Civil Court of the City of New York, Richmond County

11330/07

Katherine A. Levine, J.

This case raises the murky issue of what precise evidence a defendant insurer must present in support of its late denial based upon fraud to withstand the granting of summary judgment to a plaintiff medical services provider in a No-Fault case. It also 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 proffer the defense that a provider is fraudulently incorporated within 30 days or whether that defense remains non waivable.

Plaintiff, Manhattan Medical Imaging (“Manhattan Medical “or “plaintiff”), a medical service provider, seeks an order granting it summary judgment based upon a claimed prima facie showing that the bills were properly submitted and that the defendant State Farm Automobile Ins. Co. (“State Farm” or “defendant”) failed to pay or deny the claim within 30 days. Plaintiff also

asserts that defendant’s denial was untimely.

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).

State Farm asserts that plaintiff has failed to establish a prima facie case since the affidavit of plaintiff’s billing manager is “boilerplate” and not based upon her personal knowledge and therefore does not come in under the business records exception to the hearsay rule. The affidavit of plaintiff’s billing manager, Bella Kirzhner, clearly comes within the business records exception, as contained in CPLR 4518(a), as it exhaustively details the record keeping procedures of the business that created the records and clearly details the dates of the services, the amounts due, and her personal knowledge of the billing practices. See, Second Medical v. Auto One supra at 294-95. It details that the bills were made and kept in the ordinary course of business at the time the services were rendered and sets forth the precise mailing procedure which were followed. In fact, Kirzhner “personally packaged, sealed, applied postage to and mailed the bill.” As such, plaintiff has made a prima facie showing of entitlement.

The burden then shifts to the defendant in a no fault case to show a triable issue of fact. Alvarez v Prospect [*2]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 at 7, 19 Misc 3d 1139A (Dist. Ct. Nass. Co. 2008). 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).

Defendant contends that plaintiff’s motion should be denied because the evidence strongly suggests that 1) plaintiff’s assignor was engaged in a “staged accident” caused in furtherance of an insurance fraud scheme and therefore there is no coverage; and 2) plaintiff may be fraudulently incorporated since it’s facility may “possibly” be owned by a non licensed physician thereby violating the Business Corporation Law, the No Fault Regulations. Defendant asserts that these are non-precludable defenses, regardless of when it issued its denials. In fact, the denial of claim forms( NF-10′) dated December 12th and 26th 2001 assert as the basis of denial that the loss was not caused by a covered accident but by intentional collusive acts and also because there were violations of the fraud provision.

STAGED ACCIDENT DEFENSE

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 Misc3d 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. ” In furtherance of these goals, the Superintendent of Insurance promulgated regulations implementing the No Fault Law ( Ins. Law art. 51) including “circumscribed time frames for claim procedures” 9 NY3d at 317. The accident victim must submit a notice of claim to the insurer no later than 30 days after the accident (11 NYCRR 651.1, 65-2.4(b) and the insurance company must pay or deny the claim within 30 days after receipt of the proof of the claim (see Ins. Law §5106 (a), 11 NYCRR 65-3.8 ©). Substantial consequences flow from an insurer’s failure to company with this 30 day requirement including preclusion from asserting a defense against payment of a claim. Fair Price , 10 NY3d at 563 citing Hospital for Joint Diseases, 9 NY3d at 317-318. See, Presbyterian Hosp., supra, 90 NY2d at 278 (1997);Mt. Sinai Hosp. V. Chubb Group of Ins. Co., 43 AD3d 889-90 (2d Dept. 2007).

In Hospital for Joint Diseases, supra, the Court, citing to its prior decision in Central General Hospital, supra, 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 [*3]“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.

It is well settled, as noted by the Appellate Division in Fair Price, that the defense of a staged automobile accident survives preclusion and, if substantiated would constitute a “complete defense to the action. 42 A.D. at 354. See, Mtr of Liberty Mutual Insurance Co. v Goddard, 29 AD3d 698, 699 (2d Dept. 2006); Melbourne Medical P.C. v Utica Mutual Ins. Co., 4 Misc 3d 92, 94 ( App. Term 2d Dept. 2004). A court must first ascertain , however, whether a defendant has adduced proof in admissible form sufficient to create a triable issue of fact. Melbourne Medical, supra. Plaintiff herein alleges that the defendant failed to rebut its prima facie case since the allegations of a non covered accident or a “staged” event are not supported by evidence in admissible form and that defendant failed to present a “founded belief” that the injuries did not arise out of the accident .

The general standard the insurer must assert for a lack of coverage or fraud defense is one “premised on the fact or founded belief that the alleged injury does not arise out of an insured

incident” but was a deliberate event staged in furtherance of a scheme to defraud the insurer.” Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d at 199., See also, Metro Medical Diagnostics, P.C. v Eagle Ins. Co., 293 AD2d 751 (2d Dept 2002). Thus, the insurer has the burden to come forward with proof in admissible form to establish “the fact” or “foundation for its belief” that the alleged incident was a staged event to defraud the insurer. Mt. Sinai Hospital v Triboro Coach Inc., 263 AD2d 11(2d Dept 1999).

While opposition papers often stumble upon the failure to present evidentiary material in admissible form, an insurer may avoid this pitfall by submitting an opposition affidavit which “sets forth names of witnesses, the substance of their testimony, how it was known what their testimony would be and how the witnesses acquired their knowledge.” Complete Orthopedic Supplies, Inc. V. State Farm Insurance Co., 16 Misc 3d 996 (Civil Ct., Queens Co. 2007) citing Phillips v. Kantor & Co., 31 NY2d 307, 311-12 (1972). It is clear that “unsubstantiated hypotheses and suppositions,” such as an unsworn report of an investigator alleging that an “uncooperative” insured (but not assignor) had been involved in prior accidents alleged to be suspicious , are insufficient to raise a triable issue of the assignor’s fraud. A.B Medical Services PLLC v. Eagle Insurance Co., 3 Misc 3d 8, 10 (App. Term, 2 Dept. 2003). However, there is a dearth of case law as to what what precisely must be included within an investigator’s affidavit so as to defeat a plaintiff’s motion for summary judgment. See, Complete Orthopedic Supplies. Supra; PDG Psychological, P.C. v. State Farm Ins., Co, 12 Misc 3d 1183A, 824 N.Y.S. 2d 766 (Civil Ct., Kings Co. 2006); Inwood Hill Medical P.C. Bronx Neurodiagnostics v. Allstate Ins. Co., 3 Misc 3d 1110A, 787 N.Y.S.2d 678 (Civil Court, NY, Co. County 2004).

In a number of cases, defendant insurers have been permitted to proceed to trial based upon affidavits of investigators employed by the insurance company’s Special Investigations Unit (“SIU”) who allege personal knowledge of the alleged fraud. See, American Honda Finance Corp. V Progressive Casualty Ins. Co., 290 AD2d 850 (3d Dept. 2002) (“at this preliminary stage of the proceeding, a question of fact is lurking as to whether Perez committed fraud or made other material representations such that policy exclusion would preclude recovery); Northern Medical v. State Farm Mutual Automobile I ns. Co., 2008 NY Slip Op. 50753U, 19 Misc 3d 1117A (Civil Ct., Queens Co., 2008). [*4]

In PDG Psychological v. State Farm Ins. Co., 12 Misc 3d 1183 A, 824 N.Y.S. 2d 766 (Civil Ct. Kings Co. 2006), the defendant, in support of its defense of an intentional collision, proffered the testimony of an SIU investigator who stated that the claims had been denied because the accident occurred two months after the assignor’s policy had been instituted and because there were several discrepancies between the transcripts of the examinations under oath (“EUOs”) of the passengers and the assignor, including where they were going, when they all met, the time of the accident, where the car was at the time of the impact and the names of the passengers. These discrepancies, coupled

with the other driver’s statement, raised factual issues.

The evidence presented by defendant is somewhat similar to that presented in PDG Psychological, supra. Defendant presented statements of the assignors which, although unsworn and unsigned, were certified by the transcriber, and the signed and sworn to affidavit of Lee Ann Fink, who is employed in the Special Investigations Unit (“SIU”). Fink memorialized the somewhat minor inconsistencies in the various assignors’ statements, including the color and make of the car they were in that was supposedly involved in the accident, different reasons as to why they were all together with the same driver, who was seated in the front of the car at the time of the accident and whether the car was stopped at the point of the accident.

