[*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

Civil Court of the City of New York, Kings County

02097/08

The plaintiff was represented by Melissa Betancourt, Esq., 155 Kings Highway, Brooklyn, NY 11223-1036, 718.336.8076. The defendant was represented by Kylie A. Higgins, Esq. of the Law Offices of Teresa M. Spina, 170 Froehlich Farm Boulevard, Woodbury, NY 11797, 516.714.7727.

Genine D. Edwards, J.

In an action to recover assigned first party no-fault benefits, defendant seeks leave to amend its answers, strike the notices of trial, and compel discovery, including a deposition. It also seeks to consolidate all nineteen (19) captioned actions. Plaintiff opposes the order to show cause.

BACKGROUND

Defendant argues that plaintiff fraudulently billed for medical services it allegedly rendered to [*2]its assignors.^[FN1] Though defendant admits that it did not deny plaintiff’s bills on the basis of fraudulent billing, it maintains that it has a cause of action to recover benefits paid under a theory of fraud or unjust enrichment.^[FN2] Defendant therefore seeks leave to amend its answers to interpose counterclaims for fraud and unjust enrichment.

Upon such amendment, defendant argues that the notices of trial and certificates of readiness for the captioned actions must be vacated, and the matters stricken from the trial calendar because discovery, including a deposition is warranted with respect to plaintiff’s billing practices. Defendant also seeks consolidation of the captioned actions, arguing that discovery on its counterclaims for fraud and unjust enrichment involve common questions of law and fact.

In opposition, plaintiff asserts that it responded to defendant’s discovery demands and defendant fails to indicate how depositions would provide more relevant information than the responses and documentation previously provided. Plaintiff further alleges that leave to amend the answers must be denied because defendant did not submit an affidavit from a qualified individual with personal knowledge of the subject claim. It argues that the affidavit from Ellen Dargie, a supervisor in defendant’s medical billing unit, who prepared a spreadsheet of the bills plaintiff submitted to defendant for the years 2007 and 2008, does not affirmatively state that plaintiff engaged in fraudulent billing. Finally, plaintiff contends that defendant is attempting to set forth a defense that it is precluded from asserting.

DISCUSSION

Pursuant to CPLR § 3025(b), a party may amend its pleading at any time by leave of the Court. See NY CPLR § 3025(b); Murray v. City of New York, 43 NY2d 400, 401 NYS2d 773 (1977); Cornell Med., P.C. v. Mercury Cas. Co., 24 Misc 3d 58, 884 NYS2d 558 (App. Term, 2d Dept. 2009); Perini Corp. v. City of New York (Honeywell Street and Queens Blvd. Bridges), 27 Misc 3d 813, 897 NYS2d 860 (Sup. Ct. NY County 2010). Leave shall be freely given provided the proposed amendment is not palpably insufficient or patently devoid of merit. See Thomas Crimmins Contr. Co. v. City of New York,74 NY2d 166, 544 NYS2d 580 (1989) (“Where a proposed defense plainly lacks merit, however, amendment of a pleading would serve no purpose but needlessly to complicate discovery and trial, and the motion to amend is therefore properly denied.”); Kuslansky v. Kuslansky, Robbins, Stechel and Cunningham, LLP, 50 AD3d 1101, 858 NYS2d 212 (2d Dept. 2008); Lucido v. Mancuso, 49 AD3d 220, 851 NYS2d 238 (2d Dept. 2008) (“Where the proposed amended pleading is palpably insufficient or patently devoid of merit, or where the delay in seeking the amendment would cause prejudice or surprise, the motion should be denied.”); Uptodate Med. Servs, P.C. v. State Farm Mut. Auto. Ins. Co., 23 Misc 3d 42, 879 NYS2d 695 (App. Term, 2d, 11th & 13th Jud. Dists. 2009) (“The court must examine the merits of the cause of action or defense to be asserted in the proposed amendment since leave to amend should not be granted where the cause of action or defense to be asserted is totally without merit or is palpably insufficient as a matter of law.”).

In the no-fault context, a healthcare provider shall receive payment for services rendered to [*3]

patients whose injuries arise from covered motor vehicle accidents. The insurance carrier has 30 days from the date of receipt of the claim to pay or deny it in whole or in part. See 11 NYCRR 65-3.4; New York & Presbyterian Hosp. v. Progressive Casualty Ins. Co., 5 AD3d 568, 774 NYS2d 72 (2d Dept. 2004); Jesa Medical Supply, Inc. v. American Transit Ins. Co., —- NYS2d —-, 2010 NY Slip Op. 20231 (Civ Ct. Kings County 2010). The law requires a claim for no-fault benefits to be timely and properly denied. See Careplus Med. Supply, Inc. v. Selective Ins. Co. of Am., 25 Misc 3d 48, 890 NYS2d 258 (App. Term, 2d Dept. 2009). In other words, “all bases that an insurer has for denying a no-fault claim, except for specific and limited exceptions, must be raised in a timely denial.” Lincoln General Ins. Co. v. Alev Medical Supply, Inc., 25 Misc 3d 1019, 887 NYS2d 490 (Dist. Ct., Nassau County 2009). See also Fair Price Medical Supply Corp. v. Travelers Indem. Co., 10 NY3d 556, 860 NYS2d 71 (2008); PDG Psychological P.C. v. Utica Mut. Ins. Co., 11 Misc 3d 128(A), 815 NYS2d 496 (App. Term, 2d & 11th Jud. Dists. 2006) (An untimely denial precludes an insurance carrier from raising most defenses at the trial.); Devonshire Surgical Facility v. GEICO, 14 Misc 3d 1208(A), 836 NYS2d 484 (Civ. Ct., NY County 2006); Alev Medical Supply, Inc. v. Progressive Ins. Co., 27 Misc 3d 1220, 2010 NY Slip Op. 50813(U) (Dist. Ct., Nassau County 2010) (An insurance carrier is precluded from asserting any “precludable” defense not asserted in a timely denial.). Fraudulent billing is precluded as a defense unless it is raised in a timely denial. See Fair Price Med. Supply Corp., 10 NY3d at 564-565; Careplus Med. Supply, Inc., 25 Misc 3d at 49 (The defense of provider fraud is precluded if not timely and properly asserted.); M. G. M. Psychiatry Care, P.C. v. Utica Mut. Ins. Co., 12 Misc 3d 137(A), 824 NYS2d 763 (App. Term, 2d & 11th Jud. Dists. 2006) (Fraud defense whether premised on fraudulent billing, excessive medical treatment or otherwise is subject to the preclusion sanction.).

