70806/2005

Gary Tsirelman, PC
Attorney for Plaintiff
129 Livingston Street
Brooklyn, NY 11201
by Stefan Belinfanti, Esq.

Law Office of Deirdre J. Tobin & Assoc.
Attorney for Defendant
P.O. Box 9330
Garden City, NY 11530
by Janine Gentile, Esq.

Plaintiff brought this action to recover assigned first-party no-fault benefits in the amount of $3,960.57. Trial commenced on February 13, 2015, and was continued over several days. The issues presented were whether plaintiff may establish submission and receipt of its claim through the use of defendant’s witness and whether defendant insurer asserted a valid defense in denying payment.

At trial, instead of the customary method of establishing a prima facie case by calling a witness of the provider, plaintiff called defendant’s claims examiner, Ms. Dachs. Ms. Dachs testified that defendant received plaintiff’s bills for dates of service 11/17/03-1/19/04.

The denial, dated 7/26/04, indicated bills in the amount of $3,962.57, for dates of service 11/17/03-1/19/04, were received between 1/23/03 [sic] and 3/1/04. It also stated, “By the claimants [sic] own admission he allegedly was treated by a chiropractor and acupuncturist. [*2]However carrier received bills from an orthopedic [sic] and a physical therapist as well. Claimant stated that the receptionist at the chiropractors [sic] office gave him supplies, not an outside vendor as carrier was billed from. Carrier questions validity of claim/treatment.” Neither party presented the actual bills and defendant relied on these latter statements as the basis for the denial. Both parties rested and moved for a directed verdict. The court reserved decision and heard closing arguments.

In no-fault insurance cases, plaintiff’s prima facie burden requires establishing proof of submission to the defendant of the claim and that defendant failed to pay or deny the claim within thirty days or issued a denial that was vague, conclusory or without merit as a matter of law (see Insurance Law § 5106 [a]; Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 114 AD3d 33 [2d Dept 2013]; Ave T MPC Corp. v Auto One Ins. Co., 32 Misc 3d 128[A], 2011 NY Slip Op 51292[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]; see Westchester Med. Ctr. v Nationwide Mut. Ins. Co., 78 AD3d 1168 [2d Dept 2010]).

The Appellate Term reached a similar result in Prestige Med. & Surgical Supply, Inc. v Clarendon Natl. Ins. Co. (13 Misc 3d 127[A], 2006 NY Slip Op 51672[U], *1 [App Term, 2d Dept, 2d & 11th Jud Dists 2006]). There, the court, albeit in the context of a motion for summary judgment, found that although a “provider [ordinarily] establishes the submission’ of the claim form by demonstrating proof of proper mailing, which gives rise to the presumption that the claim form was received by the addressee,” where plaintiff’s proof was insufficient to establish mailing, the “deficiency was cured by defendant’s acknowledgment of receipt in its denial of claim forms [citations omitted] and by the admissions of the claims’ receipt in the affidavits by defendant’s claims adjusters” (id. at *2). As such, the court found plaintiff met its prima facie burden and the burden shifted to defendant to demonstrate triable issues of fact (id. [citations omitted]).

Thus, after the provider establishes submission of the bills, defendant’s burden is to prove that it paid or denied the claims within 30 days as required by statute (see Insurance Law § 5106 [a]; Insurance Department Regulations [11 NYCRR] § 65-3.8 [c]). Defendant may extend its time to pay or deny the claims by issuing timely requests for verification (11 NYCRR 65-3.5 [b]). However, it is well-established that delay letters that do not timely request verification will not serve to toll the time to pay or deny a claim (see 11 NYCRR 65-3.5 [a] [1]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535 [2d Dept 2005] [citations omitted]).

Here, rather than the customary method of establishing submission and receipt of the claim through introduction of a witness of the assignee or its billing company, as was articulated in Viviane Etienne (114 AD3d at 45), plaintiff proved such through the testimony of defendant’s witness and the introduction of the denial into evidence, which referenced the bills at issue. The court finds plaintiff was not constrained to prove its case through the conventional method of producing its own witness, but was permitted to prove such through admissible evidence using the documents and witnesses of the defendant insurer (Prestige Med. & Surgical Supply, Inc., 13 Misc 3d 127[A], 2006 NY Slip Op 51672[U], at * 2; Optimal Well-Being Chiropractic, P.C., [*3]46 Misc 3d 129[A], 2014 NY Slip Op 51807[U], at *1-*2; East Acupuncture, P.C. v Electric Ins. Co., 16 Misc 3d 128[A], 2007 NY Slip Op 51281[U], *1 [App Term, 2d Dept, 2d & 11th Jud Dists 2007] [holding NF-10 claim denial forms and affidavits of defendant’s claims examiner cured deficiencies in plaintiff’s proof of mailing]).

Furthermore, it is well-settled that “a medical provider is not required, as part of its prima facie case, to demonstrate the admissibility of its billing records or the truth of their content under the business records exception to the hearsay rule” (New York Hosp. Med. Ctr. of Queens v QBE Ins. Corp., 114 AD3d 648 [2d Dept 2014], citing see CPLR 4518 [a]; Viviane Etienne Med. Care P.C., 114 AD3d at 45). Where the insurer fails to timely contest the adequacy of the claims forms at the claims stage, as here, it is precluded from relying on any deficiencies in those forms or raising evidentiary challenges to the admissibility of the contents of the billing forms under the business records exception at the litigation stage (New York Hosp. Med. Ctr. of Queens, 114 AD3d at 649 [citations omitted]).

Therefore, defendant’s attack on the validity of the bills at trial here will not suffice to defeat plaintiff’s proof of a prima facie case. The testimony of Ms. Dachs and the denials were accepted into evidence and treated as admissions of receipt of the bills and the amount billed and not as a testament to the truth of their content (see Viviane Etienne Med. Care, P.C., 114 AD3d at 45). This result is consistent with the regulatory scheme for the prompt payment and processing of no-fault claims (see id.). Thus, plaintiff sufficiently met its prima facie burden by eliciting the credible testimony of defendant’s witness and admission of defendant’s denials. By establishing submission and receipt of the bills, the plaintiff shifted the burden to defendant to establish a valid defense for its failure to timely issue payment (see Viviane Etienne Med. Care, P.C., 114 AD3d at 45, 47; see Westchester Med. Ctr., 78 AD3d at 1169).

Defendant failed to meet its burden of establishing a justiciable defense because it failed to pay or deny the claims within 30 days as required by statute (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). Defendant also failed to extend its time to pay or deny the claims by issuing timely requests for verification (11 NYCRR 65-3.5 [b]). As defendant is sufficiently aware, delay letters, as here, that do not timely request verification will not suffice to toll the time to pay or deny a claim (see 11 NYCRR 65-3.5 [a] [1]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535 [2d Dept 2005]). After the fact, only a non-precluded defense will suffice to prevent payment (see 11 NYCRR 65-3.8). Further, although defendant denied these claims based on alleged fraud, no fraud was demonstrated at trial and defendant failed to produce a competent witness or other evidence from which same could be adduced.

Accordingly, based on the credible testimony of Ms. Dachs and examination of the denial and other exhibits admitted into the record, the court finds plaintiff met its prima facie burden of establishing proof of submission of the bills to defendant, receipt of the bills, and that payment is overdue (see Viviane Etienne Med. Care, P.C., 114 AD3d 33; see Westchester Med. Ctr., 78 AD3d 1168; see Ave T MPC Corp., 32 Misc 3d 128[A]). Defendant failed to establish an adequate defense to payment (see 11 NYCRR 65-3.8; see Viviane Etienne Med. Care, P.C., 114 AD3d at 45-47; see Nyack Hosp. v Encompass Ins. Co., 23 AD3d at 536). Therefore, plaintiff is entitled to a judgment.

The Clerk of the Court shall enter judgment for the plaintiff in the amount of $3,960.57 plus statutory costs, interest, and attorney’s fees. The motions for directed verdict are denied as moot. This constitutes the Decision and Order of the Court.

_________________________

Hon. Reginald A. Boddie

Acting Supreme Court Justice

[*1]

Civil Court of the City of New York, Queens County, April 24, 2015

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville (Lienne Pisano of counsel), for defendant.

The Odierno Law Firm, P.C., Melville (Paul Bargellini of counsel), for plaintiff.

Defendant’s motion for summary [*2]judgment is decided as follows:

This is an action to recover assigned no-fault benefits for chiropractic services allegedly rendered to plaintiff’s assignor on February 20, 2013 in the billed amount of $1,365.68. Defendant seeks an order dismissing this action based upon plaintiff’s alleged violation of Insurance Department Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act (11 NYCRR) § 65-3.16 [a] [12]), which states as follows:

“A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.”

On July 8, 2013, as established by Lori Mann, a claims representative employed by defendant, a timely denial of plaintiff’s bill was issued, based, inter alia, upon plaintiff’s alleged illegal fee-splitting. On February 10, 2014, defendant served a notice to admit, pursuant to CPLR 3123, upon the plaintiff, seeking to admit a copy of a contract purportedly entered into between plaintiff and its billing company, Systems Management Group, Inc. (SMG). The purported contract states that “[t]he Practice will pay SMG 6% of all fees charged & ultimately collected by SMG.” The court notes that the purported contract is not in admissible form as defendant has failed to lay a sufficient foundation for its admission (see Bajaj v General Assur., 18 Misc 3d 25 [App Term, 2d Dept, 2d & 11th Jud Dists 2007]). Defendant also submits the deposition transcript of Dr. Lucas Bottcher, DC, a member of the plaintiff’s practice. Therein, Dr. Bottcher admitted that plaintiff employs SMG and they are paid a fixed fee of five percent of collections. Defendant argues that since plaintiff allegedly pays six (or five) percent of its fees to its billing company, that its billing company owns six percent of plaintiff’s practice.

In opposition, plaintiff correctly argues that no court has found improper fee-splitting to be fraud nor a licensing requirement. Furthermore, defendant failed to present any case law{**47 Misc 3d at 1077} that improper fee-splitting is a defense in a no-fault action. Finally, plaintiff contends there is no support for the assertion that payment of six percent of receivables constitutes any form of ownership or control over the plaintiff. As such the parties have presented a case of first impression.

In State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]), the Court of Appeals upheld the Insurance Department’s regulation and held that a medical corporation that was fraudulently incorporated under Business Corporation Law §§ 1507 and 1508, and Education Law § 6507 (4) (c) is not entitled to be reimbursed by insurers, under Insurance Law § 5101 et seq. Business Corporation Law §§ 1507 and 1508, as applied to this action, prohibit non-chiropractors from owning any shares of or serving on the board of a professional corporation authorized to provide chiropractic services. Mallela and its progeny (Metroscan Imaging, P.C. v GEICO Ins. Co., 13 Misc 3d 35 [App Term, 2d Dept, 2d & 11th Jud Dists 2006]; Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 42 Misc 3d 30 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]) have consistently held that ownership of a professional corporation by non-professionals renders that corporation ineligible to [*3]recover no-fault benefits and that a carrier may conduct an investigation and look beyond the licensing documents in order to identify improper ownership and control of a professional corporation.

Defendant alleges that plaintiff has violated a licensing requirement by engaging in impermissible fee-splitting, in violation of the Rules of the Board of Regents (8 NYCRR) § 29.1 (b) (4) and Education Law §§ 6509-a and 6530 (19), with its billing company, Systems Management Group, Inc. Pursuant to 8 NYCRR 29.1 (b) (4) and Education Law § 6530 (19), unprofessional conduct shall include:

“permitting any person to share in the fees for professional services, other than: a partner, employee, associate in a professional firm or corporation, professional subcontractor or consultant authorized to practice [the same profession], or a legally authorized trainee practicing under the supervision of a licensed practitioner. This prohibition shall include any arrangement or agreement whereby the amount received in payment for furnishing space, facilities, equipment or personnel services used by a professional licensee constitutes{**47 Misc 3d at 1078} a percentage of, or is otherwise dependent upon, the income or receipts of the licensee from such practice.”

In Necula v Glass (231 AD2d 457 [1st Dept 1996]), the Appellate Division found that the Department of Social Services had properly found that petitioner had engaged in illegal fee-splitting pursuant to 8 NYCRR 29.1 (b) (4) where petitioner had entered into contracts with management companies under which the management companies were to provide facilities, supplies, equipment and staff necessary to operate his professional practice and petitioner was to pay the companies a percentage of his receipts. In Sachs v Saloshin (138 AD2d 586, 587 [2d Dept 1988]), the Appellate Division found that “by tendering a percentage of his patient fees to the plaintiffs, [defendant] violated the public policy of this State as reflected in Education Law § 6509-a [and] the rules for professional conduct established by the Board of Regents (8 NYCRR 29.1 [b] [4]).” A common thread throughout all of the cases cited by defendant is that while courts will refuse to enforce a contract which violates 8 NYCRR 29.1 (b) (4) and the Education Law, any punishment for unprofessional misconduct as defined by those sections is imposed by the State Board for Professional Medical Conduct. In cases where the State Board has imposed punishments, the role of the courts has been to review those punishments in the context of a CPLR article 78 proceeding.