While this court does not believe that defendant presents a strong case of a staged accident, it presents enough inconsistencies to rise above the base level of “unsubstantiated hypothesis and suppositions” so as to permit this defense to go to trial. The court is not troubled that the statements of the assignors were not verified or signed since their transcribed statements were certified by the transcriber. See R. M. Newell Co. V. Rice, 236 AD2d 843, 844 ( 4th Dept. 1997), ( deposition transcripts certified as accurate by transcriber admissible on summary judgment motion even though unsigned). Nor is the court concerned that Fink was not present during the taking of the statements See, e.g, PDG Psychological, supra, Northern Medical, P.C., supra ((trial held despite late denial based upon SIU investigators’s finding that there was a staged accident based upon his review of the file for the first time a few weeks before the trial and his running a prior claim history on the assignor).

In sum, this court denies plaintiff’s motion for summary judgment with respect to defendant’s denial based upon a staged accident.

PROVIDER FRAUD

Defendant similarly 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).^[FN1]

`In Mallela, the Court of Appeals held that insurers may withhold payment for medical services provided by fraudulently licensed medical service corporations to which patients, who are covered by no-fault insurance, have assigned their claims. Insurance Law §5102 requires no-fault carriers to reimburse patients or their medical provider assignees for “basic economic loss”. In order to combat incidences of fraud, the Superintendent of Insurance promulgated 11 NYCRR 65-3.16(a)(12) , which excludes payments made to fraudulently licensed providers from the meaning of basic economic loss as contained in Section 5102. 4 NY3d at 320. After finding this regulation valid, the Court held that carriers “may look beyond the face of licensing documents to identify wilful and material failure to abide by state and local law.” Id at 321-22. See Cambridge Medical P.C. v. Nationwide Property and Casualty Ins. Co., 19 Misc 3d 1110A, 859 N.Y.S. 2d 901 ( Civil Ct., Richmond Co. 2008).

In Eastern Medical P.C. v. Allstate Ins. Co., 19 Misc 3d 775 (Dist. Ct. Nassau Co. 2008), the court rejected [*5]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. The court first noted that there was no support for the premise behind defendant’s argument: that the Court of Appeals was ignorant of its own precedent when it decided Mallela and that the Fair Price Court chose to somehow abrogate Mallela in its decision. The court then noted that while the Court of Appeals precedent cited in Fair Price ^[FN2] dealt “with contract interpretation” or “the interplay between policies of insurance and applicable laws and regulations,” the Malella court dealt solely with statutory interpretation, 19 Misc 3d at 779. The Mallela defense was thus 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 780.

The court then noted that even though there was no contention in Mallela that medical payments were not otherwise required by the policy, the Mallela court did not qualify the insurer’s right to deny payment to the fraudulently incorporated provider by requiring a timely denial. 19 Misc 3d at 780. Rather, 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. Ter, 2d Dept. 2007). Id at 781. Nor is 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).

Defendant is therefore not precluded from raising its defense of fraudulent incorporation provided that it presents a “founded belief”that the corporation is ineligible to obtain no-fault benefits by reason of a fraudulent corporate filing. Central General Hospital., supra,; Inwood Hill Medical AB Medical Services v. Prudential Property & Casualty Insurance Company, 11 Misc 3d 137 (A) (Appellate Term Second Dept. 2006). Defendant herein alleges that Dr. Brownstein is not the sole owner of Manhattan Medical but rather shares his ownership responsibilities with Sam Stern, a non physician. The attorney’s affirmation cites a number of certificates of incorporation which allegedly show a labyrinth of interconnections between plaintiff Manhattan Medical and Universal Diagnostic Imaging, the latter of which is purportedly owned by Stern. Defendant also alleges that Brownstein owns at least five other imaging companies and is allegedly facing civil fraud lawsuits stemming from his ownership of other entities. Also attached is an EBT of the assistant office manager of plaintiff who indicates that Stern is one of the other owners of plaintiff and the testimony of plaintiff’s business manager in another where she testified that Stern is a general partner of plaintiff.

The court finds that defendant has articulated a”founded belief” that plaintiff is fraudulently incorporated as it is actually controlled by a non-licensed professional. Defendant has therefore made

allegations sufficient to raise an issue of fact as to whether plaintiff is fraudulently incorporated. See,

Tahir v. Progressive Casualty Ins. Co., 12 Misc 3d 657, 664 (Civil Ct., NY Co. 2006)(“fraudulent intent is rarely established by direct proof, but we nevertheless conclude that there are sufficient badges of fraud’ in this case from which such intention can be inferred “citing Spires v. Mihou, 13 AD3d 1056,57 (4th Dept. 2007)).

The court directs plaintiff to respond to defendant’s discovery request within 60 days of this decision.

The foregoing constitutes the Decision and Order of the Court.

DATED: September 4, 2008

Hon. Katherine A. Levine [*6]

Judge, Civil Court

ASN byon

Footnotes

Footnote 1:This defense is typically referred to as the “Malella defense” or “fraudulent incorporation” defense.

Footnote 2:he precedents followed by Fair Price were Presbyterian Hospital ,supra and Central General Hosp., supra.

[*1]

Civil Court of the City of New York, Queens County, August 22, 2008

APPEARANCES OF COUNSEL

Israel Israel & Purdy, LLP, Great Neck (Scott H. Fisher of counsel), for plaintiff. Rossillo & Licata, P.C., Westbury (John J. Rossillo of counsel), for defendant.

{**21 Misc 3d at 437} OPINION OF THE COURT

William A. Viscovich, J.

In this matter, which appears to be a case of first impression, plaintiff provider brought the within action to recover payment under no-fault for medical services, namely, electromyogram testing and nerve conduction velocity testing (hereafter EMG and NCV testing, respectively) performed for Vanessa Garcia, its assignor. At trial, the parties stipulated to the sufficiency of plaintiff’s prima facie case and agreed that the only issue for this court to determine is whether defendant could demonstrate that the tests were not medically necessary.

Defendant’s unique and novel argument, as presented to this court over the course of several days of testimony, is that while the tests as prescribed were, in fact, medically necessary, they were done in a manner so incomplete that the results were useless in terms of the diagnosis and treatment of the patient. As such, defendant argues that they are rendered medically unnecessary as a practical matter and therefore not eligible for reimbursement under the state’s no-fault statutes. Plaintiff counters with three points: first, that the tests were medically necessary; second, that the test results were in fact useful; and third, that the only issue for this court to decide is the medical necessity of the tests as prescribed, the issue of whether or not they were done correctly being irrelevant.

In the instant case, State Farm’s medical expert, Dr. James B. Sarno, determined that a complete bilateral EMG/NCV of the upper and lower extremities was, in fact, medically necessary for the treatment and care of the assignor, Vanessa Garcia, for injuries she sustained in the subject motor vehicle accident. However, Dr. Sarno further determined that the EMG/NCV study as actually administered was so incompletely performed as to be contrary to the accepted standard of care for administering said test when utilizing it to assess “electro-diagnostic evidence of radiculopathy,” thus rendering it medically unnecessary. According to Dr. Sarno, this was particularly so in light of Ms. Garcia’s injuries, the suspicion of radiculopathy in both the upper and lower extremities, her complaints of pain and her nonresponsiveness to a rehabilitation program. The doctor’s position is that the tests, as administered, would have no utilization in determining and evaluating her past and future treatment.

According to Dr. Sarno, the tests were rendered useless due to the plaintiff’s failure to test the muscles in the forearm (other{**21 Misc 3d at 438} than the brachioradialis) and in the hand. As such, plaintiff failed to properly study the C7, C8 and T1 nerve roots, a deviation from the accepted standard of care for administering said test when “assessing evidence of electro-diagnostic radiculopathy.” In fact, Dr. Sarno testified that the impression purportedly obtained from said tests, a bilateral C4 radiculopathy, could not have been obtained to any degree of medical certainty from the incomplete nature of the muscles tested and that it was a deviation from accepted medical protocol to have concluded same from the minimal number of muscles tested.

As for the lower extremity EMG, Dr. Sarno maintained that by failing to test the muscles in the extensor hallus longus, the peronei, the glutei, all muscles in the quadriceps and the paraspinal muscles, the plaintiff deviated from the accepted standard of care for administering said test when assessing evidence of electrodiagnostic radiculopathy. As such, it is defendant’s contention that the subject EMG/NCV studies were found normal in the lower extremities due only to plaintiff’s failure to test the requisite muscles. Had they been done correctly, Dr. Sarno maintains, Ms. Garcia’s diagnosis and treatment plan may have been properly furthered and she could have actually benefitted from her rehabilitation.

