PDG Psychological, P.C. v State Farm Ins. Co. (2006 NY Slip Op 51398(U))

Civil Court, Kings County

49724/04

Genine D. Edwards, J.

This is a trial of an action for first-party benefits, attorney’s fees and statutory interest commenced by PDG Psychological P.C. (“plaintiff”) as assignee of Sergey Potapov (“assignor”) against State Farm Insurance Company (“defendant”), pursuant to New York Insurance Law and the No-Fault Regulations. Plaintiff billed defendant a total of $2,758.76 for psychological treatment rendered to its assignor from October 2002 to February 2003. Defendant denied the claims due to a violation of the fraud provisions in its policy. The jury rendered a verdict in favor of the defendant. This Court reserved its decision regarding the parties’ directed verdict motions.

No-Fault reform was enacted to ensure speedy recovery of payment to providers of healthcare services rendered to those injured in automobile accidents. Presbyterian Hospital in the City of New York v. Maryland Casualty Company, 90 NY2d 274 (1997). To this end, the No-Fault Regulations allow certain providers to receive direct payment from insurance companies. 11 NYCRR §65-3.11. Providers must submit forms that include the fact and amount of the loss within 45 days of the services rendered. 11 NYCRR §65-1.1; St. Vincent’s Hospital & Medical Center v. County Wide Insurance Company, 24 AD3d 748 (2nd Dept. 2005). Thereafter, insurers must make payment or deny the claim within thirty days. 11 NYCRR §65.15(g). However, where the insurer denies the claim due to a coverage issue the thirty-day period is not applicable. Central General Hospital v. Chubb Group of Insurance Companies, 90 NY2d 195 (1997).

FACTS

Plaintiff did not offer any witnesses to prove its prima facie case of entitlement to benefits. Instead, plaintiff first argued that pursuant to a prior decision on a summary judgment motion its prima facie case was established. However, a perusal of that decision reveals that Judge George Silver simply denied summary judgment. Judge Silver did not indicate that plaintiff’s prima facie case was made.

Secondly, plaintiff argued that this Court should take judicial notice of the exhibits that were attached to the summary judgment motion and are now a part of the Court file. This Court denied that application. Exhibits attached to motions are not automatically admitted into evidence via the judicial notice doctrine. At trial, a foundation for the admissibility of each [*2]exhibit must be laid. McArthur v. Wal-Mart Stores, Inc., 274 AD2d 378 (2nd Dept. 2000) (no proper foundation was laid for the admission of the exhibit); Funk v. Kaiser-Frazer Sales Corporation, 15 AD2d 548 (2nd Dept. 1961); Petchesky v. Brooklyn Terminal Market Ass’n., 266 A.D. 680 (2nd Dept. 1943); Hogan v. National Sellers, Inc., 256 A.D. 951 (2nd Dept. 1939); Kavanagh v. Passeggio, 222 A.D. 679 (2nd Dept. 1927); A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc. v. State Farm Mutual Automobile Insurance Company, 7 Misc 3d 822 (NY Civ. Ct. Kings County 2005); Universal Open MRI of the Bronx, P.C. v. State Farm Mut. Auto Ins., 12 Misc 3d 1151(A) (NY Civ. Ct. Kings County 2006).

Plaintiff’s third attempt at having the exhibits admitted into evidence was deemed successful. Plaintiff argued that pursuant to its Notice to Admit and defendant’s Statement in Reply to Request for Admissions, the exhibits were admitted by the defendant. Defendant’s Statement in Reply to Request for Admissions was not sworn, was made by an attorney and not the plaintiff, was not verified by the plaintiff and no rationale was articulated as to why the defendant could not admit or deny the requests. Defendant’s Reply to Request for Admissions amounted to a failure to respond. Therefore, according to ELRAC, Inc. v. McDonald, 186 Misc 2d 830 (NY Sup. Ct. Nassau County 2001), the exhibits were deemed admitted by the defendant. Thus, the subject bills, denial of claim form, assignment of benefit form and delay letters were admitted into evidence.

