Civil Court of the City of New York, Kings County

089993/09

Michael Weaver, Esq.

Bruno, Gerbino & Soriano, LLP

Attorneys for Defendant

445 Broad Hollow Road, Suite 220

Melville, NY 11747

631-390-0010

Law Offices of Melissa Betancourt, P.C.

Attorney for Plaintiff

155 Kings Highway, 3rd Floor

Brooklyn, New York 11223

718-336-8076

Lisa S. Ottley, J.

This action was commenced by the Plaintiff seeking payment of no-fault party benefits for services rendered on behalf of Sara Mounier pursuant to CPLR 5106(a) of the Insurance Law and Regulation of the New York State Insurance Department (11 NYCRR Sect. 65-1.1 et. seq.).

Defendant moves for an order pursuant to CPLR §3025(b), for leave to amend its Verified Answer, and upon this court granting defendant leave to amend its answer, for dismissal of the complaint pursuant to CPLR §3211(a) 5, under the doctrines of res judicata and collateral estoppel.

Discussion

Leave to amend a pleading pursuant to CPLR 3025(b) should be granted where there is no significant prejudice or surprise to the opposing party and where the proof submitted in support of the motion indicates that the amendment may have merit. See, Edenwald Contr. Co. v. City of New York, 60 NY2d 957 [1983].

Based upon the documents submitted in support of its motion for leave to amend its Verified Answer, the court hereby grants defendant’s motion to amend its Verified Answer. See, Uptodate Medical Service, P.C., v. State Farm Mutual Automobile Insurance Company , 22 Misc 3d 128(A), 880 N.Y.S.2d 227 (AT 2nd, 11th & 13th Judicial Dists., 2009).

Next, this court will address the issue as to whether defendant is entitled to dismissal of the action on the grounds of res judicata and collateral estoppel.

In the case at bar, the defendant-insurer brought an action in Supreme Court, Nassau County, seeking declaratory relief by the filing of a Summons and Complaint which the court deemed to have been duly served upon all the defendants named within the action, which failed to appear and/or interpose or serve an answer in the action. [See, Exh. “A” annexed to defendant’s moving papers herein]. By notice of motion, the defendant herein, and the plaintiff in the Supreme Court action moved pursuant to CPLR § 3215 for an order and judgment granting plaintiff the relief sought upon default, which was granted by the Hon. Anthony L. Parga, on October 1, 2010.

The defendant moves for dismissal of this action for payment of no-fault benefits [*2]on the grounds of res judicata and collateral estoppel, inasmuch as the declaratory judgment held that no coverage existed due to the fact the loss resulted from a staged accident.

Plaintiff argues, that a declaratory judgment granted on default does not have preclusive effect, and therefore, collateral estoppel does not preclude a party from litigating the action.

Although there is case law in support of plaintiff’s argument, the cases in support of plaintiff’s argument are distinguishable from this case. As argued by defendant, in Magic Recovery Med & Surgical Supply, Inc. v. State Farm Mutual Auto Insurance Company, 27 Misc 3d 67, 901 N.Y.S.2d 774 (AT 2nd, 11 & 13th Jud. Dists., 2010), the insurance company failed to name the party in the declaratory action, therefore, the res judicata and collateral estoppel could not be granted. In EMA Acupuncture, P.C. v. Lumbermens Mutual Casualty Company, 27 Misc 3d 141, 911 N.Y.S.2d 692 (AT 2nd, 11 & 13th Jud. Dists., 2010), which was not the basis of a default declaratory judgment, but was based on whether an Order issued on default pursuant to CPLR §3216 which fails to specify whether the dismissal is with prejudice or on the merits, has a preclusive effect.

Recently, this Court in a decision by the Hon. Devin P. Cohen, denied defendant’s motion to dismiss on the ground of collateral estoppel. As in this case, the motion raised the question of the effect of a declaratory judgment order, issued on default with respect to collateral actions seeking to litigate the same issue. Judge Cohen provides a detailed analysis of the applicable law and policies underlying declaratory judgments, collateral estoppel and default judgments. See, Beford Medical Care, P.C., a/a/o Vincent Meyers v. Encompass Insurance Company, 31 Misc 3d 222, 915 N.Y.S.2d 452 [Civ. Ct., Kings Co., 2011].

Interestingly, however, the decision does not address the doctrine of res judicata. Perhaps, the defendant in that case, did not move for dismissal on the ground of res judicata.

The doctrines of res judicata and collateral estoppel are designed to put an end to a matter once it is duly decided. See, Siegel, NY Practice §442 at 747 [4th Ed.]. Res judicata, or claim preclusion, is invoked when a party, or one in privity with the party, seeks to relitigate a disposition on the merits of claims, or causes of action, arising out of the same, or series of, transactions which were raised, or could have been raised, in the [*3]

prior action. See, Matter of Hunter, 4 NY3d 260 [2005]. Res judicata applies “when a different judgment in the second [action] would destroy or impair rights or interests established by the first. See, Matter of Hunter, 4 NY3d 260 [2005]; Schuykill Fuel Corp. v. Nieberg Realty Corp., 250 NY 304.

In SZ Medical, P.C., Life Chiropractic, P.C., JH Chiropractic, P.C., New Wave Oriental Acupuncture, P.C., a/a/o Clinton Charles v. Erie Insurance Company, 24 Misc 3d 126(A), 889 N.Y.S.2d 884 [AT 2nd, 11th & 13th Judicial Dists., 2009], the court affirmed the dismissal of the case on the lower level, and held the following:

The determination as to whether there was coverage is crucial to both

plaintiffs and defendant herein, and arises out of the same transaction,

i.e., the subject accident (see e.g. Abraham v. Hermitage Ins. Co., 47

AD3d 855 [2008]; Sabatino v. Capco Trading, Inc., 27 AD3d 1019,

1020 [2006]), and a different judgment in the instant action would

destroy or impair rights or interests established by the Supreme

Court judgment (see, e.g. Schuykill Fuel Corp. v. Nieberg Realty

Corp., 250 NY at 306-307). Moreover, the record established that

defendant and the wholly owned subsidiary had the requisite privity

(see, e.g. Spasiano v. Provident Mut. Life Ins. Co., 2 AD3d 1466

[2003]). Consequently, plaintiffs were barred from relitigating the

claim pursuant to the doctrine of res judicata.

Thereafter, the First Department in Pomona Medical Diagnostics, P.C., a/a/o Jarrod Ward v. Metropolitan Casualty Ins. Co., 29 Misc 3d 138(A), 920 N.Y.S.2d 243 (1st Dept., 2010), citing SZ Medical, P.C., Life Chiropractic, P.C., JH Chiropractic, P.C., New Wave Oriental Acupuncture, P.C., a/a/o Clinton Charles v. Erie Insurance Company, 24 Misc 3d 126(A), 889 N.Y.S.2d 884 [AT 2nd, 11th & 13th Judicial Dists.], reversed the lower court’s denial of defendant’s motion for summary judgment, and held: “Contrary to plaintiff’s claim, the Supreme Court judgment is a conclusive final determination, notwithstanding that it was entered on default of plaintiff, since res judicata applies to a judgment taken by default that has not been vacated (see, Trisingh Enters., Inc., v. Kessler 249 AD2d 45 [1998]; Robbins v. Growney, 229 AD2d 356 [1996].

Herein, the plaintiff-provider, as determined by the Supreme Court, was duly served with the Summons and Complaint in the declaratory action, and therefore, judgment was entered in favor of the defendant-insurer, on October 1, 2010, due to the [*4]provider’s failure to serve and file an answer to the Summons and Complaint. There is nothing in the record to indicate that the plaintiffs, Altercare, et .al., have moved to vacate the default judgment in the Supreme Court.

Accordingly, defendant’s motion to dismiss on the ground of res judicata is hereby granted.

This constitutes the order of this Court.

Court Attorney to notify.

Dated: Brooklyn, New York

August 30, 2011

______________________________

LISA S. OTTLEY, A.J.S.C.

[*1]

Civil Court of the City of New York, Kings County, July 7, 2011

APPEARANCES OF COUNSEL

Law Office of Teresa M. Spina, Woodbury (Dominick Dale of counsel), for defendant. Gary Tsirelman, P.C., Brooklyn (Wesley Mead of counsel), for plaintiff.

{**32 Misc 3d at 716} OPINION OF THE COURT

Genine D. Edwards, J.

In the instant actions for no-fault benefits, bench trials were held on April 13, 2011 and April 14, 2011. After establishing how the bills were created and given to Israel & Israel for [*2]mailing, plaintiff’s witness, Vladmir Grinsberg, could not set forth how the bills were mailed. Mr. Grinsberg instead offered that the denial of claims indicated defendant received the bills. Plaintiff’s counsel contended that the defendant’s denial of claim forms were admissible as party admissions for the limited purpose of proving the bills were mailed and received. Defendant objected and argued that plaintiff has to lay a foundation for the admission of the denial of claim forms. Hence, a directed verdict should be rendered in defendant’s favor in all three actions.

This court requested post-trial memoranda regarding the admissibility of the defendant’s denial of claim forms as party admissions for the limited purpose of establishing that plaintiff mailed its bills to the defendant.

After due deliberation of the evidence adduced at trial, as opposed to documents annexed to a summary judgment motion, this court adheres to the Appellate Term’s ruling that denial of claim forms shall be admitted into evidence only upon the laying of a business record foundation. (Bath Med. Supply, Inc. v Utica Mut. Ins. Co., 23 Misc 3d 141[A], 2009 NY Slip Op 51030[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Bajaj v General Assur., 18 Misc 3d 25 [App Term, 2d Dept 2007].) Besides testifying that he received the denial of claim forms, Mr. Grinsberg failed to proffer any evidence to authenticate the denial of claim forms.

