[*1]

Civil Court of the City of New York, Queens County, July 27, 2009

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (Melissa A. Pirillo of counsel), for plaintiff. Law Office of Teresa M. Spina, Woodbury (John Dupuy of counsel), for defendant.

{**25 Misc 3d at 546} OPINION OF THE COURT

William A. Viscovich, J. [*2]

Due to the similarity of the factual background and legal issues to be determined in these matters, the two cases herein were consolidated for trial purposes before this court. After a pretrial conference, the parties stipulated on the record as follows as to both cases:

1. Plaintiff has established its prima facie case as a matter of law;

2. Defendant has issued timely verification requests to the plaintiff’s attorney;

3. The plaintiff’s attorney responded to those verification requests with identical “compliance letters” in each case.

Also, while not stipulated to on the record, the following facts are undisputed. In the first action (Isabel Graulan), plaintiff submitted one bill totaling $676.98 for supplies rendered to the claimant for date of service August 15, 2007. Along with the bill was a letter from plaintiff’s counsel requesting that any and all verification requests be directed to their office. Defendant timely received this bill on or about August 15, 2007. Thereafter, defendant timely requested from plaintiff’s attorney additional verification on August 24, 2007, with a follow-up request on September 24, 2007, both seeking a narrative report of the patient’s initial consultation from the prescribing/referring physician (specifically, naming one Dr. Goldman).{**25 Misc 3d at 547}

Likewise, in the second action (Cesare Iori), plaintiff timely submitted a bill totaling $372.98 for supplies rendered to the claimant for date of services July 17, 2007 (again with a letter from plaintiff’s attorney requesting that any and all verification requests be directed to their office), which defendant timely received on or about July 25, 2007. Thereafter, defendant timely requested additional verification on August 14, 2007, with a follow-up request made on September 18, 2007 seeking a manufacturer’s invoice documenting the cost of the medical equipment or supplies and proof of payment for the medical equipment or supplies.

In both cases, the plaintiff’s attorney responded to the verification requests after the follow-up letter had been sent. These self-titled “compliance letters” read, in part, as follows:

“Please be advised that the bills, medical reports, assignment of benefits and proof of claim were previously provided with the initial submission of the claim for the above-referenced patient. Be further advised that this response constitutes full compliance with any purported requests and constitutes the provider’s submission of all relevant documents in the provider’s possession. Any further requests should be directed to the party that possesses such other information. Therefore any further requests to this provider are deemed unnecessary and in violation of 11 NYCRR § 65-3.2 (c)” (emphasis added).

A review of the transcript of the proceeding reveals some confusion as to the exact nature of the issues to be decided. Nonetheless, based upon the transcript and the briefs submitted by the parties, the court has determined that the following issues control its decision in these matters:

1. Were defendant’s verification requests proper;

2. If so, were plaintiff’s responses to the defendant’s verification requests sufficient; and [*3]

3. If not, was defendant obligated to respond further to plaintiff in some form to communicate its position that the response was insufficient or could it remain silent?

Discussion of Law

Defendant’s Verification Requests Were Proper

An insurance carrier is permitted to request additional information from a claimant through a proper and timely verification{**25 Misc 3d at 548} request. (See generally 11 NYCRR 65-3.5 [b].) While the materials an insurer may request are not unlimited (see generally 11 NYCRR 65-3.5 [b]), the Insurance Law and regulations clearly outline an insurer’s right to request and receive information necessary to the processing of a provider’s claim for no-fault benefits. Furthermore, “[t]he insurer is entitled to receive all items necessary to verify the claim.” (See 11 NYCRR 65-3.5 [c].) As such, the issue for this court to determine is whether the verification requests in each of these cases were in some way inappropriate or otherwise beyond the scope of a proper verification request.

In the Graulan matter, the insurer requested “a narrative report of the patient’s initial consultation from the prescribing/referring physician (Dr. Goldman).” In the Iori matter, the insurer requested a “manufacturers invoice documenting the cost of the medical equipment or supplies” and “proof of payment for the medical equipment or supplies.” In both cases, the court finds that said requests were reasonable and in accordance with the statutory and regulatory framework of New York State’s no-fault insurance statutes and regulations.

As such, the court must now address the issue of the sufficiency of plaintiff’s responses to the defendant’s verification requests.

In the Graulan Matter, Plaintiff’s Response to Defendant’s Verification Request was Sufficient

In the Graulan matter, the defendant’s reasonable verification request was for “a narrative report of the patient’s initial consultation from the prescribing/referring physician (Dr. Goldman).” The plaintiff’s response, while pro forma, did clearly state that “further requests should be directed to the party that possesses such other information.” In this matter, that party seems to be one Dr. Goldman, who was likely known to the insurer, as evidenced by the doctor’s name being placed on the verification request.

Pursuant to 11 NYCRR 65-3.2 (e) and (f), an insurer is under a duty to “[c]learly inform the applicant” of its position and must “[r]espond promptly . . . to all communications from . . . attorneys,” including responses to verification requests. Indeed, an insurer is required to respond to a response to a verification request, regardless of whether it feels the response is sufficient. (See All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907 [Civ Ct, Queens County 2004, Agate, J.]; Lenox Hill Radiology, P.C. v Allstate Ins. Co., Civ Ct, NY County, 2008,{**25 Misc 3d at 549} Moulton, J., index No. 076/08; Media Neurology, P.C. v Countrywide Ins. Co., 21 Misc 3d 1101[A], 2008 NY Slip Op 51902[U] [Civ Ct, Kings County 2008, Ash, J.].) [*4]

At the very least, given that the response to the verification request was somewhat on point, the defendant should have responded to the verification response as being insufficient. More importantly, however, defendant should have forwarded a verification request to Dr. Goldman, or if it could not locate Dr. Goldman, the defendant should have requested that plaintiff provide contact information for him. Either way, had no response been forthcoming from either Dr. Goldman or plaintiff, this action would be premature and the court would be inclined to dismiss it as such due to the plaintiff’s failure to provide a legitimate verification response.

Given the defendant’s failure to take action on plaintiff’s marginally acceptable verification response, the court finds in favor of the plaintiff in the amount of $676.98 plus statutory interest, attorneys fees and costs and disbursements.

In the Iori Matter, Plaintiff’s Response to Defendant’s Verification Request was Insufficient and as Such Defendant was Not Obligated to Respond Further to Plaintiff in Some Form to Communicate Its Position the Response was Insufficient

Unlike the previous matter, the court finds that plaintiff’s response to the defendant’s request for verification was insufficient. As previously decided herein, the defendant’s verification request for a “manufacturers invoice documenting the cost of the medical equipment or supplies” and “proof of payment for the medical equipment or supplies” was eminently reasonable.

While plaintiff’s response in this matter was identical to the response in the previous matter, it was, at best, vague, disingenuous and totally lacking in any guidance that the defendant could find useful in obtaining the requested information. It contained neither the information requested nor alternative information sufficient to allow the defendant to expedite either payment or denial of the claim. Nor was there any indication, as in Graulan, that defendant might know whom to contact other than the plaintiff.

Here it should be pointed out that the requested items, unlike in the previous case, were likely in the control of, or at least accessible to the plaintiff. This court finds it extremely difficult to believe that plaintiff, with the assistance of counsel, who was basically acting as its billing agent (see Lenox Hill Radiology &{**25 Misc 3d at 550} MIA P.C. v Global Liberty Ins., 20 Misc 3d 434 [Civ Ct, NY County 2008, Bluth, J.], could not obtain either a manufacturer’s invoice or a proof of payment for the items provided. In that case, involving the same plaintiff’s firm, it seems that the response to the verification request therein was identical to the responses contained herein.

Courts have endorsed not only the legal obligation to respond to verification requests, but have distinctly addressed the contractual and professional obligation to likewise respond. In the case of Dilon Med. Supply Corp. v Travelers Ins. Co. (7 Misc 3d 927 [Civ Ct, Kings County 2005]), the court stated that “when a claimant submits bills to an insurer for payment, the claimant, who stands in the shoes of his assignor, must deal in good faith and cooperate with the insurer if it wants to get paid” (id. at 930). The court further outlined a good faith duty with [*5]respect to responses to verification requests, noting that “even if the claimant believes it cannot or need not comply with the insurer’s request, the claimant still has a duty to communicate with the insurer regarding the request” (id. at 931).

While in that case, unlike here, there was no response whatsoever to defendant’s verification request, the plaintiff’s response herein hardly constitutes good faith and is made more unacceptable by the language contained therein that it constituted “full compliance with . . . purported [verification] requests” and that “any further requests to this provider are deemed unnecessary and in violation of 11 NYCRR § 65-3.2 (c).”

As Judge Bluth stated in Lenox Hill Radiology & MIA PC v Government Empls. Ins. Co. (NYLJ, Aug. 27, 2008, at 27, cols 1, 2 [index No. 39CVN 2008]),

“[J]ust because plaintiff’s attorney labeled the letters ‘Verification Compliance’ does not make it so. The label is meaningless; in no way can any literate person possibly construe that letter as complying with the verification request. No verification was supplied. Those letters, which completely ignored defendant’s bona fide requests . . . specifically informed defendant that plaintiff would not be providing whatever information may have been requested. Plaintiff’s attorneys’ self-serving and threatening . . . letters did not call for a response—in fact, by specifically putting the defendant on notice that nothing else would be forthcoming{**25 Misc 3d at 551} and that any further request would be ‘unnecessary and in violation of 11 NYCRR § 65-3.2(c)’—plaintiff’s attorneys instructed defendant not to respond. Moreover, 11 NYCRR § 65-3.2 (f) only requires the insurer to respond when a response is indicated and here, no response was indicated” (emphasis added).

While the court is reluctant to impose this limitation on plaintiffs, given that the history and purpose of New York State’s enactment of the No-Fault Law is to ensure the prompt and expeditious payment of claims (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 284 [1997]), there is a somewhat competing policy concern that an insurer “is entitled to receive all items necessary to verify the claim” (see 11 NYCRR 65-3.5 [c]). Allowing the document submitted by plaintiff to qualify in this matter as a legitimate verification response could encourage no-fault plaintiffs to simply ignore verification requests based upon their own interpretation of what constitutes a valid response. As in this particular matter, they would then be able to provide nonresponsive “verifications” on their own terms, thus enabling them to move matters prematurely into litigation without a full prior vetting of the matter as anticipated by the no-fault statutes.

As such, the complaint in the matter of Custom Orthotics, LTD., as assignee of Cesare Iori v Government Empls. Ins. Co. is dismissed as premature.

Civil Court of the City of New York, Richmond County

08R000954

Katherine A. Levine, J.

Upon the foregoing cited papers, the Decision/Order on this Motion is as follows:

Defendant’s motion for summary judgment raises anew whether the recent Court of Appeals decision in Fair Price Medical Supply Corp. V. Travelers Indemnity Co., 10 NY3d 556 (2008) requires an insurer to deny a claim on the grounds that the assignor was involved in an accident while on the job and that workers compensation is hence primary within 30 days, or whether that defense is not subject to the preclusion rule.

Plaintiff Lenox Hill Radiology and MIA, P.C. A/A/O (“Lenox Radiology”

or “plaintiff”), a medical service provider, brought this action seeking reimbursement in the amount of $878.67 for medical services it provided to its assignor Zulfiqar Ahmad (“assignor or “Ahmad”) stemming from a motor vehicle accident that occurred on September 19, 2007. Plaintiff timely submitted its bill to defendant Global Liberty Insurance Co. (“defendant” or “Global”) which is a “licensed insurance carrier for vehicles for hire” (affidavit of Dwight Geddes -“Geddes affidavit” ). Global received the claim on November 2, 2007, and denied and mailed the claim on November 28, 2007 on the grounds of lack of medical necessity based upon a performed peer review report. ^[FN1] The denial did not list as a grounds lack of coverage based upon workers compensation being primary. [*2]

Defendant moved for summary of judgment on the grounds that there is no coverage since it “has reason to believe” that the assignor was in the course of his employment at the time of the accident and that therefore, workers compensation is primary and the assignor is not entitled to no -fault benefits. It further contends that the Workers Compensation Board (“Board”) is vested with the responsibility of resolving questions of fact or mixed questions of law and fact and that the Board hence has”primary and exclusive jurisdiction” to resolve questions of coverage. Thus, a no -fault insurer is only obligated to pay no-fault benefits if the workers compensation carrier denies liability for benefits. From these propositions, defendant argues that “there is no coverage” from an insurance company for no – fault benefits until the Board makes a determination that there is no workers compensation coverage and that hence, defendant’s time in which to issue a denial does not even commence until the Board makes its determination.

