant cites Central General Hospital v. Chubb Group of Ins. Companies, 90 NY2d 195 (1997) and Metro Medical Diagnostics, PC v. Eagle Insurance Co., 293 AD2d 751, (2 Dept.,2002) for this proposition. Each of these cases is improperly cited for the position that fraud by a provider is a “coverage” defense which can be asserted more than thirty (30) days after a claim is received.

While the Second Department in Central General Hospital, supra, does state that a “coverage” defense may be asserted beyond the thirty (30) day period, it clearly states that claims of fraud by the provider such as excessive billing are not “coverage” defenses. Id at 199. Similarly, Metro Medical, supra is inapplicable to the case at bar because it concerns an allegedly staged accident and not the allegation of fraud by a provider. More recently, Courts have clarified the differences between these two types of fraud allegations as they apply to the timeliness of denials and preclusion of defenses.

In Melbourne Medical, PC v. Utica Mutual Insurance Co., 4 Misc 3d 92 (App. Term 2nd & 11th Jud. Dists., 2004) the Appellate Term stated the following:

With regard to the fraud allegation, raised for the first time in defendant’s motion for summary judgment, defendant did not specify whether the fraudulent conduct was a staged automobile incident or the provider’s unilateral scheme to obtain no-fault benefits for unnecessary or excessive medical treatment. If the latter is the case, the purported defense is precluded by defendant’s untimely claim denial (Central Gen. Hosp. v Chubb Group of Ins. Cos. 90 NY2d 195, 199 [1997]; Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d at 285). If the former is the case, the defense survives preclusion (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 752 [2002]) and would, if substantiated, constitute a complete defense to the action (Matter of Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522 [2003]).

4 Misc 3d 92 at 94. This decision clearly differentiates between fraud by an assignor which implicates the coverage issues that would permit an insurer to submit its denial beyond the thirty [*5](30) day period without waiving its defenses, from fraud by the provider which must be asserted in a timely denial in order to avoid being precluded from asserting the defense.

This issue was determined with even more clarity in PSG Psychological, PC v. State Farm Ins. Co., 6 Misc 2d 1002(A); 2004 NY Slip Op. 51701 (Civ. Ct. Kings Co., 2004). There the Court stated that

[t]he fraud which defendant is claiming as a defense to payment of this claim is fraud by the plaintiff medical provider. Although an untimely denial permits a defendant to assert a defense of fraud by the assignor, a claim of fraud by the assignee must be asserted in a timely denial (Melbourne Medical, PC v. Utica Mutual Ins. Co., 4 Misc 2d 92 [2d Dept 2004]).

See also Careplus Medical Supply Inc. v. State Farm Mutual Auto. Ins. Co., NYLJ 10/13/04, p. 21, col. 1 (Civ. Ct. Kings Co., 2004). Clearly, the law in this Department is that a defense of fraud by the provider does not go to the issue of coverage and, therefore, must be asserted in a timely denial.

C.Propriety of Denial Based On “Pending Investigation”

Each of the claims for which a denial was submitted was denied on the basis of a pending investigation. Plaintiff asserts that the “no-fault regulations” prohibit such a denial but does not cite the Court to any specific regulation. There is case law in the 2nd and 11th Judicial District which supports plaintiff’s view that a denial based on a pending investigation is ineffective.

In AB Medical Services v. Prudential Property & Casualty Ins. Co., 2005 NY Slip Op 25032 (App Term 2nd & 11th Jud. Dists, 2005) the Appellate Term held that a delay letter does not extend the insurer’s time to pay or deny a claim. Similarly, the same Appellate Term held in Melbourne Medical v. Utica Mutual Ins. Co., supra, that an insurer may not rely on a letter informing a claimant that the claim is delayed pending an investigation to effect an extension of time to pay or deny the claim, even if that letter is denominated a verification request. Id at 94. In Sehgal v. Royal Ins. Co. of America, 1999 WL 1074313 (App Term, 2d & 11th Jud. Dists, 1999) the Court held that an insurer’s submission of a claim to peer review is not a request for verification and does not extend the insurer’s time to pay or deny the claim.

Other Courts are in accord with the Appellate Term, 2nd & 11th Judicial Districts. The Appellate Division, Third Department in LaHendro v. Travelers Ins. Co., 220 AD2d 971 (3d Dept 1995) held that an insurer could not extend the time to pay or deny a claim until it received a report from Health Cost Containment Associates. The statutory thirty (30) day period began to run when the insurer received the claim and responses to requests for verification, if any.