Testifying for the plaintiff, Dr. Finkelstein, in sum and substance, agreed with Dr. Sarno that the tests were medically necessary. The disagreement between the two testifying experts, however, lies in Dr. Finkelstein’s belief that the tests as performed were not incomplete and that they were useful for the diagnosis and treatment of the patient. His position was that while the testing may not have been “thorough” it was “not incomplete.” More specifically, Dr. Finkelstein maintained that the tests as done had the benefit of confirming radiculopathies at both the C3-4 and C5-6 levels of the spine and could have an impact on the patient’s treatment.

Both Dr. Sarno and Dr. Finkelstein acknowledge that EMG/NCVs are extremely uncomfortable and painful for the patient. It should be noted that Dr. Sarno maintains that a proper testing regimen in this case required the placing of needles in 48 muscles, while Dr. Finkelstein’s position was that, for this case, the placing of needles in 22 muscles was sufficient, particularly if the patient was having a difficult time dealing with the procedure.{**21 Misc 3d at 439}

Conclusions of Law

New York’s no-fault law mandates that services must be reasonable and necessary in order to be reimbursable, but neither statute nor case law specifically addresses the issue of what constitutes “medical necessity” in the context of no-fault litigation. Given that the legislature, the Appellate Terms and the Appellate Divisions of this state have, it seems, yet to establish a specific definition or set of guidelines upon which this court could rely, they must be derived from lower court decisions. In this context, the two most regularly cited cases appear to be two matters decided in Queens County Civil Court. The first, Medical Expertise v Trumbull Ins. Co. (196 Misc 2d 389 [2003]), was written by Judge Bernice Siegal, and the second, Fifth Ave. Pain Control Ctr. v Allstate Ins. Co. (196 Misc 2d 801 [Civ Ct, Queens County 2003]), was written by Judge Augustus C. Agate when he sat in this court.

In Medical Expertise (supra), Judge Siegal cited with approval a definition of medical necessity provided by the New Jersey Supreme Court, to wit:

“[A] necessary medical expense under the [No-Fault] Act is one incurred for a treatment, procedure, or service ordered by a qualified physician based on the physician’s objectively reasonable belief that it will further the patient’s diagnosis and treatment. The use of the treatment, procedure, or service must be warranted by the circumstances and its medical value must be verified by credible and reliable evidence (Oceanside Med. Healthcare v Progressive Ins., 2002 NY Slip Op 50188[U], *5 [Civ Ct, Kings County, May 9, 2002], quoting Thermographic Diagnostics Inc. v Allstate Ins. Co., 125 NJ 491, 512, 593 A2d 768, 780 [1991].)

“It is not whether or not some ‘positive’ findings may be fashioned from the results of psychological tests, but rather could a psychologist hold an objective and reasonable belief that the tool used will further the patient’s diagnosis and treatment and whether that tool is warranted given the circumstances.” (196 Misc 2d at 395 [internal quotation marks omitted].)

In Fifth Ave. Pain Control Ctr., Judge Agate determined that medical necessity entailed

“treatment or services which are appropriate, suitable, proper and conducive to the end sought by the{**21 Misc 3d at 440} professional health service in consultation with the patient. It means more than merely convenient or useful treatment or services, but treatment or services that are reasonable in light of the patient’s injury, subjective and objective evidence of the patient’s complaints of pain, and the goals of evaluating and treating the patient.” (196 Misc 2d at 807.)

He went on to say that

“for treatment or services to be medically necessary, it must be reasonably determined by the health care professional in consultation with the patient, that the treatment or services are consistent with the patient’s condition, circumstances and the best interest of the patient with regard to the type of treatment or services rendered, the amount of treatment or services rendered, and the duration of the treatment or services rendered.” (Id.)

Judge Agate went further, however, holding that in order to find that treatment or services are not medically necessary “it must be reasonably shown by medical evidence, in consideration of the patient’s condition, circumstances, and the best interest of the patient, 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.” (Id. at 807-808 [emphasis added].)

While the defendant agrees that the testing as prescribed by the plaintiff provider herein was clearly medically necessary, as defined by both Judges Siegal and Agate, its defense of lack of medical necessity is seemingly based on a single word (ineffective) in Judge Agate’s opinion. Defendant argues that the test is inherently unnecessary due to a supposedly improper methodology used in conducting it. Plaintiff counters that, as conducted, the tests were medically necessary and done correctly and that even if they were done incorrectly or incompletely, such failures do not arise, at least in the context of no-fault litigation for provider payment, to the level of being medically unnecessary.

Defendant’s position seeks a retrospective determination of medical necessity but this court can find nothing in the precedents discussed or in the no-fault statute and related regulations that establish such a position. In fact, to the contrary, they seem to require a determination of medical necessity be made prospectively from the standpoint of the insured at the time a treatment or service is rendered, not at a time when its effectiveness or lack thereof can be established retrospectively.{**21 Misc 3d at 441}

This is particularly true when one considers that the expenses sought in no-fault litigation are in reality expenses incurred by the insured, not the provider. A medical provider does not “incur” expenses when it treats an insured. Rather, the provider accepts an assignment of the insured’s benefits, allowing it to step into the shoes of the insured for litigation purposes. In theory, if not reality, the insured, not the provider, is the one seeking reimbursement for expenses already incurred. As such, the no-fault statute was clearly intended to “deliver better protection for the insured and to pay off claims quickly (NY Legis Ann, 1973, p 298)” (Pavone v Aetna Cas. & Sur. Co., 91 Misc 2d 658, 663 [Sup Ct, Monroe County 1977]), and no-fault regulations have been interpreted in favor of the insured’s rights (and through an assignment of benefits, the rights of the provider), especially as they relate toward speedy payment of proper claims on behalf of the insured. (See Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997].)

To adopt defendant’s position, quite frankly, would be to dramatically and judicially change the very nature of no-fault litigation. It would result in these proceedings all too often delving into issues more related to medical malpractice or professional misconduct litigation, a fact reflected by defendant’s brief, which cites as authority a matter decided before the State Board of Professional Medical Conduct (see Matter of Dobson, 2006 NY Phys Dec LEXIS 411 [2006]). The nature of such litigation would defeat the very purpose of the no-fault statute which is “to permit liberal recovery of moneys actually expended in the treatment of accident-related injuries.” (Vidra v Shoman, 59 AD2d 714, 716 [2d Dept 1977]; see also Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co., 233 AD2d 431 [2d Dept 1996].) This is only reinforced by the Court of Appeals findings that the regulations “are written to encourage prompt payment of claims, to discourage investigation by insurers and to penalize delays.” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 225 [1986].)

Nowhere in the statutory or regulatory scheme are “necessary expenses” defined to exclude charges for services that were duly prescribed, but improperly or inadequately performed. Insurance Law § 5102 (a) (1) defines “basic economic loss” as including, inter alia, “[a]ll necessary expenses incurred.” If either the legislature or the Superintendent of Insurance had intended that the determination regarding medical necessity should be made in hindsight, with regard for whether a procedure{**21 Misc 3d at 442} was properly performed, a statutory or regulatory change could be made to define necessary expenses as including payment for “properly performed medical procedures.” Neither has chosen to do so.

After a reading of the no-fault statutes and regulations, the precedents established by both Judge Siegal and Judge Agate and the testimony, evidence and briefs submitted in this matter, this court holds that even if defendant has demonstrated that a prescribed medical service or procedure may not have been conducted properly, reimbursement is warranted so long as said service or procedure was medically necessary. The issue of proper performance of such service or procedure is best left for other areas of litigation practice and/or, where appropriate, the State Board of Professional Medical Conduct.

The court further finds that the plaintiff in this matter, by stipulation of the parties, has established a prima facie case as to the medical necessity of the services rendered, thus shifting the burden of proof to the defendant to demonstrate, by a preponderance of the evidence, a lack of medical necessity for said services. Based on the testimony of the defendant’s own expert that the procedures in question, as prescribed, were, in fact, medically necessary and the rebuttal testimony of plaintiff’s expert explaining how the tests, as actually performed, could be of benefit to the patient, the defendant has failed to meet that burden.

Therefore, the court finds in favor of the plaintiff in the amount of $2,832.14, plus statutory interest, attorney fees and costs and disbursements.

[*1]

Civil Court of the City of New York, New York County, August 6, 2008

APPEARANCES OF COUNSEL

Law Offices of Teresa M. Spina, Woodbury, for defendant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, LLC, Mineola, for plaintiff.

{**20 Misc 3d at 948} OPINION OF THE COURT

Arlene P. Bluth, J.