Plaintiff cross moved for summary judgment on the ground that the defense that a “claimant is eligible for workers compensation” is not a coverage defense but rather a “statutory offset” which must be contained in a timely denial. Plaintiff contends that there are only four “coverage defenses” that are not subject to preclusion even if not raised in a timely denial and that the instant defense is not included in this group. Since defendant did not preserve this defense by issuing a timely denial, plaintiff contends it is entitled to partial summary judgment.

In response, defendant contends that if in fact the Board were to determine that the assignor was not working at the time of the accident but rather was using the vehicle for personal reasons, this would be in violation of his policy of insurance or “contract” with Global and would constitute a “material misrepresentation” by the insured so as to warrant a forfeiture of his rights under the policy. Defendant further contends that “misrepresentation by an insured and a material breach of the contract of insurance result in the vitiation of coverage.”

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).

The burden then shifts to the defendant in a no fault case to show a triable issue of fact. Alvarez v Prospect Hosp., 68 NY2d 320, 324 (1986). To defeat an award of summary judgment to plaintiff, defendant must provide proof, in evidentiary form, that it either paid or denied the claim within 30 days of receipt or that it asserts a non- precludable defense. Carle Place Chiropractic v. NY Central Mutual Fire Ins. Co., 2008 NY Slip Op 51065U; 19 Misc 3d 1139A (Dist. Ct. Nass. Co. 2008). District supra at 8. See Central General Hospital v. Chubb Insurance Co, 90 NY2d 195 (1997); Presbyterian Hosp. City of NY v. Maryland Casualty Co., 90 NY2d 274 (1997). [*3]

In Fair Price Medical v. Travelers Ins., 10 NY3d 556 (2008), the Court of Appeals clarified when an insurance company would not be precluded from offering a defense to its refusal to pay no – fault benefits even though it denied the claims beyond the 30 day period. There, Travelers issued its denial nearly two years after receiving the claim, based upon the assignor’s statement that he had never received medical supplies from the plaintiff. The Civil Court denied plaintiff’s motion for summary judgment, finding that defendant was not precluded by the 30 day rule since it had asserted fraud as a defense. The Appellate Division affirmed the Appellate Term’s reversal of the lower court’s order denying plaintiff summary judgment on the grounds that :

in this case, unlike a staged accident case, there was an actual automobile accident, which

caused Nivelo to sustain actual injuries, for which he was treated by actual health care providers, who issued actual prescriptions for medical supplies to treat his injuries. Nivelo’s undisputably real accident had resulting injuries triggered with the coverage provided for in his insurance policy with the defendant” Fair Price Med. Supply Corp. V. Travelers Indem. Co. 42 AD3d 277, 284 (2d Dept. 2007) affg 9 Misc 3d 76 (App. Term 2d and 11th Jud. Dist 2005).

In sum, the Appellate Division concluded that while Travelers could contest the assignor’s claim as fraudulent, it must do so within the tight deadlines imposed by the no -fault system. 42 AD3d at 286.

The Court of Appeals affirmed . It first cited to its recent review of the legal framework behind the No – Fault Law in Hospital for Joint Diseases v. Travelers Prop. Cas. Ins., 9 NY3d 312, 317 (2007); namely that the no fault insurance system was designed to ensure “prompt compensation for losses incurred by accident victims without regard to fault or negligence,” to reduce the burden on the courts, and to provide substantial premium savings to New York motorists. ” Citing to its prior decision in Central General Hospital, supra, 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. 9 NY3d at 318 . The Court explained that in such cases “an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the

first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. Fair Price, 10 NY3d at at 563 citing Joint Diseases, 9 NY3d at 318. See, e.g. Tahir v. Progressive Casualty Ins. Co., 12 Misc 3d 657, 662 (Civil Ct., NY Co., 2006) (“staged accident fraud” actually posed an issue of non coverage as opposed to fraud because under no -fault concepts, insurance coverage is limited to an “accident”).

Thus, the “key issue” in every case is whether the “facts fit within the narrow no-coverage exception to the preclusion rule” 10 NY3d at 564. A court, in determining 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. [*4]

In Westchester Medical Center v. Lincoln General Ins. Co., 60 AD3d 1045 (2d Dept. 2009), the Second Department found that the defendant failed to raise a triable issue of fact solely based on the hearsay statement of its investigator, as to whether the accident was covered by Workers Compensation benefits. The court then added that “defendant’s possible entitlement to offset any no-fault benefits it pays by any recovery pursuant to a workers compensation claim does not constitute a defense of lack of coverage, which is not subject to the requirement that there be a timely service of the disclaimer” Id at 1046 citing Fair Price supra.,

The Second Department decision in Westchester, supra, despite its brevity, controls the instant matter. Furthermore, as set forth above, the Second Department has previously enunciated its position on the preclusion rule in Fair Price, supra wherein it declared that as long as there was an actual automobile accident, which caused the assignor to sustain actual injuries for which he was treated by an actual health care provider, the case would not fall within the narrow exception to the preclusion rule. Defendant does not contend otherwise but merely argues that workers compensation is “primary” and that there is no coverage for no fault benefits until and unless a workers compensation board makes a determination that the assignor is not covered by workers compensation at which point the no – fault insurer is obligated to pay first party benefits.

Defendant cannot escape this rule by now claiming that there was “fraud ” or “misrepresentation” by as the assignor in obtaining the policy. Defendant fails to allege the type of fraud which will warrant the suspension of the preclusion. This distinction was aptly drawn in

Carnegie Hill Orthopedic Servs. P.C. v. GEICO Ins. Co., 2008 NY Slip Op 50639U, 19 Misc 3d 1111A, 862 N.Y.S.2d 813 (NY Sup. Ct. 2008) wherein the court stated that “(t)he defense of fraud based upon “staged accidents” or intentional collisions are considered defenses premised on lack of coverage, and have been found not subject to the rigorous 30-day rule because there was, in fact, no “accident.” See, Mtr. of Allstate Ins. Co v Massre, 14 AD3d 610 (2nd Dept. 2005); State Farm Mutual Automobile Ins. Co. v Laguerre, 305 AD2d 490 (2nd Dept. 2003); Metro Medical Diagnostics, P.C. v Eagle Ins. Co., 293 AD2d 751 (2nd Dept. 2002). On the other hand, cases involving fraudulent billing or excessive treatment are considered claims of “provider fraud” and can be precluded by the 30-day rule. Carnegie Hill, supra at 4 . See, Careplus Medical Supply Inc v State-Wide Ins. Co., 11 Misc 3d 29 (App Term, 2nd & 11th Jud Dists 2005); MGM Psychiatry Care PC v Utica Mutual Ins. Co., 12 Misc 3d 137(A), 824 N.Y.S.2d 763,(App Term, 2nd & 11th Jud Dists 2006).

The Carnegie court noted that the ” key distinction is that in the first circumstance the insurance carrier demonstrated that an issue existed as to whether there was any coverage at all, whereas in the second the courts were presented with an exclusion under the policy, which does not mean that there was no contractual obligation in the first instance. In the latter, the 30-day rule still applies”. Id at 4 citing Fair Price Supply Corp., supra at 42 AD3d 277.

In fact, in Fair Price, supra, the Second Department specifically stated that the exception [*5]to the preclusion rule was carved out specifically where an insurer failed to timely pay or deny fraudulent claims that arise out of staged automobile accidents. 42 AD3d at 283. The rationale for such a holding was that “a deliberate collision that is caused in furtherance of an insurance fraud scheme is simply not an “accident” covered by the subject insurance policy.” Id. To that end, no matter how “egregious” the alleged fraud was in the case before it ( medical supply company’s claim was fraudulent as medical supplies were never delivered), it was not related to the existence of coverage in the first instance. Id. at 284.

Nor does the fraudulent misrepresentation raised by defendant herein fall into the category of fraudulent incorporation A defendant is not precluded from raising its defense that plaintiff may be fraudulently incorporated since it is ” possibly” owned by both a physician and non physician, the latter of which is prohibited by both the Business Incorporation Law, the No – fault regulations and the seminal case of State Farm Mutual Auto Ins. V. Mallela, 4 NY3d 313 (2005).^[FN2]

In Eastern Medical P.C. v. Allstate Ins. Co., 19 Misc 3d 775 (Dist. Ct. Nassau Co. 2008), the court rejected Allstate’s contention that Fair Price had reshaped the analysis of fraud based defenses so as to make a Mallela fraudulent incorporation defense untimely if not made within the 30 day denial period. See, Manhattan Medical Imaging, P,C, v, State Farm Auto Ins,., 2008 NY Slip Op. 51844 (U), 20 Misc 3d 1144 (A) (Civil Ct., Richmond Co. 2008). The court found that the Mallela defense was not predicated upon a policy exclusion or the extent of coverage provided by a contract of insurance but rather upon a statutory defense arising from a claimant’s failure to comply with applicable sections of the Business Corporation, Limited Liability and Education Laws. Id at 779-780. Hence, 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.” Id at 780 citing 4 NY3d at 321 n.3. Therefore, Fair Price did not

alter, much less address prior precedent that a fraudulent incorporation defense “is a non- waivable defense .and is therefore not subject to the 30-day preclusion rule” ( Midwood Acupuncture P.C. v. State Farm Mutual Auto, 14 Misc 3d 131A, 2007 N.Y Slip Op 50052 U

( App. Term, 2d Dept. 2007). Id at 781. Nor was such a defense waived by the failure to assert it in a denial of claim form. Multiquest v. Allstate Ins. Co., 17 Misc 3d 37, 39 ( App. Term, 2d Dept. 2007).

Since the instant defendant’s claim of fraud does not fall into the category of fraud in pursuance of a staged accident or fraudulent incorporation, it does not fall within the exception to [*6]the preclusion. Having failed to raise the defense that claimant is eligible for workers compensation or that workers compensation is primary in a timely denial, plaintiff is entitled to partial summary judgment. However, since defendant timely mailed its denial based on lack of medical necessity and annexes a sufficient peer review report in support of its denial, this matter will proceed to trial on the issue of medical necessity.

In sum, defendant’s motion for summary judgment is denied and plaintiff’s cross-motion for summary judgment is granted solely with respect to the defense of workers compensation.

DATED: July 6, 2009

KATHERINE A. LEVINE

JUDGE, CIVIL COURT

ASNbyon

Footnotes

Footnote 1:The court finds that the defendant established that it generated and then mailed out a timely denial based on lack of medical necessity on November 28, 2007 in accordance with its well established procedures and through the personal knowledge of the mail clerk at Global.

Footnote 2:This defense is typically referred to as the “Malella defense” or “fraudulent incorporation” defense.

Civil Court of the City of New York, Queens County

88511/08

Cheree A. Buggs, J.

Defendant Global Liberty Insurance Company of New York (“defendant”) filed a motion for summary judgment pursuant to Civil Practice Law and Rules (CPLR) § 3212 and § 3211 [a] [7] on grounds that No-Fault Insurance does not cover a claim submitted by plaintiff Corona Comprehensive Medical Care (“plaintiff”). Plaintiff, the assignee of medical benefits of the operator of a for-hire vehicle, filed a $1,333.24 claim for no-fault insurance benefits for medical services provided to the vehicle operator for injuries arising from an automobile accident. Defendant’s contention is that the for-hire vehicle operator was working when the accident occurred on March 20, 2007, and therefore the plaintiff’s claim is payable through Workers’ Compensation Insurance from the New York Black Car Operators’ Injury Compensation Fund and not under the No Fault Insurance Law. Plaintiff opposes the defendant’s motion on several grounds, chief among them are that defendant’s claim is not a lack of coverage defense, and therefore, must be raised in a timely denial; that the defendant failed to show that a timely denial was mailed, or that such denial was mailed in duplicate; and lastly, that the existence of workers’ compensation coverage does not prevent a person from recovering no-fault benefits.

Background

It is undisputed that on March 20, 2007, the plaintiff’s assignor, Maria Cruz Martinezwasinvolved in a vehicular accident. Defendant alleges that the assignor was about to join the livery vehicle passenger pickup line on Broad Street off of Pearl Street in Lower Manhattan when the accident occurred. Plaintiff provided medical services to Ms. Martinez (the nature of which are not specified in any of the papers herein), and as assignee of Ms. Martinez, submitted a claim to the defendant for payment. Defendant insurance company alleges that although a timely denial was not required, a timely denial of claim form (“NF-10”) was issued on June 12, 2007.