In Mallela (4 NY3d at 322), the Court found that in the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud and that technical violations will not do. In every case where 11 NYCRR 65-3.16 (a) (12) has been successfully used as a complete and non-precludible defense in a no-fault action, the provider has been found to have committed violations of Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c) and appears to have never been based upon impermissible fee-splitting alone. The issue in this case is the definition of the term “licensing requirement.” The Court in Mallela (at 321) highlighted that the medical service corporation in that case “exists to receive payment only because of its willfully and materially false filings with state regulators.” Furthermore, the Court noted in footnote 2 that the Superintendent of Insurance promulgated 11 NYCRR 65-3.16 (a) (12) “to combat rapidly growing incidences of fraud in the no-fault regime, fraud that he has identified as correlative with the corporate practice of medicine by nonphysicians” (Mallela at 320 n 2).

{**47 Misc 3d at 1079}In this case, plaintiff has not been shown to have filed any fraudulent documents with the State and has not allowed non-physicians to control any aspect of their practice. As such, it is the conclusion of this court that impermissible fee-splitting, standing alone, is not a violation of a licensing requirement, does not constitute an available defense to a no-fault action and, as such, any action is solely within the purview of the appropriate state licensing board.

For the foregoing reasons, defendant’s motion is hereby denied in its entirety.

[*1]

Civil Court of the City of New York, Bronx County, April 7, 2015

APPEARANCES OF COUNSEL

Peter C. Merani, P.C., New York City (Joshua Youngman of counsel), for defendant.

Cohen & Jaffe, LLP, Lake Success (Aaron J. Perretta of counsel), for plaintiff.

Plaintiff initiated this action against defendant to recover assigned first-party no-fault benefits for medical services it provided on October 21, 2013 to its assignor for injuries sustained by its assignor resulting from a June 18, 2013 accident. Defendant now moves for summary judgment, pursuant to CPLR 3212.

Factual and Procedural Background

Plaintiff’s assignor, Hector Flores, was involved in a motor vehicle accident on June 18, 2013. After the accident, Mr. Flores underwent outpatient surgery at plaintiff’s facility in Saddle Brook, New Jersey, on October 21, 2013.{**48 Misc 3d at 338}

Plaintiff as the assignee of Mr. Flores submitted a claim to defendant in the amount of $11,778. Defendant received the claim on November 29, 2013, and issued a payment in the amount of $1,629.75 on January 3, 2014. Defendant denied the balance of plaintiff’s claim by a denial of claim form dated January 3, 2014 and mailed no later than January 6, 2014 to plaintiff. Defendant denied the balance of the claim because the amount billed exceeds the New Jersey fee schedule. Plaintiff commenced this action to recover the full $11,778 alleging that “[t]here has been no payment of the subject [b]ill” despite defendant’s payment of $1,629.75.

Arguments

Defendant seeks summary judgment on the ground that plaintiff’s bill exceeds the amount allowed under the New Jersey fee schedule in contradistinction to 11 NYCRR 68.1. Defendant annexes to its summary judgment motion an affidavit from a claims representative, who has received training in no-fault regulations and workers’ compensation fee schedules and is a certified coder, describing how she determined that plaintiff’s bill for the medical services provided on October 21, 2013 exceeds the New Jersey fee schedule. Defendant tacitly acknowledges that it did not issue its denial for the balance of the claim within the 30-day time frame required under 11 NYCRR 65-3.8 by arguing that the timeliness of its denial is irrelevant because a recent amendment to 11 NYCRR 65-3.8 makes the defense of billing above the fee schedule a non-waivable defense.

Plaintiff opposes defendant’s summary judgment motion arguing that appellate case law has explicitly established that failure to deny a bill within 30 days of its receipt precludes an insurance company from denying the claim. Plaintiff cites Mercury Cas. Co. v Encare, Inc. (90 AD3d 475 [1st Dept 2011]) and Westchester Med. Ctr. v American Tr. Ins. Co. (17 AD3d 581 [2d Dept 2005]) for the proposition that “defenses predicated upon a proper rate of payment for services rendered must be preserved within a proper and timely denial of claim.” Plaintiff tacitly concedes that it billed above the New Jersey fee schedule but argues that because it is an out of state provider, 11 NYCRR 68.6 governs not 11 NYCRR 68.1 and 11 NYCRR 68.6 does not constrain plaintiff to billing at the rate set forth in the New Jersey fee schedule. According to plaintiff, 11 NYCRR 68.6 does not limit out of state providers to the provider’s{**48 Misc 3d at 339} state’s fee schedule rate but merely requires plaintiff to charge for its services at the prevailing rate for its geographic location. Plaintiff asserts that if New York wanted to require out of state providers to charge at the fee schedule rate for their geographic location, the New York Legislature would have explicitly mandated that fees for out of state medical services be billed at the fee schedule for the provider’s geographic location. Plaintiff’s opposition does not include an affidavit from an individual who is familiar with coding and fee schedules. Instead, plaintiff posits that it need not submit an affidavit from someone with personal knowledge of coding and fee schedule issues because defendant has failed to make a prima facie showing that it is entitled to summary judgment as a matter of law.

Analysis

The proponent of a motion for summary judgment bears the initial burden of coming forward with evidence showing prima facie entitlement to judgment as a matter of law, and, unless that burden is met, the opponent need not come forward with any evidence at all. (Penava Mech. Corp. v Afgo Mech. Servs., Inc., 71 AD3d 493, 495-496 [1st Dept 2010], citing Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980].)

Once the movant establishes prima facie entitlement to judgment, the burden shifts to the opposing parties to “demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action” (Zuckerman at 560). While all “facts must be viewed ‘in the light most favorable to the non-moving party’ ” (Vega v Restani Constr. Corp., 18 NY3d 499, 503 [2012], quoting Ortiz v Varsity Holdings, LLC, 18 NY3d 335, 339 [2011]), mere conclusory allegations or defenses are insufficient to defeat summary judgment (see Zuckerman, 49 NY2d at 562).

Billing Rate

[1] Under New York’s no-fault insurance statutory and regulatory scheme a New York State medical provider may bill for eligible services in an amount not in excess of the amount allowed under the workers’ compensation fee schedule. (Insurance Law § 5108 [a]; 11 NYCRR 68.1.) “The purpose of the [no-fault] statute and the fee schedules promulgated thereunder is to ‘significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium’ ” {**48 Misc 3d at 340}(Goldberg v Corcoran, 153 AD2d 113, 118 [2d Dept 1989], quoting Governor’s Program Bill, 1977 McKinney’s Session Laws of NY at 2449, and citing Governor’s Mem in Support of Assembly Bill A7781-A).

However, for health services performed outside New York State, pursuant to 11 NYCRR 68.6, the medical provider may charge for its services according to “the prevailing fee in the geographic location of the provider.” As noted above plaintiff argues that if the New York Legislature intended out of state providers to be limited to billing for their services at the applicable fee schedule for their geographic location, the legislature would have explicitly said so in section 68.6 rather than allowing the providers to bill at the prevailing fee for their geographic location.

The court disagrees with plaintiff’s argument for three reasons. First, allowing plaintiff to bill at a rate above the New Jersey fee schedule would undermine the purpose of the no-fault scheme, “to significantly reduce the amount paid by insurers . . . thereby help[ing] to contain the no-fault premium.” (Goldberg, 153 AD2d at 118 [internal quotation marks omitted].) Indeed, the circumstances of this case illustrate that point. Plaintiff billed $11,778 for the medical services it provided to its assignor on October 21, 2013. Defendant’s certified fee coder determined, using New Jersey’s fee schedule, that plaintiff was entitled to a payment in the amount of $1,629.75 for the services plaintiff provided on [*4]October 21, 2013, a $10,148.25 difference or over six times the amount allowed under the New Jersey fee schedule. If plaintiff and those providers similarly situated were allowed to bill for their services at such an increased rate above what the fee schedule allows for their geographic location, no-fault premiums would likely increase, a result the no-fault statutory and regulatory scheme was designed to avoid. (Id.)

In support of its argument that had the New York Legislature intended out of state providers to limit their fees to the fee schedule for their geographic location it would have specifically said so in section 68.6, plaintiff refers to New Jersey Administrative Code (NJAC) § 11:3-29.4 (d) (2) which provides in pertinent part that “[w]hen the service or equipment is provided by reason of the election by the insured to receive treatment outside the State of New Jersey, the reasonable and necessary costs shall not exceed fees set forth in the fee schedules for the geographic region in which the insured{**48 Misc 3d at 341} resides.” Comparing section 68.6 with NJAC § 11:3-29.4 (d), plaintiff concludes that “[h]ad the New York Legislature intended for the ‘prevailing fee schedule’ to act as the de facto rate by which medical services rendered outside of New York state are measured, it would have specifically enumerated such within [section 68.6] as the New Jersey legislature did with its Administrative Code.” However, plaintiff misreads New Jersey’s rule and thereby undercuts its argument. New Jersey’s rule does not limit providers to the fee schedule amount for the provider’s geographic location as plaintiff suggests, but rather limits providers to the fee schedule amount where the claimant/insured resides. In this court’s opinion, New York’s out of state provider reimbursement rule more accurately compensates out of state providers since it takes into account the economic vagaries of the provider’s region rather than imposing on the provider the fee schedule rate of the claimant/insured which may not reflect the same economic conditions as the fee schedule in the provider’s geographic location.

Moreover, plaintiff’s argument that if the New York Legislature wanted to limit out of state providers to the fee schedule for their geographic location the legislature would have explicitly said so is premised upon the assumption that every other state has enacted no-fault statutes. The New York Legislature likely set out of state provider rates at the prevailing fee for their geographic locations rather than at the fee schedule rates in order to take into account providers located in regions that do not have no-fault statutes and/or fee schedule rates.

Finally, plaintiff’s argument that it is not limited to billing at the New Jersey fee schedule is not supported by another goal of the no-fault statute which is “to reduce the burden on the courts.” (Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007].) Adopting plaintiff’s reading of section 68.6 would require the court to hold a hearing every time the claimant received medical treatment from an out of state provider to determine the “prevailing fee” for the provider’s geographic location thereby increasing the burden on the courts manyfold.

Accordingly, for all of these reasons the court holds that the “prevailing fee” as that term is used in section 68.6 is the amount permitted under New Jersey’s fee [*5]schedule. (Surgicare Surgical v National Interstate Ins. Co., 46 Misc 3d 736, 744{**48 Misc 3d at 342} [Civ Ct, Bronx County 2014] [holding “that, when services are rendered outside of New York but in a jurisdiction which utilizes a fee schedule, the insurer complies with section 68.6 by paying . . . the amount permitted by that jurisdiction’s fee schedule”].)

Timeliness of Denial

[2] 11 NYCRR 65-3.8 (a) (1) provides in pertinent part that “[n]o-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim.” Here there is no dispute that defendant did not deny plaintiff’s claim within 30 calendar days after it received proof of plaintiff’s claim.

“There are substantial consequences [for] an insurer’s failure to pay or deny a claim within 30 days.” (A.M. Med. Servs., P.C. v Progressive Cas. Ins. Co., 101 AD3d 53, 65 [2d Dept 2012] [internal quotation marks omitted], citing Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007].) Where an insurance carrier fails to deny a claim within the 30-day period, it is generally precluded from asserting a defense against payment of that claim. (Id., citing Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282-283 [1997].) However, a narrow exception to this preclusion rule is recognized in “situations where an insurance company raises a defense of lack of coverage.” (Hospital for Joint Diseases, 9 NY3d at 318.) Under these circumstances, “an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed.” (Hospital for Joint Diseases, 9 NY3d at 318 [internal quotation marks omitted].)

The test for “determining whether a specific defense is precluded . . . or available . . . entails a judgment: Is the defense more like a ‘normal’ exception from coverage (e.g., a policy exclusion), or a lack of coverage in the first instance (i.e., a defense ‘implicat[ing] a coverage matter’)?” (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 565 [2008].) An example of a normal exception from a coverage/policy exclusion is where the insurer alleges the billed for services were never rendered. (Id.) Thus, an insurer is precluded from raising this defense unless timely raised in its denial. (Id.) An example of a lack of coverage in the first instance is an insurer’s “founded belief that the alleged injury does not arise out of an insured incident.” (Central Gen. Hosp. v Chubb Group of Ins.{**48 Misc 3d at 343} Cos., 90 NY2d 195, 199 [1997].) An insurer is not precluded from raising this defense even though it failed to issue a denial within the 30-day period under Insurance Law § 5106 (a) and 11 NYCRR 65-3.8 (a). (Id.)

Appellate authority stands for the proposition that a defense that the provider’s bill exceeds the maximum allowed under the fee schedule is a policy exclusion defense and thus precluded if not preserved within a timely issued denial of claim. (Mercury [*6]Cas. Co. v Encare, Inc., 90 AD3d 475 [1st Dept 2011], lv denied 18 NY3d 810 [2012] [holding fee schedule defense does not fit within narrow exception for denials based on lack of coverage]; Okslen Acupuncture, P.C. v N.Y. Cent. Mut. Fire Ins. Co., 37 Misc 3d 127[A], 2012 NY Slip Op 51887[U], *1 [App Term, 1st Dept 2012] [holding “insurer did not timely deny the claim for first-party no-fault benefits within the prescribed 30-day period, (therefore,) it is precluded from asserting the defense that the fees charged were excessive”].)