{**20 Misc 3d at 949}At trial, the parties stipulated to the following facts: The underlying accident occurred on July 31, 2006. The policy covering this accident was issued after April 5, 2002. Plaintiff submitted the claims to defendant more than 45 days after the final date of service and defendant timely denied the claims.

11 NYCRR 65-1.1 (b), part of the Superintendent of Insurance’s regulations (new regulations), requires that all policies issued on or after April 5, 2002 contain a mandatory personal injury protection endorsement (Endorsement). Automobile policies have a one-year term (see Insurance Law § 3425 [a] [8]), and both parties agree that at the time the instant policy was issued the new regulations were in effect. The portion of the Endorsement relevant here requires that claims be submitted to insurers within 45 days after services are rendered.

Plaintiff admits that she failed to fulfill the requirements of the Endorsement, and sent the bills after the 45-day time limit. At the trial, the defendant did not produce the policy. Plaintiff asserts that it was defendant’s burden to produce the policy in order to establish that the policy actually included the Endorsement; defendant asserts that because the Endorsement is mandatory under the new regulations, it applies whether or not the policy actually contains it, and so it is not necessary to produce the policy. This court agrees with defendant and finds the introduction of the policy at trial is not necessary to prove that it contained the mandatory Endorsement.

The parties were given an opportunity to submit posttrial memoranda of law. In support of its position, the defendant relies upon the very recent Appellate Term, Second Department case Eagle Chiropractic, P.C. v Chubb Indem. Ins. Co. (19 Misc 3d 129[A], 2008 NY Slip Op 50525[U] [2008]), which holds that because the policy was issued after April 5, 2002, the Endorsement was mandatory and the defendant need not prove that the policy contained the Endorsement. Plaintiff did not distinguish Eagle on its facts, and indeed, on page four of her posttrial memorandum, acknowledges that if this court were bound to follow Eagle, then defendant would win. Instead, plaintiff claims that the law is different in this department. Plaintiff maintains that this court must follow SZ Med. P.C. v State Farm Mut. Auto. Ins. Co. (9 Misc 3d 139[A], 2005 NY Slip Op 51842[U] [App Term, 1st Dept 2005]), which requires a finding for plaintiff.

Plaintiff asserts that SZ Med. requires that a defendant always produce the policy in order to support its position that{**20 Misc 3d at 950} the new regulations apply. By taking language out of context, plaintiff misreads the holding of SZ Med. Indeed, there is no split between the Appellate Terms because SZ Med. and Eagle both hold that once it is established that the policy was issued on or after April 5, 2002, then the new regulations must apply.

In SZ Med., plaintiff moved for summary judgment on its prima facie case for claims submitted between December 2002 and April 2003; defendant opposed, claiming the new regulations applied. The trial court denied summary judgment, finding that because plaintiff submitted the claims after April 5, 2002, the new regulations applied. In reversing, the Appellate Term simply made clear that the date the policy was issued determines if the new regulations are applicable, not the date when plaintiff submits its claims. The defendant in that case did not come forward with proof of when the policy was issued, and there is no indication that this crucial date could have otherwise been determined; the Appellate Term granted plaintiff’s motion for summary judgment.

Here the defendant need not produce proof that the policy was issued after April 5, 2002, because the parties stipulated to that fact. Had there been no stipulation, however, the fact remains that the earliest date that the policy covering this July 31, 2006 accident could have been issued was July 31, 2005; this was more than three years after the effective date of the new regulations. Even if the insurance policy lacked the mandatory Endorsement, then the applicable provisions of the Insurance Law or the applicable regulation, which “has the force of law” (Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196, 201 [2007]), are deemed to be part of the policy as though written into it. (See also Insurance Law § 3103 [a] [even if the policy or provision is “in violation of the requirements or prohibitions of this chapter it shall be enforceable as if it conformed with such requirements or prohibitions”]; Trizzano v Allstate Ins. Co., 7 AD3d 783 [2d Dept 2004] [auto policy]; TAG 380, LLC v ComMet 380, Inc., 10 NY3d 507 [2008] [fire policy].)

Where, as here, it is clear that the policy is subject to the new regulations, the mandatory Endorsement is read into the policy and the defendant is not required to produce it. Accordingly, after trial, the court awards judgment in favor of defendant Government Employees Insurance Company and against plaintiff Dana Woolfson, LMT. The complaint is dismissed with prejudice.

[*1]

Civil Court of the City of New York, Richmond County, June 26, 2008

APPEARANCES OF COUNSEL

Law Office of Peter C. Merani, New York City (William Larkin of counsel), for defendant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (Joaquin J. Lopez of counsel), for plaintiff.

{**20 Misc 3d at 845} OPINION OF THE COURT

Katherine A. Levine, J.

Plaintiff Prime Psychological Services, P.C. and defendant American Transit Insurance Company stipulated at oral argument that the sole issue before the court was whether the defendant’s failure to issue the denial of claim form (N-F 10 form) “in duplicate” was a fatal error, thus precluding defendant from asserting a defense which would result in the granting of summary judgment to plaintiff. There is no dispute that plaintiff established a prima facie case and that defendant timely mailed its denial of claim form, setting forth the defense of lack of medical necessity, to plaintiff.^[FN1] Defendant does not assert in its opposition that the claim forms were mailed in duplicate but simply states that the omission, if any, was neither “basic” nor “numerous” (citing Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2d Dept 2005]).

This issue presents a case of first impression since it appears that no court has directly ruled upon whether to grant summary judgment to a plaintiff when the sole deficiency in the denial of claim form was that it was not issued in duplicate. As such, a statutory analysis of the Insurance Law and the pertinent regulations promulgated thereto is in order.

Article 51 of the Insurance Law (Comprehensive Motor Vehicle Insurance Reparations Act) (added by L 1984, chs 367, 805, as amended), commonly known as New York’s No-Fault Insurance Law (No-Fault Law), provides a plan for compensation of victims of motor vehicle accidents for economic loss without regard to fault or negligence. (Oberly v Bangs Ambulance, 96 NY2d 295 [2001].) The general framework for payment of first-party benefits is contained in Insurance Law § 5106 (a), which states as follows:

“(a) Payments of first party benefits and additional first party benefits shall be made as the loss is incurred. Such benefits are overdue if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained. If proof is not supplied as to the entire claim, the amount which is supported by proof is overdue if not paid{**20 Misc 3d at 846} within thirty days after such proof is supplied. All overdue payments shall bear interest at the rate of two percent per month.”

The Superintendent of the New York State Insurance Department promulgated Regulation 68 and codified it under 11 NYCRR part 65. The pertinent regulation in this case, 11 NYCRR 65-3.8, entitled “Payment or denial of claim (30 day rule),” provides in subdivision (c) (1) that

“[i]f the insurer denies a claim in whole or in part involving elements of basic economic loss . . . the insurer shall notify the applicant . . . on the prescribed denial of claim form, in duplicate, and shall furnish, if requested by the applicant, one copy of all prescribed claims form submitted by or on behalf of the applicant thereto” (emphasis supplied).

“The governing rule of statutory construction is that courts should look first to the statutory language in question, which is to be ‘generally given its natural and most obvious meaning.’ ” (Matter of Greenberg [Ryder Truck Rental], 70 NY2d 573, 577 [1987], quoting McKinney’s Cons Laws of NY, Book 1, Statutes § 94; Association of Contr. Plumbers of City of N.Y. v Contracting Plumbers Assn. of Brooklyn & Queens, Inc., 302 NY 495, 500 [1951].) “[I]f there is nothing to indicate a contrary intent, terms of general import will ordinarily be given their full significance without limitation.” (70 NY2d at 577, quoting Statutes § 114.)

The primary goal of the court in interpreting a statute is to determine and implement the legislature’s intent. (Matter of Tompkins County Support Collection Unit v Chamberlin, 99 NY2d 328, 335 [2003].) A court “may not reject a literal construction (of a statute) unless it is evident that a literal construction does not correctly reflect the legislative intent.” (A.J. Temple Marble & Tile v Union Carbide Marble Care, 87 NY2d 574, 580-581 [1996]; see Statutes § 73.) “[T]he legislative history of an enactment may also be relevant and ‘is not to be ignored, even if words be clear’ ” (Feher Rubbish Removal, Inc. v New York State Dept. of Labor, Bur. of Pub. Works, 28 AD3d 1, 5 [4th Dept 2005], quoting Riley v County of Broome, 95 NY2d 455, 463 [2000], quoting Statutes § 124, Comment, at 252). A construction which would result in absurdity is to be rejected (Statutes § 145; see McDonald v State of New York, 176 Misc 2d 130, 134 [Ct Cl 1998]). Furthermore, “[i]n construing a statute, the court should consider the mischief sought to be remedied{**20 Misc 3d at 847} and should favor the construction which will suppress the evil and advance the remedy.” (Matter of New York Life Ins. Co. v State Tax Commn., 80 AD2d 675, 677 [3d Dept 1981]; Marigliano v New York Cent. Mut. Fire Ins. Co., 15 Misc 3d 766, 771-772 [Civ Ct, NY County 2007].)