The plaintiff rested. The defendant made a motion for a directed verdict due to plaintiff’s failure to prove a prima facie case. This Court reserved its decision. The burden of production of evidence of an intentional collision shifted to the defendant. Mount Sinai Hospital v. Triboro Coach, Incoporated, 263 AD2d 11 (2nd Dept. 1999).

In support of its case, defendant proffered the testimony of Laura Cevallos, a Special Investigation Unit Investigator for State Farm Insurance Company. Ms. Cevallos explained her educational background and investigative training, including her training with the National Insurance Crime Bureau. Ms. Cevallos testified that the assignor’s policy initiated on August 18, 2002 and the accident occurred two months later. This automatically raised a red flag in Ms. Cevallos’ mind. There were multiple passengers in the vehicle and the assignor had many prior accidents. The subject accident was reported by an attorney and not by the assignor. According to Ms. Cevallos, these factors were all suspect. Ms. Cevallos testified that she reviewed the file maintained by the Special Investigation Unit; the transcripts of the examinations under oath of the passengers and the assignor; she took a statement from the driver of the other car; and attempted to obtain additional testimony from the assignor, but he did not cooperate.

Upon a claim committee review of the assignor’s file it was decided that the claims should be denied. Ms. Cevallos was part of the claim committee and prepared the proposal for denial of the claims because the accident was intentional as evidenced by several discrepancies between the transcripts of the examinations under oath of the passengers and the assignor, including where they were going; when they all met; the time of the accident; where the car was at the time of impact; any stops along the way; the names of the passengers. These discrepancies coupled with the other driver’s statement supported a denial of the assignor’s claims. The defendant attempted to have the transcripts of the examinations under oath admitted into evidence, but failed to lay the proper foundation. A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc., supra. [*3]

Ms. Cevallos was not present during the examinations under oath nor did she formulate any of the queries, but she requested that the examinations be conducted in order to compare the testimony with the other driver’s statement. She did not obtain any recorded statements from the passengers that were in the assignor’s car.

On cross-examination, Ms. Cevallos testified that there were also questions regarding damage to the assignor’s car. But she failed to bring any photographs of the assignor’s car and she did not bring her entire file. Ms. Cevallos testified that the other driver who rear-ended the assignor’s car indicated that there was no damage to the cars and “no contact between the cars”. According to Ms. Cevallos, the other driver indicated that the assignor stopped short. Ms. Cevallos admitted that the other driver also indicated that they were traveling at forty miles per hour, the assignor stopped short, but the other driver was able to stop and did not make contact with the assignor’s car. Ms. Cevallos also admitted that no one from State Farm Insurance Company examined the brakes on the assignor’s vehicle.

On re-direct examination, Ms. Cevallos testified that an individual discrepancy in the testimony was not determinative, but all of them taken together, coupled with the other driver’s statement, could not be explained away. In addition, the other driver did not file a claim with State Farm Insurance Company.

At the close of Ms. Cevallos’ testimony the defendant rested. Plaintiff did not provide any rebuttal evidence. Plaintiff made a motion for a directed verdict. This Court reserved its decision on that motion. After deliberation, the jury rendered a verdict in favor of the defendant.

ANALYSIS

Can responses to a Notice to Admit establish Plaintiff’s prima facie case at trial?

A Notice to Admit is a discovery tool used to expedite trial by eliminating proof of undisputed matters. Rosenfeld v. Vorsanger, 5 AD3d 462 (2nd Dept. 2004); Risucci v. Homayoon, 122 AD2d 260 ( 2nd Dept. 1986); ELRAC, Inc., supra. It is not intended to eradicate ultimate facts or fundamental or material issues that can only be resolved by a full trial. Sagiv v. Gamache, 26 AD3d 368 (2nd Dept. 2006); The Hawthorne Group, LLC v. RRE Ventures, 7 AD3d 320 (1st Dept. 2004); Vasquez v. Vengroff, 295 AD2d 421 (2nd Dept. 2002); Singh v. G & A Mounting & Die Cutting, Inc., 292 AD2d 516 (2nd Dept. 2002); Glasser v. City of New York, 265 AD2d 526 (2nd Dept. 1999); DeSilva v. Rosenberg, 236 AD2d 508 (2nd Dept. 1997); Rubino v. City of New York, 209 AD2d 681 (2nd Dept. 1994); Orellana v. City of New York, 203 AD2d 542 (2nd Dept. 1994).