However, a February 2013 amendment to the insurance regulations regarding timeliness of fee schedule defenses calls into question whether Mercury Cas. Co. and Okslen Acupuncture P.C. are still controlling authority. 11 NYCRR 65-3.8 provides in pertinent part that

“(g) (1) [p]roof 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.”^[FN*]

Here the parties agree that the medical services were provided to an “injured party,” someone having a claim for {**48 Misc 3d at 344}benefits pursuant to New York’s statutory and regulatory no-fault insurance scheme, and this case does not involve an issue under Insurance Law § 5108 (a), a New York fee schedule dispute.

The relevant portion of section 65-3.8 (g) (1) for this case is subparagraph (ii) and its reference to Insurance Law § 5108 (b). This case is within the rubric of section 5108 (b) because the court is called upon to interpret 11 NYCRR 68.6, a regulation promulgated by the insurance superintendent, and as already stated above, the court interprets 11 NYCRR 68.6 as requiring plaintiff to bill for its services at the applicable New Jersey fee schedule rate for its geographic location. As such, this case involves a [*7]fee that exceeds the charges permissible pursuant to Insurance Law § 5108 (b) requiring the court to interpret and determine the applicability of 11 NYCRR 65-3.8 (g) (1) (ii).

The parties do not cite to a case interpreting section 65-3.8 (g) (1) (ii) and the court did not find such a case. Therefore, it appears to be a question of first impression whether 65-3.8 (g) (1) (ii) allows an insurer to assert a fee schedule defense even though it did not issue a denial of claim within 30 days of receipt of the claim asserting that the provider billed at a rate above the amount permitted under the applicable fee schedule for the provider’s geographic location.

Parsing section 65-3.8 (g) (1) assists in its interpretation. 11 NYCRR 65-3.8 (g) (1) relieves insurers from the obligation to pay first-party no-fault benefits under two sets of circumstances. Section 65-3.8 (g) (1) (i) relieves an insurer from paying a claim when the medical provider renders services to a patient who is not an injured party. In other words, the insurance company is not required to reimburse a provider for medical services provided to someone who is not an accident victim as that term is understood under the Insurance Law. (See Insurance Law § 5108 [b].) Section 65-3.8 (g) (1) (i) codifies an example of a defense that is more akin to a lack of coverage in the first instance because coverage never legitimately came into existence. (Fair Price Med. Supply Corp., 10 NY3d at 565.)

The court determines that the superintendent intended the same result for section 65-3.8 (g) (1) (ii). The court reaches this determination for two reasons. First, the plain language of the regulation relieves an insurer of paying the provider “under any circumstances” when the claimed medical service fees exceed the permissible amount pursuant to the applicable fee{**48 Misc 3d at 345} schedule for the provider’s geographic location. (Klein v Empire Blue Cross & Blue Shield, 173 AD2d 1006, 1009 [3d Dept 1991] [noting that “(g)enerally, the plain language used in a regulation should be construed in its natural and most obvious sense” (citation omitted)].) Therefore, “any circumstances” includes instances where the insurer fails to issue a denial raising the fee schedule as an issue within 30 days of its receipt. Second, the preceding subparagraph (i) is a codification of a defense that falls squarely within the realm of defenses that are more akin to lack of coverage in the first instance. (Matter of MHG Enters. v City of New York, 91 Misc 2d 842, 846 [Sup Ct, NY County 1977] [reasoning that “(i)n interpreting the language of a statute or regulation, the court must give meaning to its words ‘in the context of their particular setting’ ”], quoting Motor Veh. Acc. Indem. Corp. v Eisenberg, 18 NY2d 1, 3 [1966].)

This interpretation of section 65-3.8 (g) (1) (ii) conflicts with the holdings of Mercury Cas. Co. and Okslen Acupuncture P.C. wherein the First Department Appellate Division and Appellate Term held that fee schedule defenses are precluded if not raised in a timely issued denial. However, those cases predate the amendment to section 65-3.8 (g) (1) and the court determines that subparagraph (ii) abrogates Mercury Cas. Co. [*8]and Okslen Acupuncture P.C. The court reaches this determination because “[a]n administrative agency’s exercise of its rule-making powers is accorded a high degree of judicial deference, especially when the agency acts in the area of its particular expertise” (Matter of Consolation Nursing Home v Commissioner of N.Y. State Dept. of Health, 85 NY2d 326, 331 [1995]) and where the regulation is “in harmony with the statute’s over-all purpose.” (Matter of General Elec. Capital Corp. v New York State Div. of Tax Appeals, Tax Appeals Trib., 2 NY3d 249, 254 [2004] [internal quotation marks and citation omitted].) Here, the regulation pertains to an area of expertise within the Insurance Division of the Department of Financial Services. (Consolation Nursing Home, 85 NY2d at 331.) Furthermore, allowing an insurer to raise a fee schedule defense even though it was not preserved in a timely issued denial is in harmony with the no-fault statute’s goal of significantly reducing “the amount paid by insurers . . . thereby help[ing] [to] contain the no-fault premium.” (Goldberg, 153 AD2d at 118; General Elec. Capital Corp., 2 NY3d at 254.)

For these reasons, the court holds that where an insurer fails to issue a denial within 30 days of its receipt of a claim{**48 Misc 3d at 346} raising a fee schedule issue, under 11 NYCRR 65-3.8 (g) (1) (ii) the insurer is not precluded from raising its defense that the provider billed above the applicable amount permitted under the fee schedule for the provider’s geographic location in an action by the provider for first-party no-fault benefits.

Conclusion Defendant has established prima facie entitlement to summary judgment against plaintiff pursuant to defendant’s fee schedule defense under 11 NYCRR 65-3.8 (g) (1) (ii), by demonstrating that plaintiff’s bills for services provided sought amounts in excess of the amount permitted under the New Jersey fee schedule and that defendant made partial payment of plaintiff’s claim in accordance with the New Jersey fee schedule. Plaintiff has failed to demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action.

Accordingly, defendant’s motion for summary judgment is granted in its entirety and plaintiff’s claim is dismissed with prejudice.

The Clerk is directed to enter judgment in favor of defendant.

Footnotes

Footnote *:Insurance Law § 5108 provides in pertinent part that

“(a) [t]he charges for services . . . shall not exceed the charges permissible under the schedules prepared and established by the chairman of the workers’ compensation board . . .

“(b) The superintendent, after consulting with the chairman of the workers’ compensation board and commissioner of health, shall promulgate rules and regulations implementing and coordinating the provisions of this article.”

029970/14

Jaffe & Koumourdas appeared for Country-Wide Insurance Company

Law Offices of Gary Tsirelman appeared for New Century Acupuncture P.C. A/A/O William Dew

This proceeding arises out of an arbitration in which respondent New Century Acupuncture P.C. (“New Century”) sought reimbursement from petitioner Country-Wide Insurance Company (“Country-Wide”) for healthcare services which New Century allegedly provided to its assignor, William Dew, following a motor vehicle accident which occurred on May 23, 2011.

A hearing on this claim, together with seven similar claims, was held on May 20, 2014 before Michael Rosenberger, an arbitrator designated by the American Arbitration Association (“AAA”).^[FN1] Country-Wide argued that New Century’s claim for no-fault benefits should be dismissed on the grounds, inter alia, that New Century was fraudulently incorporated. Specifically, it claimed that New Century falsely represented in its certificate of incorporation that it was owned or controlled solely by licensed professionals. See, generally, State Farm Mut. Auto Insurance Co. v Mallela, 4 NY3d 313 (2005).

Country-Wide contends that New Century was actually owned or co-owned and controlled by an individual named Andrey Anikeyev, who pleaded guilty on February 15, 2013 to conspiracy to commit mail fraud and health care fraud, in violation of Title 18, United States Code, Section 371.^[FN2] As part of his plea, Mr. Anikeyev was required to forfeit his right to a number of bank accounts, including a bank account under New Century’s name.

In the Arbitration Award, issued on May 28, 2014 in favor of New Century, the arbitrator noted that Dr. Kondranina, the disclosed owner of New Century, had not been charged by any governmental agency with any crimes. He further found that there was no evidence showing Dr. Kondranina knew Mr. Anikeyev was in possession of the bank account or that Dr. Kondranina gave a substantial portion of his profits to Mr. Anikeyev.^[FN3]

The arbitrator thus concluded that Country-Wide failed to meet its burden of showing by clear and convincing evidence that New Century is actually owned by Mr. Anikeyev.

Country-Wide then pursued an appeal through AAA’s Master Arbitration process in which it argued, inter alia, that Arbitrator Rosenberger failed “to disclose a relationship, direct or indirect, with New Century Acupuncture PC and its attorneys [which] mandates vacatur.” Specifically, Country-Wide alleged that the arbitrator “is or was” a named partner of Rapuzzi Palumbo & Rosenberger, P.C., a law firm which “is closely related to” the firm of Gabriel & Shapiro, P.C., which has represented and continues to represent [*2]New Century in other no-fault proceedings.^[FN4]

The master arbitrator, Victor D’Ammora, issued a Master Arbitration Award dated August 26, 2014, upholding the Arbitration Award, finding that “[t]here is nothing in the record before me to indicate that Arbitrator Rosenberger’s decision was arbitrary, capricious, or incorrect as a matter of law.” He further determined that “[t]he issue of any possible bias or fraud by Arbitrator Rosenberger cannot be raised for the first time in this Master Arbitration and will not be considered.”

Country-Wide then filed the instant petition in which it seeks an order pursuant to CPLR §§ 7511(b)(1)(i) and 7511(b)(1)(iii) vacating the Master Arbitration Award and permanently staying the arbitration of New Century’s claim against Country-Wide for no-fault benefits on the ground that the Master Arbitrator exceeded his authority by confirming the Arbitration Award.

Country-Wide argues, inter alia, that the Award must be vacated based on Arbitrator Rosenberger’s failure to disclose his past and/or present relationship with New Century and its attorneys.

It is well settled that

[t]he judiciary should minimize its role in arbitration as judge of the arbitrator’s impartiality. That role is best consigned to the parties, who are the architects of their own arbitration process, and are better informed of the prevailing ethical standards and reputations within their business.

Matter of J.P. Stevens & Co., Inc. V Rytex Co., 34 NY2d 123, 128 (1984), quoting Commonwealth Coatings Corp. v Continental Cas. Co., 393 US 145 (1968) (White, J., concurring).

However, the parties’ role in this process “can only be achieved if, prior to the commencement of the arbitration, the arbitrator discloses to the parties all facts which might reasonably cause one of them to ask for disqualification of the arbitrator.” Matter of J.P. Stevens & Co., Inc. v Rytex Co., supra at 128.

Therefore, ” it is incumbent upon an arbitrator to disclose any relationship which raises even a suggestion of possible bias’ (citation omitted).” Matter of Kern v 303 East 57th Street Corp. 204 AD2d 152, 153 (1st Dep’t 1994), lv to app denied, 84 NY2d 210 (1994). See also, Matter of Soma Partners, LLC v Northwest Biotherapeutics Inc., 41 AD3d 257 (1st Dep’t 2007), app. dism’d, 9 NY3d 942 (2007); Matter of Catalyst Waste-to-Energy Corp. of Long Island v City of Long Beach, 164 AD2d 817, 820 (1st Dep’t 1990), app. dism’d, 76 NY2d 1017 (1990).

The failure of an arbitrator to disclose facts that might give rise to an inference of bias mandates vacatur of the arbitrator’s award. See, Matter of Soma Partners, LLC v Northwest Biotherapeutics Inc., supra; Matter of Morgan Guaranty Trust Company of New York v Solow Building Co., LLC, 279 AD2d 431 (1st Dep’t 2001).

New Century argues that this Court, like the master arbitrator, should decline to review the allegation that the arbitrator failed to disclose a potential bias because Country-Wide failed to raise any objection at the initial arbitration. See, Matter of J.P. Stevens & Co., Inc. v Rytex Co., supra at 129, which held that “a party to an arbitration may [not] sit idly back and rely exclusively upon the arbitrator’s disclosure” where that party has “actual knowledge of the arbitrator’s bias, or of facts that reasonably should have prompted further, limited inquiry.”

However,

[w]hile such responsibility to ascertain potentially disqualifying facts does rest upon the parties, the major burden of disclosure properly falls upon the arbitrator. After all, the arbitrator is in a far better position than the parties to determine and reveal those facts that might give rise to an inference of bias. Further, the very nature of the arbitrator’s quasi-judicial function, particularly since it is subject to only limited judicial review, demands no less a duty to disclose than would be expected of a Judge (citations omitted).”

Matter of J.P. Stevens & Co., Inc. v Rytex Co., supra at 129. See also, Matter of Milliken Woolens, Inc. v Weber Knit Sportswear, 11 AD2d 166 (1st Dep’t 1960), aff’d, 9 NY2d 878 (1961).

There is no evidence that Country-Wide was aware of a potential conflicting relationship before or at the time of the [*3]hearing, nor is there any indication that Country-Wide possessed sufficient facts that reasonably should have prompted it to conduct a further inquiry.^[FN5] Therefore, the issue of the arbitrator’s potential bias is properly before this Court.^[FN6]

New Century alternatively argues that there is no basis to vacate the Arbitration Award absent any evidence that Mr. Rosenberger ever directly represented New Century in any matter. It contends that Country-Wide has, at most, established a remote or mere occasional association between the arbitrator and the law firm of Gabriel & Shapiro. See, Tricots Liesse (1983), Inc. v Intrex Industries, Inc., 284 AD2d 226, 227 (1st Dep’t 2001), lv to app. denied, 97 MY2d 606 (2001); Matter of Chernuchin v Liberty Mutual Insurance Company, 268 AD2d 521, 522 (2nd Dep’t 2000).

