MUA Chiropractic Healthcare, PLLC v State Farm Mut. Auto. Ins. Co. (2019 NY Slip Op 29375)

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District Court of Suffolk County, Third District, December 6, 2019

APPEARANCES OF COUNSEL

Nicolini, Paradise, Ferretti & Sabella, PLLC, Mineola, for defendant.

Law Offices of Gabriel & Shapiro, LLC, Wantagh, for plaintiff.

Plaintiff’s cross motion seeking summary judgment is granted. Defendant’s motion, seeking an order dismissing the within complaint, upon the grounds that the plaintiff billed amounts exceeding the New York State Workers’ Compensation Board medical fee schedule, is denied.

The facts are not in dispute. This sole issue presented for consideration by the court is whether 11 NYCRR 65-3.8 (g) (1) (ii) is inconsistent with the express dictates of the Insurance Law and is therefore constitutionally void, as violative of article III, § 1 of the New York State Constitution.

The court notes that the New York State Attorney General was served with a copy of the plaintiff’s cross motion, pursuant to CPLR 1012 (b), but chose not to intervene to defend the constitutionality of 11 NYCRR 65-3.8 (g) (1) (ii), regarding the fee schedule defense, which provides:

“(g) (1) Proof of the fact and amount of loss sustained pursuant to Insurance Law section 5106(a) shall not be deemed supplied by an applicant to an insurer and no payment shall be due for such claimed medical services under any circumstances:

“(i) when the claimed medical services were not provided to an injured party; or

“(ii) for those claimed medical service fees that exceed the charges permissible pursuant to Insurance Law sections 5108(a) and (b) and the regulations promulgated thereunder for services rendered by medical providers.”

Article III, § 1 of the New York State Constitution provides: “The legislative power of this state shall be vested in the senate and assembly.”

Section 5106 (a) of the Insurance Law provides:

“(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid{**66 Misc 3d at 466} within thirty days after such proof is supplied.”

This legislative statute establishes the legal doctrine that defenses to claims not raised within 30 days after receipt of a no-fault claim are precluded. The preclusion rule has been consistently recognized and enforced by the Court of Appeals. (See Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498 [2015]; Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997].)

In 2013 the New York State Insurance Commissioner, under his rule-making power, promulgated regulation 65-3.8 which purports to remove fee schedule defenses from the statutory “preclusion doctrine.” An administrative agency’s rule-making power is limited and may not circumvent or be contrary to the legislature’s determination. (See NY Const, art III, § 1; Matter of Nicholas v Kahn, 47 NY2d 24 [1979].) Such inconsistent regulations are “preempted” by statutory dictate. (See e.g. Boreali v Axelrod, 71 NY2d 1 [1987].) Removing the fee schedule defense from the statutory preclusion rule via regulation is an unconstitutional overreach, and shall be disregarded by this court as being invalid and in contravention of the historical statutory 30-day time period given to defendants to pay or deny claims (or be subject to preclusion).

Accordingly, the defendant’s fee schedule defense became nonviable 30 days after the claim was received without denial or demand for further verification. The defendant’s motion to dismiss is denied as moot and the plaintiff’s cross motion seeking summary judgment is granted.