Accordingly, defendant’s motions for directed verdict in each of the three actions are granted because plaintiff failed to shoulder its prima facie burden.

Civil Court of the City of New York, Kings County

164656/07

Attorney for Plaintiff

Law Offices of Melissa Betancourt, P.C.

155 Kings Highway, 3rd Floor

Brooklyn, NY 11223

Attorney for Defendant

Law Offices of Daniel J. Tucker

American Transit Insurance Co.

330 West 34th St., 10th Floor

New York, NY 10001

Katherine A. Levine, J.

This motion raises the issue of whether an insurer must issue a denial within 30 days of an injured party’s failure to appear for a post claim IME. The court concludes that since a failure [*2]to appear for a post claim is a violation of a condition precedent to the contract, as opposed to a policy exclusion, a denial on this ground is not subject to the preclusion rule.

Plaintiffs Neomy Medical, P.C., Perfect Point Acupuncture, P.C., and Chiropractic Back Care, P.C., (collectively “plaintiffs”), all medical service companies, commenced this action pursuant to Insurance Law 5106(a) to recover the sum of $5,854.55 for medical services they provided to their assignor Fan fan Both (“assignor” or “Both”). Defendant American Transit Ins. Co. (“American” or “defendant”) cross moved for summary judgment based on its claim that the assignor failed to appear at an independent medical examination (“IME”)(“IME no show”).

During oral argument, defendant conceded that only some of its denials were timely; ie mailed within 30 days of receipt of claim form. Defendant contended, however, that its late denials were not fatal since failure to appear for an IME is a violation of a condition precedent to the insurance policy which vitiates the contract and makes such s violation a non- precludable defense which survives a late denial. Plaintiff countered that an IME no show is a precludable defense. The court requested briefs solely on this issue.

To grant summary judgment, “it must clearly appear that no material and triable issue of fact is presented. Forrest v. Jewish Guild for the Blind, 3 NY3d 295 (2004); Zuckerman v, City of New York, 49 NY2d 557 (1980). A plaintiff establishes a prima facie entitlement to judgment as a matter of law by submitting evidentiary proof that the prescribed statutory billing form has been mailed and received, and that payment of no-fault benefits was overdue.” Mary Immaculate Hosp. v. Allstate Ins., 5 AD3d 742, 743 (2d Dept.2004); Second Medical v. Auto One Ins., 20 Misc 3d 291, 293 (Civil Ct., Kings Co.2008).

Condition Precedent

11 NYCRR 65-1.1 (d) provides for the mandatory personal injury protection endorsement (“PIP”). Under the subheading entitled “Conditions”, “Action against Company,” the regulation provides that “No action shall lie against the [c]ompany unless, as a condition precedent thereto, there shall have been full compliance with the terms of this coverage.” One provision under this subheading provides that the eligible person shall submit to medical examinations by physicians selected by or acceptable to the insurer…when, and as often as, the Company may reasonably require.” 11 NYCRR §65 – 1.1(d)[Sec. I. Conditions, Proof of Claim (b)]. Another condition to coverage under this section is that an eligible person shall, as may reasonably be required, submit to examinations under oath (“EUO”) by any person named by the insurer. Id. ^[FN1]

In Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 7 Misc 3d 18, 20 (App. Term, 2d Dept. 2004) aff’d 35 AD3d 720 (2d Dept. 2006), the Appellate Term found that [*3]an insurer had the right to conduct an IME prior to its “receipt of the statutory claim form or its statutory equivalent which “under the regulations, trigger the verification process.” The right to an IME, at this juncture was not afforded by the verification procedures, as the “detailed and narrowly construed verification protocols are not amenable to application at a stage prior to submission of a claim form.” Id at 21. The court then noted the “Conditions” section in the Mandatory PIP predicates the right to commence an action against the insurer upon an eligible injured person’s (“assignor”) compliance with the terms of coverage. Fogel, supra, 7 Misc 3d at 25 (Golia, J., conc. in part and diss. in part).”Where an eligible injured person fails to submit to a reasonably requested IME, the insurance policy, by its terms…affords no coverage for the otherwise eligible injured person.” 7 Misc 3d at 25 citing to Orr. v Continental Cas. Co., 205 AD2d 599 (2d Dept. 1994) (Under New York law, the insurer has the right to declare the contract at the end where the insured breaches a term upon which the contract was conditioned). Thus, an insured’s refusal to comply with a reasonably requested IME which was not opposed or adequately refuted, constitutes a complete defense to the claim warranting dismissal. 7 Misc 3d at 25.

In affirming the Appellate Term, the Second Department found that there was no distinction between the contractual remedies available for failure to appear for pre claim as opposed to post claim IMEs and that the ” appearance of the insured for IMEs at any time is a condition precedent to the insurer’s liability on the policy.” Fogel v. Progressive Cas. Ins. Co., 35 AD2d 720, 721 (2d Dept. 2006).^[FN2]

The First Department subsequently found failure to comply with a request for an IME, whether pre-or post claim was a violation of a condition of coverage which would preclude an action against an insurer for payment of health services provided. Inwood Hill Medical, P.C. v. General Assurance Co., 10 Misc 3d 18. 20 (App. Term, First Dept. 2005).In Inwood Hill Medical, P.C. v. General Assurance Co., 10 Misc 3d 18, 20 (1st Dept. 2005), the First Department ruled that “inasmuch as attendance at a medical examination is a condition of coverage under Section 65-1.1, it follows that an eligible injured person’s failure to comply with a request for an IME precludes an action against an insurer for payment of health services provided.”

Preclusion Rule

Insurance Law § 5106(a) sets forth that no fault benefits “are overdue if not paid within 30 days after the claimant provides proof of the fact and the amount of loss sustained.” Similarly 11 NYCRR §65-3.8 c require that “(w)ithin 30 calendar days after proof of claim is received, the insurer shall either pay or deny the claim in whole or part.” See Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274, 278-79(1997) (“30 day rule”). [*4]

A timely disclaimer is not required, however, when the policy on which the claim rests does not, by its terms, cover the incident giving rise to liability. Handlesman v. Sea Insurance Co., 85 NY2d 96 (1994). “Under those circumstances, 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. ” Mtr. Of Worcester Ins. Co. V. Bettenhauser, 95 NY2d 185, 189 ( 2000). However, a timely disclaimer is necessary when the denial of coverage is based upon a policy exclusion or a breach of a policy condition without which the claim would be covered. Id. See, Zappone v, Home Ins. Co., 55 NY2d 131 (1982),

Although there are legions of cases discussing the preclusion rule, “drawing the line” between a lack of coverage in the first instance ( requiring no disclaimer) and a lack of coverage based on a policy exclusion (requiring a timely denial) has proven to be “problematic”. Mtr. Of Worcester, supra , 95 NY2d at 189.

In Fair Price Medical v. Travelers Ins., 10 NY3d 556 (2008), the Court of Appeals further clarified when the non-preclusion rule applied. Citing to its prior decision in Central General Hospital v. Chubb Group, 90 NY2d 195 (1997), the Court cautioned that there was only one “narrow” exception to the preclusion rule for those situations where an insurance company raises the defense of lack of coverage.Fair Price, 10 NY3d at at 563. A determination as to whether a specific defense is precluded under the 30 day rule or falls within the exception entails a judgment as to whether the defense is more like a “normal exception ” from coverage such as a policy exclusion or a lack of coverage in the first instance, i.e. a defense “implicating a coverage matter.” 10 NY3d at 565.

The oft cited distinction between policy exclusions and lack of coverage was further elaborated upon in State Farm Mut. Auto Ins. V. Mallela, 4 NY3d 313 (2005). In finding that medical corporations that are fraudulently incorporated are not entitled to reimbursement the Court of Appeals pointed to 11 NYCRR 65-3.16(a)(12), which excludes from the meaning of “basic economic loss” payments made to unlicensed or fraudulently licensed providers “thus rendering them ineligible for reimbursement” 4 NY3d at 320. These revised regulations (which include the PIP) do not ” create not a new category of exclusion, but rather merely a condition precedent with which all claimants must comply in order to receive benefits under statute”. 4 NY3d at 321 citing Mtr. Of Medical Society of NY v. Serio, 100 NY2d 854.866 (2003).

In Travelers indemnity Co. v. Milan Medical, 2009 NY Slip Op. 31604U, 2009 NY Misc LEXIS 3867 (Sup. Ct. NY Co. 2009), the court found that the Mallela defense was a “coverage defense: and as such was not subject to the preclusion rule. Id at 5. See Multiquest PLLC v. Allstate Ins. Co., 17 Misc 3d 37 (App. Term, 2d Dept. 2007); Crossbay Acupuncture v. State Farm Mut. Auto. Ins. Co., 15 Misc 3d 110 (App. Term, 2d dept. 2007); Eastern Medical P.C. v. Allstate Ins. Co., 19 Misc 3d 775, 790 ( the challenged regulation in Mallela did not create a new category of exclusion but rather was “a condition precedent with which all claimants must comply in order to receive benefits.” ). The court rejected the defendant’s contention that the [*5]defense of fraudulent incorporation did not fit within the “tight restrictions of the exception to preclusion outlined in General Hospital v. Chubb, 90 NY2d 199. Chubb, like Mallela, “spoke to a threshold coverage matter” Id.