[*2]DiscussionThe movant on a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, proffering sufficient evidence to eliminate all material issues of fact from the case (see Winegrad v New York Univ. Med.Ctr., 64 NY2d 851 [1985]).

In support of its motion, defendant has offered the sworn affidavits of Mahmoud Ragab, its Vice President of Underwriting and of Dwight Geddes, its Fault Claims Manager. Mr. Geddes attested that the defendant is a licensed insurance carrier for three categories of vehicles for hire, e.g.,”black car,” luxury and car service vehicles, and is not licensed to insure private vehicles. According to both affidavits, the assignor was a member of Corporate Transportation Group, LTD, CTG/Optimum Car and Limo dispatch, which is a member of the New York Black Car Operators Injury Compensation Fund as required by the New York City Taxi and Limousine Commission and Executive Law § 160-cc, et seq. The affidavits indicate that the plaintiff’s assignor’s license plate number was “T484693C,” and that the “T” and “C” on a New York license plate indicate a for-hire vehicle under the New York City Taxi and Limousine Commission. According to Mr. Ragab’s affidavit, black car operators must be affiliated with a dispatch or base, and the base must provide Workers’ Compensation Insurance if a driver is injured while working.

The New York Black Car Operators’ Injury Compensation Fund is a not-for-profit corporation, which was created by statute in order to ensure that black car operators who are injured while performing duties on behalf of central dispatch facilities receive workers’ compensation benefits. The central dispatch facilities are required to be members of the fund as a condition to obtaining or retaining their licenses (See NY Exec Law § 160-dd, et seq.). Pursuant to NY Executive Law § 160-cc [1], a ” [b]lack car operator’ means the registered owner of a for-hire vehicle, or a driver designated by such registered owner to operate the registered owner’s for-hire vehicle as the registered owner’s authorized designee, whose injury arose out of and in the course of providing covered services to a central dispatch facility that is a registered member of the New York black car operators’ injury compensation fund, inc.” According to Executive Law § 160-cc [4] ” covered services’ means, with respect to dispatches from or by a central dispatch facility located in the state, all dispatches from such central dispatch facility regardless of where the pick-up or discharge occurs, and, with respect to dispatches from or by a central dispatch facility located outside the state, all dispatches involving a pick-up in the state, regardless of where the discharge occurs.”

Defendant alleges that because the vehicle operator was involved in a motor vehicle accident while on duty, plaintiff is entitled to be reimbursed under Workers’ Compensation Insurance from the New York Black Car Operators’ Injury Compensation Fund, and not under the no-fault law. Insurance Law §§5102 [b] and [b][2] state “first party benefits” are payments meant to “reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle less amounts recovered or recoverable on account of such injury under state or federal laws providing social security disability benefits, or workers’ compensation benefits…” Pursuant to Insurance Law § 5102 [b][2], workers’ compensation benefits “serve as an offset against first-party benefits payable under no-fault as compensation for basic economic loss” (see also Arvatz v Empire Mutual Ins. Co., 171 AD2d 262, 268 [1991]). It is solely within the jurisdiction of the Workers’ Compensation Board to determine whether claimed injuries occurred while in the course of one’s employment (see Liss v Trans Auto Sys., 68 NY2d 15 [1986]; O’Rourke v Long, 41 NY2d 219 [1976]; O’Hurley-Pitts v Diocese of Rockville Centre, 57 AD3d 633 [2008]; [*3]Mattaldi v Beth Israel Med. Ctr., 297 AD2d 234, 235 [2002]). Workers’ Compensation Law § 142 [7] states that “[w]here there has been a motor vehicle accident which caused personal injury and there is a dispute as to whether the injury occurred in the course of employment, the Workers’ Compensation Board shall … hold an expedited hearing … whether the accident occurred within the course of employment”. (See also Jing Huo Lac v American Transit Ins. Co., 19 Misc 3d 1146[A], 2008 NY Slip Op 51177 [U] [Civ Ct, Richmond County 2008].)

Further, the defendant alleges that even if the plaintiff’s claim was not timely denied, the absence of such timely denial would not bar the defense of lack of coverage based upon the Workers’ Compensation Law, and there would be no need for the defendant insurer to issue a timely denial (see Hosp. For Joint Diseases v Travelers Prop. Cas. Ins., 9 NY3d 312, 318 [2007]; Central Gen. Hosp. v Chubb Group of Ins. Co., 90 NY2d 195 [1997]).

However, defendant’s contention that there was a valid lack of coverage defense to the plaintiff’s claim based upon workers’ compensation being the “primary” provider of benefits in the instant matter is misplaced, since the Second Department has held to the contrary. An argument of workers’ compensation being primary is not deemed to be a lack of coverage defense, but rather, a statutory offset subject to preclusion if not timely raised (see Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 [2009]).

In accordance with Insurance Law and regulations, an insurer has thirty days from the receipt

of a claim to either pay or deny the claim (see Insurance Law §5106 [a];11 NYCRR 65-3.8 [c]). Inasmuch as defendant’s principal focus in the matter herein is the workers’ compensation issue, with a presumption that such issue constitutes a lack of coverage defense, it failed to submit admissible proof that the denial was actually mailed. Although defendant contends that it issued a timely denial, it has not proffered an affidavit from an employee with either actual knowledge of the mailing of the NF-10 denial of claim form or from an employee familiar with standard office practices and procedures, which would be sufficient to establish mailing (see New York & Presbyterian Hosp. v Allstate ins. Co., 30 AD3d 492 [2006], Ying Eastern Acupuncture v Global Liberty Ins., 20 Misc 3d 144 [A], 2008 NY Slip Op 51863 [U] [App Term, 2d & 11th Jud Dists 2008]; cf. St. Vincent’s Hosp. v Geico, 50 AD3d 1123, 1124 [2008]; Midisland Med., PLLC v Allstate Ins. Co., 20 Misc 3d 144 [A], 2008 NY Slip Op 51861 [U] [App Term, 2d & 11th Jud Dists 2008].) In his affidavit, defendant’s claims manager, Mr. Geddes attested to the receipt of mail/claims and processing of claims, but failed to attest to when the denial was mailed or what the standard office practices are regarding actual mailing. Therefore, defendant has not presented evidence that the workers’ compensation defense was preserved in a timely denial.

Although in the case at bar, the defendant has proffered some admissible evidence regarding the workers’ compensation defense, in the absence of proof of the defendant’s mailing of a timely denial based upon this defense, the Court cannot address whether there is “potential merit” of its claim that the plaintiff’s assignor, Ms. Martinez, was acting within the course of her employment at the time of the accident (see A. B. Med. Servs., PLLC v American Transit Ins. Co., 8 Misc 3d 127 [A], 2005 NY Slip Op 50959 [U] [App Term 2d & 11th Jud Dist 2005]; Lenox Hill Radiology, P.C. v American Transit Ins. Co., 18 Misc 3d 1136 [A], 2008 NY Slip Op 50330 [U] [Civ Ct, New York County 2008]).

Based upon the foregoing, the Court finds that the defendant has failed to meet the required prima facie showing of entitlement to judgment as a matter of law to support its summary judgment [*4]motion. Consequently, defendant’s motion for summary judgment is denied in its entirety.

This constitutes the decision and order of this Court.

____________________________________________________________________

Date““““““Hon. Chereé A. Buggs

Judge, Civil Court

Civil Court of the City of New York, Bronx County

CV-030992-09/BX

For Plaintiff:

Michael C. Rosenberger of

Rapuzzi, Palumbo & Rosenberger, P.C.

For Defendant:

Diana Leahy of McDonnell & Adels, PLLC

Fernando Tapia, J.

In this no-fault action regarding the recurring issue of Examination Under Oath [“EUO”] letters and their presumption of mailing, this Court, after oral arguments and review of the motion papers, hereby GRANTS Defendant’s Pre-Answer Motion to Dismiss Plaintiff’s Complaint.

The above-captioned matter is demonstrative of other no-fault cases that have similar issues because the case at hand involves two topics that other motions seek to resolve: (1) violation of no-fault policy conditions and (2) unanswered verification requests. Those two main problems in turn spawn the ancillary issue regarding sufficient mailing procedures to make timely requests.

I. VIOLATION OF POLICY CONDITIONS

Defendant argues that Plaintiff’s Complaint must be dismissed as a matter of law because Plaintiff violated no-fault policy conditions when it failed to appear for its scheduled EUO. Plaintiff, in turn, claims that Defendant failed to provide a copy of the subject insurance policy in [*2]its moving papers as well as failed to show that the EUO letters were actually sent.

Section I of 11 NYCRR § 65-1.1 states the following with respect to conditions for proof of claim:

“Upon request by the Company, the eligible injured person or that person’s assignee orrepresentative shall:

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

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

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

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

In the instant case, Plaintiff claims that Defendant unnecessarily cited the aforementioned policy condition because “[t]he central issue here is derived from the terms contained within the written policy agreement between the parties.” See Pl.’s Aff. in Opp. at p. 6. Plaintiff therefore asserts that in order for Defendant to prevail on its motion, the State Farm policy itself should be included as part of the record instead of depending on the no-fault regulations under 11 NYCRR § 65-1.1. To support its argument, Plaintiff discusses Allstate Ins. Co. v. Ganesh, 8 Misc 3d 922 (Sup Ct, Bronx County 2005), a case dealing with a petitioner’s arbitration stay of an uninsured motorist claim.

In Ganesh, the respondent, the injured individual, sought coverage from the offending party’s insurance carrier [State Farm-petitioner]. State Farm disclaimed the coverage on the basis that the collision was not a motor vehicle accident [“MVA”], but instead, was an intentionally staged event, thereby constituting fraud. State Farm therefore disclaimed coverage to the injured party because per its written policy, intentionally caused losses are not covered. Id. at 923.

The Bronx Supreme Court held that State Farm did not validly disclaim coverage because it did not give sufficient admissible evidence that it was a staged event [i.e. offering the written policy as admissible evidence]. According to Hon. Billings, “[b]ecause no party introduced State Farm’s policy in evidence, State Farm never proved, most fundamentally, that the policy . . . excluded intentionally caused losses or losses involving particular conduct or imposed any conditions on anyone relating to a claimed loss.” Id. As such, the petitioner’s arbitration stay was granted and the respondent was allowed to seek coverage under State Farm’s policy.

Here, Plaintiff’s reliance on Ganesh is flawed because unlike Ganesh, this instant action deals with the issue of an EUO “no-show” which is expressly outlined in the no-fault regulations, guiding principles which written policies are based upon. Ganesh, on the other hand, dealt with the issue of coverage with respect to a questionably fraudulent claim that requires dissection of the written policy itself. Ganesh is also distinguishable from the case at bar because the relief sought in Ganesh was for a stay of arbitration of an uninsured motorist claim, as opposed to dismissal of the complaint based on non-compliance to policy conditions. As such, Ganesh fails to support Plaintiff’s claim that Defendant is required to provide the written policy as evidence. [*3]

Revisiting 11 NYCRR ｧ 65-1.1, that section is part of the revised no-fault regulations which took effect on April 5, 2002, and adopted the mandatory Personal Injury Protection [“PIP”] endorsement authorizing EUOs to be incorporated into insurance policies. In other words, compliance to a scheduled EUO is read into the written policy, and the insurer is not required to offer it as evidence to prove its claim.^[FN1] Likewise, in the case at hand, Defendant is not required to include its written policy as part of the record because its defense [of the EUO “no-show”] is found in the Endorsement. Thus, the mandatory Endorsement applies whether or not the written insurance policy actually contains it. Based on the moving papers, the date of accident was on August 27, 2008. According to NY Insurance Law ｧ 3425 (a)(8), “With respect to auto insurance, ‘required policy period’ means a period of one year from the date as of which a covered policy becomes effective after first issuance or voluntary renewal.” Furthermore, under SZ Medical P.C. v. State Farm Mutual Auto Ins. Co., 9 Misc 3d 139(A) (App Term 1st Dept 2005), the date of the written policy’s issuance determines if the Endorsement is applicable, and not the date when the plaintiff submits a claim. Applying the above to the instant action, the subject insurance policy contract could be deemed to have been issued/renewed well after April 5, 2002, given that the date of accident occurred well over six years after the effective Endorsement date. It would therefore be duplicative to submit a copy of the policy because its legislative intent was to read the Endorsement into all policies [post-April 5, 2002].^[FN2] As such, Defendant does not need to submit the policy contract because the insurance contact in effect incorporates the Endorsement that authorizes EUOs under 11 NYCRR ｧ 65-1.1.