Therefore, despite the primary importance of literal construction, “[t]he courts may in a proper case indulge in a departure from literal construction and . . . sustain the legislative intention although it is contrary to the literal letter of the statute” (Feher Rubbish Removal, Inc. at 5, quoting Statutes § 111). “The letter of a statute is not to be slavishly followed when it . . . leads to conclusions, inconsistent with the general purpose of the statute or to consequences irreconcilable with its spirit and reason.” (Matter of Statewide Roofing v Eastern Suffolk Bd. of Coop. Educ. Servs., First Supervisory Dist. of Suffolk County, 173 Misc 2d 514, 517 [Sup Ct, Suffolk County 1997].) Thus, in [*2]construing a law, a court “will sometimes be guided more by its purpose than its phraseology, whereby a statute is not to be read with a literalness that destroys the meaning, intention, purpose or beneficial end for which the statute has been designed.” (Id.; see generally Statutes § 96.) In fact, the meaning of certain words may, in a proper case, be restricted or limited so as to avoid “absurd, unjust or other objectionable results.” (Matter of Statewide Roofing at 518; see Statutes § 113.)

It is imperative in ruling upon no-fault insurance matters not to lose sight of the fundamental goal of the regulatory scheme, which is “designed to promote prompt payment of legitimate claims” (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]) and prompt resolution of injury claims, to limit cost to consumers and to alleviate unnecessary burdens on the courts. (Pommells v Perez, 4 NY3d 566 [2005]; see also Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 285 [1997] [“The tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices”]; All Health Med. Care v Government Empls. Ins. Co., 2 Misc 3d 907, 910 [Civ Ct, Queens County 2004] [the purpose of the no-fault statute is to encourage prompt payment of claims, to discourage investigation by insurers and to penalize delays].)

As the Court of Appeals noted in Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854 [2003]), the most significant{**20 Misc 3d at 848} changes made by the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65),^[FN2] was a reduction in the time frames applicable to the filing of notices and proofs of claim—a consequence of the Superintendent’s determination that much of the abuse was associated with the lengthy time frames within which claims could be presented to insurers. The Superintendent also concluded that the shorter time frames would better effectuate the legislative purpose of providing prompt compensation “as the loss is incurred, while reducing rampant abuse.” (Id. at 867; Inwood Hill Med. at *4.) Accordingly, it is the court’s duty to interpret and apply the no-fault regulations in a consistent manner leading to the prompt payment of valid, documented claims. (See Marigliano v New York Cent. Mut. Fire Ins. Co. at 774.)

With these principles in mind, this court finds that the defendant’s failure to mail the N-F 10 form in duplicate is not fatal and does not render its denial a nullity. It should first be noted that contrary to plaintiff’s contention, no court has declared that a denial of claim form is fatally defective so as to warrant its preclusion solely on the grounds that it was not issued in duplicate. In New York Univ. Hosp. Rusk Inst. v Hartford Acc. & Indem. Co. (32 AD3d 458 [2d Dept 2006]) the plaintiff attacked the validity of the defendant’s denial, both because the defendant issued its partial denial by letter rather than by utilizing the prescribed N-F 10 form, and because the denial was not issued in duplicate. While finding that the denial letter adequately conveyed the information mandated by the prescribed N-F 10 form, the court still found the denial to be defective because “defendants failed to establish that the letter had been [*3]issued in duplicate and approved by the Department of Insurance.” (Id. at 460.) The Rusk court did not discuss plaintiff’s failure to serve the denial in duplicate. Furthermore, Rusk has only been cited for the proposition that the N-F 10 denial form was not sufficiently specific or particular to apprise the claimant of the grounds upon which the disclaimer is predicated and, hence, could not constitute a valid denial. (See Westchester Med. Ctr. v Allstate Ins. Co., 45 AD3d 579 [2d Dept 2007]; Elmont Open MRI & Diagnostic Radiology, P.C. v GEICO{**20 Misc 3d at 849} Ins. Co., 18 Misc 3d 1117[A], 2008 NY Slip Op 50113[U] [Nassau Dist Ct 2008] [N-F 10 denial form issued by respondent, neither on the prescribed form as it existed in 2005, nor on the form allegedly approved by the Insurance Department in 2002, was not valid since neither old nor new regulations permit an insurer to adjust or amend its forms on its own accord]; Olympic Chiropractic, P.C. v American Tr. Ins. Co., 14 Misc 3d 129[A], 2007 NY Slip Op 50011[U] [App Term, 2d Dept 2007].)

In fact, the source for the Rusk court’s pronouncement concerning the sufficiency of the N-F 10 denial form was Nyack Hosp. v State Farm Mut. Auto. Ins. Co. (11 AD3d 664, 665 [2d Dept 2004]), where the Second Department declared that “[a] proper denial of claim form must include the information called for in the prescribed denial of claim form (see 11 NYCRR 65-3.4 [c] [11]) and must ‘promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated.’ ” Furthermore, “[a] timely denial alone does not avoid preclusion where said denial is factually insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law” (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43, 44 [App Term, 2d Dept 2004]).

In Nyack (supra), the court found the denial of claim form to be fatally defective in that it failed to include a number of the basic items called for in the prescribed form, such as the name of the health services provider, the date and amount of the claims being denied, and the date it received those claims. In Amaze (supra), the timely denial was found to be factually insufficient in that defendant failed to provide any specifics with regard to its conclusory defense that certain of the medical equipment was duplicative. Both of these cases found that preclusion was warranted because the content of the N-F 10 forms was not sufficiently specific.

There appears to be one case where a court addressed the repercussions that should attach to a party’s failure to serve a form in duplicate. In Nagy v Rothstein (53 Misc 2d 367 [Sup Ct, NY County 1966]) the defendant moved to dismiss the complaint because a notice of claim was never served and the complaint, which was not served in duplicate as required of a notice of claim, could not substitute for a notice of claim. The complaint, however, was served within the 90-day time period governing the service of a notice of claim. The court granted the plaintiff’s motion to treat the complaint, as originally served, as a notice of claim because the original complaint met all the statutory{**20 Misc 3d at 850} requirements of a notice of claim except that it did not set forth the plaintiff’s post office address and was not served in duplicate. The court first noted that it looks to the “substance of the paper served and not to its label,” and found that in accordance with the purpose behind the “notice of claim,” defendant “had due and timely notice of the incident and ample time to conduct its investigation.” (Id. at 369 [emphasis supplied].) As to the defendant’s assertion that no court has ever allowed a complaint to serve as both a notice of claim and a complaint, i.e., one paper served in place of two, the court stated that it “does not count the papers. It looks rather to their merit and their substance. No litigant who states a cause of action will be turned [*4]away by mistakes in labeling or in his counting of the papers required to be served.”^[FN3] (Id.)

The same reasoning applies to the instant matter. Plaintiff does not claim that the information contained in the N-F 10 was “insufficient, conclusory, vague or otherwise involves a defense which has no merit as a matter of law.” Nor does plaintiff contend that it was deprived of prompt specific notice as to the reasons for the insurer’s denial or that it was prejudiced because it only received one copy of the N-F 10. In fact, since the regulations set forth that both the original N-F 10 form and its duplicate shall be served on the medical provider, the service of the duplicate N-F 10 is basically redundant. As such, plaintiff’s contention that it must be awarded summary judgment because the denial was not issued in duplicate runs counter to the very legislative intent behind the No-Fault Law—to process claims within a short time frame and expeditiously so as to avoid prejudice and red tape dilatory practices.

As such, both plaintiff’s and defendant’s motions for summary judgment are denied and this case is to proceed to trial.

Footnotes

Footnote 1: Defendant commenced this motion requesting that the action be dismissed because plaintiff failed to rebut defendant’s denial of its claim on the grounds of lack of medical necessity. Plaintiff, in turn, brought a cross motion contending that it was entitled to summary judgment because defendant failed to establish that it had mailed the denial forms in duplicate, hence rendering its denial a nullity.