Here, however, there is considerable evidence that the arbitrator had more than a remote or occasional association with Gabriel & Shapiro, which has and continues to represent New Century in various no-fault proceedings.

There is no dispute that Mr. Rosenberger co-published an article in the New York Law Journal in 2013 with Jason A. Moroff, a partner at Gabriel & Shapiro, who apparently represented New Century at a AAA hearing as recently as May 28, 2014, the same day Mr. Rosenberger issued the Arbitration Award at issue in this proceeding.

There is also no dispute that the arbitrator’s law firm, Rapuzzi Palumbo & Rosenberger, shared space with Gabriel & Shapiro at 3361 Park Avenue in Wantagh, New York. Moreover, New Century does not refute Country-Wide’s representation that Rapuzzi Palumbo & Rosenberger is listed on the New York Division of Corporations Database under the “current entity name” of Gabriel [*4]& Shapiro, P.C.

Finally, there is no dispute that Gabriel & Shapiro’s current website is located at www.rprlawfirm.com, an address which appears to strongly suggest an affiliation or continuing connection with the law firm of Rapuzzi Palumbo & Rosenberger.

New Century contends that these factors merely show that Rapuzzi Palumbo & Rosenberger was “taken over” by Gabriel & Shapiro. However, New Century has failed to submit any documents clarifying the nature and circumstances of the alleged takeover or merger of the firms at issue. Moreover, New Century has failed to submit an affidavit from any attorney at Gabriel & Shapiro (which would presumably be amenable to assisting its client in this matter) attesting that Mr. Rosenberger has severed all financial and professional ties with that firm.

Therefore, based on the papers submitted and after hearing oral argument, this Court finds that the failure of the arbitrator to disclose his connection to Gabriel & Shapiro and to provide Country-Wide with a timely opportunity to reasonably ask for his disqualification based on a potential bias, mandates vacatur of the Arbitration Award.

Accordingly, it is

ORDERED and ADJUDGED that the Petition is granted, and the Arbitration Award is vacated.

This constitutes the decision and order of this Court.

Dated: April 1, 2015____________________________

Hon. Michael L. Katz

J.C.C.

Footnotes

Footnote 1:Five of the parallel claims are the subject of nearly identical motions filed under Index Numbers 029968/14, 029971/14, 029972/14, 029973/14, and 029974/14.

Footnote 2:Mr. Anikeyev acknowledged on the record before the Hon. J. Paul Oetken, a Judge of the United States District Court, Southern District of New York, that he had “submitted bills through mail to various insurance companies for acupuncture services which [he] knew were false. Some of these mailings were to insurance companies located in Manhattan, New York. These bills requested payments for health care services for time periods in excess of the actual time period the patient spent with acupuncturist.” He further admitted that he committed these actions “with intent to obtain money from various insurance companies which was not rightfully [his].”

Footnote 3:The arbitrator considered factors discussed in Andrew Carothers, M.D., P.C. v Progressive Ins. Co., 42 Misc 3d 30 (App. Term, 2nd Dep’t 2013) in determining whether or not Mr. Anikeyev, who is not a licensed acupuncturist, had exercised substantial control over the professional corporation.

Footnote 4:There is no dispute that New Century was represented by the Tsirelman Law Firm (and not by Gabriel & Shapiro) in the arbitration at issue in this proceeding.

Footnote 5:Country-Wide does not dispute that it was aware that Gabriel & Shapiro represented New Century in various matters, including several cases involving Country-Wide’s current counsel. However, there is no evidence that either Country-Wide or its counsel was aware of any connection between the arbitrator and Gabriel & Shapiro.

Footnote 6:This Court rejects New Century’s argument that this Court must assume that it is a proven fact that Mr. Rosenberger had no conflict simply because AAA (which requires arbitrators to disclose their affiliations) scheduled the hearing.

CV- 703200/13

For plaintiff, Avanguard Medical Group, PLLC(b)

Law Offices of Leon Kucherovsky, Esq.

Rachita Sharma Pate, Esq.

115 S. Corona Ave.

Valley Stream, NY 11580

(516) 881-7755

For defendant, State Farm Mutual Automobile Ins. Co.

Nicolini, Paradise, Ferretti & Sabella, PLLC

Francis J. Ammendolea, Esq.

114 Old Country Road

Mineola, New York 11501

(516) 741-6355

Defendant State Farm Mutual Automobile Insurance Company (“State Farm”), a No-Fault insurance provider, moves, pursuant to CPLR 3212, for summary judgment dismissing the complaint. Plaintiff Avanguard Medical Group, PLLC(b) (“Avanguard”) is the assignee of Patria Martell, an individual covered under a policy of insurance issued by State Farm. The complaint seeks to recover payment of an assigned No-Fault insurance claim that was denied by State Farm on the basis of improper fee schedule billing. For the reasons stated herein, State Farm’s motion for summary judgment is granted.

Facts

Avanguard is a duly accredited office-based surgical facility (“OBS facility”) operated pursuant to New York State’s Public Health Law Section 230-d, entitled “Office-based surgery.” Avanguard alleges that it provided health services to Patria Martell for injuries she sustained during a September 16, 2012 automobile accident. Martell was covered under a policy with State Farm, which included payment of No-Fault benefits for her accident related healthcare. On [*2]January 16, 2013, Avanguard billed State Farm $2,550.00 for services it provided to Martell. The bill was based on a fee schedule that incorporated a “facility fee” in accordance with “The Products of Ambulatory Surgery” (“PAS”) classification. State Farm received the bill on January 29, 2013. On February 15, 2013, State Farm responded with an NF-10 “Denial of Claim” form, refusing to pay Avanguard’s bill in its entirety.

State Farm argues, inter alia, that it properly denied the claim because Avanguard, as an OBS facility, improperly billed pursuant to a PAS facility-fee-inclusive fee schedule authorized exclusively for use by facilities licensed under Article 28 of the New York State Public Health Law (“Art. 28”).^[FN1] Avanguard acknowledges that it is not licensed under Art. 28, but contends that: (1) its bill was permissible because an OBS facility should be entitled under Insurance Law Section 5108(a) to recover its facility fee and (2) the PAS fee schedule, which authorizes facility fee reimbursement for Art. 28 facilities, does not expressly exclude an OBS facility from billing on the PAS fee schedule. On April 1, 2013, Avanguard commenced this action, alleging State Farm wrongfully denied its insurance claim and demands judgment for $2,550.00 plus interest and attorneys’ fees.

Discussion

The issue to be resolved in this motion for summary judgment is whether an OBS facility may properly bill for reimbursement pursuant to the PAS facility-fee-inclusive fee schedule. This issue is addressed by way of statutory interpretation, pending legislation, persuasive case law, and statements published regarding this subject by the New York State Department of Health (“DOH”). For the reasons discussed below, this Court finds that Avanguard, as an OBS facility, is not authorized to bill pursuant to the PAS facility-fee-inclusive fee schedule and, therefore, State Farm properly denied Avanguard’s insurance claim on the basis of improper fee schedule billing.

A. Statutory Consideration

State Farm alleges that Avanguard’s insurance claim was properly denied because it was billed on a PAS fee schedule reserved by its terms exclusively for Art. 28 licensed facilities. See Ammendolea Aff. ¶ 18. New York State Insurance Law Section 5102(a)(1) provides for the reimbursement for “economic loss” relating to “all necessary expenditures incurred for medical and surgical services.” Upper East Side Surgical, PLLC v. State Farm Ins. Co., 34 Misc 3d 1219(A), at *4 (Dist. Ct., Nassau County 2012). Compensation, pursuant to Insurance Law Section 5108(a), is, however, “limited to the amount permissible under the schedules prepared and established by the chairman of the workers’ compensation board for industrial accidents.” Id.

Among the established fee schedules are billing codes for reimbursement in accordance with the PAS classification system, which includes facility fee reimbursements expressly authorized for facilities licensed under Art. 28. Avanguard, however, is not a “Hospital” or “Ambulatory Surgery Facility” licensed under Art. 28, but rather an OBS facility under Public Health Law Section 230-d, which offers no provision for an OBS facility to recover a facility fee. Further, there is no prepared or established fee schedule pursuant to Insurance Law Section 5108(a) upon which an OBS facility may claim reimbursement for its facility fees. Thus, Avanguard fails to demonstrate how State Farm was obligated to reimburse its OBS facility fees pursuant to the PAS fee schedule.

Both parties reference the same pending legislation introduced in the New York State Senate aimed at amending Public Health Law Section 230-d to include, inter alia, authorization for OBS facilities to “seek payment from a health plan for the use of such facility.” 2011 New York State Senate Bill S4597-B, ¶ 6. It is evident from the fact that the proposed legislation was never adopted into law that there is a necessity for a legislative enactment to require No-Fault insurers to reimburse OBS facility fees along the PAS fee schedule and that such reimbursement is not currently permitted. This conclusion can be based upon principles governing the construction and interpretation of statutes in New York: The maxim expressio unius est exclusio alterius is applied in the construction of the statutes, so that where a law expressly describes a particular act, thing or person to which it shall apply, an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded.

McKinney’s Cons. Laws of NY, Book 1, Statutes, § 240; see also UMG Recordings, Inc. v. Escape Media Grp., Inc., 107 AD3d 51 (1st Dep’t 2013). The maxim is particularly appropriate here where the legislature recently, in 2007, addressed authorization and accreditation requirements for OBS facilities by enacting Public Health Law Section 230-d, which has been amended in part as recently as 2012. The right to seek reimbursement for OBS facility fees could have been included in that legislation but it was omitted. Accordingly, the current regulations requiring No-Fault insurers to reimburse Art. 28 facilities along the PAS fee schedule that includes facility fees should not be extended to OBS facilities by way of judicial fiat, but rather by legislation.

B. Case Law Considerations

Despite the unresolved controversy over what rights and billing processes, if any, might apply to an OBS facility seeking to recover its facility fees, the rule emerging from judicial decisions cited by both parties in this case is that an OBS facility is “not authorized to be reimbursed for the medical/surgical services it provided to its assignor under the facility fee’ schedule in accordance with [the PAS] system because it is not an Art. 28 facility.” Upper East Side, 34 Misc 3d 1219(A), at *4; see also Gov’t Emps. Ins. Co. v. Avanguard Med. Grp. PLLC. (GEICO), 2012 NY Misc. LEXIS 2687, at *8 (Sup. Ct., Nassau County May 31, 2012).

In Upper East Side, supra, the court found that the plaintiff, an OBS facility, was “entitled to reimbursement under Insurance Law § 5102(a)(1) for the medical/surgical services it provided to its assignor,” but that it was not authorized to bill the insurer for its facility fees pursuant to the PAS classification system “because it is not an Art. 28 facility.” 34 Misc 3d 1219(A), at *4. In doing so, the Upper East Side Court speculated that other billing alternatives might be available for an OBS facility to claim its facility fees. For example, in the absence of a [*3]prescribed OBS facility fee schedule, Avanguard could have billed the “prevailing fee in the geographic location of the provider.” Id. at *4, citing 11 N.Y.C.R.R. 68.5(1)(b). Yet, despite this ruling, Avanguard submitted its insurance claims to State Farm based upon the PAS Art. 28 facility fee schedule.

Nor does the GEICO decision provide authority for an OBS facility to predicate its facility fee claim on the PAS fee schedule established for Art. 28 facilities. The court in GEICO denied the insurer’s request for an order to stay all proceedings and preliminarily enjoin the OBS facility “from commencing any new actions, arbitrations, or proceedings against [the insurer]” wherein the OBS facility seeks to recover No-Fault benefits for facility fees. GEICO, supra, at *12. GEICO relates to any facility fee reimbursement sought by an OBS facility and was not limited, as in this case, to the insurer’s denial of the OBS facility fee claim predicated on the PAS fee schedule. Given the broad injuctive relief sought by GEICO, the court found that a triable issue existed as to whether an OBS facility may ever seek a facility fee from an insurer—pursuant to any billing method.

C. Statements Published on the DOH’s Website

Finally, the parties both cite to statements published on the DOH’s website reflecting its position concerning facility fee reimbursements to OBS facilities:

Reimbursement

35. Does OBS accreditation qualify a private OBS practice to receive a “facility fee”? PHL § 230-d does not address or require reimbursement of an OBS facility fee. Accreditation status does not require a third party insurer to pay a facility fee. An OBS practice is not a health care facility under PHL Article 28 or as defined by PHL § 18. Neither Medicaid nor Medicare pays a facility fee to private physicians’ offices for office-based surgery. DOH does not establish fee schedules or billing guidelines for OBS.

Office-Based Surgery (OBS) Frequently Asked Questions (FAQ’s) for Practitioners, NY State Dep’t of Health, https://www.health.ny.gov/professionals/office-based_surgery/obs_faq.htm (last updated Mar. 2014). These statements support the conclusion that State Farm was under no obligation to reimburse Avanguard’s facility fee. Accordingly, summary judgment should be entered in favor of State Farm and Avanguard’s complaint should be dismissed.

