NY Rehab Pain Mgt. & Med. Servs., PC v State Farm Auto Ins. Co. (2016 NY Slip Op 50821(U))

13672/13

Baker Sanders, LLC Attorney for the Plaintiff 100 Garden City Plaza, Suite 500 Garden City, New York 11530 Ph: (516) 741-4799

Bruno, Gerbino, & Soriano, LLP Attorney for the Defendant 445 Broad Hollow Road, Suite 220 Melville, New York 11747 Ph: (631) 390-0010

Papers Submitted:

Upon the foregoing papers, the Defendant STATE FARM AUTO INS. CO.’s motion (“State Farm”) seeking an order pursuant to CPLR § 3212 granting it summary judgment dismissing the complaint against it or in the alternative, an order pursuant to CPLR § 3212 (e) granting it partial summary judgment, is determined as provided herein.

The Plaintiff in this action, NY Rehab Pain Management & Medical Services, P.C. (“NY Rehab”) seeks to recover first party no-fault benefits for services allegedly supplied to its [*2]assignor, Gamal Elshekh, to treat him for injuries he allegedly suffered as the result of an automobile accident on December 26, 2008. State Farm maintains that the Plaintiff’s failure to appear for an Examination Under Oath (“EUO”) is violative of both the terms and conditions of the applicable insurance policy as well as the No-Fault regulations and entitles it to dismissal of the complaint.

The facts pertinent to the determination of this motion are as follows:

In response to 21 bills submitted by NY Rehab for services it allegedly provided Elshekh on December 29th , 30th and 31st and January 2nd, 3rd, 5th, 6th, 7th, 8th, 9th, 12th, 14th and 17th, by letter dated February 2, 2009, which was allegedly mailed on February 3rd, State Farm allegedly notified NY Rehab that it must submit to an EUO, which would be conducted on March 2, 2009. Similarly, in response to bills submitted by NY Rehab for services it allegedly provided Elshekh on January 17th, 19th, 21st, 26th and 28th, by letter dated February 11, 2009, which was allegedly mailed on February 12th, State Farm allegedly notified NY Rehab that payment for those services would not be made either until it appeared for the previously noticed EUO. A copy of the February 2nd letter was enclosed with that notification. Once again, in response to bills submitted by NY Rehab for services it allegedly provided Elshekh on January 17th, 19th, 21st, 24th, 26th, 27th, 28th and 31st, by letter dated February 17, 2009, which was allegedly mailed on February 18th, State Farm allegedly notified NY Rehab that payment for those services would also not be made until it appeared for the previously noticed EUO and a copy of the February 2nd letter was again enclosed.

Finally, in response to NY Rehab’s bills submitted for services it allegedly rendered to Elshkeh on January 28th, and 31st and February 2nd and 4th, by letter dated February 24, 2009, which was allegedly mailed on February 25th, State Farm allegedly notified NY Rehab that payment for those services would not be made until it appeared for the previously noticed EUO and a copy of the February 2nd letter was again enclosed.

State Farm alleges that no one appeared for the EUO on March 2, 2009 and so by letter dated March 5, 2009, which was allegedly mailed on March 6th, State Farm alleges it sent a follow up letter to NY Rehab rescheduling its EUO for March 23, 2009 with respect to the aforementioned bills as well as with respect to additional bills it had received for services NY Rehab allegedly provided Elshek on Febraury 9th, 11th, 13th, 16th, 18th and 23rd.

State Farm alleges that no one appeared for that EUO, either, as a result of which, by notices dated March 31, 2009, which were allegedly accompanied by Explanations of Review, State Farm allegedly notified NY Rehab, via NF-10s, that all of the aforementioned claims were denied based on its policy violation, i.e., its failure to appear for its EUO. Those notices were allegedly mailed on April 1, 2009.

One hundred and eleven additional claims for services rendered between February 9, 2009 and May 18, 2010 were also allegedly denied via NF-10s and accompanied by Explanations of Benefits based upon NY Rehab’s failure to provide the verification that had previously been sought, i.e., again, based upon its failure to appear for the EUO on March 2, 2009 and March 23, 2009. Two other bills for services rendered February 4, 2009 and June 11, 2009, in the amount of $ 33.70 each along with statutory interest, were paid on July 9, 2013. Seven other claims for services allegedly rendered to Elshek on January 8, 2009, January 28-31, 2009, January 31, 2009, June 9, 2009 and June 18-22, 2009 were allegedly denied on June 26, 2013 as duplicative and [*3]claims for services allegedly rendered on January 26, 2009 and February 2, 2009 were allegedly denied as duplicative on October 13, 2013.