In the very recent decision of Unitrin Advantage Ins. Co. V. Bayshore Physical Therapy, 2011 NY Slip Op 1948 (App. Div., 1st Dept. 3/17/11), the First Department explicitly found that “the failure to appear for IMEs requested by an insurer…is a breach of a condition precedent to coverage under the No-Fault policy, and therefore fits squarely within the exception to the preclusion doctrine. Id at 2 citing Central General Hosp. V. Chubb, 90 NY2d 195 (1997)(defense that injured person’s condition and hospitalization were unrelated to the accident was non precludable ). The First Department justified its finding that an IME no show was a non -precludable defense on the ground that a “breach of a condition precedent to coverage voids the policy ab initio.” Thus, the failure to appear for an IME cancels the contract as if there was no coverage in the first instance and the insurer has the right to deny all claims retroactively to the date of loss, regardless of whether the denials were timely. Id.

In light of the afore-mentioned precedent, it is clear that the claimant’s failure to comply with a condition precedent to coverage voids the contract ab initio and defendant is not obligated to pay the claim, regardless of whether it issued denials beyond the 30 day period. Furthermore, since the contract has been vitiated, defendant may deny all the claims retroactively to the date of loss. In light of the above, the case is dismissed with prejudice.

This constitutes the Amended Decision and Order of the Court which replaces the Decision and Order of the Court dated March 30, 2011, which is hereby recalled and vacated.

DATED: April 7, 2011__________________________

KATHERINE A. LEVINE

JUDGE, CIVIL COURT

Footnotes

Footnote 1:Since the right to conduct EUOs and IMEs both appear in the PIP, and thus constitute conditions precedent to coverage, the case law treats both of these examinations in the same fashion.

Footnote 2: The majority found that the language mandating compliance with the terms of the coverage as a condition precedent to bringing a lawsuit applied solely to “an insureds cooperation with the post claim verification protocols with regard to IMEs.” 7 Misc 3d at 22.

Civil Court of the City of New York, Kings County

161737/07

Ingrid Joseph, J.

Recitation, as required by CPLR §2219 (a), of the papers

considered in the review of this Motion

PapersNumbered

Notice of Motion Affidavits Annexed ………….1

Opposition/Answering Affidavits .. ..2

Replying Affidavits .

In this action to recover assigned first-party no-fault benefits, plaintiff filed a motion for summary judgment on or about September 16, 2009, which was returnable on October 6, 2009. The parties signed a written adjournment stipulation on the return date since the defendant failed to submit opposition. In the stipulation, the litigants agreed that the defendant would serve responsive papers upon plaintiff on or before January 29, 2010 and that any cross-motion served beyond the extended date would be denied as untimely. The defendant breached the agreement by serving the cross-motion and opposition on March 5, 2010, approximately one month after the due date. Consequently, the court rejected the defendant’s submissions when the parties appeared on March 29, 2010. The defendant now seeks an order pursuant to CPLR § 2221(e)(2) & (e)(3), granting leave to renew plaintiff’s prior motion for summary judgment and upon renewal, an order denying plaintiff’s motion and granting defendant’s cross-motion for summary judgment.

The issue before the court is whether the defendant can move for leave to renew its adversary’s motion on the basis that its cross-motion and opposition, which was rejected and not entertained, constitutes new facts?

The defendant’s untimely responsive papers, once rejected, constituted a default on the part of the defendant in opposing plaintiff’s motion (Lumbermen’s Mut. Cas. Co. v Fireman’s Fund American Ins. Co., 117 AD2d 588 [2d Dept 1986]; and see Omega Diagnostic Imaging, P.C. v MVAIC, 2011 WL 817397 [Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2011]; Manhattan Medical Imaging, P.C. v Nationwide Ins. Co., 27 Misc 3d 127(A)[Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2010]; Acupuncture Healthcare Plaza, P.C. v Zurich Ins. Co., 22 [*2]Misc 3d 126(A) [Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2008][the court’s grant of relief requested in an unopposed motion is considered a default judgment]). Even though the court allowed the defendant to orally address the issue of whether plaintiff met its prima facie burden, the resulting judgment in plaintiff’s favor was a default judgment. The court is cognizant that CPLR § 2221 is silent as to who may bring a motion to renew, but the Appellate Term has held that a party cannot renew a motion upon which it defaulted (Manhattan Medical Imaging, P.C., 27 Misc 3d 127(A)[Sup. Ct, App Term 2nd, 11th, 13th Jud. Dists 2010]). The appropriate procedural device for obtaining relief from a default judgment is a motion to vacate pursuant to CPLR § 5015(a)(1)(Eugene Di Lorenzo, Inc. v A.C. Dutton Lumber Co., Inc., 67 NY2d 138, 141 [1986]).

Even assuming arguendo that a motion for leave to renew was appropriate in this context or the court converted the motion into one to vacate the default judgment, the defendant has failed to meet the criteria for relief under either theory.

A motion for leave to renew, pursuant CPLR § 2221, creates an avenue for a party to provide the court with pertinent facts that it failed to include in the previous motion when such motion was before the court (8 NY Prac., Civil Appellate Practice § 5:2). The motion must be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination and shall contain reasonable justification for the failure to present such facts on the prior motion (CPLR § 2221(e)(2) & (e)(3); Rizzotto v Allstate Ins. Co., 300 AD2d 562 [2d Dept 2002]). In order to garner relief under CPLR § 5015, the defendant must show a reasonable excuse for the default and a meritorious defense.

The defendant’s cross-motion and opposition do not constitute new facts within the contemplation of CPLR § 2221, because the information contained therein is not newly discovered and would have been available when plaintiff’s motion was before the court but for the defendant’s untimeliness. Additionally, the defendant’s excuse of law office failure is untenable for purposes of CPLR §§ 2221 and 5015. Law office failure can be accepted as a reasonable excuse in the exercise of the court’s sound discretion, but the movant must submit supporting facts to explain and justify the default and mere neglect is not acceptable as a reasonable excuse (Cole-Hatchard v Grand Union, 270 AD2d 447 [2d Dept 2000] quoting Bravo v New York City Hous. Auth., 253 AD2d 510 [2d Dept 1998] and Davito v Marine Midland Bank, 100 AD2d 510 [2d Dept 1984]). The defendant’s excuse, that the task of responding to plaintiff’s motion was assigned to an attorney who left the firm, and the opposition due date had lapsed before the law office could “sort through” the former attorney’s caseload, represents nothing more than the law office’s neglect in managing its active cases. Furthermore, the defendant failed to provide details or submit any evidence in support of its explanation. Thus, the court finds that the excuse is conclusory and insufficient.

Accordingly, the defendant’s motion is denied.

This constitutes the decision and order of the court.

March 15, 2011_____________________________

HON. Ingrid Joseph

Judge, Civil Court

Civil Court of the City of New York, New York County

17035/05

Soraya Campbell, Esq. of Bruno Gerbino & Soriano LLP appeared in support of the motion

Christopher McCollum, Esq. appeared in opposition to the motion

O’Shea, J.

Plaintiff, a professional corporation, instituted this action to recover first-party, no fault benefits for services rendered to its assignor, Shonta Robinson, who was injured in an automobile accident on August 4, 2002. On or about October 28, 2002, plaintiff submitted three claims for payment totaling $14,929.08. On February 1, 2008, plaintiff was awarded summary judgment on its claims.

On December 17, 2008, plaintiff served a proposed judgment in the total amount of $55,090.03, which included statutory attorney’s fees and $39,151.85 in interest, which plaintiff calculated using compounded interest at the rate of 2% per month from the date defendant was required to pay or deny the claim (November 28, 2002) to the date of the proposed judgment (December 17, 2008). Shortly thereafter, on December 30, 2008, defendant paid the underlying claims in the amount of $14,929.08, along with the statutory attorneys fees in the amount of $850.00. Defendant then moved by order to show cause two weeks later seeking, inter alia, an order vacating or staying entry and execution of the judgment on the grounds that plaintiff [*2]miscalculated the interest. On May 18, 2009, four months after judgment was entered, a decision and order was issued staying “entry of this judgment . . . until the correct interest amount is added to the judgment.”

Sixteen months later, in September, 2010, plaintiff e-mailed defendant a copy of an amended application for judgment with interest in the amount of $40,238.48, calculated from April 5, 2005, the date the complaint was filed,^[FN1] to the date of the new proposed judgment. Plaintiff again used a compounded rate of 2% per month in calculating the interest.^[FN2] Nothing more happened. There is no record that the proposed amended judgment was ever entered by the Clerk or that plaintiff or defendant took any steps to challenge or compel entry of the newly proposed judgment or to lift the stay.

Three months later, on December 21, 2010, plaintiffs commenced enforcement proceedings on the original judgment. In its Execution With Notice to Garnishee, plaintiff stated as follows:

“[J]udgment was entered on January 7, 2009, . . . in the amount of $55,090.93, including costs, of which $57,391.12, together with interest from December 21, 2010, remains due and unpaid.”

One month later, on January 18, 2011, in a reprise of its January 2009 order to show cause, defendant moved for an order: (i) vacating or modifying the judgment; (ii) staying entry of the judgment; (iii) vacating or staying the execution of judgment; and (iv) staying execution of the judgment pending a hearing and determination of the motion. Defendant claims this relief on the grounds that (a) it was improper for plaintiff to seek execution of a judgment that was stayed and never entered by the Clerk; and (b) the interest calculation remains incorrect. Plaintiff opposes the motion on the grounds, inter alia, that the stay was self-executing and lifted when he served the amended application for judgment, and his calculations of interest are correct. The order to show cause initiating the instant motion provides that “pending the hearing and determination of this application, entry of judgment . . . is hereby stayed [and] pending the hearing of this application, any attempted enforcement of or execution on the judgment is hereby stayed. . . .”