Conclusion

Accordingly, it is hereby ordered that State Farm’s motion for summary judgment is granted, the complaint is dismissed, and the Clerk is directed to enter judgment accordingly. This constitutes the decision and order of this Court.

Dated: December 12, 2014

___________________________

Hon. James E. d’Auguste, J.C.C.

Footnotes

Footnote 1:. In the “Explanation of Review” accompanying the NF-10 “Denial of Claim” form, State Farm explains, inter alia, that Avanguard is not eligible to bill pursuant to a PAS fee schedule which includes a “facility fee” because it is not a licensed Art. 28 facility. Code “X3796” on the final page of the “Explanation of Review” is explained in part as follows:

[*1]

Civil Court of the City of New York, Bronx County, November 17, 2014

APPEARANCES OF COUNSEL

Bruce Somerstein & Associates, P.C., New York City, for defendant.

Cohen & Jaffe, LLP, Lake Success, for plaintiff.

In this action seeking reimbursement for assigned no-fault benefits, this court must answer the question of whether an insurer complies with the requirement of 11 NYCRR 68.6 to pay the “prevailing fee in the geographic location of the provider” when it reimburses the provider for health services rendered in another state in accordance with that state’s no-fault fee schedule.

Factual and Procedural Background

On February 23, 2012, Vincent Molino was operating an automobile when he was involved in a four-car accident caused by an intoxicated driver. Following the accident, Molino received treatment from plaintiff Surgicare Surgical for knee, lower back, and neck injuries. [*2]Surgicare performed arthroscopic surgery on Molino at a location in New Jersey approximately one year after the accident.

Plaintiff, as the assignee of Molino, submitted a claim on May 6, 2013 to defendant National Interstate Insurance Company in the amount of $10,800 for the surgery. Two days later, defendant sent a verification form to plaintiff requesting additional information. Plaintiff replied to the verification form by way of a “medical necessity” letter dated May 31, 2013. Defendant then issued payment in the amount of $5,996.67, but denied the remaining portion of plaintiff’s claim. In a standard “Denial of Claim” form, dated June 13, 2013, defendant indicated that plaintiff’s fees were “not in accordance with fee schedules” and were “reduced in accordance with the New Jersey No-Fault Ambulatory Surgery Fee Schedule guidelines.” Plaintiff commenced this action to recover the remainder of its claim. Despite defendant’s payment of $5,996.67, plaintiff alleges in its complaint that “there [was] no payment of the subject bill” (complaint ¶ 15).

Defendant now moves to dismiss. Plaintiff opposes the motion and cross-moves for summary judgment on its complaint.

Arguments In support of its motion to dismiss, defendant argues that, under 11 NYCRR 68.6, it was required to pay the “prevailing fee in the geographic location of the provider.” Since health care services were rendered in New Jersey, a state which has promulgated a fee schedule under its no-fault laws, defendant{**46 Misc 3d at 739} contends that the reimbursement provided for in New Jersey’s fee schedule constitutes the “prevailing fee” under New York’s section 68.6. Defendant concludes, therefore, that it properly denied so much of plaintiff’s claim that exceeded the maximum charge under New Jersey’s fee schedule for the services in question. In support of its position, defendant annexes to its reply papers an affidavit from a professional medical coder, Lisa Acuna, who states that defendant properly calculated the payment amount for plaintiff’s claim under New Jersey’s fee schedule. Lastly, defendant argues that dismissal is warranted because plaintiff is estopped from seeking the remainder of its claim based on the doctrine of accord and satisfaction.

In opposition, plaintiff asks preliminarily that this court deem defendant’s motion to dismiss as one for summary judgment pursuant to CPLR 3212 (c). As to the merits, plaintiff does not dispute that New Jersey’s fee schedule, if applicable, would bar plaintiff’s claim. However, plaintiff contends that New Jersey’s fee schedule does not apply because the term “prevailing fee” in the regulation is not synonymous with “fee schedule.” Plaintiff argues that in contrast to New Jersey’s version of section 68.6, which expressly limits out-of-state reimbursements to those rates set forth in the host state’s fee schedule, New York’s rule for reimbursement of out-of-state services does not refer to a local “fee schedule.” By omitting specific reference to a fee schedule, plaintiff argues, New York’s Legislature refused to limit payments for out-of-state services to the amounts set forth in another state’s fee schedule. Plaintiff further contends that this court would exceed its authority by interpreting the plain language of section 68.6 to require that an insurer pay anything other than the “prevailing fee of the geographic location of the provider.”

Despite defendant’s submission of the Acuna affidavit in its reply papers, plaintiff argues that defendant’s failure to include an affidavit from a competent medical coder in its initial moving papers warrants denial of the instant motion. Additionally, plaintiff contends that defendant failed to timely issue its denial and neglected to preserve its fee schedule defense when issuing the standard denial form. Lastly, plaintiff argues that the “partial” payment of $5,996.67 on plaintiff’s $10,800 claim effectively estops defendant from denying any unpaid portion of the claim.

In support of its cross motion for summary judgment, plaintiff argues that it has established timely mailing of its claim and{**46 Misc 3d at 740} that payment on the claim is overdue. Defendant opposes the cross motion.

Discussion

On a motion to dismiss pursuant to CPLR 3211, the court affords the pleadings a liberal construction, giving the non-moving party the benefit of every favorable inference, and determines only whether the facts as alleged fit within any cognizable legal theory (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]). However, allegations consisting of bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not presumed to be true (see Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000]). In such a case, “[a] CPLR 3211 dismissal may be granted where documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law” (see Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 571 [2005] [internal quotation marks omitted]).

Two procedural issues arise in the context of defendant’s motion to dismiss. First, plaintiff’s complaint alleges that “there [was] no payment of the subject bill” (complaint ¶ 15), however, this statement is not only refuted by defendant’s evidence of a $5,996.67 payment to plaintiff, but also by plaintiff’s admission that it received this payment from defendant. Plaintiff’s allegation of no payment is flatly contradicted by the evidence and, thus, clearly erroneous. As such, plaintiff can only seek the unpaid portion on its $10,800 claim.

[1] Secondly, to the extent that plaintiff claims defendant neglected to annex a qualifying affidavit from a medical coder to its initial moving papers, defendant later cured this defect in its reply papers by way of the affidavit from Lisa Acuna. Acuna, who is a certified medical coder, avers that defendant paid the exact amount permitted under New Jersey’s fee schedule for the health services provided by plaintiff. Although plaintiff could have responded to the affidavit in its cross motion, it failed to do so. Thus, plaintiff had—but waived—an opportunity to dispute those assertions (see Held v Kaufman, 91 NY2d 425, 430 [1998] [defenses raised for the first time in reply papers on a motion to dismiss were properly considered without danger of prejudice where plaintiff was afforded opportunity to respond]). In sum, while the parties disagree about whether New Jersey’s fee schedule applies under these circumstances, neither party{**46 Misc 3d at 741} disputes that, if New Jersey’s fee schedule does apply, defendant complied with section 68.6.

[2] With respect to plaintiff’s request to convert this motion to one for summary judgment, this court declines to deem defendant’s instant motion as one for summary judgment pursuant to CPLR 3211 (c). Although resolution of a purely legal question is appropriate on a motion for summary judgment (see Mihlovan v Grozavu, 72 NY2d 506, 508 [1988]), the court may also decide a motion to dismiss pursuant to rule 3211 when it is premised entirely on an issue of statutory interpretation (see McKechnie v Ortiz, 132 AD2d 472 [1st Dept 1987]) or when the sufficiency of the pleadings poses a question of law (see e.g. Rosner v Paley, 65 NY2d 736, 738 [1985]). Since no issues of fact need to be determined in order to resolve the instant motion, this court is left to answer a question of law, that is, whether defendant complied with section 68.6 when it limited payment for the health services performed by plaintiff to the amount allowable under New Jersey’s fee schedule. Thus, some interpretation of the regulation at issue is called for.

In a claim brought under New York’s Comprehensive Motor Vehicle Insurance Reparations Act, otherwise referred to as the “No-Fault Law” (see Insurance Law § 5101 et seq.), a provider’s reimbursement for eligible health services performed in New York “shall not exceed the charges permissible under [the fee schedule established by the New York State Workers’ Compensation Board]” (see Insurance Law § 5108 [a]). Under subdivision (c), “[n]o provider of health services . . . may demand or request any payment in addition to the charges authorized [under the fee schedule]” (Insurance Law § 5108 [c]).

Responsibility for administering the Insurance Law rests with the Superintendent of Insurance who has “broad power to interpret, clarify, and implement the legislative policy” (A.M. Med. Servs., P.C. v Progressive Cas. Ins. Co., 101 AD3d 53, 64 [2d Dept 2012] [internal quotation marks omitted]; see Insurance Law § 301). In the no-fault context, section 5108 (b) of the Insurance Law empowers the superintendent to “promulgate rules and regulations implementing and coordinating the provisions of [the No-Fault Law].” These rules, found in part 68 of the New York Insurance Department Regulations, “govern[ ] the charges for professional health services” (see Great Wall Acupuncture v GEICO Gen. Ins. Co., 16 Misc 3d 23, 25-26 [App Term, 2d Dept 2007]).

Within this regulatory framework, the Insurance Department has promulgated section 68.6 which provides that “[i]f a professional{**46 Misc 3d at 742} health service . . . is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider” (11 NYCRR 68.6).

The question of exactly what constitutes the “prevailing fee” in this context appears to be one of first impression since neither of the parties nor this court have located authority interpreting section 68.6 in relation to a state which utilizes a no-fault fee schedule. However, the Superintendent of Insurance has issued a formal opinion interpreting section 68.6 in the context of a foreign jurisdiction that apparently did not have a fee schedule. The opinion, which involved a question of licensure for physical therapists providing health services in Guatemala, specifically cites the section at issue and states:

“[*5]As to the amount of the reimbursement, where the health services are provided outside of New York State . . . [t]he dollar amount of the reimbursement for physical therapy services (or other professional health services) performed on an eligible injured person under a New York No-Fault insurance policy in Guatemala is determined by the permissible cost for such services in Guatemala” (Ops Gen Counsel NY Ins Dept No. 03-04-03 [Apr. 2003], 2003 WL 24312368 [US], *2 [emphasis added]).

The Superintendent’s use of the word “permissible” is significant as it strongly suggests that reimbursement for health services performed in a foreign jurisdiction may be regulated by that jurisdiction’s laws, including a governing no-fault regime. Indeed, the principle of limiting reimbursements to “permissible” amounts is mirrored in the section of the Insurance Law that codifies the No-Fault Law’s salient feature of explicitly restricting reimbursement for health services performed in New York to the amounts allowable by this State’s fee schedule (see Insurance Law § 5108 [a]); therefore, it is only logical that the same principle should apply to foreign jurisdictions. Consistent with the use of “permissible” in the core provision of the No-Fault Law, the Superintendent has reasonably interpreted the language of section 68.6 to require that an insurer pay for any health service performed in a locale outside of New York at the permissible cost for that location. As such, the Superintendent’s interpretation of its own regulations is entitled to deference (LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009] [“the (Insurance) Superintendent’s ‘interpretation (of its own regulations) if not irrational or unreasonable,{**46 Misc 3d at 743} will be upheld in deference to his special competence and expertise with respect to the insurance industry, unless it runs counter to the clear wording of a statutory provision’ ”]).

In addition, the language of the preceding subsection within section 68.6 also utilizes the term “prevailing fee.” That subsection, section 68.5 (b), states that

“If a professional health service is performed which is [eligible for no-fault benefits], but is not set forth in fee schedules adopted or established by the superintendent, and: . . .

“(b) if the superintendent has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent” (11 NYCRR 68.5 [b] [emphasis added]).

Section 68.5 (b) requires that the insurer pay the “prevailing fee in the geographic location of the provider” only if this State’s fee schedule has not established a permissible charge for the health service or has not adopted the type of provider who seeks reimbursement for no-fault benefits. In other words, for any claimed health service, the insurer must look first to the fee schedule in determining the proper reimbursement amount. It is only after the insurer concludes that the fee schedule does not apply that it may look to the “prevailing fee” in the provider’s location. The provider’s likelihood of receiving the “prevailing fee” is further conditioned upon the insurer’s prerogative to re-categorize the particular health service to fit under existing fee schedules. By looking first to the application of a fee schedule, section 68.5 employs a logical approach in which [*6]the insurer pays a “prevailing fee,” as plaintiff defines that term, only after all possible fee schedule applications have been exhausted.

Both the Insurance Department’s opinion and section 68.5 (b)’s formula for applying the “prevailing fee” comport with the policy goals underlying the legislature’s adoption of a fee schedule. The purpose of a fee schedule is “to significantly reduce the amount paid by insurers for medical services, and thereby help contain the no-fault premium” (Goldberg v Corcoran, 153 AD2d {**46 Misc 3d at 744}113, 118 [2d Dept 1989] [internal quotation marks omitted], citing Governor’s Program Bill, 1977 McKinney’s Session Laws of NY at 2449; Governor’s Mem in Support of Assembly Bill 7781-A). Moreover, per Insurance Department regulation, the express purpose of the fee schedule was to “contain . . . the cost of no-fault insurance” (see 11 NYCRR 68.0). Like New York, New Jersey passed similar no-fault legislation as a “cost-containment initiative” (see Casinelli v Manglapus, 181 NJ 354, 360, 858 A2d 1113, 1116 [2004]). In furtherance of policy goals akin to New York’s, New Jersey’s Department of Insurance has promulgated a medical fee schedule (see 11 NJ Admin Code 11:3-2.9). Thus, the “permissible” charge for health services rendered in New Jersey are limited by the maximum amounts permitted under New Jersey’s fee schedule.