State Farm maintains that after an investigation by its Special Investigative Unit, it determined that it had a reasonable and objective basis to request an EUO to ascertain whether NY Rehab was entitled to collect no-fault benefits under 11 NYCRR 65-3.16 (a) (12). More specifically, in support of its motion, State Farm has submitted an affidavit of its investigator Joseph Farrington who attests that he had reason to believe that NY Rehab might be fraudulently incorporated as the purported owner of the facility was suspected of being a nominal owner. See, State Farm Mut. Auto. Ins. Co. v Robert Mallela, 4 NY3d 313 (2005).

In support of its motion, State Farm has submitted copies of all of the letters sent to NY Rehab accompanied by Certificates of Mailing Lists indicating that correspondence was sent on each of the cited dates to “NY REHAB PAIN MANAGEMENT’ at “32-44 31st ST, Long Island City, NY 11106.”

State Farm has also submitted the affidavit of David Warfel who attests in detail to State Farm’s business practices and procedures which lead to the creation of the all of the notices allegedly sent to NY Rehab, including the letters dated February 2, 2009, February 11, 2009, February 17, 2009, February 24, 2009, March 5, 2009 and March 31, 2009. He also attests to the creation of the NF-10 denial of claim forms denying claims for services provided from February 9, 2009 up to and including May 18, 2010.

While State Farm relies on the Certificates of Mailing issued by the United States Post Office, standing alone, they establish only that something was mailed to NY Rehab on the dates in question, however, they do not establish what was mailed.

Nevertheless, State Farm has submitted an affidavit of George Perry attesting to the procedures regarding both the creation and the mailing of requests for EUOs as well as for additional verification and denials that were in place at the pertinent times. He explains how those documents are generated and how the Claim Service Assistant(s) compile them in packages for mailing, create the Certificates of Mailing logs, bundle the envelopes along with the corresponding log and places them in a bin for pick up by its mail department. He explains that beginning in April 2008, State Farm has, in its ordinary course of business, paid for and secured a Certificate of Mailing from the United States Post Office for all letters containing requests for EUO and/or additional verification as well as for denials or NF-10s. The Post Office places a postmark on the Certificates of Mailing log indicating the date on which it took possession of the listed envelopes and those Certificates are returned to State Farm’s Office where they are maintained.

State Farm has also submitted the affidavit of Kevin O’Leary, Esq., of Bruno, Gerbino & Soraiano, LLP, the attorneys for State Farm. He attests that he was present at the office where the EUOs were scheduled on March 2, 2009 and March 23, 2009. He attests that had someone from NY Rehab appeared at the office on either of those dates, the receptionist would have so notified him and he would have either conducted the EUO himself or assigned another attorney to do so. He attests that no one appeared on either of the dates on behalf of NY Rehab and that no one contacted his office to confirm or reschedule the EUOs, either.

It is well established that summary judgment may be granted only when it is clear that no triable issue of fact exists. (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]) A party seeking [*4]summary judgment bears the initial burden of demonstrating its entitlement to judgment as a matter of law by submitting evidentiary proof in admissible form. (Zuckerman v. City of New York, 49 NY2d 557, 562 [1980]) A failure to make that showing requires the denial of that summary judgment motion, regardless of the adequacy of the opposing papers. (Ayotte v. Gervasio, 81 NY2d 923 [1993]) If the movant makes a prima facie showing, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact. (Alvarez v. Prospect Hospital, supra at 324) “[T]o defeat a motion for summary judgment the opposing party must show facts sufficient to require a trial of any issue of fact’ “. (Friends of Animals v. Associated Fur Manufacturers, Inc., 46 NY2d 1065, 1067—1068 [1979], quoting CPLR § 3212, subd. [b]) “On a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party”. (Ortiz v. Varsity Holdings, LLC, 18 NY3d 335, 339 [2011])

11 NYCRR 65-1.1provides as follows:

In the case of a claim for health service expenses, the eligible injured person or that person’s assignee or representative shall submit written proof of claim to the Company, including full particulars of the nature and extent of the injuries and treatment received and contemplated, as soon as reasonably practicable but, in no event later than 45 days after the date services are rendered. The eligible injured person or that person’s representative shall submit written proof of claim for work loss benefits and for other necessary expenses to the Company as soon as reasonably practicable but, in no event later than 90 days after the work loss is incurred or the other necessary services are rendered. The foregoing time limitations for the submission of proof of claim shall apply unless the eligible injured person or that person’s representative submits written proof providing clear and reasonable justification for the failure to comply with such time limitation. Upon request by the Company, the eligible injured person or that person’s assignee or representative shall:

(a) execute a written proof of claim under oath;

(b) as may reasonably be required, submit to examinations under oath by any person named by the Company and subscribe the same;

(c) provide authorization that will enable the Company to obtain medical records; and

(d) provide any other pertinent information that may assist the Company in determining the amount due and payable.