In the exercise of its control over its judgments, a court may open them upon the application of anyone for sufficient reason in the furtherance of justice. Its power to do so is [*3]inherent and does not rely on any particular statute (Woodson v. Mendon Leasing Corp., 100 NY2d 62 [2003]; Ladd v. Stevenson, 112 NY 325 [1889]). However such relief generally should be resorted to only to relieve a party from judgments taken through fraud, mistake, inadvertence, surprise or excusable neglect (McKenna v. County of Nassau, 61 NY2d 739 [1984]). Correction of a miscomputation of interest constitutes just such an error (e.g. Kiker v. Nassau County, 85 NY2d 879 [1995][a mistake in assessing the amount of interest on a judgment may be corrected even after the appeals process has been completed, where the proper rate was clearly directed by statute]; see also Gaul v. Commercial Union Ins. Co., 268 AD2d 816 [3d Dep’t 2000]; Bauman v. Bauman, 200 AD2d 380 [1st Dep’t 1994]).

In recognition of the fact that the interest calculation was incorrect, on May 18, 2009, this Court granted Defendant a stay of the entry of the judgment until “the correct amount of interest is added to the judgment.” As the correct amount of interest has still not been added to the judgment, the May 18, 2009, stay remains in full force and effect. Accordingly, defendant’s new application for a stay of entry of the judgment is denied as unnecessary (see e.g., Med. Soc’y v. Serio, 99 NY2d 608 [2003]; Matter of Peter B., 2010 NY Slip Op 3920 [2d Dep’t 2010]).

Defendant’s motion to vacate or to modify the judgment is also denied. As defendant has not identified anything wrong with the judgment aside from the improper calculation of interest (which was already addressed in the prior motion), there is no reason to either vacate or modify it. However, Defendant’s motion for an order staying enforcement is granted. Until the judgment has properly been entered, there is nothing to enforce.

As for the calculation of interest itself, Plaintiff offers authority to suggest that he is entitled to compound interest, while Defendant argues that the interest should not be compounded. The “old” regulations found at 11 NYCRR § 65.15(h)(1) provided for interest at the rate of “two percent per month, compounded.” That regulation was superseded on April 5, 2002 by Insurance Department Regulations found at 11 NYCRR § 65-3.9(a) , which provides for “interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month.”

Citing Belt Parkway Imaging, P.C. v State Wide Ins. Co., 2010 NY Slip Op 52229U [2010]). Plaintiff contends that it is up to Defendant to show that the new regulations apply, a determination made with reference to the contents of the policy in effect at the time of the accident. As Defendant has not met that alleged burden, plaintiff argues that it is entitled to interest calculated under the old regulations. In opposition, Defendant contends that the contents of the policy in effect at the time are irrelevant to this inquiry. Citing to Circular Letter No. 9, dated April 9, 2002,^[FN3] Defendant asserts that only the notice of claim and proof of claim provisions are governed by the policy endorsement in effect at the time of the submission of the claim. Everything else is dictated by whether the claim was submitted before or after April 5, 2002.

Defendant’s interpretation finds support in the Court of Appeals determination in Medical [*4]Society v. Serio, 100 NY2d 854 [2003]). Describing the various aspects of the new regulations, the Court states as follows:

“Under the revised regulations, this interest is no longer to be compounded, as before, but is instead to be calculated as simple interest (11 NYCRR 65-3.9 [a])” (emphasis added)

See also Gokey v. Blue Ridge Ins. Co., 2009 NY Slip Op 50361U [Sup. Ct. Ulster Co. 2009]). This conclusion is further reinforced by the fact that the change in the interest calculation was reflective of the change in market conditions at the time. not on anything having to do with the insurance policy per se or its endorsement (see 2001-19 NY St. Reg. 17][noting, “The Department, by regulation, required compounding at a time of double-digit interest rates. In the current interest rate environment, compounding is not reflective of the financial market]; 2000-31 NY St. Reg. 19; 1999-16 NY St. Reg. 7). Plaintiff’s reliance on the determination by the Second Department in Belt Parkway Imaging, P.C. v State Wide Ins. Co., supra, is misplaced. There is no indication in the decision that the accident in question post-dated the inception of the new regulations. Accordingly, the interest in this case shall be calculated as simple not compound interest.

As for the proper term of the interest, Plaintiff contends that the term of the interest runs from the date of the commencement of this proceeding to the present, as interest was not tolled in the order staying execution of the judgment, while defendant argues that such an interpretation provides an inappropriate windfall to plaintiff. Defendant also argues that, in any event, plaintiff should not be entitled to accrual of interest past the date of the original judgment, as defendant paid the principal amount at that time.

On the subject of interest, the insurance regulations provide as follows:

(a) All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, calculated on a pro rata basis using a 30-day month. 11 NYCRR § 65-3.9

The interest which accrues on overdue no-fault benefits at a rate of two percent per month is a statutory penalty designed to encourage prompt adjustments of claims and inflict a punitive economic sanction on those insurers who do not comply (East Acupuncture, P.C. v. Allstate Ins. Co., 61 AD3d 202 [2d Dep’t 2009]). Claimants are also required to act promptly. Failure to act promptly after a denial of claim results in a toll of the statutory interest provisions, for to do otherwise would reward a recalcitrant plaintiff with a windfall of punitive interest payments, and would contravene the legislative goal of promptly resolving no-fault claims ( see East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202, 210 [2d Dep’t 2009]; see also LMK Psychological Services, supra, 12 NY3d at 223-224).

Ordinarily prejudgment interest runs from the accrual of the claim or the occurrence of the damages until the date that a decision or verdict is made (see e.g., CPLR § 5001). However, in a no-fault context, regulations provide that where litigation is not commenced within 30 days of denial of the claim, interest is tolled until the date of commencement of the action (see 11 NYCRR 65-3-9[c]; see also LMK Psychological, supra, 12 NY3d at 223-224; Smith v. Nationwide Mut. Ins. Co., 211 AD2d 177 [4th Dep’t 1995][Insurance Law § 5106(a) supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004]).The “closing” date for prejudgment interest ordinarily is the date of the decision rendering judgment (see CPLR § 5001[c] ). The actual entry of judgment occurs sometime later, and prejudgment interest also [*5]accrues between the rendering of judgment and the entry of judgment, and post-judgment thereafter (See CPLR §§ 5002 – 5004). In the case of Civil Court matters, CCA § 1401 requires the prevailing party to “prepare” the judgment within 30 days after the rendering of judgment by the Court, or the losing party may do so. This limitation is both short and precisely bounded so that the entry of judgment does not rely on the caprice or diligence of the prevailing party (see Henry Modell & Co. v. Minister, Elders & Deacons of the Reformed Protestant Dutch Church, 68 NY2d 456 [1986]).

Notwithstanding the requirement that judgment be prepared within 30 days of the rendering of judgment, plaintiff here waited ten months after judgment was rendered by Judge Mendez on February 1, 2008, before filing an application for judgment. Because the calculations of interest were incorrect, on May 18, 2009, the judgment was stayed to permit plaintiff the opportunity to correct the interest calculations. Two years have passed since the judgment was stayed and it has been three years since judgment was rendered. Yet, plaintiff contends that it is entitled to collect compounded interest at the rate of 2% per month throughout the entire period of its inaction, a contention with which this Court disagrees.

In February of 2010, the Second Department declined to pass on the issue of whether the accrual of interest may be tolled where it is found that there has been an unreasonable delay in the entry of judgment (SZ Med., P.C. v Lumbermens Mut. Cas. Co., 2010 NY Slip Op 20044 [App. Term Second Dep’t 2010]). While the majority noted that it shared the dissent’s concerns with regard to this issue, it declined to consider the matter as it was not raised in the court below.

Justice Golia, in his dissent, argued that permitting interest to accrue between the date of the order and the date of the actual entry of judgment “would be rewarding such delay with what amounts to essentially a windfall of punitive interest payments.” As the purpose of the no-fault regulations was to encourage the prompt resolution of no-fault claims, permitting a recalcitrant plaintiff to accrue interest after the conclusion of litigation “would be at odds with the legislative goal of promptly resolving no-fault claims.” (SZ Med., P.C. v Lumbermens Mut. Cas. Co., 2010 NY Slip Op 20044 [App. Term. 2d Dep’t 2010], Golia, J. dissenting).

No fault regulations provide for interest to accumulate throughout the course of the litigation “unless the applicant unreasonably delays the . . . court proceeding.” (11 NYCRR § 65-3.9[d]). A court proceeding ends with the entry of judgment. Judgment is to be prepared by the prevailing party within 30 days of the rendering of judgment (CCA § 1401). It follows that any delay thereafter, absent good cause, is unreasonable. Here, plaintiff waited ten months to enter the original judgment, miscalculated the interest, waited an additional 17 months after judgment was stayed correct the interest calculation, and then miscalculated it a second time. This was unreasonable. Accordingly, interest as provided by 11 NYCRR § 65-3.9 is tolled as of March 2, 2008 — 30 days after the Court initially rendered summary judgment for plaintiffand the date by which plaintiff should have prepared the judgment in the first instance.

Enter order accordingly.

Dated:March 14, 2011______________________________

Ann O’Shea, AJSC

Footnotes

Footnote 1: Plaintiff used the April 5, 2005, date in recognition of 11 NYCRR 65-3.9 and the Court of Appeals decision in LMK Psychological Services, PC v. State Farm Mutual Auto Insurance, 12 NY3d 217 (2009), which provided that the accrual of interest is tolled from 30 days after the claim is denied to the date the civil action is commenced. The regulation was adopted “to encourage claimants to swiftly seek to resolve any dispute concerning their entitlement to no fault benefits” (LMK Psychological, 12 NY3d at 223-224).