Herein, defendant’s counterclaims for fraud and unjust enrichment are palpably insufficient and patently devoid of merit because the claims were not denied on the grounds of fraudulent billing. They were paid in part and denied in part based upon medical necessity and the charges not being in accordance with the fee schedule. Further, the denials were submitted for the first time in defendant’s reply papers, without an affidavit attesting that the denials were timely mailed to plaintiff pursuant to a standard office practice or procedure. See Rengifo v. City of New York, 7 AD3d 773, 776 NYS2d 865 (2d Dept. 2004) (Defendant cannot rely on documents submitted for the first time in its reply papers.); Fair Price Med. Supply v. Liberty Ins. Co., 12 Misc 3d 145(A), 824 NYS2d 762 (App. Term, 2d & 11th Jud. Dists. 2006) (Defendant failed to establish a timely denial via an affidavit by one with personal knowledge that the denial of claim form was timely mailed or an affidavit containing a sufficiently detailed description of standard office mailing procedure to give rise to the presumption of timely mailing.). As all evidence indicates that the counterclaims pertain to a precluded defense, defendant may not assert them in an amended answer. See Cornell Med., P.C., 24 Misc 3d at 60 (App. Term, 2d Dept. 2009) (“In our opinion, since defendant’s proposed counterclaim [for unjust enrichment] pertains to a defense which is precluded due to defendant’s untimely denials, the Civil Court properly denied the branch of defendant’s motion seeking leave to amend the answer to assert the counterclaim.”).

In reading Judge Engoron’s decision in, Quality Psychological Services, P.C. v. GEICO Ins. Co., Index No.47851/08, Civil Court, Bronx County, dated July 22, 2010, published in the New York Law Journal, August 3, 2010, in conjunction with other decisions discussing no-fault law, this Court is persuaded that the instant matters smack of fraud and unjust enrichment considering the compilation of plaintiff’s bills annexed to Ms. Dargie’s affidavit. However, this Court must follow the law set forth by the Court of Appeals. See Fair Price Medical Supply Corp., 10 NY3d at [*4]564-565. To be quite frank, the buck stops at the insurance carriers upon the receipt of claims for no-fault benefits. Insurance carriers concerned about fraudulent claims must use the verification process to obtain additional information. It behooves GEICO and all other insurance companies to diligently investigate the claims and submit well-thought out denials within the time allotted by the Legislature,^[FN3] until such time as the law is amended.

Accordingly, defendant’s application to amend the answers is denied. Thus, the remaining parts of the order to show cause to strike the notices of trial, compel discovery^[FN4] including a deposition, and to consolidate^[FN5] all nineteen (19) captioned actions are denied as moot.

The order to show cause is denied in its entirety.

This constitutes the decision and order of the Court.

Dated: August 16, 2010____________________________

Genine D. Edwards

Judge of Civil Court

Footnotes

Footnote 1: Specifically, defendant alleges that in one day plaintiff’s treating psychologists performed medical services that amounted to more than 24 hours of testing.

Footnote 2: Defendant paid-in-part and denied-in-part plaintiff’s claims for no-fault benefits. Thus, the counterclaims are based upon plaintiff having obtained partial payments for services rendered.

Footnote 3: “While the 30-day period plus any applicable tolls for paying or denying a claim may be too short a time frame in which to detect billing fraud, any change is up to the Legislature.'” Lincoln General Ins. Co. v. Alev Medical Supply, Inc., 25 Misc 3d at 1022 (quoting Fair Price Med. Supply Corp.,10 NY3d at 565.).

Footnote 4: Discovery may not be obtained regarding matters that are not in issue at trial. See Alev Medical Supply, Inc. v. Progressive Ins. Co., 27 Misc 3d 1220, 2010 NY Slip Op. 50813(U) (Dist. Ct., Nassau County 2010).

Footnote 5: Pursuant to CPLR § 602(a), the Court may consolidate actions involving common questions of law or fact. See Whiteman v. Parsons Transp. Group of New York, Inc., 72 AD3d 677, 900 NYS2d 87 (2d Dept. 2010). Consolidation is usually granted where the issues in the action sought to be consolidated are identical or essentially the same or if it will result in a complete disposition of all claims arising out of the same transaction or incident in one action. Defendant sought consolidation to obtain discovery on its counterclaims for fraud and unjust enrichment. Since leave to amend the answer to interpose the counterclaims was denied, defendant may not obtain consolidation. Moreover, without the amendment defendant cannot consolidate the nineteen captioned actions because the evidence demonstrates that although the actions were brought by a single assignee, the causes of action arose from different automobile accidents on various dates in which unrelated assignors suffered diverse injuries and required different medical treatment. See Poole v. Allstate Ins. Co., 20 AD3d 158, 799 NYS2d 247 (2d Dept. 2005).

[*1]

Civil Court of the City of New York, Kings County, July 27, 2010

APPEARANCES OF COUNSEL

Israel, Israel & Purdy LLP, Great Neck (Josephine Lupis-Usinger of counsel), for plaintiff. Peknik Peknik & Schaefer LLC, Long Beach (Matthew Bruzzese of counsel), for defendant.

{**29 Misc 3d at 367} OPINION OF THE COURT

Pamela L. Fisher, J.

Plaintiff, John Giugliano, DC, P.C., assignee of Laura Hebenstreit,{**29 Misc 3d at 368} instituted this action to recover first party no-fault benefits from defendant Merchants Mutual Ins. Co. A trial was held before this court on June 30, 2010. After considering and evaluating the trial evidence and upon weighing and assessing the credibility of the witnesses, the court makes the following findings of fact and conclusions of law.

At trial, the parties stipulated that plaintiff established its prima facie case, that defendant established timely denials, and that the bills, denials, and underlying medical records would be admitted into evidence. The sole issue remaining for trial was whether plaintiff was entitled to recover for the claims submitted based on the New York Workers’ Compensation Medical Fee Schedule (hereafter “Fee Schedule”).

As stated in Roberts Physical Therapy, P.C. v State Farm Mut. Auto Ins. Co. (14 Misc 3d 1230[A], 2006 NY Slip Op 52565[U], *2 [Civ Ct, Kings County 2006]), in order

“[t]o contain the cost of providing medical services to patients treated under New York’s No-Fault law, the state legislature set limits on the fees health care providers may charge patients who sustain injuries . . . by incorporating into the no-fault scheme the fee [*2]schedules established by the Worker’s Compensation Board for industrial accidents.”