Plaintiff in the case at bar is therefore in violation of the policy condition requiring submission of EUOs for verification purposes in order to make a determination of first-party benefits because Plaintiff did not appear at the two scheduled EUOs as required by the Endorsement. Accordingly, Plaintiff failed to submit valid proof of claim. The discussion now turns to the mailing mechanics involved in procuring such verifications.

II. VERIFICATION REQUESTS

A. Defendant’s contentions

According to 11 NYCRR § 65-3.5 (a), once the insurer receives the NF-2 application for benefits, the insurer “[s]hall forward to the parties . . . those prescribed verification forms it will [*4]require prior to payment of the initial claim.”^[FN3]

In this instant matter, the issue before the Court is whether the mailing of a letter via certified mail return receipt requested is entitled to the same presumption of receipt as regular first-class mail in the absence of the signed returned receipt. This Court determines that it is.

Here, Defendant argues that Plaintiff did not appear to the scheduled EUO despite timely notification to Plaintiff.^[FN4] To substantiate its argument, Defendant provided a sworn affidavit from a calendar clerk at the law office who explained that she was personally responsible for scheduling/handling EUOs. See Toyla Hogan Aff. at ¶ 1. Defendant also provided a sworn affidavit from a Claims Representative who attested her personal knowledge of State Farm’s mailing procedures of EUO letters via certified mail.^[FN5] See Alyson Johnson-Shaw Aff. at

¶¶ 3, 7.

Plaintiff counters that Defendant failed to meet its prima facie burden of proving that the two EUO letters were actually mailed because Defendant’s supporting affidavits are not from individuals who personally mailed the EUO letters. See Pl.’s Aff. in Opp. at pp. 6-7. Plaintiff further argues that Defendant’s affidavits “[a]re actually just a string of several irrelevant and/or conclusory assertions.” Id. at p. 10. To support its contentions, Plaintiff relies on Clark v. Columbian Mut. Life Ins. Co., 221 AD2d 227 (1st Dept 1995).

In Clark, the defendant moved for summary judgment on the basis that no triable issues of fact remained with respect to denying the plaintiff’s life insurance proceeds, especially after sending notices to the plaintiff to make payments so that his life insurance policy would remain active. The plaintiff denied receipt of those notices and further argued that the defendant’s deponent who testified on the regular office procedures of mailing the notices failed to show that he was aware of the computer-generated mailing log which listed the names of those receiving such notices. Id. at 228. The Court denied the motion, finding no presumption of receipt by the insured. Id. at 228-29.

Plaintiff’s reliance on Clark is misplaced because Defendant in the instant case submitted mail lists into evidence, whereas the deponent in Clark was not even aware of the computer-generated mail lists that were used for cross-referencing of the envelopes containing the notices. See Def.’s Reply Aff. at ¶ 6. In addition, the plaintiff in Clark expressly denied receipt of the notice. Here, Plaintiff, in its pleadings, did not explicitly or implicitly deny that it never received the EUO letters. Instead, Plaintiff contends that Defendant failed to show that the EUO letters were actually mailed. This Court therefore turns to the final issue of the presumption [*5]of mailing/receipt.

B. Plaintiff’s contentions

What constitutes “sufficient mailing” under no-fault regulations with respect to raising the presumption that an EUO letter was sent and received via certified mail, return receipt requested?

Here, Plaintiff contends that Defendant has the burden to show that the EUO requests were actually mailed. Based on Defendant’s sworn statements, the EUO letters were sent via certified mail. Thus, the question before the Court is whether the use of certified mail return receipt requested creates a more demanding presumption of mailing and receipt threshold above and beyond that of a letter sent via regular first-class USPS mail. The court finds that it does not.

1. Legal presumption: a basic discussion

This Court finds that Defendant has met its burden because the Court adheres to the longstanding precept that a basic fact [i.e. a mailed letter] raises the existence of a presumed fact [i.e. receipt of the letter] until the presumption is rebutted by admissible evidence.

Under Rule 301 of the Federal Rules of Evidence, a “[p]resumption imposes on the party against whom it is directed the burden of going forward with evidence to rebut or meet the presumption . . .” Sufficient evidence can therefore be considered by a fact finder in order to rebut a presumption.^[FN6] The least sufficient approach to a presumption is the “permissible inference” one in which a fact finder may conclude that a presumed fact exists. See Black’s Law Dictionary, 8th ed 2004. A permissible presumption, then, allows someone to infer that a presumed fact does exist from a basic one. Applying this to the mailed letter example, it can therefore be presumed that proper mailing occurred and it is more likely than not that the letter was received.^[FN7]

Does the presumption of receipt by regular mail apply to items of sent certified mail?

2. Rebutting the presumption

Defendant established prima facie proof that it mailed requests for additional verification of the claim by providing sworn affidavits from two State Farm office employees as well as an employee from the office of Defendant’s lawyers, all who have personal knowledge of mailroom procedures of EUO letters. See Def.’s Reply Aff. at ¶¶ 10-11.

More importantly, Defendant submitted its mail list which is not only additional prima facie proof of mailing, but is key to creating the presumption of receipt.^[FN8] The very function of [*6]“return receipt” is to provide proof of delivery, as guaranteed by the U.S. Postal System.^[FN9]

Here, Plaintiff relies on State of New York v. International Fidelity Ins. Co.,

181 Misc 2d 595 (Sup Ct, Albany County 1999) to support its contention that Defendant failed to meet its prima facie burden to prove actual mailing of the EUO letters. In Int’l Fidelity —a non-no-fault case— the movant-plaintiff-NYS sought to prove that it never received the defendant’s cancellation notices about the terminated bonds which were sent via certified mail. The cross-movant-defendant-IFIC argued that it was entitled to summary judgment because NYS could not rebut the presumption of receipt of the cancellation notices. Id. at 599.

The Albany County Court held, inter alia, that routine office practices cannot create a presumption of receipt of letters sent via certified mail. Id. As the Court stated, “To create a presumption of receipt, IFIC has the burden of describing a standard office procedure used to ensure that items are properly mailed, or provide proof of the actual mailing.” Id.

Plaintiff’s reliance on Int’l Fidelity is misplaced because State Farm submitted both sworn affidavits from a claims representative with personal knowledge about mailroom procedures and proof of actual mailing to complement those affidavits, as previously mentioned in II.A. of this decision. See also Hernandez, supra. Furthermore, State Farm retained its mail lists, unlike the plaintiff [NYS] in Int’l Fidelity, who destroyed its mail logs. See Int’l Fidelity, 181 Misc 2d 595 at 598-99.

Also, in the case at hand, even if Ms. Johnson-Shaw, the State Farm Claims Representative, did not attest that she was personally responsible for preparing the EUO letters and mailing them via certified mail, return receipt, the fact that State Farm retained its mail lists serves as its safety net, thereby allowing it to create the presumption of receipt because those mail lists represent actual proof of mailing. Defendant should therefore not be punished for taking advantage of various mailing options which aim to ensure delivery from both the sender’s and recipient’s ends.

Mailing procedures’ technological developments, today, ensure that items are mailed and received so that presumptions can be eliminated. In fact, the USPS has the capacity to reproduce the image of the green return receipt card as a PDF attachment when certified mail is procured via the internet, or else when the sender did not receive the green card back and instead goes to the USPS to follow up on the status of the card. See FN. 9.

As footnoted earlier, the regulation is not specific about the means in which to send substantially equivalent written notices to the required parties; it merely instructs the insurer to “forward” them. See NYCRR § 65-3.5 (a). In fact, it may very well have been the legislative intent of the NY Insurance Department to be vague in order to avoid enforcement of a particular form of mailing in the event it becomes outdated, which would breed any problems regarding receipt. Until the no-fault regulations streamline its mailing requirement, it is presumed that a properly addressed letter that was mailed was duly delivered to the intended individual when using any method of mailing that the USPS offers, however basic or sophisticated that form of mailing is.

III. CONCLUSION [*7]

Satisfying no-fault policy conditions does not have to be compromised at the expense of challenging mailing procedures because proof of mailing of verification letters via regular USPS is enough to create a presumption of receipt. In addition, use of certified mail does not create a more demanding presumption of mailing and receipt beyond that of a letter that was properly mailed. The regulations make no distinction between sending a letter via regular mail or via certified mail.

WHEREFORE Defendant’s Pre-Answer Motion to Dismiss Plaintiff’s Complaint is hereby GRANTED.

This constitutes the decision and order of this Court.

Dated: July 2, 2009____________________________________

Bronx, NYHon. Fernando Tapia, J.C.C.

Footnotes

Footnote 1: See Dana Woolfson LMT, a/a/o Tania Rega v. GEICO, 20 Misc 3d 948 (Civ Ct, NY County 2008) (holding that an insurer does not need to produce the insurance policy at trial to show that the contract contained the Endorsement).

Footnote 2: See Eagle Chiropractic, P.C. a/a/o Annette Monk et. al. v. Chubb Indemnity Ins. Co., 19 Misc 3d 129(A), 2008 WL 712036 (NY Sup App Term 9th & 10th Jud Dists 2008) (stating that the Endorsement was required to be included in auto insurance policies issued or renewed after April 5, 2002).

Footnote 3: The regulation uses “forward” to describe the manner in which notification is to be effected. The only kink is determining what constitutes sufficient “notice” because the regulation does not specify the mailing procedure by which to notify the injured party.

Footnote 4: The EUO was requested with respect to the medical bill of $67.40 which was submitted after other bills were disclaimed. See Def.’s Aff. at ¶ 11. The sought-after EUO is for Theresa M. Hastava, D.C., the individual in question for being fraudulently involved with the healthcare practice. See Claudia Fulco Aff. at ¶ 19.

Footnote 5: Per 11 NYCRR ¶ 65-3.6 (b), timely verification requests are made either via phone calls or by mail. Defendant sent the first EUO letter via certified mail on or about October 29, 2008, with reference numbers 102808JK35 and 102808JK36. The second letter was sent on or about December 1, 2008, with reference numbers 120108JK24 and 120108JK25. See Def.’s Reply Aff. at ¶¶ 10-11.

Footnote 6: As per Notes of Committee on the Judiciary, House Report No. 93-650.

Footnote 7: See Nassau Ins. Co. v. Murray, 46 NY2d 828, 829 (NY 1978) where the 1st department held that “It is settled law that a properly addressed and stamped envelope placed in a U.S. mailbox is presumed to have been received by the addressee.”

Footnote 8: See Hernandez v. Merchants Mut. Ins. Co., 14 Misc 3d 1215(A) (Sup Ct, Bronx County 2006), where movant-defendant-insurer sought summary judgment to dismiss the plaintiff’s complaint, arguing it timely disclaimed coverage via written notice and quoting Residential Holding Corp. v. Scottsdale Ins., 286 A.D2d 679 (NYAD 2d Dept 2001) (where proof of actual mailing or proof of a standard office practice/procedure designed to ensure that items are properly addressed and mailed).

Footnote 9: See , accessed June 22, 2009.

[*1]

Civil Court of the City of New York, Richmond County, June 30, 2009

APPEARANCES OF COUNSEL

Barry & Associates, L.L.C., Plainview, for defendant.[*2] Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola, for plaintiff.

{**25 Misc 3d at 244} OPINION OF THE COURT

Katherine A. Levine, J.

{**25 Misc 3d at 245}This case calls the court to reconcile the seeming anomaly between precedent and the insurance regulations as to what repercussions attach to an insurance carrier’s failure to adhere to the time limits for requesting follow-up verification in no-fault insurance cases. Since the regulations only address the repercussion that attaches to an insurer’s late submission of an additional verification request,^[FN1] and the tenets of statutory construction mandate that different parts of one statute are to be construed together, this court concludes that an insurance carrier should not be subject to greater penalties for submitting a late follow-up verification request than for submitting a late additional verification request.

Plaintiff Pine Hollow Medical, P.C., a medical service provider, brings this action pursuant to Insurance Law § 5106 (a) to recover $699.34 for services it provided to its assignor Jonathan Aurelien, for injuries he allegedly sustained in an automobile accident. Defendant Global Liberty Insurance moved for summary judgment on the grounds that plaintiff’s lawsuit was premature since plaintiff failed to comply with defendant’s verification requests. Plaintiff does not dispute defendant’s assertion that it never provided the requested information, but asserts that defendant’s follow-up verification request was late because it was made on the 11th day after 30 days had already transpired since defendant’s first request for verification, in violation of 11 NYCRR 65-3.6 (b).