Footnote 2: Plaintiff also unilaterally increased the amount of attorney’s fees claimed from $850 to $1,700 and the costs of service of the summons and complaint from $25 to $40. In addition, plaintiff failed to credit defendant with the payment of the principal sum two years earlier.

Footnote 3:Circular Letter No. 9, dated April 9, 2002, by the Insurance Department, states that the new regulation “provides for revised endorsements with new notice provisions, [and that] these new provisions will not be applicable to claims until new policies containing the revised endorsements are issued or renewed” (see Brentwood Pain & Rehabilitation Servs., P.C. v Progressive Ins. Co., 2009 NY Slip Op 31881U [Sup. Ct. NY Co. 2009]).

[*1]

Civil Court of the City of New York, Kings County, January 3, 2011

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, L.P., Melville, for defendant. Yelena Shlyamkovich, P.C., Brooklyn, for plaintiff.

{**2011 N.Y. Slip Op. at 1} OPINION OF THE COURT

Devin P. Cohen, J.

Defendant’s motion to dismiss pursuant to CPLR 3211 (a) (5) is decided as follows:

Procedural History

This action arises from an August 6, 2008 incident wherein plaintiff’s assignor allegedly sustained personal injuries and subsequently received treatment from plaintiff health services provider. On August 27, 2009, plaintiff commenced this action seeking to recover first-party no-fault benefits for services rendered to its assignor. Issue was joined by service of defendant’s{**2011 N.Y. Slip Op. at 2} [*2]answer on or about October 7, 2009.

Prior to the commencement of this lawsuit, defendant initiated a declaratory judgment action in Kings County Supreme Court, seeking a declaration that the incident of August 6, 2008 was a “staged or intentional incident” and therefore “not a covered event as defined by the applicable policy of insurance issued by Encompass” (plaintiff’s exhibit A). Plaintiff and its assignor, Vincent Meyers, were both named defendants in the declaratory judgment action. Neither plaintiff nor its assignor answered or appeared in the declaratory judgment action, and defendant moved for a default judgment.

On January 10, 2010 Justice Robert J. Miller granted the default judgment against plaintiff and its assignor and issued a declaratory judgment finding that defendant, “by reason of no coverage, is not required to provide a defense and/or indemnification to [plaintiff or its assignor] . . . in any current or future proceedings . . . including lawsuits seeking to recover no-fault benefits . . . arising out of the alleged incident of August 6, 2008” (defendant’s exhibit A at 3). Defendant now moves this court pursuant to CPLR 3211 (a) (5) for an order dismissing the complaint in this action, with prejudice, on the grounds of collateral estoppel based upon the order issued in the declaratory judgment action, and “for such other and further relief this court deems just and proper” (defendant’s motion to dismiss at 1).

This case raises the question of the effect of a declaratory judgment order, issued on default, with respect to collateral actions seeking to litigate the same issue. To address this question requires an analysis of the intersection of the applicable law and policies underlying declaratory judgments, collateral estoppel and default judgments.

Legal Standards

CPLR 3001 provides that “[t]he supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed.” The general purpose of the declaratory judgment is often described as “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation either as to present or prospective obligations” (James v Alderton Dock Yards, 256 NY 298, 305 [1931]). Thus, a primary goal in seeking a declaratory judgment is a decisive determination as to the rights of the parties in ongoing or future collateral actions.

The Court of Appeals in Kaufman v Eli Lilly & Co. (65 NY2d 449 [1985]) outlined the purpose of the doctrine of collateral estoppel and the circumstances under which it is applied. Generally, the doctrine “precludes a party from relitigating an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point” (id. at 455 [internal quotation marks omitted]). The doctrine stems from the principles of judicial economy and fairness (id. at 455).

In order for the doctrine of collateral estoppel to apply, two requirements must be satisfied: (1) “the identical issue necessarily must have been decided in the prior action and be decisive of the present action” (id. at 455); and (2) “the party to be precluded from relitigating the issue must have had a full and fair opportunity to contest the prior determination” (id. at 455). “The party seeking the benefit of [preclusion] has the burden of demonstrating the identity of the issues [while] the party [opposing] application [of the doctrine] has the burden of establishing the absence of a full and fair opportunity to litigate” (id. at 456).

The doctrine of collateral estoppel will only apply to matters “actually litigated and{**2011 N.Y. Slip Op. at 3} [*3]determined” in a prior action (Restatement [Second] of Judgments § 27). Without “actual litigation” there is no identity of issues (see Kaufman, 65 NY2d at 457). In general, courts have taken the position that “an issue is not actually litigated if . . . there has been a default” (Kaufman, 65 NY2d at 456-457; see Restatement [Second] of Judgments § 27, Comments d, e). More recently both in Zimmerman v Tower Ins. Co. of N.Y. (13 AD3d 137 [1st Dept 2004]) and Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co. (27 Misc 3d 67 [App Term, 2d Dept 2010]) appellate courts have reiterated their adherence to this principle and its application to declaratory judgments. Each court held that declaratory judgments issued on default would not be given preclusive effect in collateral proceedings.

The Parties’ Contentions

Defendant contends that collateral estoppel should apply and the case should be dismissed based upon the determination in the declaratory judgment action that the alleged accident was not a covered incident. Defendant contends that the decisive issue of coverage is the same in both actions. Furthermore, defendant (plaintiff in the declaratory judgment action) contends that plaintiff (a defendant in that action) had a full and fair opportunity to litigate the matter in the declaratory judgment action in that it was duly served with the summons and complaint and failed to appear or interpose an answer. Finally, defendant contends that, as a policy matter, “to not give preclusive effect to the Supreme Court judgment is to create a disincentive for a provider, or an Eligible Injured Person, to ever appear and litigate the issues of the Declaratory Judgment” (defendant’s reply at 2).

In opposition, plaintiff cites the general rule articulated above that collateral estoppel does not apply where there has been a default because the issues have not been “actually litigated” (see Zimmerman, 13 AD3d 137; Kaufman, 65 NY2d at 457). Plaintiff offers no explanation for its default in the declaratory judgment action.

Analysis

The line of appellate cases referenced above adheres to the principle that collateral estoppel does not apply where there has been a default in the prior action. It has been argued that when it first articulated this principle in Kaufman, the Court of Appeals did not intend it to be applied in such a bright-line manner, but rather intended a more case-specific evaluation of whether the issue had been “actually litigated” (see Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 153 [1988] [in analyzing the application of collateral estoppel “no rigid rules are possible, because . . . factors may vary in relative importance depending on the nature of the proceedings”]; see Kaufman, 65 NY2d at 457). In the no-fault context specifically, the argument has been made that declaratory judgments rendered on default should be given collateral estoppel effect (see Magic, 27 Misc 3d at 69-76 [Golia, J., dissenting]). That said, in light of the current appellate case law, the court is constrained from dismissing this case on the basis of collateral estoppel.

However, the fact that collateral estoppel does not apply does not mean that the instant action should proceed. The efficacy of a declaratory judgment relies on the assumption that it will be given preclusive effect in collateral actions. To allow the action to continue as though the declaratory judgment (DJ) action never occurred would create a disincentive for no-fault providers to ever appear in declaratory judgment actions and would undermine the purpose of the declaratory judgment process. While plaintiff/DJ defendant cannot, under the case law, be prejudiced by the default finding, neither should plaintiff/DJ defendant be unfairly advantaged [*4]by its own default.{**2011 N.Y. Slip Op. at 4}

In general, a default judgment is a presumptively valid judgment entitled to enforcement, unless or until reversed or set aside (All Terrain Props. v Hoy, 265 AD2d 87 [1st Dept 2000]; but see also Fleet Bus. Credit, LLC v Michael P. Costelloe, Inc., 19 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2008] [limited exception for out-of-state defaults where defendant alleges a lack of personal jurisdiction in the prior action]). To avoid enforcement of a default judgment, a defendant must move to vacate and offer both a reasonable excuse for its default and a meritorious defense to the underlying action (CPLR 317). In the court’s view, a declaratory judgment, issued on default, should be treated in the same manner. Plaintiff’s proper recourse, if it wishes to proceed with this action, is to move to vacate the default judgment in the declaratory judgment action by offering a reasonable excuse for its failure to appear and a meritorious defense to that action.

The court is empowered to stay its own proceedings “[e]xcept where otherwise prescribed by law . . . in a proper case, upon such terms as may be just” (CPLR 2201). One instance in which the staying of a given action is often deemed appropriate is when another (collateral) action is pending (see Connors, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C2201:4 [discussing implied stay provision on a motion to dismiss pursuant to CPLR 3211 (a) (4)]). Since plaintiff contends that the declaratory judgment cannot be given preclusive effect because it was not “actually litigated,” this court will stay the instant matter to afford plaintiff the opportunity to move to vacate its Supreme Court default and, if granted, to “actually litigate” the coverage question in the declaratory judgment action.

Conclusion

For the foregoing reasons, the court exercises its discretion to stay this action indefinitely pending any vacatur of the default judgment in the collateral declaratory judgment action. This decision is without prejudice to defendant to remake or renew this motion in the event that plaintiff is unsuccessful in vacating the declaratory judgment.

[*1]

Civil Court of the City of New York, Kings County, December 7, 2010

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn, for plaintiff. Law Offices of Teresa M. Spina, Woodbury, for defendant.

{**30 Misc 3d at 486} OPINION OF THE COURT

Alice Fisher Rubin, J.