The Fee Schedule is divided into seven sections: Introduction and General Guidelines, Evaluation and Management, Anesthesia, Surgery, Radiology, Pathology and Laboratory, Medicine, and Physical Medicine. The Fee Schedule also contains a chiropractic fee schedule section, and a psychology fee schedule section. Each of these sections lists a variety of medical procedures and assigns to each procedure a number known as a current procedural terminology registry code (hereinafter CPT code). In the instant matter, plaintiff, a licensed chiropractor, submitted bills indicating that manipulation of spine under anesthesia (CPT code 22505) and closed treatment of mandibular fracture with manipulation (CPT code 21451) were performed on the assignor. The CPT codes which plaintiff utilized in billing are listed in the surgery section of the Fee Schedule. Dr. Macki was identified as the primary surgeon and Dr. Giugliano was identified as the co-surgeon for the procedures.

Defendant called Laurene Skeffington, a compliance analyst, to testify regarding whether plaintiff properly billed for the services pursuant to the Fee Schedule. Ms. Skeffington testified that it was not appropriate for a chiropractor to utilize the surgical fee schedule even when the procedures performed are not{**29 Misc 3d at 369} listed under the chiropractic fee schedule. She also testified that it was not appropriate to bill CPT code 22505 twice regardless of the fact that both the thoracic and cervical spine were treated.

Plaintiff called Dr. John Giugliano as a rebuttal witness. Dr. Giugliano testified that as the procedures performed, manipulation of spine under anesthesia and closed treatment of mandibular fracture with manipulation, are not listed under the chiropractic fee schedule it was appropriate for them to be billed utilizing the CPT codes listed in the surgery section of the Fee Schedule. Dr. Giugliano stated that it was permissible for CPT code 22505 to be billed twice as two separate areas were treated, namely the thoracic and cervical spine. Dr. Giugliano testified that the procedures required the participation of two doctors and that he served as co-surgeon during the procedures.

It should be noted that the surgery section of the Fee Schedule denotes different percentages of payment based on whether a participating surgeon is acting as a “Surgical Assistant” or a “Co-Surgeon.” A surgical assistant bills at 16%, while co-surgeons are directed to apportion billing in relation to the responsibility and work done. (See New York Workers’ Compensation Fee Schedule, Surgery, at 4.) Defendant’s witness did not offer testimony regarding whether plaintiff should have billed as a surgical assistant or a co-surgeon. Plaintiff’s rebuttal witness, Dr. Giugliano, testified that the classifications are interchangeable and he was entitled to bill as a co-surgeon. Absent proof to the contrary, the court finds that plaintiff was entitled to bill as a co-surgeon under the Fee Schedule.

With respect to plaintiff utilizing the surgery CPT codes, the court finds that plaintiff successfully rebutted defendant’s testimony and plaintiff was entitled to use these CPT codes as the procedures were not listed under the chiropractic fee schedule. When a charge for a reimbursable service has not been scheduled by the superintendent, then the provider shall establish a fee consistent with other fees for comparable procedures shown in such schedule subject to review by the insurer. (Id.; see also Studin v Allstate Ins. Co., 152 Misc 2d 221 [Suffolk Dist Ct 1991].) Therefore, the court finds that plaintiff established that the procedures were properly billed pursuant to the Fee Schedule and plaintiff is entitled to be reimbursed for the services performed.{**29 Misc 3d at 370}

Judgment in favor of the plaintiff in the amount of $2,980.58 plus costs, disbursements, [*3]statutory interest and statutory attorneys fees.

[*1]

Civil Court of the City of New York, Kings County, May 29, 2010

APPEARANCES OF COUNSEL

Law Offices of Daniel J. Tucker, New York City (Peter Coates of counsel), for defendant. Law Offices of Melissa Betancourt, P.C., Brooklyn (Aaron Cargain of counsel), for plaintiff.

{**28 Misc 3d at 828} OPINION OF THE COURT

Sylvia G. Ash, J.

In an action seeking payment of first-party no-fault benefits, defendant moves to reargue the court’s decision dated October 9, 2009, wherein the court found that defendant’s denial of plaintiff’s claim was untimely.

The court found that defendant’s follow-up verification request was two days late, thus reducing its denial time to 28 days (see Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 [2007]), which made its denial in this case late by one day. Defendant contends that the court erred in its finding that its follow-up verification request was sent two days late rather than one day late. Defendant argues that Presidents’ Day is a legal holiday and should not have been included in computing the timeliness of defendant’s denial.

In an action to obtain payment of first-party no-fault benefits, 11 NYCRR 65-3.8 provides that a no-fault insurance carrier has 30 days from the date of receipt of the claim to pay or deny a claim in whole or in part. However, the insurance carrier’s time to pay or deny a claim is extended by making a timely demand for verification. (See Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862 [2d Dept 2009].) A claim does not have to be paid or denied until the insurance carrier has been provided with all timely demanded verification. (See New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]; Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d 889 [2d Dept 2007].) Pursuant to 11 NYCRR 65-3.5 (b) the insurance company must request additional verification within 15 business days of the [*2]receipt of the prescribed verification forms. However, an untimely verification request will reduce the 30 calendar days wherein a claim must be denied or paid upon receipt of the requested information. (11 NYCRR 65-3.8 [j].)

The court notes that the rule specifically states business days rather than calendar days. However, the statute does not define either term. Traditionally the law has recognized the difference between a calendar day and business day (see Miuccio v Puppy City, Inc., 22 Misc 3d 1132[A], 2009 NY Slip Op 50404[U] [2009]). A calendar day is defined as a Sunday or any day of the week specifically mentioned (see General Construction Law § 19). Therefore, even a holiday would be considered a calendar day. Generally, when an act must be done within a given number of days, and the last day falls on a holiday, the time is extended{**28 Misc 3d at 829} to the next business day (see General Construction Law § 20). However, when an act must be done within a given number of “calendar” days weekends and legal holidays are not excluded in the calculation thereof.

The General Construction Law does not contain a definition of business days. In examining how the term is defined in different statutes, it generally means any calendar day except Sunday and any legal holiday (see Miuccio v Puppy City, Inc., supra). However, this definition comes into conflict with the way most courts define business days when it comes to no-fault cases, where Saturday, Sunday and holidays have generally been excluded.

Here, if the rule called for 15 calendar days, Presidents’ Day as an intervening holiday would not be excluded in calculating defendant’s verification request (General Construction Law § 20). However, since the rule specifically states that such request must be submitted within 15 business days, it appears that the legislature’s intent was to at least exclude legal holidays in calculating the number of days required to submit additional verification requests.