Aurelien was allegedly injured in an automobile accident and received medical treatment at Pine Hollow on March 23, 2006. Global sent a verification request to plaintiff’s attorney for a [*3]letter of medical necessity from the referring physician on April 6, 2006. Having received no response, defendant mailed a second verification request dated May 17, 2006, requesting the same letter of medical necessity. It appears that defendant was thus one day late in requesting the follow-up verification.

Pursuant to Insurance Law § 5106 (a) and 11 NYCRR 65-3.5, an insurer is required to either pay or deny a claim for no-fault automobile insurance benefits within 30 days from the date an applicant supplies proof of claim or it will be precluded from offering any defenses at trial. (Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d 889, 890 [2d Dept 2007]; see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997].) An insurer may toll the 30-day period by properly{**25 Misc 3d at 246} requesting additional verification^[FN2] within 15 days from the receipt of the no-fault insurance claim forms (NF-3 or claim form). (Psych. & Massage Therapy Assoc., PLLC v Progressive Cas. Ins. Co., 5 Misc 3d 723 [Civ Ct, Queens County 2004]; 11 NYCRR 65-3.5 [b].^[FN3]) If the “requested verification[ ] has not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested” (11 NYCRR 65-3.6 [b]).^[FN4] If the insurer does not receive the verification request after its follow-up request is sent, its time to pay or deny the claim is tolled pending submission of the requested information. “A claim need not be paid or denied until all demanded verification is provided” (New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2d Dept 2004]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553, 554 [2d Dept 1999]). The insurer must pay or deny the claim within 30 days after it receives verification of all relevant information it requested pursuant to its original request for additional information (11 NYCRR 65-3.5 [c]; 65-3.8 [a] [1];^[FN5] Westchester County Med. Ctr. at 554).

In Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co. (233 AD2d 431, 432 [2d Dept 1996]) the court found that the follow-up requirements for verification requests, as contained in 11 NYCRR 65.15 (e) (2) (the predecessor to 11 NYCRR 65-3.6 [b]), must be “strictly[*4] construed” so that “when an insurance company has not received ‘verification’ within 30 days after requesting it, [the insurer] must, within the ensuing 10 days, ‘follow up’ with a second request, documenting the second request in the file and notifying the applicant or the applicant’s attorney.” In Presbyterian (supra) the insurer, after not receiving{**25 Misc 3d at 247} a response to its request for additional verification, failed to make any follow-up request and merely waited three months until it received the requested records after which it issued a denial. The Second Department found that the 30-day period within which the carrier should have paid or denied the claim had run ” ‘even before verification [was] obtained’, due to the carrier’s ‘lack of diligence in obtaining the verification’ ” (233 AD2d at 433, quoting Keith v Liberty Mut. Fire Ins. Co., 118 AD2d 151, 154 [2d Dept 1986]).

There have been divergent opinions on whether the defendant insurance company must wait until 30 days have expired before sending out the follow-up verification request. In Psych. & Massage Therapy Assoc., PLLC (5 Misc 3d at 724-725), the court found that the regulations do not mandate that the insurer wait 30 days before sending a follow-up request since the time frame of 30 days was a limit to the amount of time an insurer may wait before sending a follow-up request. This expeditious handling of the verification follow up was consistent with the case law and the goals of the No-Fault Law.^[FN6] In Park Slope Med. & Surgical Supply, Inc. v Country-Wide Ins. Co. (19 Misc 3d 1138[A], 2008 NY Slip Op 51063[U] [Civ Ct, Richmond County 2008]), this court adopted the reasoning of Psych. & Massage Therapy Assoc. (supra) and held that defendant is allowed to send a follow-up verification request on the 30th day after the original request for verification.

Based upon the aforementioned precedent, it would appear that since defendant was one day outside the 10-day window period in which it had to mail its follow-up verification request, defendant could not take advantage of the tolling period and hence could not argue that the instant lawsuit was premature. However, unlike the arguments presented in the aforementioned cases, defendant here raises the somewhat novel argument that even if its follow-up verification request was untimely, “such untimeliness is not fatal but would merely reduce the number of days it has to either pay or deny the claim.” Specifically, defendant argues that since it was only one day late in mailing its{**25 Misc 3d at 248} follow-up verification request, the 30-day time period it had to pay or deny the claim would still begin to run after it received all of the requested verification but would be reduced by one day to 29 days. Defendant does not cite any authority for this proposition. [*5]

11 NYCRR 65-3.8 (j) states that “[f]or the purposes of counting the 30 calendar days after proof of claim, wherein the claim becomes overdue . . . , with the exception of section 65-3.6 of this subpart, any deviation from the rules set out in this section shall reduce the 30 calendar days allowed.” Section 65-3.6 (b), as set forth above, governs the follow-up requirements for verification requests if any verification has not been supplied to the insurer pursuant to the additional request.

There appears to be no higher court analysis of what the phrase “with the exception of section 65-3.6” means within the context of ascertaining what repercussions, if any, attach to an insurer’s late submission of a follow-up verification. However, in Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co. (262 AD2d 553 [1999]), the Second Department found that under the old regulations, a follow-up letter that was sent beyond the 10-day window period was timely and that the insured was entitled to the tolling of the 30 days as contained in 11 NYCRR 65.15 (g). Since the plaintiff never responded to the follow-up verification letter, the 30-day period in which defendant had to pay or deny the claim never commenced and defendant’s denial of the claim was not untimely.

There, the defendant received the claim on April 28, 1997, and made a timely demand for additional verification on May 1. Having not received verification within 30 days, the defendant then made a “timely demand” for follow-up verification on June 13. (262 AD2d at 555.) The defendant thereupon denied the claim on June 19. In its brief before the Second Department, the defendant insurer argued that even assuming June 13^[FN7] was the date it mailed the follow-up request, its denial was still timely on the grounds that the regulations (11 NYCRR 65.15 [g] [10]) only addressed the repercussions if the initial{**25 Misc 3d at 249} (additional) verification request was not timely sent, and then did not require preclusion of the defense but only a reduction of the 30-day period in which the insurer had to pay or deny the claim, after receiving the verification material, by the amount of the delay. Without commenting on defendant’s reasoning, the Second Department found that defendant had submitted a timely follow-up request.

Subsequently, in Liberty Queens Med. v Tri-State Consumer Ins. (188 Misc 2d 835 [Nassau Dist Ct 2001]), the court dealt directly with the apparent inconsistency between the Appellate Division precedent that the verification requirements must be strictly complied with [*6]and the regulatory language which provided for an extension of time in which a defendant insurer had to pay or deny a claim based upon outstanding verification pursuant to 11 NYCRR 65.15 (d) (2) and (g) (1) (under the new regulations—11 NYCRR 65-3.6 [b] and 65-3.8 [j]). There, the defendant insurer made the additional verification request 11 days after receiving the claim and hence was one day late in making the request pursuant to 11 NYCRR 65.15 (d) (2).

The plaintiff argued that because the request for additional verification was untimely, the defendant insurer waived its right to extend the 30-day period and therefore was required to make a determination on the claim within 30 days of the initial submission, citing Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co. (233 AD2d 431 [1996]). The Liberty court first distinguished the matter before it from Presbyterian where the court was not required by the facts before it to focus on the “specific issue presented here,” i.e., the tolling provision of section 65.15 (g) (10). (188 Misc 2d at 839.) Therefore, the “broad general language” utilized by the Presbyterian court should not be construed as determinative of how the court should rule upon a one-day delay in complying with the specific regulation before it. (Id.)

Addressing the insured’s “one-day deviation” from the requirement that it send its additional verification request within 10 days, the court found that the purpose of the No-Fault Law—”avoiding prejudice to insureds by providing for prompt payment or disclaimers of claims”—was sufficiently served by “truncating the presumptive 30-day period which the insurer itself would otherwise have to eventually review the proof submitted” as set forth in 11 NYCRR 65.15 (g) (10). (Liberty at 840.) To impose the “draconian result” requested by plaintiff for a “one-day deviation” from the promulgated standards{**25 Misc 3d at 250} would deprive the insurer entirely of its right to obtain and review the needed proof and would “contravene rather than implement the statutory intent.” (Id.)

Based upon the two aforementioned precedents, it is clear that defendant should not be deprived entirely of the opportunity to review and obtain the needed proof by dint of its one-day tardiness in submitting its follow-up request. 11 NYCRR 65-3.8 (j) only addresses the repercussions of an insurer’s failure to request the additional verification within the set time lines, since it expressly excludes section 65-3.6, which discusses follow-up verification requests, and then sets forth that any deviation from the time frame shall reduce the 30 calendar days allowed in which to pay or deny the claim. As such, the regulations do not even contain a punitive provision for an insurer who does not make a follow-up verification request within the 10-day period.

“A statute or legislative act is to be construed as a whole, and all parts of an act are to be read and construed together to determine the legislative intent” (McKinney’s Cons Laws of NY, Book 1, Statutes § 97; Frank v Meadowlakes Dev. Corp., 6 NY3d 687, 691 [2006]) and construed so as to harmonize [*7]with one another (Anglin v Anglin, 80 NY2d 553, 558 [1992]). In the interpretative context, a court “must read the entire law and accord respect to the interlocking and interrelated features of all its parts.” (Anglin at 558.) Furthermore, even apparently conflicting provisions of a statute must be reconciled in a manner most consistent with the overall legislative intent. (Statutes § 98; Schulman v Group Health Inc., 39 AD3d 223 [1st Dept 2007].) Finally, the common mandate of statutory construction is to assume that the Legislature “did not intend a patently absurd result.” (Covington v Walker, 307 AD2d 908, 909 [2d Dept 2003]; see Statutes § 145; In re Adamo, 619 F2d 216, 219 [2d Cir 1980].)

It would be patently absurd and contravene the meaning of 11 NYCRR 65-3.8 (j) to impose a more draconian punishment on an insurer who is one day late in requesting follow-up verification than on an insurer who is one day late in requesting additional verification. Since in the latter situation, the only repercussion to the insurer’s tardiness is the diminution in the time it has to issue a denial or pay the claim, it begs all credulity to impose the more drastic remedy of precluding the insurer from even issuing a denial because of its tardiness in requesting follow-up verification. If anything, the aforementioned regulation{**25 Misc 3d at 251} imposes no repercussion upon the insurer who is tardy in requesting follow up.

Since defendant has yet to receive any response to its verification requests, its 30-day period in which to deny or pay the claim has not yet commenced and the instant action is premature. In light of the above, it is not necessary for this court to determine whether the defendant’s time to deny or pay the claim, once it does receive the requested information, is diminished by one day.

Defendant’s motion for summary judgment is granted and the case is dismissed.

Footnotes

Footnote 1: As will be explained below, an additional verification request precedes a follow-up verification request under the no-fault insurance regulations.

Footnote 2: The additional verification request is to be distinguished from the initial verification forms (including the claim form or NF-3) which must be forwarded by the insurer to the parties required to complete them within 10 days of receipt of the completed application for no-fault benefits (NF-2).

Footnote 3: This opinion will also cite to the analogous provisions under the old no-fault regulations (old regulations) which were effective through December 31, 2002, since many of the operative cases were brought under the old regulations. The analogous provision to section 65-3.5 (b) under the old regulations is 11 NYCRR 65.15 (d) (1), which provided that an insurer shall request additional verification within 10 days of receiving the prescribed verification forms.

Footnote 4: The analogous provision under the old regulations is 11 NYCRR 65.15 (e) (2).

Footnote 5: The analogous provision under the old regulations is 11 NYCRR 65.15 (g) (1).

Footnote 6: However, in Sea Side Med., P.C. v State Farm Mut. Auto Ins. Co. (12 Misc 3d 1127 [Civ Ct, Richmond County 2006]), Judge Sweeney found that the clear language of 11 NYCRR 65-3.6 (b) required the insurer to “follow up with the plaintiff for the verification at least once in the 10-day period specified therein” (id. at 1131). By sending the follow-up verification request only 28 days after the first verification request had been mailed, defendant failed to mail the follow-up request within the 10 days and “the toll occasioned by defendant’s initial requests for verification dissipated ab initio” (id.).

Footnote 7: (See reply brief for defendant-appellant in Westchester, available at 1999 WL 34593237 [briefs and other related documents].) In their briefs, the parties differed as to when the insurer sent the follow-up verification request; the plaintiff contended that it was sent on June 13 while the defendant insurer argued it was sent on June 3. The Appellate Division adopted June 13 as the date that the follow-up verification request was sent and this court will presume that the Appellate Division, after considering all the evidence, properly ascertained the operative date.