District Court, Nassau County, in Atlantis Medical, PC v. Liberty Mutual Ins. Co., 2002 NY Slip Op 40043 (Dist Ct, Nassau Co, 2002) held, relying on LaHendro, supra and Sehgal, supra that once the insurer has received from claimant all of the information necessary to verify the [*6]claim, “any time spent analyzing the claim is on the insurer’s dime” Atlantis Medical, supra..

In the case at bar, each of the claims that defendant denied was denied on the basis that there was a pending investigation. There is no distinction between the above cited cases concerning delays of the determination of claims based upon a continuing investigation and a denial of the claim based on a pending investigation. The conclusion is the same: an insurer may not delay or deny a claim based upon its desire to further investigate the claim, except in compliance with the regulatory verification procedures. LaHendro v. Travelers Ins. Co., supra; AB Medical Services v. Prudential Property & Casualty Ins. Co., supra; Melbourne Medical v. Utica Mutual Ins. Co., supra; Sehgal v. Royal Ins. Co. of America, supra; Atlantis Medical, PC v. Liberty Mutual Ins. Co., supra.

D.Authentication of Assignment of Benefits;

Invalid Verification of Treatment Forms

Defendant argues in its Memorandum of Law in Opposition to Plaintiff’s motion that plaintiff has failed to establish its prima facie case because it has failed to authenticate the various assignment of benefits forms and, therefore, has no standing to bring the instant action. Defendant also argues that the verification of treatment forms are unsigned. This issue has long been resolved in this Judicial District. A Plaintiff’s prima facie case is established by “the submission of a complete proof of claim and the amount of the loss. (See Insurance Law §5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U]{App Term, 2d & 11th Jud Dists])”. Ocean Diagnostic Imaging PC A/A/O Jean Baptists Turenne, Johnson Turenne, v. State Farm Mutual Automobile Insurance Company, NYLJ, Sept 24, 2004, p. 28, col. 5 (App Term 2d & 11th Jud Dists, 2004). The defense of invalid assignment must be raised in a timely denial or it is waived. Presbyterian Hosp. v. Maryland Cas. Co., supra.;Presbyterian Hosp. v. Aetna Cas. & Sur. Co., supra; Quality Medical Healthcare, PC v. Lumberman’s Mutual Casualty Co., 2002 NY Slip Op 50098 (App Term 1st Dept, 2002); Inwood Hill Medical OC v. Allstate Ins.Co., NYLJ, Aug. 23, 2004, p. 19, col. 1 (Civ. Ct. Queens Co., 2004).

Here, each claim that was denied was denied because of a pending investigation. As defendant has failed to deny any of the claims on the basis that the authentication is invalid, this defense is waived. Similarly, as defendant has failed to deny any of the claims on the basis that the verification of treatment form is invalid, defendant has waived this defense. Id.

E.Question of Fact as to Whether the Services Billed for Were Provided

Defendant argues in its Memorandum of Law that there is a question of fact as to whether the services billed for and raised in this action were provided. The factual basis for this argument is the suspension of Michael M. Katz’s and Valentino J. Bianchini’s medical licenses. There is no indication in the defendant’s papers that these doctors were the only doctors providing services at plaintiff’s office. Moreover, defendant does not allege that Dr. Bianchini’s license was suspended during a time when services were provided to the assignors in this action. Accordingly, defendant has failed to establish that there is a question of fact sufficient to defeat plaintiff’s motion for [*7]summary judgment as to whether the billed for services were provided.

F.Plaintiff’s Standing to Bring This Action

Defendant argues that plaintiff does not have standing to bring the instant action because Michael M. Katz, the owner of plaintiff corporation, was suspended from practicing medicine from July 7, 2000 to July 6, 2001, surrendered his license on or about November 18, 2003 and the subsequent owner, Valentino J. Bianchini, surrendered his license to practice medicine on or about November 21, 2002. Essentially, defendant is making two arguments: 1) that plaintiff may not be compensated for services provided by an unlicensed medical professional and 2) that a professional corporation that is not properly licensed may not sue to recover no-fault benefits.