In the case at bar, plaintiff submitted its claim to the defendant on February 5, 2007. The court, in computing the time defendant was required to request additional verification, hereby defines business day to mean any calendar day excluding Saturday, Sunday and legal holidays. Therefore, the court agrees with the defendant that Presidents’ Day, being a legal holiday, should have been excluded in computing the time for the verification request, and as such, its request was one day late not two days late.

Accordingly, defendant’s motion to reargue and vacate the court’s order dated October 9, 2009, is hereby granted to the extent that the parties’ summary judgment motions are denied, and this matter is set down for trial on the sole issue of medical necessity.

Civil Court of the City of New York, Kings County

042765/08

Plaintiff:

Max Valerio, Esq.

Gary Tsirelman, P.C.

55 Washington Street, Suite 606

Brooklyn, New York 11201

Defendant:

Dominick Dale, Esq.

Law Offices of Teresa M. Spina

170 Froehlich Farm Boulevard

Woodbury, New York 11797

Pamela L. Fisher, J.

Plaintiff, Beal-Medea Products, Inc., assignee of Michael Perez, instituted this action to recover first party no-fault benefits from Defendant GEICO. A trial was held before this Court on March 29, 2010 and April 5, 2010. After considering and evaluating the trial evidence and upon weighing and assessing the credibility of the witnesses, the Court makes the following findings of fact and conclusions of law.

The parties stipulated that Plaintiff established its prima facie case, that Defendant established timely denials, and that the sole issue for trial was medical necessity. The parties also stipulated to the admission of the bills and denials. It is Defendant’s burden at trial to show that the supplies provided to Plaintiff’s assignor were medically unnecessary. See Amaze Med. Supply, Inc. v. Eagle Ins. Co., 2003 NY Slip Op 51701U (NY App. Term 2003). To meet its burden, at a minimum, Defendant must establish a factual basis and medical rationale for its asserted lack of medical necessity, which is supported by evidence of the generally accepted medical/professional [*2]practices. See Nir v. Allstate Ins. Co., 2005 NY Slip Op 25090 (NY Civ. Ct. 2005).

At trial, Defendant called Dr. Michael Jacobs to testify regarding the peer review report of Dr. Andrew Miller. Plaintiff objected on hearsay grounds to Dr. Jacob’s testimony because he was not the author of the original peer report. The Court now turns to the question of whether it is permissible for a substitute doctor to testify.

The Appellate Term First and Second Department have held that a substitute peer doctor is permitted to testify as the witness is subject to full cross-examination, however they have limited the substitute peer’s testimony to the basis for denial as set forth in the original peer review report. Bronx Expert Radiology, P.C. v. New York Cent. Mut. Fire Ins. Co., 2009 NY Slip Op 51475U, 1 (NY App. Term 2009). See also Home Care Orthos. Med. Supply v. American Mfrs. Mut. Ins. Co., 14 Misc 3d 139(A) (2007); Spruce Med. and Diagnostic, P.C. v Lumbermen’s Mut. Cas. Co., 15 Misc 3d 143A(2007). Bronx Expert did not limit its holding to cases where documents are in evidence. When the parties have stipulated that either the peer report or the underlying medical records are admitted into evidence applying the Bronx Expert standard is clear. However when the parties have not stipulated documents into evidence the Court must determine to what extent may the witness rely on out-of-court documents without violating the hearsay rule. See Progressive Med., Inc. v Allstate Ins. Co., 2010 NY Slip Op 50219U (NY App. Term 2010).

In SK Med. Servs., P.C. v. New York Cent. Mut. Fire Ins. Co., 2006 NY Slip Op 26227, 1 (NY Civ. Ct. 2006), a lower court case decided before Bronx Expert, the parties stipulated that the peer report was in evidence and the court held that the substitute peer was permitted to testify. The substitute peer was limited to testifying to the facts and opinions contained in the peer review report. Id. The decision was based on the rationale that an insurer may not assert new grounds for its refusal to pay a claim and must adhere to the defense as stated in its denial. Id. Permitting a substitute peer to testify does not violate these principles as long as the substitute peer doctor is limited to the basis for the denial as set forth in the original peer report. Id. As the parties stipulated the peer into evidence, SK Medical did not address the evidentiary concerns associated with admitting the peer report or underlying medical records into evidence when a substitute peer testifies. When documents are not in evidence, the Plaintiff will inevitably object to the testimony of the peer or substitute peer on hearsay grounds. Bronx Expert does not expound upon hearsay concerns. Instead the case states that Defendant’s expert is not precluded from testifying because his opinion may have been based, at least in part, on his review of the assignor’s medical records prepared by plaintiff. See Bronx Expert.

In IAV Med. Supply, Inc. v Progressive Ins. Co., 2010 NY Slip Op 50433U, 5 (NY Civ. Ct. Mar. 15, 2010), the Court relied on the standard set forth in Bronx Expert, and held that a substitute peer doctor was permitted to testify when there were no documents in evidence because the witness would be subject to cross-examination and his testimony would be limited to the original peer review reports. IAV Medical allowed the testimony by relying on the fact that the peer reports had been submitted to the Plaintiff prior to trial as part of a summary judgment motion and expert disclosure, however the court did not address hearsay concerns.When the peer report and/or underlying medical records have not been stipulated into evidence, Defendant must overcome Plaintiff’s hearsay exception in order to elicit testimony from the expert witness. In this instance, the Court may rely on the framework laid by Wagman. Wagman v. Bradshaw, 292 AD2d 84, 85 (NY App. Div. 2d Dep’t 2002). In Wagman, the Appellate Division [*3]held that an expert witness may testify when he or she relied upon inadmissible out-of-court material to formulate an opinion provided: (1) it is of a kind accepted in the profession as reliable as a basis in forming a professional opinion, and (2) there is evidence presented establishing the reliability of the out-of-court material referred to by the witness. Id. See also Hambsch v New York City Tr. Auth., 63 NY2d 723); Supple Mind Acupuncture, P.C. v. State Farm Ins. Co., 2008 NY Slip Op 51856U (NY App. Term 2008). Under the purview of Wagman, it follows that a peer doctor as well as a substitute peer doctor would be permitted to testify as long as the witness is able to satisfy the two prong Wagman test. The testimony of the peer and substitute peer are deemed permissible because of an exception to the hearsay rule. Namely their testimony is deemed permissible when they have established the reliability of the out of court documents relied upon. It is a contradiction to permit the peer doctor to testify based on an exception to the hearsay rule and in turn prohibit a substitute peer from testifying. Both the peer and substitute peer are relying on out of court documents which fall under a hearsay exception. Generally, litigants can satisfy the first prong of Wagman, however establishing the second prong is more difficult.