The eligible injured person shall submit to a medical examination by physicians selected by, or acceptable to, the Company, when, and as often as, the Company may reasonably require.

An Insurer has 30 days after proof of claim is received in which to pay or deny a claim. 11 NYCRR 65.5 (g)(3). However, 11 NYCRR 65.15 (d) (1) affords an insurance company 10 days after receipt of an application for no-fault benefits or a bill for payment of benefits in which to seek additional verification. And, upon receipt of the prescribed verification forms, an insurance company may seek additional verification within 15 days. (11 NYCRR 65.3.5 [b]). In the event that the requested verification is not received by the insurance company within 30 days from the date of the request, the insurance company has an obligation to follow-up either by telephone or by mail within 10 days. (11 NYCRR 65.15 [e] [2]). If the Insurance company [*5]complies with all of these conditions, and all of the verification is still not received, the insurance company may deny the claim. In fact, the insurance company’s 30 days to pay or deny a claim does not begin to run until all requested verification information is received, (11 NYCRR 65.15 [g][1][I]) including the performance of an Examination Under Oath if one has been requested. (11 NYCRR 65-3.8 [a][1])

” It is well established that the failure to comply with the standard policy provision requiring disclosure by way of submission to an [EUO] as often as may be reasonably required, as a condition precedent to performance of the promise to indemnify, constitutes a material breach’ of the policy, precluding recovery of the policy proceeds (citations omitted)”. (IDS Prop. Cas. Ins. Co. v. Stracar Med. Services, P.C., 116 AD3d 1005, 1007 [2d Dept. 2014], quoting Bulzomi v. New York Cent. Mut. Fire Ins. Co., 92 AD2d 878, 878 [2d Dept. 1983]) An insurance company which establishes ” that it twice duly demanded an examination under oath’ from the assignees, that the assignees twice failed to appear, and that [it] issued a timely denial of the claims’ arising from the assignees’ provision of medical services to the assignors” establishes its prima facie entitlement to judgment as a matter of law. (IDS Prop. Cas. Ins. Co. v. Stracar Med. Services, P.C., 116 AD3d at 1007, quoting Interboro Ins. Co. v. Clennon, 113 AD3d 596, 597 [2d Dept. 2014]; citing Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720, 721 [2d Dept. 2006]). It must establish that “it timely and properly mailed its EUO scheduling letters and its denial of claim forms, which denied the claims on the ground that plaintiff had failed to appear at duly scheduled EUOs.” Bay LS Med. Supplies, Inc. v. Allstate Ins. Co., 50 Misc 3d 147(A) (App Term 2016), citing St. Vincent’s Hosp. of Richmond v. Government Empls. Ins. Co., 50 AD3d 1123 [2d Dept. 2008]) “[A]dmissible evidence in the form of an affidavit of an employee with knowledge of the [insurance company’s] standard office practices or procedures designed to ensure that items were properly addressed and mailed” may be used to establish the mailing of required documents. (St. Vincent’s Hosp. of Richmond v. Govt. Employees Ins. Co., 50 AD3d at 1124, citing New York & Presbyt. Hosp. v. Allstate Ins. Co., 29 AD3d 547 [2d Dept. 2006]; Hospital for Joint Diseases v. Nationwide Mut. Ins. Co., 284 AD2d 374 [2d Dept. 2001]; Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679 [2d Dept. 2001]; Delta Diagnostic Radiology, P.C. v. Chubb Group of Ins., 17 Misc 3d 16 [App Term 2007]; see also, Five Boro Psychological Services, P.C. v. Progressive Northeastern Ins. Co., 27 Misc 3d 141(A) [App Term 2010]; cf. Westchester Med. Ctr. v. Countrywide Ins. Co., 45 AD3d 676 [2d Dept. 2007]). An attorney “who would have conducted the EUO if the [assignee] had appeared certainly [is] in a position to state that the [assignee] … did not … appear in his office on the date[s] indicated as directed in the notice and did not otherwise appear in his office on the date indicated”. (Hertz Corp. v. Active Care Med. Supply Corp., 124 AD3d 411, 411 [2d Dept. 2015]). And, belated objections to an EUO demand based upon a lack of grounds therefor which are first made in an action are not permitted. Rutland Med., P.C. v. State Farm Ins. Co., 45 Misc 3d 1033, 1034 (Civ Ct Kings County 2014), citing Five Boro Psychological and Licensed Master Social Work Servs. PLLC v. Geico Gen. Ins. Co., 38 Misc 3d 354 (Civ Ct Kings County 2012); see also, Eagle Surgical Supply, Inc. v. Allstate Ins. Co., 46 Misc 3d 128(A) (App Term 2014), citing Viviane Etienne Med. Care, P.C. v. State Farm Mut. Auto. Ins. Co., 35 Misc 3d127(A) (App Term 2012); Crescent Radiology, PLLC v. American Tr. Ins. Co., 31 Misc 3d 134 (A) (App Term 2011); All Boro Psychological Services, P.C. v. State Farm Mut. Auto. Ins. Co., 46 Misc 3d [*6]127(A) (App Term 2014)

NY Rehab alleges that State Farm has not properly established that its notices for Examinations Under Oath were properly addressed or mailed. The affidavits of David Warful and George Perry adequately establish State Farm’s practices and procedures leading to the creation of the subject notices as well as their mailing. Contrary to NY Rehab’s contention, the correspondence was not erroneously addressed to Long Island City instead of Astoria. There is only one address at 32-44 31st Street in those towns which is identical.