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

009158 CVN 08

Jacqueline S. Linder, Esq. (for defendant)

McDonnell & Adels, PLLC

401 Franklin Ave 2nd Fl

Garden City NY 11530

(516) 328-3500

Melissa A. Pirillo, Esq. (for plaintiff)

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

150 Herricks Rd

Mineola NY 11501

(516) 741-4799

Anil C. Singh, J.

Hon. Anil C. Singh, J.:

Plaintiff Cambridge Medical, P.C. (“Cambridge Medical”) seeks reimbursement of first party no-fault benefits from defendant insurer. Defendant joined issue and served upon plaintiff its discovery demands, including a deposition notice. Plaintiff failed to comply with the demands. Defendant then moved to compel the testimony of plaintiff’s alleged owner, Eileen S. Debbi, M.D., and to require plaintiff to answer the interrogatories and provide documentation regarding the ownership/operation of the plaintiff. Cambridge Medical opposes the motion and applies for a protective order pursuant to CPLR 3103.

Defendant contends that Dr. Debbi is not the owner of Cambridge Medical. It believes that the real owner is one Mark Levitan, who is a non-physician and the owner of Nissa Management, Inc. Movant supports its application with an examination under oath taken of Dr. [*2]Debbi on March 8, 2007, in an unrelated proceeding. Dr. Debbi was questioned about Cambridge Medical. Adirondack contends that Dr. Debbi refused to respond to most of the questions at the EUO regarding management agreements and lease agreements, although she provided just enough testimony to indicate that she had little control over the daily operations of Cambridge Medical; had no knowledge of the plaintiff’s finances; and that Cambridge Medical was to a large extent controlled by Mark Levitan of Nissa Management, Inc.

Plaintiff opposes, contending that defendant has failed to show good cause for the deposition. It maintains that defendant’s allegation that Cambridge Medical is fraudulently incorporated lacks any support and is based on speculation, conjecture and surmise. Plaintiff maintains that the defendant simply used Dr. Debbi’s EUO testimony and chose portions of the testimony to distort and make it appear that there were issues with plaintiff’s corporation. Accordingly, the deposition is being sought to harass and to delay trial.

Discussion

Plaintiff chose to commence an action in the Civil Court and is bound by Article 31 of the CPLR, which grants as of right discovery in all civil plenary proceedings. Specifically, CPLR 3101(a) provides that there shall be “full disclosure of all matters material and necessary in the prosecution or defense of an action….” The terms “material and necessary” are to be

interpreted liberally to require disclosure upon request, of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity. The test is one of usefulness and reason (Allen v. Crowell-Collier Publishing Co., 21 NY2d 403 (1968).

Once an action is commenced, “any party may take the testimony of any person by deposition upon oral or written questions” [CPLR 3106(a)]. Parties may ask broad questions to ascertain the truth or to bring out relevant evidence that may assist in the prosecution or defense of the action [Seaman v. Wyckoff Heights Medical Center, Inc., 8 Misc 3d 628 (2005)]. Notice on a corporate party may not specify the individual to be examined, as initially the corporation may decide who it will produce [Rufus v. New York State Teachers Association, 42 AD2d 1040 (4th Dept. 1973)]. Employees who have knowledge are subject to being deposed [Ferraro v. New York Telephone Co., 94 AD2d 784 (2nd Dept. 1983); CPLR 3101(a)(1)].

The fact that the action was brought under the no-fault law is irrelevant to the demand for a deposition. The no-fault regulations govern, inter alia, the payment of claims and defenses to reimbursement. The “good cause” standard cited by plaintiff concerns a carrier’s right to delay payment of claims in order to conduct investigations [11 N.Y.C.R.R. 65-3.39(c)]. It does not limit a party’s right to discovery sought in good faith pursuant to Article 31 of the CPLR.

Defendant has a good-faith basis to question Dr. Debbi. The EUO of Dr. Debbi was conducted in 2007. She appeared to know little about the medical operation of Cambridge Medical and the medical personnel who worked at the office. It may well be that plaintiff is correct that there was no management agreement with Nissa Management, Inc., and that Mark Levitan was simply an employee of plaintiff. However, defendant is entitled to question Dr. Debbi under oath to ascertain the ownership status of Cambridge Medical.

Accordingly, the motion by defendant to compel the production of Dr. Debbi for examination before trial and to respond in a complete and meaningful way to defendant’s [*3]discovery demands is granted. Plaintiff shall: 1) provide full and complete answers to the interrogatories and provide documentation to defendant regarding the ownership/operation of the plaintiff within twenty (20) days of the date of this order; and 2) produce Dr. Debbi for deposition within forty-five (45) days of the date of this order.

Plaintiff’s application for a protective order is denied.

The foregoing constitutes the decision and order of the court.

Date:June 29, 2009_________________________

New York, New York

Anil C. Singh

Civil Court of the City of New York, Kings County

039163/07

Genine D. Edwards, J.

In this action, plaintiff seeks to recover first-party no-fault benefits from defendant in the amount of $6,040.24, for medical services allegedly provided to its assignor, Flor A. Barrietos-Mercado. Defendant now moves for summary judgment, arguing that the underlying insurance policy was retroactively cancelled and deemed void ab initio. Plaintiff has no written opposition to the motion.

BACKGROUND

Plaintiff allegedly rendered medical services to Barrietos-Mercado for injuries resulting from an automobile accident on May 2, 2001. Barrietos-Mercado assigned her no-fault benefits concerning such services to plaintiff. In turn, plaintiff submitted a bill in the amount of $6040.24 to defendant but the bill was not paid. Consequently, plaintiff commenced this action.

On or about February 25, 1999, defendant issued an insurance policy to Barrietos-Mercado. The insurance application listed Barrietos-Mercado’s residential and registration addresses as

“1402 79th Street, North Bergen, New Jersey 07047.” See Exhibit C-2. It also included the following statement:

Applicant’s Certification: I declare and certify:

1) Certify that the zip code on this application is the zip code of my residence . . . .

4) I have personally read and received a copy of this application. To the best of my knowledge and belief all statements contained in this application are true.

5) I understand that if I obtained this insurance through fraud or misrepresentation, my policy will be voided. I understand that the Assigned Company will not pay claims if the policy is voided.

Id.

After the accident, defendant conducted an investigation which revealed that “32-38 83rd Street, 1st Floor, East Elmhurst, New York 11370” was Barrietos-Mercado’s actual address. Due to the misrepresentation in the insurance application, defendant, on June 7, 2007, returned Barrietos-Mercado’s premium check and retroactively cancelled the insurance policy.

[*2]THE LAW

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact. St. Claire v. Empire Gen. Contr. & Painting Corp., 33 AD3d 611, 821 NYS2d 471 (2d Dept. 2006). See also Alvarez v. Prospect Hosp., 68 NY2d 320, 508 NYS2d 923 (1986). The motion shall be supported by an affidavit from a person with knowledge of the facts. See CPLR 3212(b). Once the moving party satisfies these standards, the burden shifts to the adverse party to demonstrate the existence of evidence, in admissible form, sufficient to require a trial. See Katona v. Low, 226 AD2d 433, 641 NYS2d 62 (2d Dept. 1996); De Santis v. Romeo, 177 AD2d 616, 576 NYS2d 323 (2d Dept. 1991).

Retroactive cancellation of an automobile insurance policy is permitted under New Jersey law but prohibited under New York law. Compare Palisades Safety & Ins. Ass’n v. Bastien, 175 N.J. 144, 814 A.2d 619 (N.J. 2003) (policy void ab initio because insured misrepresented his marital status), and Rutgers Cas. Ins. Co. v. LaCroix, 194 N.J. 515, 946 A.2d 1027 (N.J. 2008) (“When a named insured has engaged in conduct that has resulted in the voiding of an automobile insurance policy, courts have employed the rescission remedy to deny that insured the right to claim PIP benefits under the void policy.”) with Eagle Ins. Co. v. Singletary, 279 AD2d 56, 717N.Y.S.2d 351 (2nd Dept. 2000) (“New York law does not allow retroactive cancellation.”), and A.B. Med. Servs. PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8, 820 NYS2d 378 (App. Term, 2d Dept. 2006) (automobile insurance policy may not be retroactively cancelled on ground that insured obtained policy through fraud or misrepresentation). This conflict of law, although arising in the context of a motor vehicle accident, must be resolved by the conflict of law rules relevant to contracts, not torts. Eagle Ins. Co., 279 AD2d at 58 (citing Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 NY2d 309, 618 NYS2d 609 (1994)). The “center of gravity” or “grouping of contacts” inquiry determines which state has the most significant contacts with the dispute. See Careplus Med. Supply, Inc. v. Selective Ins. Co. of America, 2009 NY Slip. Op. 29109 (App. Term, 9th & 10th Jud. Dists. 2009). Generally, Courts look at the place of contracting, the place of negotiation and performance of the contract, the location of the subject matter of the contract, and the domicile or place of business of the contracting parties to determine which state has the most significant contacts with the dispute. See id; Eagle Ins. Co., 279 AD2d at 59; Li-Ellie Service, Inc. v. AIU Ins. Co., 23 Misc 3d 1112(A), 2009 NY Slip. Op. 50719(U) (Civ. Ct. New York County 2009).

THE FINDINGS

New Jersey law applies to this action. The insurance policy involves a company doing business in New Jersey, and an individual representing at the time the contract was entered into that she is a resident of New Jersey and that the car would be garaged in that state.Thus, the validity of the making and cancellation of the contract must be determined under New Jersey law.

Under New Jersey law, no-fault benefits are unavailable when it is sought as part of an insured’s first-party claim for benefits under his or her own policy of insurance declared void because of material misrepresentations made to the insurer. Palisades Safety & Ins. Ass’n, 175 N.J. at 148. See also Remsden v. Dependable Ins. Co., 71 N.J. 587, 367 A.2d 421 (N.J. 1976); Lovett v. Alan Lazaroff & Co., 244 N.J. Super. 510, 582 A.2d 1274 (N.J. Sup. Ct. App. Div. 1990).

A misrepresentation, made in connection with an insurance policy, is material if, when made, “a reasonable insurer would have considered the misrepresented fact relevant to its [*3]concerns and important in determining its course of action. In effect, materiality [is] judged according to a test of prospective reasonable relevancy.” Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 542, 582 A.2d 1257 (1990). As we have stated, “[t]he right rule of law . . . is one that provides insureds with an incentive to tell the truth. It would dilute that incentive to allow an insured to gamble that a lie will turn out to be unimportant.” Id. at 541-42, 582 A.2d 1257. Accordingly, our test for materiality “encourages applicants to be honest.” Mass. Mut. v. Manzo, 122 N.J. 104, 115, 584 A.2d 190 (1991) (explaining that misrepresentation is material if it “naturally and reasonably influence[s] the judgment of the under-writer in making the contract at all, or in estimating the degree or character of the risk, or in fixing the rate of premiums”) (citation omitted). Palisades Safety & Ins. Ass’n, 175 N.J. at 148-49.

There is no doubt that Barrietos-Mercado’s statements influenced how defendant analyzed the risk and ultimately assigned the premium associated to the insurance policy. Consequently, her statements were material misrepresentations that warranted the retroactive cancellation of Barrietos-Mercado’s insurance policy.

Plaintiff, a health-care provider, stands in the shoes of its assignor. It acquires no greater rights than that of its assignor. Lech v. State Farm Ins. Co., 335 N.J. Super. 254, 762 A.2d 269 (N.J. Super. Ct. App. Div. 2000) (“While an assignee’s rights can be no greater than those of the assignor, neither can they be any less.”); accord A.B. Med. Servs. PLLC, 12 Misc 3d at 11 (“We hold that only innocent third-parties who are injured are protected . . . and not a health care provider who deals with the assignor-insured at its peril in accepting an assignment of the insured’s no fault benefits.”). As a result, plaintiff may not recover first-party no-fault benefits from defendant.

Accordingly, defendant’s motion for summary judgment is granted. Plaintiff failed to demonstrate the existence of evidence, in admissible form, sufficient to require a trial. The action is dismissed.

This constitutes the decision and order of this Court.

Date: June 3, 2009________________________

Genine D. Edwards

Judge of Civil Court

Civil Court of the City of New York, Richmond County

21817/07

Attorney’s for Defendant:

Gullo & Associates

520 86th Street

Brooklyn, New York 11209

Attorney’s for Plaintiff:

Phillips, Krantz & Levi, LLP

14 Avenue T

Brooklyn, New York 11223

Katherine A. Levine, J.