Footnote 2: For a detailed analysis of the history behind the amended Regulation 68, see Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854, 860-864 [2003]) and Inwood Hill Med. v Allstate Ins. Co. (3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U] [Civ Ct, NY County 2004]).

Footnote 3: While discussing the number of papers, the court never specifically addressed the fact that the complaint quo notice of claim was not served in duplicate. However, by granting plaintiff’s motion for leave to serve an amended notice of claim and an amended complaint, the court obviously did not find the failure to serve the papers in duplicate to be fatal.

[*1]

Civil Court of the City of New York, Queens County, June 13, 2008

APPEARANCES OF COUNSEL

Emilia I. Rutigliano, Brooklyn, for plaintiff. Law Office of Karen C. Dodson, Melville (William Angstreich of counsel), for defendant.

{**20 Misc 3d at 782} OPINION OF THE COURT

William A. Viscovich, J.

Plaintiff brought this action to recover no-fault payments totaling the sum of $1,559 for medical supplies provided to the insured/assignor on September 21, 2005 and on October 3, 2005, for treatment of alleged injuries sustained in a motor vehicle accident occurring on September 16, 2005, together with statutory interest, statutory attorneys fees and costs.

A previous decision by Judge Lebedeff of this court, issued on May 9, 2007, had determined that plaintiff had made out its prima facie case, that defendant’s NF-10 denial dated November 16, 2005 was timely issued, that said denial was based upon a peer review and that the only triable issue was as to the medical necessity of the items furnished to the assignor. The parties further stipulated at trial as to the expertise of the peer review doctor, Dr. Susan Corcoran, in internal medicine and to the introduction into evidence of the peer review itself.

Based upon Judge Lebedeff’s previous finding regarding the plaintiff’s prima facie case and the stipulation entered into by the parties, the plaintiff rested, thus shifting to the defendant insurer the burden of rebutting plaintiff’s prima facie case of medical necessity.

The defendant called Dr. Corcoran who testified, in sum and substance, that there was no medical necessity for any of the supplies provided. Of particular relevance in this matter is that while the parties did stipulate to the [*2]admission of the peer review, they did not stipulate to the entrance into evidence of any of the underlying medical records and reports upon which the peer review was based. Nor did the defendant attempt to have them introduced even though they were relied upon by Dr. Corcoran in preparing both the peer review and her testimony.

After Dr. Corcoran’s testimony was completed, the defendant rested. Plaintiff presented no witnesses and also rested. Defendant then moved for a directed verdict of dismissal, arguing that the findings and opinions of Dr. Corcoran in her peer review and in her testimony were sufficient to demonstrate the lack of medical necessity for the supplies provided to the assignor and that they were not rebutted by the plaintiff.

Plaintiff opposed the motion, contending that pursuant to Wagman v Bradshaw (292 AD2d 84 [2d Dept 2002]) Dr. Corcoran’s testimony must be disregarded by this court since it was based upon medical records and reports that were not in evidence{**20 Misc 3d at 783} and for which there was no evidence presented regarding their reliability. (See Hambsch v New York City Tr. Auth., 63 NY2d 723 [1984].) Defendant countered that this court should apply the ruling of the Appellate Term, First Department, in Cross Cont. Med., P.C. v Allstate Ins. Co. (13 Misc 3d 10 [2006]), wherein the court held that a “plaintiff may not be heard to argue that defendant’s expert opinion was not derived from a ‘professional[,] reliable’ source or to otherwise challenge the reliability of its own medical records and reports.” (Id. at 11.)

The court denied defendant’s motion for a directed verdict of dismissal, and reserved decision on the ultimate issue as to the medical necessity, or lack thereof, of the billed-for supplies, pending a determination as to the admissibility of Dr. Corcoran’s testimony.

For the reasons stated herein, the court now finds that the testimony of Dr. Corcoran regarding the various reports not in evidence is admissible. As such, judgment is made in favor of the defendant and the matter is dismissed.

“It is well settled that, to be admissible, opinion evidence must be based upon one of the following: first, personal knowledge of the facts upon which the opinion rests: second, where the expert does not have personal knowledge of the facts upon which the opinion rests, the opinion may be based upon facts and materials in evidence, real or testimonial; third, material not in evidence provided that the out-of-court material is derived from a witness subject to full cross-examination; and fourth, material not in evidence provided the out-of-court material is of the kind accepted by the profession as a basis in forming an opinion and the out-of-court material is accompanied by evidence establishing its reliability.” (Wagman v Bradshaw at 86-87.)

The Court of Appeals has held that an expert witness may testify that he or she relied on out-of-court material provided that it is of a kind generally accepted in the profession as reliable and there is evidence presented establishing the reliability of the out-of-court material referred to by the witness (Hambsch v New York City Tr. Auth., supra).

Clearly in this matter, the first three possible requirements are not relevant, thereby leaving this court to decide if, pursuant to Wagman, the material not in evidence, which was relied upon by defendant’s witness, is accompanied by any evidence establishing its reliability. [*3]Pursuant to Hambsch, the court must{**20 Misc 3d at 784} also determine if the material in question is the kind accepted in the profession and if there has been any evidence presented establishing the reliability of those materials.

As to the Wagman issue, an initial interpretation of the testimony in relation to that case seems to indicate that the defendant offered no evidence as to the reliability of the documents relied upon, therefore requiring the court to disregard the testimony and thereby find in favor of the plaintiff. However, in addition to Cross Cont. Med., P.C. (supra), several recent cases in both the First and Second Departments, including the Appellate Term, First Department, seem to indicate that, at least in the context of no-fault first-party benefits, a plaintiff may not challenge the reliability of its own medical records which were relied upon by the insurer in preparing a peer review report.

First, in Home Care Ortho. Med. Supply, Inc. v American Mfrs. Mut. Ins. Co. (14 Misc 3d 139[A], 2007 NY Slip Op 50302[U] [App Term, 1st Dept 2007]), the Appellate Term, First Department, reversed a judgment in favor of the plaintiff in an action, as in the case here, brought by a medical goods supply company to recover assigned, first-party no-fault benefits. The lower court’s decision was at least partially based on its preclusion of the insurer’s expert’s testimony because it relied, at least in part, on a review of the assignor’s medical records. Following its previous decision in Cross Cont. Med., P.C. (supra), the court held that “[p]laintiff may not be heard to challenge the reliability of the assignors’ medical records and reports, which, in response to defendant’s verification requests, were affirmatively relied upon by plaintiff as proof of claim” (at *1).

Following the decision in Home Care Ortho Med. Supply, Inc. (supra), Judge Peter Sweeney of the Civil Court of the City of New York rejected the plaintiff’s contention that the insured’s experts should have been precluded from basing their professional opinions, in part, on the information obtained from plaintiff’s assignors during independent psychological examinations. Judge Sweeney went further in finding that

“the holding in Home Care Ortho. Med. Supply, Inc. is consistent with the legislative policy reflected in the numerous provisions of the No-Fault Law which provide for the prompt verification and disposition of claims (Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214, 222 [1996]; Presbyterian Hosp. in City of New York v Maryland Cas. Co., 90{**20 Misc 3d at 785} NY2d 274, 281 [1997]; Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224-225 [1986]; Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co. 827 NYS2d 217, 220 (35 AD3d 720) [2nd Dep’t 2006])” (Primary Psychiatric Health, P.C. v State Farm Mut. Auto Ins. Co., 15 Misc 3d 1111[A], 2007 NY Slip Op 50583[U], *3 [Civ Ct, Kings County 2007]).

Finally, in a very recent case, Andrew Carothers, M.D., P.C. v GEICO Indem. Co. (18 Misc 3d 1147[A], 2008 NY Slip Op 50546[U], *2 [Civ Ct, Kings County 2008]), the court, also citing Cross Cont. Med., P.C. (supra), actually permitted the plaintiff’s medical records, which at least in part formed the basis of its peer review, to be admitted into evidence through its claims examiner as defendant’s business records. That court rejected plaintiff’s argument that their admission was inappropriate since the claims examiner was incompetent to testify as to the reliability of the records as she had testified that they were received by the defendant from the [*4]treating physicians and she had no knowledge of how these doctors created or maintained their records in the regular course of business. While this court may not have extended the business records exception to the hearsay rule to such an extent, the holding is consistent with the holdings in the other cases referred to above.

As for the Hambsch requirement that the material be generally accepted in the profession as reliable and that there be evidence establishing its reliability, the cases referred to above clearly indicate that the plaintiff cannot be heard to challenge the reliability of the particular documents. As for the professional acceptability of these items, Dr. Corcoran testified that they were sufficient to form the basis of a peer review and her expertise was stipulated to by both parties. Without any testimony to the contrary, this court finds that the out-of-court documents relied upon by Dr. Corcoran in preparing her peer review and her testimony are of the type accepted in the profession as reliable.