[3] Based on the foregoing, this court holds that, when services are rendered outside of New York but in a jurisdiction which utilizes a fee schedule, the insurer complies with section 68.6 by paying the “permissible” charge for that particular medical service, that is, the amount permitted by that jurisdiction’s fee schedule. There being no dispute that defendant issued payment on plaintiff’s claim in accordance with New Jersey’s fee schedule, plaintiff is not entitled to more. Since plaintiff’s action is based entirely on its claim of entitlement to reimbursement in excess of New Jersey’s “permissible” charge, the relief sought in the complaint must be denied and the action dismissed.

Contrary to plaintiff’s position, this court neither exceeds its “jurisdiction” nor subverts the plain language of section 68.6 by holding that an insurer complies with section 68.6 when the reimbursement amount is consistent with another state’s fee schedule. Rather, this court merely adopts a reading of section 68.6 that comports with both the Insurance Department’s interpretation of its own regulation, as well as the policy goals underlying New York’s (not to mention, New Jersey’s) No-Fault Law.

Aside from the core objective of “provid[ing] a tightly timed process of claim, disputation and payment” (see LMK Psychological Servs., P.C., 12 NY3d at 222), another important goal of the no-fault laws was also to “reduce the burden on the courts” (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 317 [2007] [internal quotation marks omitted]). If this court were to accept plaintiff’s interpretation of section 68.6, rather than “reduce the burden on the courts,” similar {**46 Misc 3d at 745}no-fault disputes would routinely call upon trial courts to conduct evidentiary hearings on local billing practices to determine the “prevailing fee” in a neighboring location notwithstanding the fact that such a jurisdiction has already established its own legally permissible fee. Such a situation would undoubtedly subvert the No-Fault Law’s core objective of creating a speedy process of claim, dispute resolution, and, ultimately, payment.

Equally important, the goals of consistency and fairness are undermined when injured parties, or their provider-assignees, can be reimbursed for the same health services at different rates [*7]from those permitted under either New York’s or even another state’s fee schedule simply because the services were rendered outside of New York but are to be paid in this State. Plaintiff’s proposed reimbursement scheme would only frustrate the purposes of both jurisdictions’ no-fault laws because providers would be incentivized to treat New York patients in other jurisdictions hoping to receive more for performing the same health service outside of New York’s borders.

[4] Turning to plaintiff’s remaining contentions, this court finds no merit in plaintiff’s argument that defendant’s denial of claim was untimely. An explicit schedule for claim submission, response, and decision is provided in Insurance Department regulations (see 11 NYCRR 65-1.1, 65-2.4 [c]; 65-3.5 [a], [b]; 65-3.8 [c]). Although it is well-established that “[an insurer] that fails to deny a claim within the 30-day period is generally precluded from asserting a defense against payment of the claim” (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312, 318 [2007]), if the insurer seeks additional verification, the 30-day window is tolled until the insurer receives the requested information (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556, 563 [2008]). Here, plaintiff made its claim on May 6, 2013, but defendant sent back a verification form two days later. The 30-day window was therefore tolled until defendant received the verification information it requested. Plaintiff admittedly submitted this information by way of a medical necessity letter on May 31, 2013. Given that defendant issued the denial of claim form on June 13, 2013, which was well within 30 days of plaintiff’s medical necessity letter, defendant’s denial was timely.

[5] Plaintiff further contends that, even assuming timeliness of its denial, defendant nevertheless failed to preserve its billing practices defense. However, an insurer preserves such a defense{**46 Misc 3d at 746} merely by checking the “fees . . . not in accordance with the fee schedule” box on the standard denial form (Megacure Acupuncture, P.C. v Lancer Ins. Co., 41 Misc 3d 139[A], 2013 NY Slip Op 51994[U], *3 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2013]; Arco Med. NY, P.C. v Lancer Ins. Co., 37 Misc 3d 136[A], 2012 NY Slip Op 52178[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Not only did defendant check the appropriate box in its denial of plaintiff’s claim, but it also specified the basis for the denial, namely, that plaintiff’s reimbursement was “reduced in accordance with the New Jersey No-Fault Ambulatory Surgery Fee Schedule guidelines.”

Lastly, plaintiff’s argument that defendant’s partial payment on the claim somehow indicates that defendant was satisfied with the entirety of the claim is unavailing (see 11 NYCRR 65-3.8 [d] [“Where an insurer denies part of a claim, it shall pay benefits for the undisputed elements of the claim. Such payments shall be made without prejudice to either party” (emphasis added)]).

This court has considered the remainder of plaintiff’s contentions and finds them to be without merit.

Accordingly, it is ordered that defendant’s motion is granted and the complaint is dismissed; and it is ordered that plaintiff’s cross motion is denied in its entirety.

[*1]

Civil Court of the City of New York, Kings County, October 5, 2014

APPEARANCES OF COUNSEL

Law Offices of Aloy O. Ibuzor, New York City, for defendant.

Korsunskiy Legal Group, P.C., Brooklyn, for plaintiff.

This case raises anew the seemingly irreconcilable tensions that arise from treating an examination before trial (EUO) as{**56 Misc 3d at 285} both a condition precedent to coverage and as part of the verification procedures. It appears that no court has ruled upon whether an insurance company can issue a denial beyond the 30 day period for failure to appear for an EUO when the insurance company itself has failed to comply with the time lines specified in the verification procedures. This matter was submitted on the issue of whether an insurance company must schedule an EUO of the provider, pursuant to 11 NYCRR 65-3.5 (b), within 15 business days after it completes the assignor’s EUO, and what are the ramifications that flow from a late request for an additional EUO.

Plaintiff Prestige Medical P.C. (plaintiff, provider, or Prestige), a medical provider, brought this action for $2,423.58 for medical services it provided to its assignor Khalil Abdullah (assignor or Abdullah). After the EUO of the assignor was held on February 14, 2012, defendant Travelers Home and Marine Insurance Company (defendant, insurer, or Travelers), by letter dated March 13, 2012, requested an EUO of the provider, and thereafter scheduled the EUO for April 3, 2012. After the provider failed to appear, Travelers issued a follow-up letter, dated April 3, 2012, which rescheduled the EUO for April 23, 2012. After the provider again failed to appear, Travelers issued a denial dated May 9, 2012, based upon the provider’s EUO no-show.

Defendant moves for summary judgment based upon the plaintiff’s EUO no-show and outstanding verification. Plaintiff cross-moves for summary judgment on the grounds that the defendant failed to send out a scheduling letter to the provider for an EUO within 15 business days after holding the EUO of the assignor, as mandated by 11 NYCRR 65-3.5 (b).

In Unitrin Advantage Ins. Co. v Bayshore Physical Therapy, PLLC (82 AD3d 559 [1st Dept 2011]), the First Department held that a failure to attend an EUO (or independent medical exam [IME]) is a violation of a condition precedent to coverage which vitiates the policy. The First Department reasoned that since failure to appear for an EUO (or IME) cancels the contract as if there was no coverage in the first instance, an insurer could deny all claims retroactively to the date of loss and outside of the 30 day deadline in which to issue a denial. This court has followed Neomy Med., P.C. v American Tr. Ins. Co. (31 Misc 3d 1208[A], 2011 NY Slip Op 50536[U] [Civ Ct, Kings County 2011]; see also Tarnoff Chiropractic, P.C. v{**56 Misc 3d at 286} GEICO Ins. Co., 35 Misc 3d 1213[A], 2012 NY Slip Op 50670[U] [Nassau Dist Ct 2012] [court within Second Department follows Unitrin holding that denial need not be timely]).

The Second Department has also recognized that failure to comply with the insurance policy’s requirement to submit to an EUO or IME “is a material breach of the policy, precluding recovery of the policy proceeds.” (Interboro Ins. Co. v Clennon, 113 AD3d 596, 597 [2d Dept 2014], citing to Unitrin.) However, the Appellate Term, Second Department, while noting the Unitrin decision, still appears to hold that failure to appear for an EUO or IME is a precludable defense. (Clinton Place Med., P.C. v New York Cent. Mut. Fire Ins. Co., 43 Misc 3d 127[A], 2014 NY Slip Op 50472[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014]; Clinton Place Med., P.C. v New York Cent. Mut. Fire Ins. Co., 43 Misc 3d 126[A], 2014 NY Slip Op 50468[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2014].)

As cogently noted by the Honorable Fred J. Hirsh in Tarnoff, “[a]n EUO is a hybrid between a condition precedent to coverage and verification” (2012 NY Slip Op 50670[U], *5). Most of the provisions relating to EUOs are contained in regulations relating to verification. (Id.; see 11 NYCRR 65-3.5.) Nor does the insurer have an “unfettered right to request an EUO,” as it must have both an objective basis and justification for requesting it. (Id.)

To that end, this court holds that before an insurance company can take advantage of denying the claim beyond the 30 day period pursuant to Unitrin, it must first comply with the notification time lines contained in the verification procedures. 11 NYCRR 65-3.5 (b) authorizes an insurer to request “any additional verification required . . . to establish proof of claim . . . within 15 business days of receipt of the prescribed verification forms” (i.e., the completed application for no-fault benefits [N-F 2 form]) (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 299 [2007]). By properly requesting this additional verification within 15 business days from receipt of the proof of claim form, an insurer may toll the 30 day period in which it must deny the claim. (Prime Psychological Servs., P.C. v Nationwide Prop. & Cas. Ins. Co., 24 Misc 3d 230, 233 [Civ Ct, Richmond County 2009]; see Psych. & Massage Therapy Assoc., PLLC v Progressive Cas. Ins. Co., 5 Misc 3d 723, 724 [Civ Ct, Queens County 2004], citing 11 NYCRR former 65.15 [d] [1].) If the requested verification has not been supplied to the insurer within 30 days after the original{**56 Misc 3d at 287} request, the insurer shall, within 10 days, follow up upon its request for verification either by a telephone call or by mail. (11 NYCRR 65-3.6 [b].)

The insurance regulations provide for EUOs and IMEs as part of an insurer’s “entitlement to ‘additional verification’ following the insurer’s receipt of a provider’s statutory claim forms.” (Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 19 [App Term, 2d Dept, 2d & 11th Jud Dists 2004], affd in part 35 AD3d 720 [2006].) Section 65-3.5 (d) provides that if the additional verification required by the insurer is a medical examination, it must be scheduled within 30 days from date of receipt of the prescribed verification forms. (See Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 19 [App Term, 2d Dept, 2d & 11th Jud Dists 2004]; see also Prime Psychological, 24 Misc 3d at 233; All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co., 20 Misc 3d 554 [Civ Ct, Kings County 2008]; Lumbermens Mut. Cas. Co. v Inwood Hill Med., P.C., 8 Misc 3d 1014[A], 2005 NY Slip Op 51101[U] [Sup Ct, NY County 2005].) Where an EUO is requested as additional verification, an insurer must schedule it within a reasonable time frame and as “expeditiously as possible.” (Eagle Surgical Supply, Inc. v Progressive Cas. Ins. Co., 21 Misc 3d 49, 51 [App Term, 2d Dept, 2d & 11th Jud Dists 2008].) An insurer that conducts an EUO has 30 days from the date the EUO is conducted to pay or deny the claim. (Tarnoff, 2012 NY Slip Op 50670, *11, *12; see 11 NYCRR 65-[*3]3.8 [a] [1].)

After the EUO of the assignor was conducted on February 14, 2012, the insurer did not issue a letter requesting an EUO of the provider until March 13, 2012, some 28 calendar days, or 19 business days after the EUO had been conducted. When the provider failed to appear for the scheduled April 3, 2012 EUO, the insurer, on that same day, issued a follow-up letter rescheduling the EUO for April 23, 2012. After the provider again failed to appear, Travelers issued a denial dated May 9, 2012 based upon the provider’s EUO no-show.

This court rules that since defendant failed to abide by the 15 day time frame in which to request additional verification in the form of an additional EUO, as required by 11 NYCRR 65-3.5 (b), it forfeited its right to issue an untimely denial as permitted by the Unitrin decision. The other ramification of Travelers’ untimely request for an additional EUO is the reduction of its time in which to issue its denial after the provider failed to appear for the rescheduled EUO on April 23, 2012.{**56 Misc 3d at 288}

In Nyack Hosp. v General Motors Acceptance Corp. (8 NY3d at 300), the Court of Appeals found that per 11 NYCRR 65-3.8 (j), any deviation from the rules governing verification shall reduce the 30 calendar day period in which an insurer can deny the claim. 11 NYCRR 65-3.8 (l) provides that “[f]or the purposes of counting the 30 calendar days . . . , with the exception of section 65-3.6 [follow-up requirements] . . . , any deviation from the rules set out in this section shall reduce the 30 calendar days allowed.” Since Travelers requested the EUO of the provider 19 days, rather than within 15 days after the EUO of the assignor had been held, its time in which to issue a denial is reduced by four days. Travelers therefore had 26 days from April 23, 2012, or until May 19th, in which to issue a denial. Travelers issued a timely denial on May 9, 2012. Accordingly, Traveler’s motion for summary judgment is granted and the plaintiff’s cross motion for summary judgment is denied.