This case calls into question what precisely a peer review report, submitted by an insurance company in support of its denial for lack of medical necessity, must contain in order to defeat a plaintiff’s motion for summary judgment and/or to grant a defendant’s cross motion for summary judgment. As will be explained below, while a peer review report may be sufficient to defeat a plaintiff’s motion for summary judgment it may not be sufficient to warrant granting of summary judgment to the defendant insurer, even when the plaintiff does not submit evidence to rebut the report. This dichotomy, in the context of no-fault insurance, has not been definitively clarified by the higher courts.

Plaintiff Millennium Radiology, P.C, (“plaintiff” or “Millennium”) commenced this action to recover from defendant, New York Central Mutual Fire Insurance Company (“defendant” or “NY Central”), the sum of $1,791.71 for the two MRIs it performed upon its assignor, Adrine Grant (“Grant” or “assignor”). In support of its application for summary judgment, plaintiff contends that the defendant has not submitted competent medical evidence to support its denial of the claim for lack of medical necessity.

Defendant opposed plaintiff’s application and cross-moved for summary judgment on the [*2]grounds that the services provided by plaintiff were not medically necessary. In support of its denial, defendant submitted a copy of a peer review prepared by its chiropractor Albert Claps, D.C. who concluded that there was no justification for the MRIs performed upon the assignor because the referring provider failed to indicate whether the assignor was experiencing “an improvement or degradation with regard to her causally related symptoms” and because the doctor failed to reveal why the MRIs were ordered or how the outcomes of these tests would assist in the treatment of the assignor.

During oral argument, defendant maintained that the complaint should be dismissed because the plaintiff had failed to submit any medical evidence to rebut the peer review report. Plaintiff responded that it was under no duty to offer any evidence in rebuttal and that the conclusion of defendant’s expert regarding the medical necessity of the MRIs created an issue of fact which must be determined at trial.

A plaintiff makes a prima facie case “by submitting evidentiary proof that the prescribed statutory billing forms were mailed and received and that payment of no-fault benefits were was overdue.” A.B. Medical Services, v. Liberty Mutual Ins. Co., 39 AD3d 779, 780 (2d Dept. 2007). See, Ins. Law, §5106(a); 11 NYCRR 65-3.8(c); Nyack Hospital v. Metropolitan Property & Cas. Co., 16 AD3d 564 (2d Dept. 2005); Mary Immaculate Hospital v. Allstate Ins. Co., 5 AD3d 742– 43 (2d Dept. 2004). It is clear that plaintiff has established its prima facie case. The affidavit of plaintiff’s billing manager exhaustively details the record keeping procedures of the business, and clearly sets forth the procedures for the creation and retention of bills, of which she has personal knowledge. See Manhattan Medical v. State Farm Mutual Automobile, 2008 NY Slip Op. 51844(U), 20 Misc 3d 1144(A)(Civil Ct., Richmond Co.2008) citing Second Medical v. Auto One Ins., 20 Misc 3d 291, 294-95 (Civil Ct., Kings Co. 2008). The affidavit further details that the bills at issue were made and kept in the ordinary course of business at the time the services were rendered and sets forth the precise mailing procedure that was followed. Moreover, the billing manager personally mailed the bill and forms.

A presumption of medical necessity attaches to a defendant’s admission of the plaintiff’s timely submission of proper claim forms, and the burden then switches to the defendant to demonstrate the lack of medical necessity. Acupuncture Prime Care, P.C. v. State Farm Mutual Auto Ins., 2007 NY Slip Op. 52273U, 2007 NY Misc. LEXIS 7860 (Dist. Ct., Nassau Co. 12/3/2007); A.B. Medical Services, PLLC v. NY Central Mutual Fire Ins. Co., 7 Misc 3d 1018(A), 801 NYS2d 229 (Civil Ct. Kings. Co. 2005); Citywide Social Work & Psychological Services v. Travelers Indemnity, 3 Misc 3d 608, 609 (Civil Ct., Kings Co. 2004). Defendant thus bears “both the burden of production and the burden of persuasion with respect to the medical necessity of the treatment or testing for which payment is sought.” See, Bajaj v. Progressive Ins. Co., 14 Misc 3d 1202(A) (N.Y.C. Civ. Ct. 2006). Thus, once a plaintiff has proven its prima facie case, the defendant must prove that the test was not medically necessary. Nir. v. Allstate Insurance Co., 7 Misc 3d 544, 546 (Civil Ct, Kings Co. 2005). A defendant may raise a triable issue of fact by submitting a denial of claim form stating that the claim is being denied based on a medical examination or peer review report requested by the insurer. The insurer need not set forth the medical rationale in its denial of claim form. Rather, the insurer need only submit a copy of that report to the applicant or its attorney upon written request. A.B. Medical Services, PLLC v GEICO, 39 AD3d 778, 779 ( 2d Dept. 2007); A B. Medical Services v. Liberty Mutual Ins. Co., 39 AD3d 779 ( 2d Dept. 2007). See, 11 NYCRR 65-3.8(b)(4).

Summary judgment is a “drastic and harsh” remedy and “should be used sparingly.” Utica National Ins. Group v. Providian Medical Services, P.C.,2008 N.Y Slip. Op.52610U, 22 Misc 3d 1107A ( Sup. Ct., Queens Co., 2008). See Epstein v. Scally, 99 AD2d 713, 714 (1st Dept. 1984 ). Summary judgment cannot be resolved by conflicting affidavits. Epstein v. Scally, [*3]supra . To grant summary judgment, it must clearly appear, on the papers alone, ” 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); Utica Nat’l Ins. Group, supra . The court’s function on a motion for summary judgment is issue finding rather than issue determination. Precision Diagnostic Imaging, P.C., v. Travelers Insurance Co., 8 Misc 3d 435, 436 ( Civil Ct., N.Y Co. 2005), citing Brown v Achy, 9 AD3d 30, 33 n 2 (1st Dept. 2004). Once such proof has been offered, in order for the opposing party to defeat the motion for summary judgment, it must “show facts sufficient to require a trial of any issue of fact.” Inwood Hills Medical P.C. v. Bronx Neurodiagnostics P.C., 3 Misc 3d 1110A, 787 NYS2d 678 (Civil Ct., NY Co., 2004) quoting CLR 3212 (b). See, Alvarez v. Prospect Hospital, 68 NY2d 320 (1986).

To defeat a plaintiff’s motion for summary judgment, the report must be in admissible form; i.e. signed and sworn to. See, Radiology Today v. GEICO, 20 Misc 3d 70

(App. Term, 2d Dept. 2008); A.B. Medical Services PLLC v. Lumbermens Mutual Cas. Co., 4 Misc 3d 86 (App. Term, 2 & 11th Jud. Dists. 2004). Some courts have also held that in additional to being in admissible form, the peer review report or medical examination must raise a triable issue of fact for lack of medical necessity by setting forth “a sufficiently detailed factual basis and medical rationale for the claim’s rejection.” Nir, supra at 546 citing Amaze Medical Supply v. Eagle Ins., 2 Misc 3d 134A, 2004 NY Slip Op. 51701U (App. Term, 2d and 11th Jud. Dists. 2003). Cross bridge Diagnostic Radiology, PC v. Progressive Ins. Co. 2008 NY Slip Op 51761U , 20 Misc 3d 143A (App. Term, 2d Dept. 2008); Delta Diagnostic v. Chubb Insurance Co., 17 Misc 3d 16 (App. Term, 2d Dept. 2007). The quantum of evidence presented in the peer review report need not rise to the level of evidence presented at trial through the peer review doctor to substantiate the peer review report’s conclusion as to lack of medical necessity. Nir, supra at 546-547.

Plaintiff errs in contending that its motion should be granted since the peer review report does not contain competent medical evidence to support a finding of medical necessity, as a party cannot establish its entitlement to judgment “merely by pointing to gaps in the opponent’ s proof.” Falah v. Stop & Shop Companies, Inc., 41 AD3d 638 (2d Dept. 2007). Furthermore, the peer review report is in admissible form and contains a sufficient rationale so as to create an issue of fact concerning medical necessity. While somewhat bare bones, the report does in artfully state that the MRI studies appear to be medically unnecessary because the referring doctor does not indicate whether the claimant experienced improvement or degradation with regard to her causally related symptoms, and there was no indication from the referring doctor why the MRIs were ordered or how the anticipated outcome of the tests would assist with the management of the assignor’s case.

However, while a peer review report may be sufficient to defeat a motion for summary judgment by the plaintiff, at trial, the peer review report must be supported by testimony regarding the “generally accepted medical/professional practice. “Nir, supra at 547 citing CityWide Social Work & Psychological Servs. v. Travelers Indemnity Co., 3 Misc 3d 608, 612 (Civil Ct., Kings Co. 2004). Generally accepted practice “is that range of practice that the profession will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling. CityWide, supra at 616. As this court held in H.M. Parekh v. Allstate Ins. Co., Index No. 2041/07, Civil Ct, Richmond County, 3/04/08, at trial a defendant must show by medical evidence “that the treatment or services would be ineffective or that the insurer’s preferred health care treatment or lack of treatment would lead to an equally good outcome.” H.M. Parekh v. Allstate Ins. Co., supra , citing Fifth Ave. Pain Control Center v. Allstate Ins. Co., 196 Misc 2d 801, 807-08 (Civ. Ct. Queens Co. 2003).

The instant peer review report, standing alone, does not rise to this standard and does not establish, as a matter of law, that the services rendered were not medically necessary. As such, this court finds the contents of the report to be insufficient to warrant the granting of defendant’s cross motion, even though the plaintiff failed to submit evidence to rebut the peer review.

Defendant cites a plethora of Appellate Term cases for the proposition that once the defendant insurer rebuts the inference that the services are not medically necessary, the plaintiff must refute this inference in order to create a triable issue of fact. The court first notes that the Appellate Term at times has not ruled that defendant must be awarded summary judgment unless plaintiff refutes the evidence offered by defendant, but only that “such proof may entitled the insurer to summary judgment.” Damadian MRI in Elmhurst v. Liberty Mutual Ins., 2 Misc 3d 128A, 787 NYS2d 919 (App. Term, 2d & 11th Jud. Dists 2004). See A.B. Medical Servs.v. NY Central Mutual Fire Ins., 3 Misc 3d 136A, 787 NYS2d 675 (App. Term 9 & 10th Jud. Dists. 2004)(“summary judgment may, in appropriate circumstances, be awarded to the defendant unless the plaintiff comes forward with admissible proof in reply to create a triable issue of fact). The Appellate Division has not addressed this dichotomy.

Since the report does not contain sufficient evidence to demonstrate the absence of any material issues of fact so as to warrant judgment to defendant (See, e.g.,. Delta Diagnostic v. Chubb, 17 Misc 3d 16, 18 (App. Term 2d Dept. 2007), this case will proceed to trial.

The foregoing constitutes the Decision and Order of the Court.

Dated: April 30, 2009______________________Honorable Katherine A. Levine

Judge, Civil Court

Civil Court of the City of New York, Bronx County

020438-08

Appearance of Counsel-

Plaintiff- Michael J Palumbo, 188 East Post Road, suite 300, White Plains, NY 10601, 914-681-7117

Defendant- Teresa M. Spina, 170 Froehlich Farm Blvd, Woodbury, NY 11797, 516-496-5800

Elizabeth A. Taylor, J.

The issue before the Court is whether the submission of a notice to admit is [*2]sufficient to establish a prima facie case to recover no-fault first party benefits for unpaid medical expenses.

Under CPLR §3123 a notice to admit is a “written request for admission by the latter of the genuineness of any papers or documents…described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry.” (CPLR §3123(a)). If a party fails to respond to a notice to admit within 20 days after service, the matters therein are deemed admitted for the purpose of the pending litigation. (CPLR §3123(a)). A notice to admit is a vehicle for resolving and eliminating matters that may be factually relevant but are not really in dispute, thus a notice to admit is not permissible to seek admissions to material issues. (Villa v. New York City Hous. Auth., 107 AD2d 619, 620 [1984][1st Dep’t]).

In order to establish a prima facie case for first party no-fault benefits a plaintiff must present the claim forms submitted to the insurer in admissible form, then establish that the payment of benefits is overdue, and prove the claim and assignment forms were served upon insurer. (Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742, 742-743 [2004][2nd Dep’t]). Laying the proper evidentiary foundation is commonly done by a witness who can testify that the claim form is a business record pursuant to CPLR §4518. However, it has become increasingly popular for plaintiffs to attempt to forgo the necessity of a witness through the use of interrogatory responses and responses or lack of responses to notices to admit to establish their prima facie case.