In the case at bar, the plaintiff served a Notice to Admit with attachments that included, inter alia, its subject medical bills, a denial of claim form and an assignment of benefits form. At trial, due to the defendant’s failure to respond to the Notice to Admit, this Court deemed the documents admitted, and they were marked into evidence. However, upon further reflection and review of the relevant caselaw, it is clear that the plaintiff’s Notice to Admit and the documents attached thereto go to the heart of this matter, that is, plaintiff’s prima facie entitlement to no-fault benefits. Hence, according to the relevant caselaw, a Notice to Admit cannot be used to prove plaintiff’s case, which is material in this no-fault action. Indeed, while it may be argued that the defendant should have been able to verify the contents of its own denial of claim form, it is pellucidly clear that the defendant cannot verify the contents of the assignment of benefits form nor the subject bills. The contents of these documents are material to the instant case and [*4]cannot be admitted via a Notice to Admit. Sagiv, supra.

Considering the foregoing, plaintiff failed to prove its prima facie case. Plaintiff did not provide any evidence of the fact and amount of the loss; that the claim was untimely denied or that payment was not made; that its assignor assigned his right to payment of no-fault benefits to plaintiff and that the bills were submitted to the defendant. Amaze Medical Supply Inc. v. Eagle Insurance Company, 2 Misc 3d 128(A) (App. Term 2nd & 11th Jud. Dists. 2003); Mary Immaculate Hospital v. Allstate Insurance Comapany, 5 AD3d 742 (2nd Dept. 2004); New York Craniofacial Care, P.C. v. Allstate Insurance Company, 11 Misc 3d 1071(A) (NY Civ. Ct. Kings County 2006); Inwood Hill Medical P.C. v. Allstate Insurance Company, 3 Misc 3d 1110(A) (NY Civ. Ct. New York County 2004); Ultimate Medical Supplies v. Lancer Insurance Company, 7 Misc 3d 1002(A) (NY Civ. Ct. Kings County 2004).

Although this Court need not consider the remaining issues it is compelled to briefly discuss the issues that plague trials involving staged accidents.

At a trial involving a claim for no fault benefits, who has the burden of proving that insurance coverage exists?

It is clear that there is a dearth of reported trial cases that discuss this hotly contested issue, and there are no appellate decisions. The plaintiff herein argued that since the defendant alleged “staged accident” as an affirmative defense then the defendant must prove that the staged accident precludes coverage. This Court is not persuaded by that argument.

The plaintiff, as the proponent of a claim for no-fault benefits, always maintains the burden of persuasion. A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc., supra; Universal Open MRI of the Bronx, P.C., supra; V.S. Medical Services, P.C. v. Allstate Insurance Company, 11 Misc 3d 334 (NY Civ. Ct. Kings County 2006). See also, Vasile v. Hartford Accident & Indemnity Company, 213 AD2d 541 (2nd Dept. 1995); Gongolewski v. Travelers Insurance Company, 252 AD2d 569 (2nd Dept. 1998). The plaintiff meets that burden by proving that it submitted the fact and amount of the loss to the defendant as well as nonpayment by the defendant or untimely denial by the defendant. SZ Medical, P.C., JH Chiropractic P.C., New Wave Oriental Acupuncture P.C. v. Country-Wide Insurance Company, 12 Misc 3d 52 (App. Term 2nd & 11th Jud. Dists. 2006); Contemp. Med. Diag. & Treatment, P.C. v. Government Employees Insurance Company, 6 Misc 3d 137(A) (App. Term 2nd & 11th Jud. Dists. 2005); Careplus Medical Supply Inc. v. Allstate Insurance Company, 9 Misc 3d 128(A) (App. Term 2nd & 11th Jud. Dists.2005); A.B. Medical Services PLLC, D.A.V. Chiropractic P.C., LVOV Acupuncture P.C. v. Commercial Mutual Insurance Co., 12 Misc 3d 8 (App. Term 2nd & 11th Jud. Dists. 2006). With this proof comes a presumption of coverage. V.S. Medical Services, P.C., supra; Universal Open MRI of the Bronx, P.C., supra; A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc., supra; Amaze Medical Supply Inc. supra.