Both of the above-captioned actions are for recovery of unpaid no-fault medical bills. Plaintiff seeks to collect monies due after defendant denied reimbursement for bills received from plaintiff for medical services rendered to the assignors, Johnson and Diggs. Defendant’s denials were based on a lack of medical necessity.

During trials before this court on July 29 and August 4, 2010 to determine the issue of medical necessity of the treatments rendered, the court was presented with novel issues regarding the admissibility of some of defendant’s documents. The court reserved decision and instructed both parties to submit legal briefs discussing the issues. After reviewing the briefs and the law, the court finds that defendant did not establish its prima facie case and hereby enters judgment in favor of plaintiff.

Discussion

In both cases, defendant stipulated that plaintiff had established its prima facie case by proving that its claims were mailed and received by defendant, and that payment of no-fault benefits is overdue. Plaintiff stipulated that defendant issued timely and proper denials, but did not stipulate that defendant had a proper basis for the denials. The denials, written by Dr. Sohn, were based upon peer reviews, each authored either by himself, Dr. Ferrante or Dr. Snitkoff. Dr. Snitkoff was the only doctor not available to testify.

In the Johnson case, only one out of the four peer reviews presented was admitted into evidence. Two of the peer reviews not admitted were signed by Dr. Ferrante, but not notarized or dated; the third peer review not admitted was signed by Dr. Snitkoff, but not notarized. In the Diggs case, one peer review was admitted into evidence and two were not. The peer reviews{**30 Misc 3d at 487} not admitted, allegedly by Drs. Sohn and Snitkoff, were unsigned and not notarized.^[FN1]

The parties were to discuss the peer reviews not admitted into evidence in their memoranda. Generally, an unsigned peer review does not constitute admissible evidence and cannot be used to support a lack of medical necessity defense. (See CPLR 2106; Bronx Multi Med. Care, P.C. v Kemper Cas. Ins. Co., 21 Misc 3d 127[A], 2008 NY Slip Op 51928[U] [App Term, 1st Dept 2008].) Additionally, a peer review must be properly authorized or affirmed, by a notary, for example, in order to be admissible. (See Vista Surgical Supplies, Inc. v Travelers Ins. Co., 50 AD3d 778, 778 [2d Dept 2008]; Sandymark Realty Corp. v Creswell, 67 Misc 2d 630, 631 [Civ Ct, NY County 1971].) This court is not aware of any law which requires a peer review to be dated. However, the court hereby deems the date to be a necessary component in order to further authenticate the document, and also to ensure that the peer review is accurately described in the denial.

Peer Reviews Not Admitted Into Evidence

Defendant’s Arguments

Defendant’s memorandum includes several arguments. First, defendant states that it provided plaintiff with an expert witness disclosure on July 1, 2010 and plaintiff did not object to any documents contained in the disclosure. It is defendant’s position that plaintiff has now waived any objections to any information that was included in the disclosure because there was ample time to review and take action before trial. Defendant also proffers that any defect which may have existed in the{**30 Misc 3d at 488} denials was cured by plaintiff stipulating that they were timely and proper.

Lastly, defendant states that because Drs. Sohn and Ferrante were present to testify about their own peer reviews, the reviews do not have to be in evidence for their testimony to be valid. In support of this argument, defendant relies on Urban Radiology, P.C. v Tri-State Consumer Ins. Co. (27 Misc 3d 140[A], 2010 NY Slip Op 50987[U], *2 [2010]), which states that, where the underlying documents relied upon by a doctor to write a peer review are not used for their truth,^[FN2] but only to form an opinion based on the information contained in the documents, the defendant does not have to establish the reliability of those documents.

Plaintiff’s Arguments

In its memorandum, plaintiff concedes to stipulating that defendant’s denials were timely, but emphasizes that it only stipulated that the denials were proper in form, not in substance. According to St. Barnabas Hosp. v Allstate Ins. Co. (66 AD3d 996, 996 [2d Dept 2009]), a proper denial of a claim for no-fault benefits must include not only standard form information prescribed by the Insurance Department, but also must “promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated” (internal quotation marks and citations omitted). Plaintiff posits that defendant’s denials fail to state viable reasons with specificity.

Next, plaintiff notes that none of the documents relied upon by either Dr. Sohn or Dr. Snitkoff in creating their peer reviews were admitted into evidence, and that neither party had any personal knowledge of where the documents came from. Plaintiff also asserts that the undated peer reviews do not provide any evidence that they are the peer reviews referred to in defendant’s denials, and there was no testimony to provide an explanation for the omissions.

Finally, plaintiff argues that a peer review must be in evidence to be used as a basis for a denial. Plaintiff claims that an unsubstantiated, inadmissible peer review is equivalent to no peer review at all; therefore, a denial based on such a peer review is unsubstantiated as well. Plaintiff cites Innovative Chiropractic, P.C. v Travelers Ins. Co. (27 Misc 3d 141[A], 2010 NY{**30 Misc 3d at 489} Slip Op 50994[U], *1 [App Term, 2d, 11th & 13th Jud Dists 2010]), which explains that a proper peer review “set[s] forth a factual basis and medical rationale for the conclusion that there was a lack of medical necessity for the services at issue.” Following this rationale, plaintiff asserts that before defendant can even prove the denials are proper, a peer review must first be in admissible form, which is not the case here.

Defendant Has Not Proved Its Prima Facie Case

Although plaintiff did not object to the documents contained in defendant’s expert witness disclosure before trial, defendant has not provided, and the court has not found, any authority to support the notion that plaintiff waived its ability to object to the denials during trial. Further, the court cannot support defendant’s argument that plaintiff’s stipulation cured the defects in defendant’s denials. At least one case has stated that a defective denial cannot be corrected nunc pro tunc beyond the time period where the denial is due. (See Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2d Dept 2004].) However, the Nyack case is silent on the process of how a defective denial is cured, even within the time period of when it is due.

Defendant’s final argument suggests that, although some of the peer reviews by Drs. Sohn and Ferrante were not in evidence, the doctors’ testimony regarding those documents is still valid. The Urban case cited by defendant, however, only states that a party does not have to establish the reliability of the underlying documents used to create a peer review, but does not state that the same is true for the actual peer review. As stated previously, there is case law providing that a peer review must be admissible to be used in establishing a lack of medical necessity defense.

Based on the law, neither of the peer reviews at issue in the Diggs case can be rendered admissible because they were not signed, regardless that one of the doctors was present to testify. Since the documents are not admissible, they cannot serve as a valid basis for defendant’s denials and, therefore, defendant is not able to establish its prima facie case.

In the Johnson case, because Dr. Snitkoff was not present, there is no way to authenticate his signature, and his peer review is therefore inadmissible. Although not notarized, it would seem as though Dr. Ferrante’s peer reviews are admissible because he was present in court to affirm his own{**30 Misc 3d at 490} signature. However, because both of his peer reviews fail to state the date they were signed, this court cannot ensure that the peer reviews presented were the ones relied upon and referenced in the denials. Based upon the aforementioned facts and law, defendant has not provided sufficient proof of its medical necessity defense and judgment is entered in favor of plaintiff.

Footnotes

Footnote 1: Plaintiff argues that the one peer review admitted in the Diggs case was in error because there was a month-long gap between the date of the peer review and the date it was signed, which is a violation of CPLR 4518. The court finds this argument to be misplaced and will not review the documents already admitted into evidence.

Footnote 2: For example, to prove that there was an injury or that a patient was treated as set forth in the records. (Urban Radiology, P.C., 2010 NY Slip Op 50987[U], *2.)

Civil Court of the City of New York, Queens County

086674/10

The petitioner was represented by Jonathon H. Kaufman, Esq. of Serpe, Andree & Kaufman, 149 Main Street, Huntington NY. The respondent was represented by Stacey Gorny, Esq. of Lewis Johns Avallone Aviles, LLP, 425 Broad Hollow Road, suite 400, Melville, NY.

Genine D. Edwards, J.

Petitioner seeks to vacate an arbitration award rendered following mandatory arbitration

because the arbitrator allegedly disregarded applicable law. Respondent opposes the application

and contends that the arbitrator’s decision was neither arbitrary nor capricious.

William Salas, petitioner’s insured, drove a loaner vehicle, while his own vehicle was being repaired at a car dealership. Salas’ vehicle was insured by petitioner and the loaner vehicle was insured by respondent. While driving the loaner vehicle, Salas struck a pedestrian. Petitioner paid no-fault benefits to the pedestrian. Thereafter, it submitted a claim to arbitration and sought reimbursement from respondent for expenses and medical benefits paid to the pedestrian.

Salas signed a loaner/rental agreement before he took control of the loaner vehicle. [*2]Paragraph 6 of the agreement stated, in pertinent part:

You are responsible for all damage or loss You cause to others. You agree to provide auto liability, collision and comprehensive insurance covering You, Us and the Vehicle. Your personal auto insurance coverage is primary (emphasis added). If you have no auto liability insurance in effect on the date of loss, or if We are required by law to provide liability insurance, We provide auto liability insurance (the Policy”) that is secondary to any other valid and collectible insurance, whether primary, secondary, excess or contingent . . . .”

Notice of Petition, Exhibit C. Based upon paragraph 6 of the agreement, the arbitrator determined that petitioner failed to prove its prima facie case. Thus, petitioner was deemed primarily responsible for no-fault payments and was not entitled to reimbursement for expenses and medical benefits paid to the pedestrian.