Courts have held that Plaintiff invariably can not rebuff the reliability of the out of courts documents relied upon by an expert when the out of court documents consist of documents that plaintiff or assignor have prepared. See Andrew Carothers, M.D. (Martinez) v. GEICO, 2008 NY Slip Op 50456[U], 18 Misc 3d 1147[A], 859 NYS2d 892 (Civil Ct., Kings Co. 2008); Home Care Ortho. Med. Supply Inc., v. American MFRS. Mut. Ins. Co., 2007 NY Slip Op 50302[U], 14 Misc 3d 139[A], 836 NYS2d 499 (App. Term, 1st Dept. 2007); Primary Psychiatric Health, P.C., v. State Farm Mutual, 2007 NY Slip Op 50583[U], 15 Misc 3d 1111[A], 839 NYS2d 436 (Civil Ct., Kings Co. 2007). In Popular Imaging, P.C. v State Farm Ins. Co., 2009 NY Slip Op 52355U (NY Civ. Ct. 2009), a peer doctor was permitted to testify with respect to a peer report and underlying medical records which were not in evidence. The Court found that the peer doctor satisfied the Wagman two prong test for permitting expert testimony based upon out of court documents. Id. The Court held that a Plaintiff invariably can not rebuff the permissibility of the expert testimony on reliability grounds when those documents are Plaintiff’s or assignor’s documents.

In PLP Acupuncture, P.C. v. Progressive Cas. Ins. Co., 2009 NY Slip Op 50491U, 1-2 (NY App. Term 2009), the Court permitted a substitute peer doctor to testify. The Court applied the Wagman test and held that the substitute peer could rely upon out of court documents in forming his opinion as long as the substitute peer offers proof of the reliability of the out of court documents. Id. The Court further held that as some of the medical reports relied upon by defendant’s acupuncturist in his peer review report were prepared by plaintiff, plaintiff could not challenge the reliability of its own medical records and reports. Id.

In Dilon Med. Supply Corp. v. New York Cent. Mut. Ins. Co., 2007 NY Slip Op 52454U, 2 (NY App. Term 2007), the Appellate Term reversed a lower court which precluded a substitute doctor from testifying. The Court held that since defendant sought to call a medical expert witness who was available for cross-examination, and his testimony as to the lack of medical necessity of plaintiff’s services would be limited to the basis for the denials as set forth in the original peer review reports, the expert witness should have been permitted to testify. Id.

Applying this standard to the case at hand, the Court will permit the substitute peer doctor to testify and limit his testimony to the basis for denial as set forth in the original peer review. Plaintiff objected to Dr. Jacob’s testimony based upon hearsay grounds. The Court of Appeals has [*4]held that an expert witness may testify that he or she relied upon specific, inadmissible out-of-court material to formulate an opinion provided: (1) it is of a kind accepted in the profession as reliable as a basis in forming a professional opinion and (2) there is evidence presented establishing the reliability of the out-of-court material referred to by the witness. See Wagman. Dr. Jacobs testified that the out-of-court documents he relied upon were professionally reliable, however he did not present evidence establishing the reliability of the out-of-court material. Therefore, Defendant failed to demonstrate either that the testimony did not rely on out-of-court documents for the truth of the matters stated herein, or that the documents were being relied upon for their truth but fell within an exception to the rule against hearsay. See Progressive Med., Inc. v Allstate Ins. Co., 2010 NY Slip Op 50219U (NY App. Term 2010). Accordingly, Dr. Jacobs’ testimony is stricken and the Court finds that Defendant did not establish a factual basis and medical rationale for its asserted lack of medical necessity.

Judgement in favor of Plaintiff in the amount of $563.04, plus costs, disbursements, statutory interest and statutory attorneys fees. This constitutes the decision and order of the Court.

May 6, 2010

Pamela L. Fisher

Judge, Civil Court

Civil Court of the City of New York, Richmond County

08R014639

A P P E A R A N C E S:

Attorneys for Plaintiff:

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

Attorneys for Defendant:

Peter C. Merani, P.C.

298 Fifth Avenue, 3rd Floor

New York, NY 10001

Katherine A. Levine, J.

Plaintiff Anthony Mandracchia, D.C. (“plaintiff”), a medical service provider, brings this action pursuant to Insurance Law § 5106(a) to recover $320.30 for services it provided to its assignor, Dwayne Loftin (“assignor”), for injuries he allegedly sustained in an automobile accident. Defendant Allstate Insurance Co. (“defendant”) moves to dismiss pursuant to CPLR § 3211 or, in the alternative, for summary judgment pursuant to CPLR § 3212 on the grounds that the instant action is barred by the six (6) year Statute of Limitation. Plaintiff opposes the motion.

Pursuant to Insurance Law § 5106, a complete proof of claim is a prerequisite to receiving no-fault benefits. Under the old regulations applicable to insurance policies issued before April 5, 2002, the written proof of claim must be submitted to the insurance company “as soon as reasonably practicable, but in no event later than 180 days after the date services are rendered or 180 days after the date written notice was given to the insurer. 11 NYCRR 65.12. See Rockman v. Clarendon, 2008 NY Slip Op 52093 (U), 21 Misc 3d 1118(A) (Civil Ct., Richmond Co. 2008) citing Montefiore Medical Center v. Mary Immaculate Hospital, 9 AD3d 354 (2d Dept. 2004). Within 30 days of receiving the claim, an insurer shall either pay or deny the claim in whole or in part. See 11 NYCRR 65.15(g)(3). In the event an insurer fails to timely deny a claim or request verification from the provider, the insurer is precluded from asserting that the claim was untimely or incomplete. Presbyterian Hosp. In City of NY v. Maryland Cas. Co., 90 NY2d 274, 282 (1997); Montefiore Medical Center v. NY Cent. Mut. Fire Ins. Co., 9 AD3d 354, 355 (2d Dept. 2004); NY Hosp. Med. Ctr. Of Queens v. Country-Wide Ins. Co., 295 AD2d 583 (2d Dept. 2002).