Thereafter, the burden of production, that is, providing an explanation for why there is no coverage, shifts to the defendant. Central General Hospital, supra; Mount Sinai Hospital, supra; A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc., supra; V.S. Medical Services, P.C., supra; Universal Open MRI of the Bronx, P.C., supra. This burden, in effect, allows the [*5]defendant to disprove the presumption of coverage, thus demonstrating its denial of plaintiff’s complaints. Palmier v. United States Fidelity and Guaranty Company, 135 AD2d 1057 (3rd Dept. 1987). Of course, there is no set standard by which the defendant will achieve its burden; the evidence must be judged on a case by case basis. The assertion “no insurance coverage” in defendant’s verified answer amounts to a denial of plaintiff’s allegations. Beece v. Guardian Life Insurance Company of America, 110 AD2d 865 (2nd Dept. 1985). The defendant is not proving an affirmative defense, wherein it has the burden of proof. Prime Medical P.C. v. Travelers Indemnity Co., 2 Misc 3d 1009(A) (NY Civ. Ct. Kings County 2004) (insurer has the burden of proving lack of medical necessity); Stand-Up MRI of the Bronx v. General Assurance Insurance, 10 Misc 3d 551 (NY Dist. Ct. Suffolk County 2005).

Here, plaintiff maintains the burden of persuasion, even if the defendant designated its denial as an affirmative defense. Sinacore v. State of New York, 176 Misc 2d 1 (NY Ct. Cl. 1998). If the defendant sustains its burden of production of a fact or founded belief that the accident was staged, then the plaintiff should submit rebuttal evidence proving that coverage existed or risk losing its claim. A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc., supra; Universal Open MRI of the Bronx, P.C, supra.

At trial, what is the standard of proof for proving insurance coverage?

This Court concurs with the recent decisions by Judges Jack Battaglia (A.B. Medical Services, PLLC, D.A. Chiropractic, P.C., Daniel Kim’s Acupuncture, P.C., Somun Acupuncture, P.C., Square Synagogue Transportation Inc. v. State Farm Mutual Automobile Insurance Company ), Arlene Bluth (V.S. Medical Services, P.C. v. Allstate Insurance Company), and Richard Velasquez (Universal Open MRI of the Bronx, P.C. v. State Farm Automobile Insurance Company). These cases have clearly and succinctly indicated that the ultimate question in the staged accident arena is: whether the incident was intentional or not? Thus, the standard of proof as to that issue is preponderance of the evidence. Id. It is plaintiff’s burden to prove by a preponderance of the evidence that coverage existed for the accident. The defendant has the opportunity to explain why there is no coverage. When all of the evidence has been submitted the finder of fact must determine whether the evidence preponderates in favor of the plaintiff or the defendant. V.S. Medical Services, P.C., supra.

Based upon the foregoing, the evidence offered by the defendant did not meet its burden of producing evidence of a fact or founded belief that the collision was intentional. The defendant failed to proffer admissible evidence to rebut the presumption of coverage. The fact that the accident occurred soon after the purchase of the policy and the testimony by Ms. Cevallos indicating that the assignor had a record of prior accidents, taken together or alone does not sustain defendant’s burden. More importantly, the defendant did not provide any admissible evidence regarding the specific discrepancies in the testimonies of the passengers and the assignor or the other driver’s statement. Indeed, the defendant never offered the other driver’s testimony at this trial.

Based upon the evidence provided at trial, the defendant’s motion for a directed verdict is granted based upon plaintiff’s failure to prove its prima facie case.

This constitutes the decision and order of this Court.

Dated: July 14, 2006______________________

Genine D. Edwards, J.C.C.