[*1]

Civil Court of the City of New York, Kings County, October 1, 2014

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville, for defendant.

Law Office of Stephen Goldblatt, P.C., Brooklyn, for plaintiff.

Defendant’s motion for summary judgment is decided as follows:

Defendant’s motion is granted to the extent that it established the timely and proper generation and mailing of examination under oath (EUO) scheduling letters and plaintiff’s failure to appear on the scheduled EUO dates of January 18, 2013 and February 13, 2013. Defendant also established that the claims were timely denied.

Plaintiff, in opposition, does not challenge the timely mailing of defendant’s EUO [*2]requests or denials or that plaintiff failed to appear on the scheduled dates. Rather, plaintiff objects to the reasonableness of the EUO requests and attaches copies of letters addressed to defendant’s law firm responding to defendant’s EUO requests. In a letter dated January 17, 2013 plaintiff indicates that “there appears to be a disparity between [the position of the law firm] and that of State Farm.” Specifically, plaintiff requests clarification as to whether defendant was requesting both the production of documents and an EUO or whether defendant would consider the production of the documents to be sufficient. It is unclear whether and to what extent defendant responded to this letter as no responsive letter is included in the papers. Plaintiff’s subsequent letter, dated February 7, 2013, objects to appearing for an EUO and indicates that plaintiff believes it has fully met its obligation under the no-fault policy to comply with all reasonable requests for verification. Again, it is unclear whether defendant responded to plaintiff’s correspondence.

This court previously held in Five Boro Psychological & Licensed Master Social Work Servs., PLLC v GEICO Gen. Ins. Co. (38 Misc 3d 354 [Civ Ct, Kings County 2012, Cohen, J.]) that an objection must be timely to be meaningful. Thus, the court found that an objection to EUO requests raised for the first time after the action was commenced was too late to constitute a legitimate response and was insufficient to preserve an objection to reasonableness of those requests (see Five Boro, 38 Misc 3d 354, 357; see also Viviane Etienne Med. Care, P.C. v{**45 Misc 3d at 1035} State Farm Mut. Auto. Ins. Co., 35 Misc 3d 127[A], 2012 NY Slip Op 50579[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012]). Here, in contrast, plaintiff offers evidence of a timely and specific objection to the reasonableness of defendant’s EUO requests and, as such, is not precluded from raising that objection in opposition to defendant’s motion (cf. Five Boro, 38 Misc 3d 354; see Viviane Etienne Med. Care, P.C., 35 Misc 3d 127[A], 2012 NY Slip Op 50579[U]).

Under the circumstances, plaintiff raises a question of fact with respect to the reasonableness of the EUO requests and whether, if defendant failed to respond, plaintiff’s failure to appear for the EUOs was excusable (cf. Five Boro, 38 Misc 3d 354; see Canarsie Chiropractic, P.C. v State Farm Mut. Auto. Ins. Co., 27 Misc 3d 1228[A], 2010 NY Slip Op 50950[U] [Civ Ct, Kings County 2010, Ash, J.]). The matter shall proceed to trial on the issues of plaintiff’s prima facie case and the reasonableness of defendant’s EUO requests.

[*1]

Civil Court of the City of New York, New York County, September 30, 2014

APPEARANCES OF COUNSEL

Jones Jones LLC, New York City (Agnes Neiger of counsel), for petitioner.

Law Office of Ricky J. Lucyk, Woodbury (Evan Przebowski of counsel), for respondent.

The decision/order on this motion is as follows: Petitioner’s motion to vacate is granted and respondent’s cross motion to confirm is denied.

On December 23, 2013, petitioner filed its petition under article 75 of the CPLR to vacate an award made by arbitrator Mavis Thomas on September 24, 2013. In its papers, petitioner argued that the award made by the arbitrator to respondent was improper because the arbitrator exceeded its power in violation of CPLR 7511 (b). On March 3, 2014, respondent filed its cross motion pursuant to CPLR 7510 to confirm the arbitrator’s award and argued that the arbitrator’s determination was proper as it acted within its permitted discretion.

The facts before the court are not in dispute. Petitioner is a public benefit corporation under the laws of the State of New York and is self-insured. On October 1, 2010, a bus operated by petitioner was involved in a three-car motor vehicle accident with Christina McNamara (subrogor) and Michael Castelluccio. Nonparty Castelluccio was insured by respondent, which provided no-fault benefits to subrogor. In January 2011, subrogor commenced a personal injury action (action No. 1) naming petitioner, Eli Riviera (petitioner’s bus operator) and Michael Castelluccio as defendants. On September 22, 2011, respondent filed for arbitration seeking reimbursement from petitioner for the no-fault benefits paid on behalf of subrogor. While waiting for the resolution of action No. 1, the arbitration proceeding was adjourned on two different occasions. On January 9, 2013, after trial in action No. 1, a jury found, by unanimous verdict, that Eli Riviera was 0% responsible for the motor vehicle accident and that Michael Castelluccio was 100% responsible for the motor vehicle accident. Petitioner and Eli Riviera were found not liable for subrogor’s injuries and were dismissed from the action. An attorney for subrogor served the proposed judgment on petitioner.{**46 Misc 3d at 708}

On September 24, 2013, petitioner and respondent appeared for the arbitration proceeding. For reasons not explained to the court, neither side informed the arbitrator of the jury’s verdict, nor listed any documentation relating to the verdict as evidence in the arbitration. At the hearing, petitioner sought an adjournment to provide the arbitrator with the jury verdict, but its application was denied and the arbitrator refused to consider the jury verdict. The arbitrator’s rationale was that since petitioner had sufficient time to provide the jury verdict as evidence and only did so “at the table,” it would not consider the jury verdict.

Petitioner argues that the decision of the arbitrator should be vacated because it is irrational, arbitrary, and capricious and constitutes the wrong application of relevant law. Specifically, petitioner asserts that by refusing to accept the decision of the jury, the arbitrator exceeded its power pursuant to CPLR 7511 and that the decision by the jury had preclusive effect on the arbitration and is res judicata as to petitioner’s liability and the failure to give preclusive effect to the jury verdict is grounds for the vacatur. Petitioner further contends that the arbitrator’s failure to grant an adjournment for petitioner to formally submit the jury verdict into evidence and the arbitrator’s subsequent failure to even consider the jury verdict constituted an abuse of discretion. Respondent argues that pursuant to the rules of the arbitration, the arbitrator was within its discretion to refuse an adjournment and to refuse to consider the jury verdict first produced at the hearing despite being available for nine months, and that the jury verdict was not binding on the arbitration.

The arbitration in this matter was mandatory as required by statute (see Insurance Law § 5105 [requiring that the sole remedy of actions between insurers involving the recovery of personal injury benefits paid pursuant to the no-fault rules is mandatory arbitration]). In cases of compulsory arbitration, due process requires “closer judicial scrutiny of the arbitrator’s determination” (Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 223 [1996]). Under CPLR article 75 a review should include whether the award is supported by evidence or other basis in reason (Matter of Petrofsky [Allstate Ins. Co.], 54 NY2d 207 [1981]). Awards after mandatory arbitration, upon judicial review, are to be measured according to whether they are rational or arbitrary and capricious (Caso v Coffey, 41 NY2d 153 [1976]). In a mandatory arbitration, the arbitrator’s power derives from the statute which mandates{**46 Misc 3d at 709} upon the parties the arbitration. Consequently, the arbitrator cannot make its decisions with less than substantial evidence, without reasonable basis or in disregard of applicable rules of law (Mount St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 NY2d 493 [1970]).

“Res judicata serves to preclude the renewal of issues actually litigated and resolved in a prior proceeding as well as claims for different relief which arise out of the same ‘factual grouping’ or ‘transaction’, and which should have or could have been resolved in the prior proceeding” (Braunstein v Braunstein, 114 AD2d 46, 53 [2d Dept 1985]; see also Breslin Realty Dev. Corp. v Shaw, 72 AD3d 258 [2d Dept 2010]; Mew Equity LLC v Sutton Land Servs., L.L.C., 37 Misc 3d 1225[A], 2012 NY Slip Op 52161[U] [Sup Ct, Kings County 2012]). Conversely,

“[t]he doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in the prior action or proceeding, and decided against that party or those in privity, whether or not the tribunals or causes of action are the same” (Breslin Realty Dev. Corp., 72 AD3d at 263).

Here, respondent’s subrogor and petitioner litigated, in an earlier court proceeding, the very same claim heard by the arbitrator. Specifically, a court heard the very same facts relating to subrogor’s claim that petitioner was liable for her injuries. A jury evaluated these facts and made the determination that someone other than petitioner was 100% liable for subrogor’s injuries. Hence, the claim brought by respondent in the arbitration, standing in the shoes of subrogor, arose out of the same factual transaction and had been fully litigated and determined by a court prior to the arbitration hearing. The arbitrator’s decision to not give preclusive effect to a final determination made by a court was irrational (Matter of Social Servs. Empls. Union, Local 371 v City of N.Y., Dept. of Juvenile Justice, 82 AD3d 644 [1st Dept 2011]; Motor Veh. Acc. Indem. Corp. v Travelers Ins. Co., 246 AD2d 420 [1st Dept 1998] [based on the principle of res judicata, an arbitrator exceeds his power by conducting a hearing and making an award premised on the same claim as a prior award]; see also Matter of Pinnacle Envt. Sys. [Cannon Bldg. of Troy Assoc.], 305 AD2d 897 [3d Dept 2003] [second arbitration was barred by the doctrine of res judicata as it involved the same parties and precisely the same issues]; Matter of State of{**46 Misc 3d at 710} N.Y. Off. of Mental Health [New York State Correctional Officers & Police Benevolent Assn., Inc.], 46 AD3d 1269 [3d Dept 2007]; Matter of New York Tel. Co. v State Farm Ins. Co., 137 Misc 2d 376 [Sup Ct, NY County 1987]). At bar, since the claim against petitioner had been litigated and a court had rendered a final judgment after jury verdict, by not giving this final judgment and verdict res judicata effect, the arbitrator disregarded applicable rules of law.

This case is distinguished from Matter of Falzone (New York Cent. Mut. Fire Ins. Co.) (15 NY3d 530 [2010]) in several respects. In Falzone, the Court of Appeals held that an arbitrator’s failure to apply collateral estoppel to preclude a determination of an issue resolved in a prior arbitration proceeding was not subject to review by the Court (id. at 535). This case involves the application of res judicata while Falzone involved the application of collateral estoppel. In Falzone, the Court specifically distinguished between the two doctrines and wrote “[s]ince the instant claim involves the doctrine of collateral estoppel, not res judicata, petitioner’s reliance on Appellate Division decisions barring subsequent arbitrations on res judicata grounds is misplaced” (id.). To allow an entire claim involving the same facts and arguments to be re-litigated for a second time is inequitable, a waste of resources and contrary to well-established principles of law. Second, in Falzone the arbitration between the parties was voluntary and not subject to the heightened standard and “more-exacting” review that the Court must undertake following mandatory arbitration. Using the lesser review standard, the Falzone court was only “applying this State’s well-established rule that an arbitrator’s rulings, unlike a trial court’s, are largely unreviewable” (id. at 534). Third, in Falzone the arbitrator declined to give preclusive effect to another arbitrator’s decision. In the instant case, the arbitrator declined to give preclusive effect, or even consider, a final judgment reached by a jury, after trial.

Although neither party provided any satisfactory reason as to why the arbitrator was not informed of the trial court verdict until the day of the arbitration, considering that the arbitration was stayed, specifically because of the ongoing court action, the arbitrator’s decision to refuse to consider the verdict was simply irrational. It is therefore ordered that the petition to vacate arbitrator Mavis Thomas’ determination of September 24, 2013 is granted; and it is also ordered that the matter is remanded back to arbitration in accordance with CPLR 7511 (d) to be{**46 Misc 3d at 711} heard by the same arbitrator; and it is also ordered that respondent’s cross motion is denied.

[*1]

Civil Court of the City of New York, New York County, August 14, 2014

APPEARANCES OF COUNSEL

Rivkin Radler LLP, Uniondale (Shana Slawitsky of counsel), for defendant.

Gary Tsirelman P.C., Brooklyn (Irena Golodkeyer of counsel), for plaintiff.

Plaintiff brought this no-fault benefits action seeking {**45 Misc 3d at 759}reimbursement for $844.13 for medical services rendered to assignor, Jacques Gladys. Plaintiff submitted to defendant one bill for date of service May 31, 2011. Defendant denied the claim on the basis that the medical provider failed to appear for two scheduled examinations under oath (EUOs).