The Appellate Term, First Department has allowed the use of interrogatory responses to establish a prima facie case, stating “having admitted receipt of plaintiff’s claims for no-fault first party benefits, defendants may not now be heard to argue that plaintiff failed to establish that the claims had been mailed and received. (P.L.P. Acupuncture, P.C., v. Travelers Indem. Co., 19 Misc 3d 126(A) [2008][N.Y.App. Term 1st Dept.], quoting Fair Price Med. Supply, Inc. v. St. Paul Travelers Ins. Co., 16 Misc 3d 8,9 [2007][N.Y.App. Term 1st Dept.]). However, there are notable differences between the use of interrogatories and a notice to admit. As previously mentioned, a notice to admit may not be used to seek answers to material issues, whereas, an interrogatory is given under oath and may be used to address any relevant question. (Villa at 620). Furthermore, the use of a defendant’s response to interrogatory questions in which it is stated that the claims were mailed and received followed by a subsequent denial is much different than the scenario in which a defendant fails to respond to a notice to admit and it is therefore deemed admitted that they received the claim.

Courts differ drastically on the treatment of the notice to admit to establish a prima facie claim. A number of courts find that the use of a notice to admit seeking admissions as to the receipt of relevant claim forms, bills and defendant’s denial of the same goes to the “heart of the matter” or is a “material issue” and therefore, inadmissible to establish plaintiff’s prima facie case. (see RJ Med. P.C. v. All-State Ins. Co., 15 Misc 3d 1140(A) [2007][NY City Civ. Ct. Bronx County]; PDG Psychological, [*3]P.C. v. State Farm Ins. Co., 12 Misc 3d 1183(A) [2006][N.Y.City Civ. Ct. Kings County]). Meanwhile, other courts have held that the information requested in the notice to admit does not individually go to the “heart of the matter” even though collectively they may be dispositive. (see Seaside Med., P.C. v. General Assur. Co., 16 Misc 3d 758 [2007][NY Dist. Ct. Suffolk]). Further, other courts have held that the admissions of the receipt of relevant claim forms, bills and denials by notice to admit does not go to the “heart of the matter” and is therefore permissible; however, it does not establish a prima facie case because the formalities of the business record exception to the hearsay rule have not been observed. (Bajaj v. General Assur. Co., 18 Misc 3d 25, 28 [2007][NY App. Term 2nd Dept.]).

This Court is cognizant that the Second Department and First Department often differ on matters concerning no-fault litigation. However, since the First Department has yet to speak on the matter, this Court is bound by the Bajaj decision of the Appellate Term, Second Department. “The doctrine of stare decisis requires trial courts…in this department to follow precedents set by the Appellate Division of another department until the Court of Appeals or [the Appellate Division of this department] pronounces a contrary rule.” (Striver 140 v. Cruz, 1 Misc 3d 29, 31 [2003][NY App. Term 2nd Dept.]), quoting Mountain View Coach Lines v. Storms, 102 AD2d 663, 664 [1984][2nd Dept.]).

The Second Department has held that a plaintiff must lay a proper foundation for the admissibility under the business records exception to establish a prima facie case. (Bajaj at 28). According to Bajaj,the use of a notice to admit to ask the defendants if they have received the claim form is a proper use of the notice to admit. (id.). If defendant fails to respond to this notice to admit, it is then admissible that the defendant in fact received plaintiff’s claim form. (id.). However, an acknowledgment by defendant that they received the claim form is not a concession of the facts set forth in the claim. (id.). It remains the plaintiff’s burden to lay the sufficient foundation establishing that the claim form is a business record, and as such, is admissible to prove the truth of the matters asserted therein. (id.). This holding continues to be upheld by the Second Department. (see Vista Surgical Supplies, Inc. v. State Farm Mutual Ins. Co., 22 Misc 3d 128(A) [2009][N.Y.App. Term 2nd Dept.]).

Accordingly, the Court finds that an admission by notice to admit that defendant received plaintiff’s claim form is not a concession of the facts set forth in the claim form. The plaintiff still has the burden to establish the claim form is admissible as a business record exception to the hearsay rule to prove the truth of the matters asserted therein. Due to their failure to establish that the claim forms are business records, plaintiffs have not established a prima facie case. It is noted that the plaintiffs called no witnesses to testify.

Accordingly, plaintiff’s actions are dismissed.

The foregoing shall constitute the decision and order of this Court.

Dated: __April 30, 2009_______________

J.C.C.

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

74171 CVN 2007

Attorneys for the Plaintiff

By: Michael C. Rosenberger, Esq.

Law Offices of Bryan Rothenberg

Attorneys for the Defendant

By: Kenneth F. Popper, Esq

Manuel J. Mendez, J.

Defendant AIU Insurance Company, moves for summary judgment pursuant to CPLR §3212 alleging there exists no triable issues of fact because the underlying policy was retroactively cancelled and deemed void ab initio, based on a material misrepresentation in the insurance application, pursuant to the terms of the policy and under Virgina Law. This is an action to recover no-fault benefits for services from a transportation company rendered to the assignor.

Plaintiff opposes the motion and claims that it is error to hold that a policy obtained using fraudulent misrepresentations could be void ab initio as indicated in Vehicle and Traffic Law §313. Plaintiff also claims that the defendant has not offered sufficient proof that the misrepresentation was material such that the insurer would refuse to make such a contract and [*2]provided no affidavit by an individual with personal knowledge of the investigation.

RELEVANT FACTS

Defendant issued a policy to the assignor, Jorge Garcia for a 1995 Dodge Caravan on or about April 21, 2007. At that time he listed his address as 424 Cornwallis Court, Ashland, VA 23005. The defendant claims that Jorge Garcia indicated on a residency request letter dated August 13, 2007, the car was garaged in Virginia, and that he had not changed his residency since he applied for the policy (a copy of the letter is annexed to the motion papers as part of “Exhibit E”). The policy issued contains specific language which the defendant alleges resulted in the policy being void ab initio as a result of the misrepresentations ( certified copy of the policy is annexed to the motion papers as part of “Exhibit C”).

Pursuant to its investigation of the claim regarding the accident of July 7, 2007, defendant held an Examination Under Oath and determined Jorge Garcia had been living in Bronx, New York and not Virginia at the time he signed the closing statement. The defendant cancelled the policy ab initio via letter dated October 24, 2007, with the rescission effective fifteen days from the date of receipt.

LEGAL ANALYSIS

In order to prevail on a motion for summary judgment, the proponent must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence, eliminating all material issues of fact. Id.; Klein v. City of New York, 89 NY2d 833, 834-35 (1996) Ayotte v. Gervasio, 81 NY2d 1062, 1062 [1993], Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986) Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985), Zuckerman v. City of New York, 49 NY2d 557, 427NYS2d 595 (1980). Once the moving party has satisfied these standards, the burden shifts to the opponent to rebut that prima facie showing, by producing contrary evidence, in admissible form, sufficient to require a trial of material factual issues. Kaufman v Silver, 90 NY2d 204, 208 [*1997]; Amatulli v Delhi Constr. Corp., 77 NY2d 525, 533-34 (1999); Iselin & Co. v Mann Judd Landau, 71 NY2d 420, 427 [1988]. In determining the motion, the court must construe the evidence in the light most favorable to the non-moving party. (SSBS Realty Corp.v. Public Service Mut. Ins. Co., 253 AD2d 583, 584-85 [1st Dept. 1998]; Martin v. Briggs, 235 AD2d 192, 196 [1st Dept., 1997]).

A conflict of law dispute concerning an insurance policy is resolved by application of the conflict of law rules that apply to contracts. Matter of Integon Insurance Co.v. Garcia, 281 AD2d 480, 721 NYS2d 660 [N.Y.A.D. 2nd Dept. 2001]. The test to determine which state law governs involves the “grouping of contacts,” the state with the most significant contacts to the dispute has the law which governs the outcome of the dispute. Eagle Insurance Co. v. Singletary, 279 AD2d 480, 717 NYS2d 351 [N.Y.AD2d Dept. 2000]. It has been held that “significant contacts” regarding an insurance contract include, “the place of contracting, … the place of negotiation and performance, the location of the subject matter of the contract and the domicile or place of business of the contracting parties.” Jones v. AIG Insurance Co., 15 Misc 3d 1123(A), [*3]841 NYS2d 219 [Sup. Ct. Queens County 2007], Matter of Integon Insurance Co.v. Garcia, 281 AD2d 480, supra , and Eagle Insurance Co. v. Singletary, 279 AD2d 480, supra .

The Appellate Division, Second Department, in Eagle Insurance v. Singletary, 279 AD2d 480, supra ,in a factual situation similar to that of the instant action, determined that New York’s governmental interests needed to be balanced against the significant contacts with Virginia. In finding that Virginia law applies, the Court identified Virginia as the location where the contract of insurance was negotiated and obtained by parties doing business and expected to reside in that state and there was an expectation that the vehicle would be garaged there, so that it had the most contacts. The Court also determined this interest takes precedence over New York State’s interest in protecting innocent third parties from denial of insurance coverage.

The policy in this action involves a company doing business in Virginia and an individual representing at the time the contract was entered into in Virginia, that he was a resident of that state. There are significant contacts with Virginia so that the law of that state applies to this action.

The Virginia Code §38.2-309, titled, “When answers or statements of applicant do not bar recovery on policy,” specifically states,

“All statements, declarations and descriptions in any application for an

insurance policy shall be deemed representations and not warranties.

No statement in an application or in any affidavit made before or after

loss under the policy shall bar recovery upon a policy of insurance unless

it is clearly proved that such answer or statement was material to the risk

when assumed and was untrue.”

The Supreme Court of Virginia, has interpreted the statute to apply to insurance companies contesting a claim on the basis of an insured’s misrepresentation and developed a two part test. The insurer is required to demonstrate,

“(1) that the statement or omission on the application was untrue

and

(2) that the insurance company’s reliance on the false statement

or omission was material to the company’s decision to

undertake the risk and issue the policy.”

It is not enough to prove a falsity, the insurer is required to clearly prove that the untruthful answers would have reasonably influenced the company’s decision to issue the policy. See Commercial Underwriter’s Insurance Company v. Hunt & Calderone, P.C., 261 Va. 38, 540 S.E. 2d 491(2001) and Montgomery Mutual Ins. Co. v. Riddle, 266 Va. 539, 587 S.E. 2d 513 (2003). [*4]

The defendant provides the Examination Under Oath (EUO) transcript of Jorge Garcia,

dated September 24, 2007 (annexed as “Exhibit D” to the motion papers), as proof of the material misrepresentation. Mr. Garcia states that although he was residing in New York at the time he entered into the policy in Virginia, he only worked and lived in New York and worked in a delicatessen for part of the year, and he would return and reside in Virginia during the summer when he did construction work. (EUO Transcript at pages 37-39) . Mr. Garcia also indicates that he had inquired of the person filling out the application for his policy, if he could change the listed address and was advised that he would have to wait until some bills arrived, and that since he was planning to return to Virginia he did not change the address. He indicates he was advised that a New York policy would be more expensive but that was not a factor in his decision to keep the address listed as Virginia (EUO Transcript at pages 51-52). The defendant also annexes the affidavit of Fae Pitts, an Underwriter III by AIG Marketing Inc., (annexed to the motion papers as “Exhibit E”) she bases her knowledge on a review of the records and indicates the policy was cancelled retroactively based upon material misrepresentations. Fae Pitts does not provide sufficient details as to the reliance on the misrepresentations being material to the company’s decision to undertake the risk. There is no statement from the individual responsible for filling out the insurance application or sufficient proof to confirm or deny the statements made by Jorge Garcia regarding dual residency.

CONCLUSION

This Court finds there is a conflict of law between Virginia and New York, and Virginia law prevails. Defendant has not met its burden of proof sufficient to obtain summary judgment concerning whether the policy was void ab initio. Defendant has provided proof that Jorge Garcia provided misrepresentations on his insurance policy, but has not clearly established that it relied on those misrepresentations when it undertook the risk or that truthful answers would have influenced the insurer’s decision to issue a policy. It is unclear based on the EUO testimony of Jorge Garcia, whether the individual responsible for preparing the application on behalf of the defendant was aware of the misrepresentations and continued have the policy issued. The defendant has not met its burden of proof, there is no need to address the deficiencies in the plaintiff’s papers.

Accordingly, for the foregoing reasons the defendant’s motion for summary judgment is denied.

The foregoing shall constitute the Decision and Order of the Court.

Dated: April 20, 2009

Manuel J. Mendez

Judge, Civil Court