As such, this court finds that the defendant has presented sufficient evidence to establish a defense based upon a lack of medical necessity, thus shifting the burden to the plaintiff to present its own evidence of medical necessity (see West Tremont Med. Diagnostic, P.C. v GEICO Ins. Co., 13 Misc 3d 131[A], 2006 NY Slip Op 51871[U] [App Term, 2d & 11th Jud Dists 2006]). Plaintiff presented no evidence or testimony in this matter,{**20 Misc 3d at 786} choosing instead to rely upon its argument made above and its cross-examination of Dr. Corcoran. Without more, this court finds that plaintiff has failed to refute defendant’s expert witness testimony and has failed to produce rebuttal evidence to prove the medical necessity of the medical supplies provided to its assignor.

Accordingly, judgment is hereby rendered for the defendant and plaintiff’s complaint is dismissed.

Civil Court of the City of New York, Richmond County

11704/07

Counsel for Defendant:

Gregory J. Guido, Esq.

SHORT & BILLY, P.C.

217 Broadway, Suite 511

New York, NY 10007

212-732-3320

Counsel for Plaintiff: Joaquin J. Lopez, Esq.

Baker, Sanders, Barshay, Grossman,

Fass, Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Katherine A. Levine, J.

Plaintiff Jin Huo Lac (“plaintiff” or “Lac”), a medical service provider, commenced this

action, pursuant to the No-Fault Law, to recover payments from defendant American Transit Insurance Company (“defendant”) for services plaintiff rendered to its assignor Maria Acosta (“assignor” or “Acosta”) as a result of the injuries that she sustained in an automobile accident. .

Defendant moves to dismiss the action on the ground that the assignor is entitled to Workers Compensation because she was attached to a taxi corp/ car service base as an employee and that the Workers Compensation Board (“Board”) has primary jurisdiction over issues of coverage. Defendant had previously denied plaintiff’s claim based upon the aforementioned reason (See Explanation of Benefits and NF 10 form attached as Exhibit 6 to defendant’s motion.) Defendant asserts that this court therefore lacks jurisdiction to hear the complaint pursuant to 11 NYCRR § 65-3.16(a)(9), Section 142 (7) of the Workers Compensation Law and precedent. Defendant also seeks to amend its answer to include the affirmative defense that this court lacks subject matter jurisdiction.

Plaintiff asserts that “a no-fault insurer asserting a defense that Workers Compensation is primary would need to establish, as a threshold matter, that the claimant was employed at the time of the underlying motor vehicle accident.” Plaintiff asserts that defendant failed to submit any admissible evidence that the assignor was employed at the time of the accident. To this end, plaintiff contends that the police accident report, which states that the TLC license plate on the car Acosta was driving is registered, is inadmissable as rank hearsay since there is no proof that the officer saw the accident. Even assuming, arguendo, that the report is admissible, plaintiff contends that defendant still has failed to establish that the assignor was “working” at the time of the accident; i.e. that the accident occurred during the course of employment.

Plaintiff and defendant stipulated at oral argument that the main issue before the court [*2]was whether the Workers Compensation Board has primary jurisdiction over the factual question of whether plaintiff’s assignor was acting within the scope of her employment at the time of the accident. An ancillary but determinative issue is whether the police accident report, which sheds light upon the issue of the assignor’s employment, is admissible.

In support of its position, defendant asserts that the assignor was the driver of a livery vehicle, license number T455140C , registered in New York State and insured by American Transit Insurance Company. In its reply papers defendant avers that the aforementioned license plate was authorized by the Taxi & Limousine Commission “which reasonably infers that the vehicle is a taxi or for-hire”. Defendant further avers that the police accident report and defendant’s review reveals that the vehicle operated by Acosta was registered and insured by Katt Corporation which defendant summarily asserts is a taxi/limousine service.

The police accident report (exhibit 7) does not have the two boxes – “not investigated at scene” and “accident reconstructed” on the first line checked off. Therefore, the police officer who filled out this form presumably observed the results of the accident. The accident report also sets forth that the car is registered to the Katt Corporation and lists the insurance policy number. The accident report checks off that a duplicate copy must be sent to the NYC Taxi & Limousine Commission.

The only document that relates to plaintiff’s employment, or lack thereof, is the NF-3 – “Verification of Treatment by Attending Physician or other provider of Health Service” (Exhibit 2 to defendant’s moving papers) which was presumably filled out by plaintiff Lac. Question number 4 – Occupation – is filled out as not applicable and question number 10 – “is condition due to injury arising out of patient’s employment?” is answered as “No” . The NF-3 is not signed but notes that the signature is on file.

Pursuant to Insurance Law §5102 (b), “first party benefits” means payments to reimburse a person for basic economic loss due to personal injury arising out of use or operation of a motor vehicle, less (2) “Amounts recoverable on account of such injury under…Workers’ Compensation benefits, or disability benefits under article nine of the Workers’ Compensation Law. 11 NYCRR 65-3.16(a)(9) provides that pursuant to Insurance Law, §5102 (b), “when the applicant is entitled to Workers’ Compensation benefits due to the same accident, the Workers’ Compensation carrier shall be the sole source of reimbursement for medical expenses.”

Similarly, Workers’ Compensation Law, §142 (7) provides 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 on…whether the accident occurred within the course of employment”

The courts have consistently ruled that the Legislature has vested “primary jurisdiction” in the Workers’ Compensation Board over the issue of the availability of coverage under the Workers’ Compensation Law, and that the plaintiff has “no choice but to litigate this issue before the Board”. Liss v. Trans Auto Systems, Inc., 68 NY2d 15, 21 (1986); Alvarez v. Empire Mut’l [*3]Ins. Co., 171 AD2d 262, 268 (1st Dept. 1991); Diane Becker v. Clarkstown Cent. Sch. Dist., 157 AD2d 641 (2d Dept. 1990); Lenox Hill Radiology v. American Transit Ins. Co., 2008 NY Slip Op. 50330U, 18 Misc 3d 1136A, 239 N.Y.L.J. 46 (Civil Ct., NY Co. 2008). See, Mattaldi v. Beth Israel Medical Center, 297 AD2d 234 (1st Dept. 2002)(threshold issue of whether the plaintiff was in the course of her employment must first be determined by the Board.

Where a case is likely to fall within the exclusive jurisdiction of the Board, the plaintiff bears the burden of pleading and proving the absence of compensation. The plaintiff must demonstrate either that 1) no compensation policy covering the plaintiff was in existence, or 2) that plaintiff was not an employee of the defendant, or 3) that the injury did not arise out of and in the course of plaintiff’s employment. O’Rourke v Long, 41 NY2d 219, 225 (1976); Weber v. State of New York, 104 Misc 2d 947 (Court of Claims, 1980).

“Where the availability of Workmen’s Compensation hinges upon the resolution of questions of fact or upon mixed questions of fact and law, the plaintiff may not choose the courts as the forum for the resolution of such questions.” O’Rourke v Long , 41 NY2d 219, 228 (1976). On the other hand, the presence or absence of insurance coverage for a particular employee is a question of law to which the court retains jurisdiction. Id. at 225. Likewise, where the determination of the employment status of an injured party involves a pure matter of law, such as statutory construction, the court retains jurisdiction. Id. at 224. See, Jean-Paul Fouchecouort v. Metropolitan Opera Assn, 537 F. Supp. 2d 629 (S.D.NY)(court determined that plaintiff, an opera singer, fell within the statutory definition of an employee and that plaintiff was therefore barred by the exclusive remedies provisions of the Workers Compensation Law from bringing suit before court).

Pared to its minimum, the procedural implications of O’Rourke are that “where the trial court can resolve the limited issues of employment status or the existence of a compensation policy in a reasonable summary fashion, it should do so. Conversely, where determination of an issue, such as whether the accident arose out of plaintiff’s employment, is likely to require extensive fact finding similar to a plenary trial, the court should, in the exercise of sound discretion, defer to the Board.” Weber v. State of New York, 104 Misc 2d 947 (Court of Claims, 1980). Then, the Board must be given an opportunity to find plaintiff’s injuries the result of a compensable accident; this claim being a jurisdictional predicate to a civil action. Liss, supra at 21; O’Rourke, supra at 226.