An action to recover first party benefits owed under an insurance policy is viewed as a breach of contract governed by the six year statute of limitations contained in CPLR 213(2). Alleviation Supplies, Inc. v Enterprise Rent-A-Car, 12 Misc 3d 787, 791 (Civil Ct., Richmond Co. 2006). See, Benson v. Boston Old Colony, 134 AD2d 214, 215 (1st Dept. 1987); Spring World Acupuncture, PC. V. NYC Transit Authority ., 24 Misc 3d 39 (2009). In contract cases, the cause of action accrues ,and the statute of limitations begins to run at the time of the breach.Micha v. Merchants Mutual Ins. Co., 94 AD2d 835, 836 ( 2d Dept. 1983). [*2]

In no fault actions, a defendant insurer’s contractual obligation to pay the first party benefits arises after it receives the claim. As set forth above, pursuant to Insurance Law §5106, an insurer must either pay or deny the claim within 30 days of submission of proof or the bill becomes overdue. The cause of action thus accrues once the claim is overdue. In Line Chiropractic v. MVAIC, 2005 NY Slip Op 50275U, 6 Misc 3d 1032A (Civil Ct, Bronx Co. 2005), and the statute of limitations thus commences either upon the denial of the claim or, if the thirty days after the submission of plaintiff’s proof of claim. Mandarino v. Travelers Prop. Cas. Ins. Co., 37 AD3d 775 (2nd Dept. 2007); Micha v. Merchants Mut. Ins. Co., 94 AD2d 835, 836 (3d Dept. 1983), citing Insurance Law 675(1); Chester Medical Diagnostic v. Kemper Casualty Ins. Co., 2008 NY Slip Op. 52009(U), 21 Misc 3d 1108(A) (Civil Ct., Kings Co. 2008).

On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is time-barred, the defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired. Cimino v. Dembeck,61 AD3d 802 (2d Dept. 2009). See, Swift v New York Med. Coll., 25 AD3d 686, 687 ( 2d Dept. 2006). “In order to make a prima facie showing, the defendant must establish, inter alia, when the plaintiff’s cause of action accrued” (Swift v New York Med. Coll., 25 AD3d at 687). Furthermore, in deciding a CPLR 3211 motion to dismiss, “a court must take the allegations in the complaint as true and resolve all inferences ] in favor of the plaintiff” Cimino, supra, (Sabadie v Burke, 47 AD3d 913, 914,(2d Dept. 2008).

On a motion for summary judgment, a court may consider evidence contained in documents supplied by a party to the court. See Kwiecinski v. Chung Hwang, 2009 NY Slip Op 06630, 2009 NY App. Div. LEXIS 6503 (3d Dept. 2009); Sonnenfeldt v. Kyriakoudes, 226 AD2d 286 (1 Dept. 1996) citing Central Petroleum Corp. v. Kyriakoudes, 121 AD2d 165 (1st Dept. 1986). A court may utilize these admissions as evidence upon which it can make findings of fact. Potamkin Cadillac Corp. v. BRI Coverage Corp., 38 F3d 627 (2d Cir. 1994); Freemantle v. U.S. Hoffman Machinery Corp., 2 AD2d 634 (3d Dept. 1956)(statements in answers to interrogatories or in proposed findings of fact are admissions against the party that made them); Bertha Building Corp. v. National Theatres Corp., 248 F.2d 833, 836 (1957).

Plaintiff has annexed to its complaint a ledger providing the particulars of the assignor’s bill, including the date of accident and the date of service of August 25, 1998. The complaint avers that “the bill was received timely”; i.e. that plaintiff submitted the bill to Allstate within 180 days. The complaint also avers that more than 30 days have passed since the bill was submitted and that defendant failed to properly deny the bill within 30 days of receipt. Given these admissions, the court follows the rational of Pinnacle Open MRI, PC., v. Republic Western Insurance Co., 18 Misc 3d 626 (Dist. Ct., Nassau Co. 2008), in determining the latest date by which plaintiff could have commenced the lawsuit and be timely. In Pinnacle, the defendant insurer averred that it did not have the NF-3 claim form filed with it by the plaintiff, although it did not deny its receipt. The court therefore used the date of service, added the additional 180 days that plaintiff had to file the claim, and then added the maximum of 30 days in which the insurer had in which to pay or deny the claim to determine the day that plaintiff’s cause of action ripened.

Utilizing this formula, plaintiff would be barred by the six year statute of limitations from [*3]bringing this action. Adding the additional 180 days to the date of service – August 25, 1998- and then adding an additional 30 days in which the insurer had to pay or deny the claim – bring the date that the claim became overdue to March 23, 1999. Since plaintiff admits that the service of the summons and complaint upon defendant was completed on August 6, 2008 ( see proposed judgment and attorney’s affirmation of plaintiff’s counsel dated October 6, 2008 annexed to defendant’s motion as Exhibit “B”) it is clear that the instant action was commenced way beyond the six year statute of limitations. As such, the complaint is dismissed.

The foregoing constitutes the order and decision of the court.

Dated: April 28, 2010_____________________________

KATHERINE A. LEVINE

JUDGE, CIVIL COURT

ASN by_________on________

A P P E A R A N C E S:

Attorneys for Plaintiff:

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

Attorneys for Defendant:

Peter C. Merani, P.C.

298 Fifth Avenue, 3rd Floor

New York, NY 10001

[*1]

Civil Court of the City of New York, Bronx County, April 7, 2010

APPEARANCES OF COUNSEL

Ferdinand Diaz for claimant. Jaffe & Koumourdas (Peter Coates of counsel), for defendant.

{**28 Misc 3d at 861} OPINION OF THE COURT

Fernando Tapia, J.

In these nonpayment of no-fault insurance benefits cases before the Commercial Small Claims Part, this court, after oral testimony and review of submitted cases/statutes from claimant, hereby dismisses these cases without prejudice.

Does the Commercial Small Claims Part have subject matter jurisdiction to try a no-fault case when a specific No-Fault Part exists within New York City Civil Court? This court finds that it does not. Thus, under New York City Civil Court Act § 1805-A,^[FN1] the above-captioned case is transferred to the No-Fault Part for proper adjudication.

I. Factual Background

Claimant is an assignee for an individual patient who sought health care treatment from a motor vehicle accident. Claimant’s representative is not an attorney. On or about December 10, 2009 claimant’s representative appeared before the Commercial Small Claims Part to recover [*2]no-fault benefits from defendant Countrywide Insurance, which is represented by counsel.^[FN2]

Claimant seeks $4,365.52 and $5,000 from defendant for unpaid no-fault bills. Defendant argues that the cases should be dismissed for lack of subject matter jurisdiction because claimant became an assignee of the claim that originally belonged to an individual, and not to a commercial entity. Claimant’s representative counters with a First Department Appellate Term case (claimant’s representative relies on East End Med., P.C. v Oxford Health Ins., Inc. [12 Misc 3d 135(A), 2006 NY Slip Op 51229(U) (App Term, 1st Dept 2006)], which will be discussed later) which ruled in favor of the plaintiff, stating that the claim could be heard in the Small Claims Part.