NY Rehab also maintains that State Farm has not established its nonappearance at the scheduled EOUs. State Farms’s attorney’s affidavit attesting to NY Rehab’s nonappearance at the scheduled EUOs satisfies its obligation to establish NY Rehab’s nonappearance. Hertz Corp. v. Active Care Med. Supply Corp., 124 AD3d at 411; New Capital Supply, Inc. v. State Farm Mut. Auto. Ins. Co., 45 Misc 3d 758, 761 (Civ Ct New York County 2014), citing Natural Therapy, Accupuncture, P.C. v. State Farm Mut. Ins. Co., 42 Misc 3d 137(A) (AppTerm 2014) (attorney’s affirmation stating that he was present at office on the date the EUO was scheduled and that had the provider appeared he would have conducted the EUO or assigned an attorney to do so suffices to establish a provider’s nonappearance at an EUO); see also, Palafox PT, P.C. v. State Farm Mut. Auto. Ins. Co., 49 Misc 3d 144(A) (App Term 2015)

NY Rehab also opposes this motion on the grounds that State Farm did not have good cause for requiring it to appear for an EUO in the first place and that in any event, its owner appeared for an EUO with respect to the identical issues in question here in another case. Again, belated objections to the propriety of the EUO are not permitted at this juncture. Rutland Med., P.C. v. State Farm Ins. Co.,supra, citing Five Boro Psychological and Licensed Master Social Work Servs. PLLC v. Geico Gen. Ins. Co., supra; see also, Eagle Surgical Supply, Inc. v. Allstate Ins. Co., supra, citing Viviane Etienne Med. Care, P.C. v. State Farm Mut. Auto. Ins. Co.,supra; Crescent Radiology, PLLC v. American Tr. Ins. Co.,supra; All Boro Psychological Services, P.C. v. State Farm Mut. Auto. Ins. Co.,supra. And, ” an insurance company is entitled to obtain information promptly while the information is still fresh to enable it to decide upon its obligations and protect against false claims. To permit [the defendants] to give the information more than [three] years after the [loss] would [constitute] a material dilution of the insurance company’s rights’ “. (IDS Prop. Cas. Ins. Co. v. Stracar Med. Services, P.C., 116 AD3d at 1007-08, quoting Argento v. Aetna Cas. & Sur. Co., 184 AD2d 487, 487-488 [2d Dept. 1992]; see also, Johnson v. Allstate Ins. Co., 197 AD2d 672, 672 [2d Dept. 1993], lv denied 82 NY2d 664 [1994]; Lentini Bros. Moving & Stor. Co. v. New York Prop. Ins. Underwriting Assn., 53 NY2d 835, 836 [1981]; Azeem v. Colonial Assur. Co., 96 AD2d 123, 125 [4th Dept. 1983], affd 62 NY2d 951 [1984]) A belated appearance by NY Rehab in a separate proceeding does not excuse its breach of its policy and the regulations here.

Finally, NY Rehab opposes State Farm’s motion based on outstanding discovery. ” A party who contends that a summary judgment motion is premature is required to demonstrate that discovery might lead to relevant evidence or [that] the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the movant’ “. (Interboro Ins. Co. v. Clennon, 113 AD3d 596, 597 [2d Dept. 2014], quoting Cajas—Romero v. Ward, 106 AD3d 850, 852 [2d Dept. 2013]; citing CPLR 3212 [f]) NY Rehab has not met that burden.

State Farm cites to an exhibit consisting of hundreds of pages to be reviewed in an [*7]attempt to confirm its allegation that seven claims were properly denied as duplicative. Therefore, it has not established that the seven claims were properly denied as duplicative. However, it has, in any event, established that those claims were submitted following NY Rehab’s failure to appear for its EUO, thereby justifying State Farm’s denial of those claims.

Accordingly, it is hereby

ORDERED, that the Defendants’ motion seeking summary judgment is GRANTED and the Plaintiff’s complaint is dismissed.

This constitutes the Decision and Order of the Court.

All applications not specifically addressed are DENIED.

DATED: May 24, 2016
Mineola, New York
Hon. Randy Sue Marber, J.S.C.