Defendant moves for summary judgment under CPLR 3212 on the ground that the medical provider failed to appear for two scheduled EUOs and, thus, that plaintiff breached a condition precedent to coverage. Plaintiff’s most persuasive argument in opposition is that defendant failed to prove the provider’s nonappearance for the EUOs. Plaintiff argues that Michael Sirignano’s affirmation is insufficient because, plaintiff argues, he has no personal knowledge of the provider’s nonappearance for the EUOs. (Golodkeyer affirmation, Sept. 12, 2013, ¶ 24.) Without moving for disclosure, plaintiff seeks disclosure about defendant’s special investigation unit (SIU) file and its SIU investigation and claims practices before, it urges, it can properly oppose defendant’s summary judgment motion. (Golodkeyer affirmation, Sept. 12, 2013, ¶ 16.)

After oral argument, the court asked the parties to submit memorandums of law about whether Sirignano’s affirmation comports with an Appellate Term, Second Department decision: Alrof, Inc. v Safeco Natl. Ins. Co. (39 Misc 3d 130[A], 2013 NY Slip Op 50458[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists, Mar. 21, 2013]). Since oral argument, only defendant submitted a memorandum of law on this issue.

In Alrof, the court determined that the “affidavit of defendant’s attorney was of no probative value as it lacked personal knowledge of the nonappearance of plaintiff.” (Alrof, 39 Misc 3d 130[A], 2013 NY Slip Op 50458[U], *1.) The court held that “[i]t is well settled that a motion for summary judgment must be supported by an affidavit from a person having knowledge of the facts (CPLR 3212 [b]). A conclusory statement from an attorney which fails to demonstrate his or her personal knowledge is insufficient to support summary judgment.” (Id. at *1-2.)

The proof the Alrof court considered was an affidavit from Vincent F. Gerbino, a partner at Bruno, Gerbino & Soriano, LLP. In his affidavit, Gerbino states that he has “personal knowledge of the facts at issue . . . based on [his] review of the file and [his] knowledge of office practices and procedures.” (Exhibit 2, Gerbino aff, Mar. 23, 2009, ¶ 3.) Gerbino states that {**45 Misc 3d at 760}the “office mailed correspondence to Jonathan Rosario [the assignor] notifying that he was scheduled for an EUO on July 18, 2008, at 10:00 AM. He did not appear on this date. Therefore, . . . this office . . . re-scheduled . . . [the] EUO on July 30, 2008, at 1:00PM.” (Exhibit 2, Gerbino aff, Mar. 23, 2009, ¶ 3.) Gerbino thus states that “Jonathan Rosario failed to appear at both . . . EUO’s.” (Exhibit 2, Gerbino aff, Mar. 23, 2009, ¶ 3.)

Since Alrof, the court revisited the issue of the sufficiency of an attorney’s affirmation to prove nonappearance at EUOs in Bright Med. Supply Co. v IDS Prop. & Cas. Ins. Co. (40 Misc 3d 130[A], 2013 NY Slip Op 51123[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists, July 5, 2013]). In Bright Med., the court held the court below properly denied defendant’s summary judgment motion because “defendant failed to submit proof by someone with personal knowledge of the nonappearance of plaintiff for the EUOs in question.” (Id., citing Alrof, 39 Misc 3d 130[A], 2013 NY Slip Op 50458[U], *1.)

The proof the Bright Med. court considered was the affirmation of Michael A. Callinan. (Defendant’s reply affirmation, exhibit 9.) Callinan states that the

“EUO for July 14, 2009, was scheduled at your affiant’s office, located at 445 Broad Hollow Road, Melville, New York 11747. I was present at your affiant’s office . . . on July 14, 2009, the date of the scheduled EUO. Further, had the EUO proceeded, I would likely have been the attorney assigned to conduct said EUO.” (Exhibit 9, Callinan affirmation, July 28, 2010, ¶¶ 15-16.)

Callinan states that “[b]ased on this personal knowledge, as well as a review of the file maintained by our office . . . I know that Plaintiff failed to appear for a scheduled EUO on July 14, 2009.” (Exhibit 9, Callinan affirmation, July 28, 2010, ¶ 16.) Callinan’s office scheduled the second EUO on August 10, 2009. (Exhibit 9, Callinan affirmation, July 28, 2010, ¶ 16.) Callinan states that he “was present at your affiant’s office, located at 445 Broad Hollow Road, Melville, New York 11747, the location of the scheduled EUO, on August 10, 2009, the date of the scheduled EUO. Further, had the EUO proceeded, I would likely have been the attorney assigned to conduct said [*3]EUO.” (Exhibit 9, Callinan affirmation, July 28, 2010, ¶ 17.) Callinan states that “[b]ased on this personal knowledge, as well as a review of the file maintained by our office . . . I know that Plaintiff, Bright Medical Supply Co., failed to appear for a scheduled EUO on August 10, 2009.” (Exhibit 9, Callinan affirmation, July 28, 2010, ¶ 17.)

{**45 Misc 3d at 761}Since Bright Med., the court determined that the affirmation of defendant’s attorney “who was present in his office to conduct plaintiff’s EUO on the scheduled dates . . . was sufficient to establish that plaintiff had failed to appear.” (Natural Therapy Accupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 42 Misc 3d 137[A], 2014 NY Slip Op 50134[U], *1 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists, Jan. 28, 2014].) In Natural Therapy, the court considered the affirmation of Elizabeth Adels, a partner at McDonnell & Adels, PLLC. (Defendant’s additional submission, Adels affirmation, Oct. 12, 2011, ¶ 1.) Adels states that on “April 29, 2010, Plaintiff was scheduled to submit to an EUO . . . . I was present in the office on this date in order to conduct the EUO of Plaintiff. No one affiliated with Plaintiff appeared for the EUO scheduled for April 29, 2010.” (Defendant’s additional submission, Adels affirmation, Oct. 12, 2011, ¶ 3.) Adels states that defendant rescheduled the EUO for May 25, 2010. (Defendant’s additional submission, Adels affirmation, Oct. 12, 2011, ¶ 3.) Adels states

“I was present in the office on this date in order to conduct the rescheduled EUO of plaintiff. Once again, no one affiliated with Plaintiff appeared for the EUO rescheduled for May 25, 2010. If Plaintiff had appeared for the scheduled EUOs, I would have conducted the EUO of Plaintiff or assigned one of the other attorneys responsible for conducting EUOs to conduct the EUO of Plaintiff.” (Defendant’s additional submission, Adels affirmation, Oct. 12, 2011, ¶ 3.)

This court must decide whether Michael Sirignano’s affirmation is sufficient, under Alrof and its progeny,^[FN*] to prove the provider’s nonappearance for the EUOs. Also, this court must also determine whether Sirignano has personal knowledge of the provider’s nonappearance at the EUOs.

Sirignano’s affirmation is sufficient to prove the provider’s nonappearance for the two EUOs. Sirignano has personal knowledge of the provider’s nonappearance at the EUOs. Sirignano states the following:{**45 Misc 3d at 762}

“3. On July 27, 2011, plaintiff was scheduled to submit to an EUO at the offices of Rivkin Radler located 926 RXR Plaza, Uniondale, New York 11556, at 10:00 o’clock in the forenoon of that day [sic]. I was present in the office on this date. No one affiliated with the Plaintiff appeared for the scheduled EUO. If Plaintiff had appeared for the scheduled EUO, I would have conducted the EUO [*4]of Plaintiff or assigned one of the other attorneys responsible for conducting EUOs to conduct the EUO of Plaintiff.

“4. Thereafter, State Farm rescheduled the EUO for August 30, 2011. I was present in the office on this date. Again, no one affiliated with the Plaintiff appeared for the scheduled EUO on August 30, 2011. If Plaintiff had appeared for the scheduled EUO, I would have conducted the EUO of Plaintiff or assigned one of the other attorneys responsible for conducting EUOs to conduct the EUO of Plaintiff.” (Notice of motion, exhibit 3, Sirignano affirmation, July 11, 2012, ¶¶ 3-4.)

Sirignano has personal knowledge: He was present on both dates, July 27, 2011 and August 30, 2011. Plaintiff did not appear on either date. Like the attorney in Natural Therapy, Sirignano was present on both dates that plaintiff was scheduled for the EUO. Had plaintiff appeared, Sirignano would have conducted plaintiff’s EUO. Or, he would have assigned one of the other attorneys responsible for conducting EUOs to conduct plaintiff’s EUO.

Unlike the attorney in Alrof who explained in conclusory language that plaintiff failed to appear for EUOs, Sirignano explains his basis for knowing that plaintiff failed to appear for two EUOs.

Sirignano does not equivocate like the attorney in Bright Med. did: “I would likely have been the attorney assigned to conduct said EUO.” (Exhibit 9, Callinan affirmation, July 28, 2010, ¶ 17.) Sirignano states that “[i]f Plaintiff had appeared for the scheduled EUO, I would have conducted the EUO of Plaintiff or assigned one of the other attorneys responsible for conducting EUOs.” (Notice of motion, exhibit 3, Sirignano affirmation, July 11, 2012, ¶ 4.)

Plaintiff argues that Sirignano’s “potential assignment [of plaintiff’s EUO] diminishes [his] credibility as to his personal knowledge that no one affiliated with Plaintiff appeared for the{**45 Misc 3d at 763} scheduled EUOs.” (Golodkeyer affirmation, Sept. 12, 2013, ¶ 24.) Sirignano’s statement does not diminish his credibility, in fact it highlights his credibility.

Plaintiff’s other arguments are also unpersuasive. That the EUO scheduling letters indicate that the EUOs were scheduled at Rivkin Radler LLP’s office in Uniondale, New York, “Attn. Barry Levy, Esq.” is of no consequence. (See notice of motion, exhibit 1.) Plaintiff’s argument—that based on the EUO letters Barry Levy, Esq. was the attorney who would conduct the EUO—is misplaced. (Golodkeyer affirmation, Sept. 12, 2013, ¶ 24.) Sirignano states that he was responsible for plaintiff’s EUO.

That the EUO scheduling letters indicate that the plaintiff call “JUDY AUBIN . . . no later than seven days prior to this examination to confirm your attendance” is also of no consequence. Sirignano states that he was responsible for plaintiff’s EUO. In any event, plaintiff does not allege that it attempted to confirm the EUO appointments with Ms. Aubin or anyone else at Rivkin Radler LLP.

Nor is it significant that Sirignano does not describe the “check-in procedure that is followed by the law firm regarding EUO attendance.” (Golodkeyer affirmation, Sept. 12, [*5]2013, ¶ 25.) Sirignano need not describe the firm’s check-in procedure for EUOs. Sirignano need only demonstrate, through his personal knowledge, that the plaintiff failed to appear for two scheduled EUOs.

Plaintiff did not respond to defendant’s request for EUOs. (See Concourse Chiropractic, PLLC v State Farm Mut. Ins. Co., 42 Misc 3d 131[A], 2013 NY Slip Op 52225[U], *1 [App Term, 2d Dept, 9th & 10th Jud Dists, Dec. 20, 2013] [“(P)laintiff did not respond in any way to the EUO scheduling letters sent by defendant. Since the opposing affirmation submitted by plaintiff’s counsel was insufficient to raise a triable issue of fact with respect to the claims denied on the ground that plaintiff had failed to appear at the EUOs . . . defendant is entitled to summary judgment”], citing Crescent Radiology, PLLC v American Tr. Ins. Co., 31 Misc 3d 134[A], 2011 NY Slip Op 50622[U], *1 [App Term, 2d Dept, 9th & 10th Jud Dists 2011].)

Plaintiff’s request for defendant’s special investigation unit file, the SIU investigation, and its claims practices is not necessary to oppose defendant’s summary judgment motion: “Since plaintiff does not claim to have responded in any way to the EUO request, its objections regarding the EUO requests will not now be heard . . . and therefore discovery relevant to the {**45 Misc 3d at 764}reasonableness of the EUO requests was not necessary to oppose the motion.” (Flatlands Med., P.C. v State Farm Mut. Auto. Ins. Co., 39 Misc 3d 142[A], 2013 NY Slip Op 50763[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists, May 6, 2013], citing CPLR 3212 [f] and Crescent Radiology, 31 Misc 3d 134[A], 2011 NY Slip Op 50622[U], *1; Natural Therapy, 42 Misc 3d 137[A], 2014 NY Slip Op 50134[U], *1.) Plaintiff did not respond to defendant’s EUO requests; therefore, plaintiff cannot now object to defendant’s EUO requests. Also, plaintiff did not move to compel disclosure. Plaintiff’s request, raised only in its opposition papers, is denied.

Defendant proved that it timely and properly mailed the EUO letters to plaintiff. Defendant proved that plaintiff failed to appear for the EUOs on July 27, 2011, and August 30, 2011. Defendant also proved that it timely and properly mailed the denial, NF-10, to plaintiff.

Plaintiff’s counsel’s affirmation, coming from an individual without personal knowledge, has no probative value. Plaintiff’s counsel’s affirmation creates no material issue of fact for trial.

Defendant’s motion is granted.

Footnotes

Footnote *:One of the cases defendant attaches to its memorandum of law pre-dates Alrof. (Exhibit 1, Mega Supplies Billing, Inc. v State Farm Mut. Auto. Ins. Co., 36 Misc 3d 130[A], 2012 NY Slip Op 51276[U], *2 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012].) Also, in the cases defendant attaches on the Alrof issue—the sufficiency of an affirmation or affidavit to demonstrate personal knowledge of the assignor’s or the provider’s nonappearance at an EUO—the parties never raised the Alrof issue on appeal. (Exhibit 4.)