II. The Small Claims Part: Truly a “People’s Court”

A. Brief Discussion on the Small Claims Part

Small claims court is an informal court that is part of Civil Court. (See A Guide to Small Claims Court, Unified Court System; see also Siegel, NY Prac § 581 [4th ed].) As such, there{**28 Misc 3d at 862} is no requisite motion practice involved. In fact, motion practice is discouraged in small claims. (See Weiner v Tel Aviv Car & Limousine Serv., 141 Misc 2d 339, 341 [Civ Ct, NY County 1988] [where movant sought to dismiss pro se claimant’s case, the Civil Court held that the Small Claims Part need not entertain a pretrial motion, absent extraordinary circumstances].)

Under CCA 1809 (1) (“Procedures relating to corporations, associations, insurers and assignees”),

“[n]o corporation, except a municipal corporation, public benefit corporation, school district or school district public library wholly or partially within the municipal corporate limit, no partnership, or association and no assignee of any small claim shall institute an action or proceeding under this article, nor shall this article apply to any claim or cause of action brought by an insurer in its own name or in the name of its insured whether before or after payment to the insured on the policy” (emphasis added).

The purpose of CCA 1809 (1) is to keep businesses from using the Small Claims Part as claimants. (See Siegel, Supp Practice Commentaries, McKinney’s Cons Laws of NY, CCA 1809, 2010 Electronic Update.) To address whether businesses can use the Small Claims Part, then, CCA 1809-A was enacted by the New York State Legislature. A discussion follows.

B. CCA Article 18-A: Legislative Enactment Governing the

1. Legislative History and Intent of Article 18-A

In 1987 the New York Legislature enacted CCA article 18-A, which outlines the [*3]jurisdictional parameters for commercial cases in the Small Claims Part.^[FN3]

Under CCA 1809-A (“Procedures relating to corporations, associations, insurers and assignees”), “[a]ny corporation . . . which has its principal office in the city of New York and an assignee of any commercial claim may institute an action or proceeding under this article” (CCA 1809-A [a] [emphasis added]).

Furthermore, under CCA 1801-A (“Commercial claims defined”), ” ‘commercial claim’ . . . shall mean and include any cause of action for money only not in excess of the maximum amount permitted for a small claim in the small claims part of{**28 Misc 3d at 863} the court . . . provided that . . . the claimant is a corporation, partnership or association.” (CCA 1801-A [a].)^[FN4]

Commercial litigants can therefore initiate suit in the Commercial Small Claims Part. The Unified Court System also has a booklet titled A Guide for the Use of the Commercial Claims Part which is available to the public.

Article 18-A has been criticized for simply paralleling the existing article 18 instead of being an independently distinct rubric for commercial claims being brought to the Small Claims Part. (See Siegel, General Practice Commentary on “Commercial” Small Claims Article, McKinney’s Cons Laws of NY, Book 29A, UCCA 1801-A, at 815-816.) Nevertheless, there are relevant sections germane to the cases at hand that explain why the Commercial Small Claims Part is not the proper venue.

2. Implications of Article 18-A Regarding the Above-Captioned Cases

As mentioned earlier, motion practice is discouraged in small claims. No-fault matters, on the other hand, command motion practice because of their complicated nature.^[FN5] It therefore follows that these two no-fault cases be transferred to the No-Fault Part for proper adjudication in the interest of justice, so that the assignee can be accommodated accordingly.

According to CCA 1802-A (“Parts for the determination of commercial claims established”), the Commercial Small Claims Part “[s]hall not be exclusive of but shall be alternative to the procedure . . . with respect to actions commenced in the court by the service of a summons.” That is, Commercial Small Claims Part is to be used as an alternative forum, not an exclusive one.

In the cases at hand, the most relevant section is CCA 1809-A (“Procedures relating to corporations, associations, insurers and assignees”), which states that no individuals or corporations shall take an assignment of any claim or demand, with the intent and for the purpose of bringing an action or proceeding in the Commercial Small Claims Part (CCA 1809-A [b]). As assignment by an individual to a corporation is neither a small claim nor a commercial claim because it was assigned; neither is it a commercial claim because it was not originally commercial{**28 Misc 3d at 864} when the [*4]assignment was made.^[FN6] This effectively precludes the bringing of a common medical benefits case in the Small Claims Part.

Thus, an assignee may bring a case in the Commercial Small Claims Part, as long as it does not exceed five such suits per month, and as long as its main reason is to have the case tried on its merits, and not as a procedural legal strategy to get a favorable outcome from a forum such as small claims.^[FN7]

Here, claimant relies on East End Med., P.C. v Oxford Health Ins., Inc. (12 Misc 3d 135[A], 2006 NY Slip Op 51229[U]) to put forth its argument that the Commercial Small Claims Part is the proper forum to resolve these cases. In East End Medical, the health care provider (the appellant) sought to recover no-fault insurance benefits from 13 of its patient assignors in this consolidated action. The majority opinion ruled that the appellant’s no-fault case was prematurely dismissed because the merits were not seriously considered. (2006 NY Slip Op 51229[U] at *1.)

It is, however, the cursory sua sponte discussion of subject matter jurisdiction in the dissent that ignites the relevance of East End Medical with respect to the case at hand.^[FN8] According to the dissent, because the claimant’s case was not originally “commercial” as defined pursuant to CCA 1809-A,^[FN9] it could not have been brought in the Commercial Small Claims Part under CCA 1809-A. (2006 NY Slip Op 51229[U] at *2.)

This court, therefore, agrees with the dissent that where there is a more proper forum that specifically addresses claims by{**28 Misc 3d at 865} health care providers for nonpayment of basic economic loss claims, it is that forum that should be regarded as having subject matter jurisdiction. The proper forum with jurisdiction to entertain the type of claim at issue in the instant matter, however, presupposes the existence of a statute that permits through logical reasoning the creation of a judicial forum to most effectively adjudicate no-fault medical benefits claims.

III. Insurance Law Article 51: New York State Comprehensive Automobile Insurance Reparations Act (Also Known as the No-Fault Law)

The No-Fault Insurance Law was created in 1973 for the express purpose of promoting “prompt resolution of injury claims, limit[ing] cost to consumers and alleviat[ing] unnecessary burdens on the courts.” (Byrne v Oester Trucking Inc., 386 F Supp 2d 386, 391 [SD NY 2005], citing [*5]Pommells v Perez, 4 NY3d 566 [2005].)