Plaintiff opposes defendant’s argument on standing in its reply affirmation of counsel. Plaintiff states that no services involved in this action were provided during a period when the plaintiff or its principal were not properly licensed and that a physician may recover for medical services rendered when it was licensed, even if no longer licensed and/or registered, citing CKC Chiropractic v. Republic Western Ins. Co., 2004 NY Slip Op 24351 (Civ. Ct. Kings Co., 2004) . Defendant has properly raised an issue of fact as to whether the alleged principal of plaintiff corporation was properly licensed when the services sued for herein were provided to assignors Boglio and M. Perkins. These services were provided during a period of time when Dr. Michael Katz, the principal of plaintiff corporation, was allegedly suspended from the practice of medicine. The information provided by defendant is in the form of Orders of the New York Department of Health indicating that Dr. Katz was suspended from practicing medicine for one year from July 7, 2000 to July 6, 2001 and surrendered his license to practice medicine by signed Order, signed by him on November 18, 2003. As to the second standing issue raised by defendant, the only information provided concerning the ownership of plaintiff corporation is a purported copy of a web site listing. The Court holds that the web site information is hearsay and insufficient to establish or even raise a question of fact as to the ownership of plaintiff corporation.

There is no question that medical services must be provided by a licensed professional. The only services provided during the period of Dr. Katz’s suspension that are involved in this action are services provided to Kate Boglio on September 8, 2000 and to Mozeik Perkins on August 11, August 18 and September 6, 2000. As a question of fact has been raised as to whether Dr. Katz performed these services, the Court holds that summary judgment is denied only as to the claims of Kate Boglio and Mozeik Perkins and only on the issue of whether Dr. Katz performed these services. As to plaintiff’s standing to bring this action because of the status of the corporation’s license, its relationship to the corporation’s principal’s license and the ability to collect no-fault benefits, the Court holds that further discovery is necessary on the factual issues that underlie defendant’s argument.

DISCOVERY MOTION

Defendant moves this Court for an extension of the discovery ordered by this court in a discovery Order dated November 20, 2003, approximately three (3) months prior to defendant’s [*8]making their motion. Plaintiff’s opposition to the discovery motion was made five (5) months later. Defendant’s basis for its motion is law office failure: it neglected to timely attend to discovery in this matter after the Court Order on November 20, 2003. It should be noted that the discovery Order provides for discovery of all parties. Neither plaintiff nor defendant conducted any discovery pursuant to the Court’s Order. It should also be noted that defendant’s counsel attempted to resolve the discovery dispute by communicating with plaintiff’s counsel prior to making a motion to the Court. Defendant’s attempt at resolution of the discovery issue was unsuccessful and a motion was then necessary.

Because of the relative timeliness of defendant’s attempt to resolve the discovery dispute and neither party’s compliance with the Court’s Order, the Court is inclined to grant defendant’s motion to a limited extent consistent with the Court’s other rulings contained in this Decision and Order.

Generally, discovery should be completed before a motion for summary judgment is made. In the instant case plaintiff’s motion for summary judgment was made only after defendant moved to extend discovery after unsuccessful attempts to obtain consent from plaintiff’s counsel to do so by stipulation. Plaintiff submitted its motion at the same time as its opposition to defendant’s motion and should have denominated its motion a cross-motion. Defendant properly argues that plaintiff’s motion is premature. However, consistent with the Court’s rulings herein on plaintiff’s motion for summary judgment, the only issues that survive those rulings are related to plaintiff’s standing to bring this action, Further discovery on any other issues would have no effect on the Court’s decision.

The Court rules that the Discovery Order, dated November 20, 2003, is extended for forty-five (45) days from the date of this Decision and Order for discovery solely on the issues of the licensing of plaintiff and plaintiff’s principals and which medical professional performed the services provided to assignors Boglio and M. Perkins. Consistent with the Court’s rulings herein, in the event that plaintiff is found to have standing to bring this action, plaintiff would be entitled to summary judgment on all claims that have not already been paid.

CONCLUSION

Three of the claims brought, for services to assignors Korets, Savelyn and Yakhshibekov, have already been paid and are not considered in this motion. Either because of untimeliness or denials based on pending investigations, defendant has waived its defenses to all of the other claims. Defendant has also waived its defenses on the bases of the authentication of the assignment of benefits and the alleged invalidity of the verification of treatment forms for failure to raise these defenses in their denials. The Court has insufficient information to rule that plaintiff does or does not have standing to bring this action. Accordingly, on defendant’s discovery motion the Court’s prior discovery Order, dated November 20, 2003, is extended for forty- five (45) days from the date of this Order for the parties to engage in discovery solely on the issues of the licensing of plaintiff and plaintiff’s principals and which medical professional performed the services provided to assignors Boglio and M. Perkins. In the event that plaintiff is found to have standing to bring this action, plaintiff is entitled to summary judgment on all claims that have not already been paid. [*9]

This constitutes the Decision and Order of this Court.

DATED:February 17, 2005

______________________________

LOREN BAILY-SCHIFFMAN, J.C.C.