In the instant application, petitioner equates a loaner vehicle to a rental vehicle and asserts that as between a no-fault insurer of a rental vehicle and a no-fault insurer of a non-owner renter, the primary source of coverage for no-fault benefits is the no-fault insurer of the rental vehicle. In opposition, respondent contends that the award should stand because the arbitrator’s decision was neither arbitrary nor capricious. It contends that the arbitrator based its decision upon credible evidence, namely paragraph 6 of the loaner/rental agreement.

“Courts are reluctant to disturb the decisions of arbitrators lest the value of this method of resolving controversies be undermined.” Matter of Goldfinger v. Lisker, 68 NY2d 225, 508 NYS2d 159 (1986). Where arbitration is pursuant to a voluntary agreement of the parties, the award will be upheld unless it violates strong public policy, is totally irrational, or exceeds a specifically enumerated limitation of the arbitrator’s power. See Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 214, 652 NYS2d 584 (1996) (Where arbitration is pursuant to voluntary agreement of parties, the arbitrator’s determination on issues of law, such as application of statute of limitations as well as on issues of fact, is conclusive, in absence of proof of fraud, corruption, or other misconduct.); Teamsters Local 814 Welfare, Pension and Annuity Funds v. County Van Lines, Inc.,56 AD3d 567, 867 NYS2d 190 (2 Dept. 2008). In the case of mandatory arbitration, as is the case here, due process imposes closer judicial scrutiny on the arbitrator’s determination. RDK Medical P.C. v. General Assur. Co., 8 Misc 3d 1025(A), 806 NYS2d 448 (Civ. Ct. Kings County 2005). Therefore, “[a]n arbitration award in a mandatory arbitration proceeding will be upheld if it is supported by the evidence and is not arbitrary and capricious.” State Farm Mut. Auto. Ins. Co. v. City of Yonkers, 21 AD3d 1110, 801 NYS2d 624 (2d Dept. 2005). See also Kemper Ins. Co. v. Westport Ins. Co., 9 AD3d 431, 779 NYS2d 788 (2d Dept. 2004); State Farm Mut. Auto. Ins. Co. v. American Transit Ins. Co., 26 Misc 3d 127(A), 906 NYS2d 783 (2d, 11th & 13th Jud. Dists. 2009). This is a priority of payment claim. In order to determine the priority of payment, all relevant policies should be reviewed and considered. Petitioner never produced its policy. Thus, [*3]the arbitrator properly relied upon the respondent’s policy to determine that petitioner was primarily responsible to make no-fault payments to the pedestrian. In addition, this Court is unpersuaded by petitioner’s assertion that a loaner vehicle is akin to a rental vehicle and thus, respondent is primary for no-fault coverage. See M.N. Dental Diagnostics, P.C. v. Government Employees Ins. Co., 24 Misc 3d 43, 884 NYS2d 549 (App. Term. 1st Dept. 2009). It has been held that a loaner vehicle is a “temporary substitute vehicle”, which ordinarily is covered under the insured’s policy. See Lancer Ins. Co. v. Republic Franklin Ins. Co., 304 AD2d 794, 759 NYS2d 734 (2d Dept. 2003); ELRAC, Inc. v. Mehlinger, 258 AD2d 500, 684 NYS2d 625 (2d Dept. 1999).

The application to vacate the arbitration award is denied. Thus, the award is confirmed.

This constitutes the decision and order of the Court.

Date: December 6, 2010 _____________________________

Genine D. Edwards

Judge of Civil Court [*4]

Civil Court of the City of New York, Kings County

056025/09

Devin P. Cohen, J.

Upon review of the foregoing papers, and after oral argument, the defendant’s motion to dismiss is denied.

In this action to recover assigned first-party no-fault benefits, defendant insurance provider moves pursuant to CPLR 3211(a)(1) and (7) to dismiss all causes of action in the complaint based on plaintiff’s alleged failure to attend two duly requested Examinations Under Oath (EUOs).

CPLR 3211(a)(1)

To obtain pre-answer dismissal pursuant to CPLR 3211(a)(1), defendant must allege that its defense is fully founded upon documentary evidence. Moreover, the documentary evidence offered in that defense “must resolve all factual issues as a matter of law, and conclusively dispose of the plaintiff’s claim” (Teitler v Max J. Pollack & Sons, 288 AD2d 302 [2d Dept 2001]). “Documentary evidence” within the meaning of CPLR 3211(a)(1), must be “unambiguous and of undisputed authenticity” (Fontanetta v Doe, 73 AD3d 78 [2d Dept 2010] citing Siegel, Practice Commentaries, McKinney’s Cons. Laws of NY, Book 7B, CPLR C3211:10, at 21-22). CPLR 3211(a)(1) does not anticipate or intend the use of affidavits submitted as testimony substitutes (see e.g. Berger v Temple Beth-El of Great Neck, 303 AD2d 346 [2d Dept 2003]).

Affidavits submitted by a defendant “will almost never warrant dismissal under CPLR 3211” (Lawrence v Miller, 11 NY3d 588, 595 [2008]). In the context of CPLR 3211(a)(1), the narrow exception to this general rule might be affidavits used solely to establish the bona fides of other, genuinely documentary evidence. For instance, a certifying affidavit establishing a true and accurate copy of a filed deed might support a motion for dismissal under CPLR 3211(a)(1).

By its nature, the pre-answer motion to dismiss deprives the parties of the opportunity and obligation to have a trial, to exchange discovery, or for the non-moving party to have even a responsive pleading in the action. This is a drastic remedy, and should be reserved to cases which turn on an undisputed and undisputable document (e.g. a dishonored check, a deed, etc.). CPLR [*2]3211(a)(1) should not be used as a pre-answer alternative for what is more properly a request for summary judgment pursuant to CPLR 3212.

Defendant relies upon two affidavits to support the instant motion. The affidavit of Jackie Hackett describes the standard office procedure for generating and mailing verification requests, including EUO notices, as well as denials. The affidavit of calendar clerk Toyla Hogan alleges that the plaintiff failed to appear for the EUOs purportedly scheduled by the defendant. Presumably, this is the “documentary evidence” to which defendant’s motion refers.

Defendant’s affidavits are not the type of evidence required in order to succeed on a pre-answer motion to dismiss pursuant to CPLR 3211(a)(1). Rather, defendant’s proffered affidavits are testimonial in nature. They are essentially offered as substitutes for testimony which would otherwise be offered later at trial. These testimonial affidavits are, by their nature, neither unambiguous nor of undisputed authenticity. They depend heavily on the credibility attached to them as recitations of the facts of the case. They offer only one view (or two views) of the factual narrative which underlies the claim in question.

CPLR 3211(a)(7)

Defendant further asserts that the claim should be dismissed because plaintiff’s pleading fails to state a cause of action (CPLR 3211[a][7]). Under CPLR 3211(a)(7), the applicable test is whether the pleading states a cause of action, not whether the proponent of the pleading, in fact, has a meritorious cause of action (see Sokol v Leader, 74 AD3d 1180 [2d Dept, 2010]). “Whether a plaintiff can ultimately establish its allegations is not part of the calculus” (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11 [2005]). “[O]n a motion to dismiss pursuant to CPLR 3211(a)(7), the court must determine whether, accepting as true the factual averments of the complaint and according the plaintiff the benefits of all favorable inferences which may be drawn therefrom, the plaintiff can succeed upon any reasonable view of the facts stated” (Board of Educ. of City School Dist. of City of New Rochelle v County of Westchester, 282 AD2d 561, 562 [2d Dept 2001]).

As previously established, the testimonial affidavits of Ms. Hogan and Ms. Hackett are not documentary evidence as required under CPLR 3211(a)(1). More germane to a CPLR 3211(a)(7) analysis, while these affidavits, if taken as true, might bear on the merits of plaintiff’s action, they do not affect whether or not the complaint itself states a cause of action. Here, plaintiff’s complaint states a cause of action in that plaintiff claims to have properly submitted bills to defendant for acupuncture services rendered to its assignor which have not been paid. Thus, dismissal is not appropriate under CPLR 3211(a)(7).

Ripeness

Defendant seems to suggest that this action should be dismissed as premature because plaintiff has failed to comply with defendant’s verification requests scheduling the EUOs, and that the failure to comply tolls the defendant’s time to deny the claim. Pursuant to NYCRR § 65.15(h), an outstanding verification request tolls the 30 day statutory period during which defendant must pay or deny a claim. Since an insurer is not obligated to pay or deny a claim while verification requests for that claim are outstanding, any lawsuit filed during such period is deemed premature (see Vista Surgical Supplies v General Assur. Co., 12 Misc 3d 129(A) [App Term, 2d Dept 2005]; Ocean Diagnostic Imaging, P.C. v Nationwide Mutual Ins. Co., 11 Misc 3d 135(A) [App Term, 2d Dept 2006]). However, in this case, defendant admits that it issued a denial for this claim on January 28, 2008, citing plaintiff’s alleged failure to appear for the scheduled EUOs. Having denied the claim, [*3]defendant essentially invited the plaintiff’s subsequent proceedings to challenge the denials.

For the reasons stated, defendant’s motion is denied. The plaintiff shall serve a copy of this decision and order on defendant’s counsel, with notice of entry. Defendant shall serve and file an answer in this matter within 30 days of plaintiff’s service of this order. This constitutes the decision and order of this court.

Civil Court of the City of New York, Kings County

141235/2008

Law Offices of Teresa M. Spina, Attorneys for Defendant,

Geico Indemnity Company, 170 Froehlich Farm Blvd, Woodbury, NY 11797

Moshe D. Fuld, P.C., Attorney for Plaintiff, 38 West 32nd Street, 7th Fl, New York, NY 10001

Reginald A. Boddie, J.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved by Order to Show Cause to consolidate this matter with forty-five other pending cases commenced by the same provider against the defendant, to amend its answer to include a fraudulent incorporation defense, for additional discovery, and for a stay pending resolution of this issue in all the cases. Plaintiff opposed the motion and seeks costs and sanctions.