At the crux of no-fault insurance litigation is the issue of whether the injured party sustained a “serious injury” as defined by Insurance Law § 5102 (d). This “serious injury” threshold, as defined, “provides that in order for a victim of an automobile accident to bring an action for ‘non-economic loss,’ [such as] pain and suffering, he or she must demonstrate ‘serious injury’ [resulting from the accident].” (Lamana v Jankowski, 13 AD3d 134, 136 [1st Dept 2004].)

A determination that the “serious injury” threshold has not been met, however, does not preclude a no-fault claimant from recovering any basic economic loss incurred as a result of a motor vehicle accident (MVA). With a limit of up to $50,000 per person, a claimant can seek to recover for medical services, lost wages, and other reasonable and necessary expenses. It is these types of claims that constitute the overwhelming majority of the No-Fault Part Civil Court case calendar.

In an attempt to handle these claims fairly and expeditiously pursuant to the spirit and letter of the No-Fault Law, a “No-Fault Part” was created in Bronx Civil Court. The No-Fault Part is a specialized court created in Bronx County^[FN10] to handle no-fault basic economic loss claims. This court would have the exclusive authority for entertaining all motions and trials pertaining to these claims.

The No-Fault Part has greatly facilitated the removal of the vast majority of MVA claims from the sphere of common-law{**28 Misc 3d at 866} tort litigation into a quick, sure and efficient system for obtaining compensation for economic loss suffered from a car accident.^[FN11] The nature of the claims exclusively involves payment demands by health care providers (always represented by counsel), as assignees, for health care services and treatment rendered parties (assignors) involved in MVAs.

Likewise, the defendants are exclusively insurance carriers and also invariably represented by counsel. In addition to representation by counsel, limited discovery is allowed in the No-Fault Part. The daily court calendar is divided such that during the morning calendar call, all procedural and nonprocedural motions are heard and orally argued, if not taken on submission. In the afternoon, all bench trials are conducted.^[FN12] This approach, suffice it to say, has generated a fair, uniform, and expeditious adjudication of an otherwise crushing volume of [*6]no-fault cases.

The court’s singular focus on medical benefits claims has allowed judges, attorneys, and court staff to develop the No-Fault Part into an efficient mechanism for the adjudication of these claims. This efficiency is predicated first upon a narrow body of law effectively interpreted and applied by a judge with the sole responsibility of adjudicating medical benefits claims that, secondly, are handled by experienced counsel on a daily basis in an adversarial, but nonconfrontational courtroom setting in the disposition of these claims. The functional structure of the No-Fault Part is consistent, therefore, with one of the No-Fault Law’s goals: the expeditious handling of basic economic loss claims. From a commonsense policy standpoint, the No-Fault{**28 Misc 3d at 867} Part is the proper forum to bring medical benefits claims actions.

IV. Conclusion

In sum, these two cases at hand are not “commercial” per se, based on CCA 1809 (1), as assignees are barred from initiating suit in the Small Claims Part. Instead, they should be adjudicated in the No-Fault Part. Wherefore these cases are hereby dismissed without prejudice so that they can be transferred to the No-Fault Part, which is the proper forum.

Footnotes

Footnote 1: Pursuant to New York City Civil Court Act § 1805-A (b), “[t]he court shall have power to transfer any commercial claim or claims to any other part of the court upon such terms as the rules may provide, and proceed to hear the same according to the usual practice and procedure applicable to other parts of the court.”

Footnote 2: Peter Coates of Jaffe and Koumourdas appeared on the record.

Footnote 3: This took effect on January 1, 1991.

Footnote 4: The amount is currently $5,000.

Footnote 5: An example of a small claims case is where a store customer sues a furniture store for defective furniture. Such a case does not require motion practice, unlike no-fault cases where expert testimony of health care professionals is generally part of proving a plaintiff’s case as to the medical necessity of a treatment or service.

Footnote 6: Dunrite Auto Body & Motors v Liberty Mut. Ins. Co., 160 Misc 2d 168, 171 (Suffolk Dist Ct 1993); see also Arthur F. Engoron, Small Claims Manual: A Guide to Small Claims Litigation in the New York State Courts, at 35 (5th ed 2001).

Footnote 7: To start a commercial claims case, the commercial claimant must give a statement to the commercial claims court clerk as to why she/he is starting a lawsuit. The claimant must also pay a $20 filing fee to the clerk, plus the cost of mailing the notice of the lawsuit to the defendant. The claimant must also file a verification that no more than five commercial claims have been initiated by that claimant anywhere in New York State during a calendar month. (See A Guide for the Use of the Commercial Claims Part, at 2 [1996].)

Footnote 8: In East End Medical, subject matter jurisdiction was neither raised nor briefed by the party on appeal. The Appellate Term therefore broached the issue on its own.

Footnote 9: “Commercial” means any corporation, partnership, or association with its principal office in New York State can initiate suit in the Commercial Small Claims Part, so long as the entity is not a collection agency or entity that take assignments of debts. (See CCA 1809-A; see also A Guide for the Use of the Commercial Claims Part, at 1 n 1 [1996].)

Footnote 10: Both Brooklyn and Queens Civil Court have created a similar No-Fault Part to accommodate such cases.

Footnote 11: The purpose of no-fault auto insurance is to encourage expeditious resolution of claims without the necessity of imposing an additional burden on courts. (See Matter of Gretka [General Acc. Group], 100 Misc 2d 170 [Sup Ct, Erie County 1979].)

Benefits to be paid on a “no-fault” basis were adopted by the New York State Legislature as a means of reducing the caseload of the courts and to provide a fair and adequate way of recovering for those injured in auto accidents. (See Gamble v Randolph, 91 Misc 2d 436 [Rochester City Ct 1977].)

The object of Insurance Law of 1939 § 670 et seq. was to assure prompt compensation to accident victims of substantially all of their economic loss without regard to fault. (See Matter of Criterion Ins. Co. of Wash., D.C. [Commercial Union Assur. Co.], 89 Misc 2d 36 [Sup Ct, Nassau County 1976].) This same tenet is echoed in the current No-Fault Law, along with Ohio Cas. Ins. Co. v Continental Ins. Co. (101 Misc 2d 452 [Sup Ct, Erie County 1979]).

Footnote 12: Although nonjury trials are officially held during the morning calendar call and motions during the afternoon calendar call, most motions are able to be resolved in the mornings as well. If not, then they are resolved in the afternoon calendar.