Defendant alleged that plaintiff provider, Urban Radiology, is ineligible for reimbursement of no-fault benefits, under Insurance Law § 5102 (a) (1), because at the time services were rendered plaintiff was fraudulently incorporated, in violation of Business Corporation Law §§ 1503, 1507,1508, and Education Law §§ 6530 and 6531. Courts have previously held that fraudulent incorporation is not a precluded defense and constitutes a complete bar to recovery under the no-fault insurance regulations (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; AB Medical Services PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [2006]).

In brief, defendant asserted that “Although Dr. Rigney is listed as the owner of Urban Radiology, P.C. according to the Office of Professions of New York State, it is possible that he may not in fact be the true’ owner of Urban Radiology, P.C. The instant UCC filing demonstrates that Ocean MRI, Inc. exerts total control of the proceeds and profits of Urban Radiology, P.C.” (affirmation of Eileen Hopkins ¶ 16). Defendant further alleged that Dr. Rigney was owner of JRWB Diagnostic Imaging, P.C., which also conducts MRIs, and that in [*2]January 1999 an arbitrator determined that Ocean MRI and David Batisyan were the true owners (affidavit of Eileen Hopkins ¶ 18). Accordingly, defendant requested depositions of Dr. John T. Rigney and Mr. Aleksander Kamsan, the former billing manager, with respect to all of plaintiff’s cases pending in this Court (Id. at ¶ 27).

During oral argument of this motion, defendant conceded that the cases are at various stages of litigation, including some which are already scheduled for trial, and that the facts differ in each case, except that the services were rendered by the same provider.

Consolidation

Civil Practice Law and Rules § 602 (a) provides for consolidation of actions in appropriate circumstances as follows:

When actions involving a common question of law or fact are pending before a court, the court, upon motion, may order a joint trial of any or all matters in issue, may order the actions consolidated, and may make such other orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.

However, consolidation is highly disfavored by courts in no-fault insurance cases. Generally, no-fault benefit claims may not be consolidated unless the facts and circumstances arise from a common accident. (Metro Medical Diagnostics, P.C. v Motor Vehicle Accident Indemnity Corp., 6 Misc 3d 136[A], 2005 NY Slip Op 50238[U] [2005]; Poole v Allstate Ins. Co., 20 AD3d 158, 519 [2d Dept 2006] (holding it would be an improvident exercise of discretion not to sever forty-seven claims where a single trial of claims would prove unwieldy and confuse the trier of fact.) Here, defendant cannot establish that the no-fault cases arose from a common set of facts or accident as grounds for consolidation. Instead, defendant seeks to proceed on the basis that the claims share a common question of law.

The identical issue was presented in a case decided by the Appellate Term in 2008 (S & B Neurocare, P.C. v Geico, 20 Misc 3d 132[A], 2008 NY Slip Op 51450[U] [2008]). There, the defendant also sought to consolidate all pending cases between the parties and assert a fraudulent incorporation defense. The court denied the motion, holding that merely alleging a medical provider is fraudulent fails to create sufficient questions of law and fact to justify consolidation. (id.) The court also upheld the denial of defendant’s motion to compel discovery because “[d]efendant failed to submit an affidavit specifying any facts entitling it to pretrial proceedings almost a year after the notice of trial was filed” (id.; see also New York City Civ Ct Act § 208.17 [d]).

Similarly, the facts here clearly militate against consolidation. The cases are all at unspecified stages of litigation. Although defendant failed to set forth the procedural posture of each case, defendant acknowledged that many of the cases had proceeded past discovery and were noticed for trial. Notably, plaintiff stated, “Most cases the defendant seeks to consolidate have had a Notice of Trial filed, and the defendant is precluded from demanding additional [*3]discovery therein” (affirmation of Michael Reich ¶ 16). Consequently, it would be unwieldy to join the cases and clearly prejudicial to the plaintiff. Furthermore, defendant ‘s underlying premise for alleging fraudulent incorporation, on these facts, is speculative. For the reasons set forth herein, consolidation is inappropriate and therefore denied.

Stay

Defendant also sought a stay pursuant to CPLR 2201, pending the outcome of discovery and a hearing on the alleged fraudulent incorporation defense. Defendant averred that a stay is necessary to maintain the status quo, to promote judicial economy and in the interests of justice (affirmation of Eileen Hopkins ¶ 34).

CPLR 2201 provides, “[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just.” A search revealed no cases where the Civil Court issued a stay of multiple actions, in similar circumstances, pending further discovery and the hearing of a Mallela claim. However, where relief was requested in the Supreme Court seeking a stay of Civil Court proceedings, the court treated these motions as motions for preliminary injunction. (see St. Paul Travelers Ins. Co. v Nandi, 15 Misc 3d 1145[A], 2007 NY Slip Op 51154[U] [2007]; New York Central Mutual Ins. Co. v McGee et al, 25 Misc 3d 1232[A], 2009 NY Slip Op 52385[U] [2009].)

To prevail on an application for preliminary injunction, the moving party must demonstrate a probability of success on the merits, danger of irreparable harm in the absence of being granted relief and a balance of equities in its favor (St. Paul Travelers at *7). Here, defendant clearly did not meet this test. Defendant has not established that it can properly assert a claim of fraudulent incorporation. Defendant also cannot establish irreparable harm since proof of fraud is an absolute defense to a claim for payment; nor can defendant demonstrate a balance of equities in its favor at this juncture in the litigation.

Nevertheless, the parties need not be held to the elevated standard of a preliminary injunction since, unlike the requests in St. Paul Travelers and New York Central Mutual, the defendant here does not seek to have this court stay proceedings pending in another court (15 Misc 3d 1145[A]; 25 Misc 3d 1232[A]). As such, defendant is not required to show that it would be entitled to preliminary injunction (Siegal, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C2201:2).

As the Court of Appeals artfully noted in Mallela,

The [no fault] regulatory scheme, however, does not permit abuse of the truth seeking opportunity that 11 NYCRR 65-3.16 (a) (12) authorizes. Indeed, the Superintendent’s regulations themselves provide for agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause (see 11 NYCRR65-3.2 [c]). In the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do. (Mallela, 4 NY3d 313 [2005].) [*4]

Here, defendant’s statement that, “Although Dr. Rigney is listed as the owner of Urban Radiology, P.C. according to the Office of Professions of New York State, it is possible that he may not in fact be the true’ owner of Urban Radiology, P.C.” is insufficient to show that defendant has a good faith basis to allege that Dr. Rigney is not the owner of Urban Radiology. Defendant has presented no affidavits or documents which address the issue of the alleged fraud with any certainty. Rather, defendant moved this court to stay the actions in order to explore the possibility of fraud. Consequently, this court declines to grant a discretionary stay in circumstances where, as here, the defendant’s request for relief is based almost entirely on speculation rather than specific testimonial or documentary proof. (see St. Paul Travelers at *7.) Accordingly, defendant’s request for a stay is denied. Defendant may renew its request in the individual cases, as appropriate, upon presentation of additional proof consistent with this decision.

Leave to amend the answers and permit additional discovery

Finally, defendant requested leave to amend its answers and for additional discovery. CPLR 3025 (b) commits the grant or denial of such leave to the trial court’s discretion (Edenwald Contracting, 60 NY2d at 959, citing Murray v City of New York, 43 NY2d 400, 404-05 [1977]; Thomson v Suffolk County Police Dept., 50 AD3d 1015 [2d Dept 2008]). It provides that leave “shall be freely given upon such terms as may be just” (CPLR 3025 [b]).

In other words, the court should freely grant leave to amend a pleading based on the facts and circumstances of each case and where there is no significant prejudice or surprise to the non-moving party (Sewkarran v DeBillis, 11 AD3d 445 [2d Dept 2004]). However, the evidence submitted in support of the motion must indicate that the amendment may have merit (Edenwald Contracting, 60 NY2d at 959; Ingrami v Rover, 45 AD3d 806, 808 [2007]). Where the proposed amendment is “palpably insufficient or patently devoid of merit,” the court should deny leave to amend (Yemini v Goldberg, 46 AD3d 806 [2d Dept 2007] (citations omitted); Beja v Meadowbrook Ford, 48 AD3d 495 [2d Dept 2008]).

CPLR 3101 governs disclosure and requires “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof” (CPLR 3101 [a]). The court has previously held that, under appropriate circumstances, a party may move to seek additional discovery for the purpose of supporting a Mallela claim, pursuant to CPLR 3101 (a) (One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, 740 [2d Dept 2008]). In instances where such discovery is sought, movant is not required to show “good cause,” but rather that the documents sought are “material and necessary in the prosecution” of the action (CPLR 3101 [a]; One Beacon at 741 (citations omitted)).

Here, the court is unable to determine whether leave to amend and for additional discovery is appropriate, or in which cases it may be appropriate, as defendant has failed to articulate details regarding the procedural posture of each case. In any event, in as much as the court has declined to consolidate the cases, these issues need not be determined. Accordingly, the requests for leave to amend and for additional discovery are denied without prejudice to [*5]renew upon a proper showing in each case.

Other relief

Defendant’s remaining requests for relief are premature, and therefore not addressed. Plaintiff’s requests for costs and sanctions are denied.

This constitutes the Decision and Order of the Court.

Dated: August 23, 2010

________________________

Reginald A. Boddie