Plaintiff contends that before a defendant insurance company can argue that the Board has primary jurisdiction, it must establish, as a threshold matter, that the claimant was employed at the time of the underlying motor vehicle accident, citing Global Liberty Ins. Co. v. Abdelhaq, 36 AD3d 909 ( 2d Dept. 2007). It also asserts that it is impossible for defendant to establish employment since the one document that might shed light on the assignor’s employment – the police accident report – is rank hearsay.

The Second Department’s decision in Global Liberty is quite cryptic but does not appear [*4]in any way to diminish the force of the aforementioned precedent.^[FN1] At issue in Global was whether the court should permanently stay an arbitration proceeding over a claim for No-Fault benefits on the grounds that the insured was entitled to Workers Compensation benefits. The petitioner insurance company claimed that the insured’s “base affiliation” with a cab service obligated the latter to secure Workers Compensation for the insured. The court refused to issue a stay on the grounds that the petitioner insurance company “failed to submit evidence that Kenmore was the insured’s employer at the time of the accident.” In fact, the petitioner alleged that the insured violated his insurance contract by failing to notify petitioner that “he left his base affiliation with Kenmore”.

The most that can be garnered from Global is that when the only proof submitted is that the insured had some how ceased his relationship with the cab company, hence negating any implication that there was an employment relationship, the court need not relinquish jurisdiction to the Board. In the instant matter, on the other hand, there is conflicting evidence as to whether any employment relationship existed : the NF-3 seems to negate the existence of an employment relationship whereas the police accident report seems to confirm it. The issue thus presented is whether the police accident report constitutes admissible evidence and, if so, does it constitute sufficient evidence to raise a complicated factual question on employment so as to warrant the intercession of the Workers Compensation Board.

In Lenox Hill Radiology, supra , the court addressed the quantum of proof necessary for the court to decline jurisdiction in favor of the Workers Compensation Board. The defendant insurance company relied upon two documents in support of its position that the assignor was employed at the time of the accident. The first was an application for No-Fault benefits (N-F 2), filled out on behalf of the assignor and signed by the assignor. The question on this form inquiring whether the assignor was in the course of his employment at the time of the accident was answered yes. The second document was the MV -104 police accident report filled out by an officer which stated that the assignor ‘s vehicle was a taxi.

As to admissibility, the court found both documents to come within the business exception to hearsay. The police accident report could be considered “under the business record exception …to the extent it was based upon the personal observations of the police officer present at the scene and under a business duty to make it” Id. citing Westchester Medical Ctr v. State Farm Mut. Ins. Co., 44 AD3d 750, 753 ( 2d Dept. 2007). Since neither the box “not investigated at the scene” nor “accident reconstruction” were checked off, the court concluded that the officer’s notation that the assignor’s vehicle was a “taxi” was “necessarily based on his observation at the scene of the accident”. The same conclusion could also be drawn from the [*5]police report in the instant matter.^[FN2]

After citing the aforementioned precedent for the proposition that Worker’s Compensation is primary, the Lenox court stated that the “defendant must show only that there is potential merit’ to its claim that [the assignor] was employed at the time of the accident so as to trigger a determination by the Workers’ Compensation Board. Id. citing A.B. Medical Serv. PLLC v. American Transit Ins. Co., 8 Misc 3d 127A, 801 NYS2d 776 [App. Term 2d Dept. 2005). The court found that the NF-2 stating that the assignor was employed at the time of the accident, and the observation of the police officer that the vehicle was a taxi, was sufficient for defendant to meet its burden. The court also noted that the plaintiff had failed to tender any evidence about the assignor’s employment status.

Conversely, in A.B. Medical, supra , the court found that the insurance company had failed to establish the defense’s “potential merit” so as to warrant the Workers Compensation Board’s review of the facts. As against plaintiff’ s proof – the assignor’s sworn statement that he was not working when the accident occurred and the purported employer’ s sworn statement that the assignor was not working – the insurance company interposed only a claim adjuster’s statement that claimant was eligible for Workers Compensation, based upon an employer’s unsworn statement dated 18 months before the accident, and a police accident report that the court would not consider since it was offered for the first time in defendant’s reply papers. The court therefore concluded that the defendant’s claim that the assignor acted in the course of his employment at the time of the accident was “mere speculation” and failed to establish any issues of fact regarding Worker’s Compensation coverage that must be resolved by the Board.

In all cited cases but one ^[FN3] the courts have found primary jurisdiction to rest with the Board only where the movant has presented evidence about the employment relationship above and beyond a police accident report, i.e. the “right of control, method of payment, furnishing of material and nature of work, which are traditionally considered in determining whether an employment relationship existed”. Arvatz v. Empire Mutual Ins. Co, supra , 171 AD2d at 267. See, Juan Lapont v. Savvas Cab Corp., 244 AD2d 208 (1st Dept. 1997) (sufficient facts presented to demonstrate potential merit of Workers Compensation defense: plaintiff’s supervisor gave him work assignments and distributed his wages; supervisor also provided affidavit stating that he and plaintiff were both employees at defendant cab corporation and that defendant maintained a Workers Compensation insurance policy for its employees ); Hammer Associates, Inc v. Delmy Productions, Inc., 118 AD2d 441 (1st Dept. 1986) ( plaintiff entered into a written contract for a stipulated sum for a term certain and the time and place where he would work was determined by defendants leading to court’s conclusion that plaintiff was an employee “as a [*6]matter of law” ); Weber v. State, supra (claimant’s decedent employed by the State as a custodian, the policy of compensation insurance covering claimant was procured by state and was in full force and effect at time of accident, and claimant’ s demise arose out of and in course of employment); Lenox Hill Radiology, supra (police accident report and application for no-fault benefits (N-F 2)..

Based on the aforementioned precedent and the evidence presented, this court concludes that the defendant has failed to show that there is potential merit’ to its claim that the assignor was employed at the time of the accident so as to trigger a determination by the Workers’ Compensation Board. Its motion for summary judgment to dismiss the complaint is denied.

Defendant’s motion to amend its answer to include an affirmative defense based upon this court’s lack of subject matter jurisdiction is granted. Leave to amend pleadings should be freely given (CPLR §3025[b]), and, in the absence of surprise or prejudice, it is an abuse of discretion as a matter of law for a trial court to deny leave to amend an answer during a trial. McCaskey, Davies & Assocs. v. N.Y.C. Health & Hops. Corp., 59 NY2d 755, 757 (1983); Smith v. Pizza Hut of America, Inc., 289 AD2d 48 , 50 (1st Dept. 2001). Plaintiff does not even assert, in its cross motion for summary judgment, that it will be prejudiced.

While the court, as set forth above, has serious doubts about the viability of defendant’s argument that this court lacks subject matter jurisdiction, both parties will have an opportunity, at trial, to present their positions as to whether, as a matter of law, there is Workers Compensation insurance coverage for the assignor and whether the assignor falls within the statutory definition of an employee under the Workers Compensation Law. This court reserves a decision on whether plaintiff has proven its prima facie case until trial.

The foregoing constitutes the decision and order of the court.

Dated:June 12, 2008

Staten Island, NYHon. Katherine A. Levine

Judge, Civil Court

Appearances

Counsel for Defendant:

Gregory J. Guido, Esq.

SHORT & BILLY, P.C.

217 Broadway, Suite 511

New York, NY 10007

212-732-3320

Counsel for Plaintiff: [*7]

Joaquin J. Lopez, Esq.

Baker, Sanders, Barshay, Grossman,

Fass, Muhlstock & Neuwirth

150 Herricks Road

Mineola, NY 11501

516-741-4799

Footnotes

Footnote 1:There are no cases which, to this court’s knowledge, have followed Global whichprobably accounts for plaintiff’s citation solely to Global.

Footnote 2: The only difference is that here, there is no notation that the vehicle was a taxi. The officer identified the make of the vehicle as a Lincoln.

Footnote 3: Attached to defendant’s papers is the case of Precision Diagnostic Imaging v. American Transit Ins. Co., 054411 CV 2003 (Civil Ct., NY Co. 5/16/05).

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

2765/08

For plaintiffs:

Edward Shapiro. P.C.

Wantagh, NY

For defendant:

McDonnell and Adels, P.C.

Garden City, NY

Arlene P. Bluth, J.

Upon the foregoing cited papers and after argument, defendant moves for summary judgment pursuant to CPLR §3212 dismissing the complaint or, in the alternative, for an order pursuant to CPLR 3124 compelling plaintiffs to respond to its discovery demands on Mallella issues. For the following reasons, the branch of the motion for summary judgment is denied and the branch of the motion compelling discovery is granted to the extent set forth below.

In this action, plaintiffs seek to recover first-party No-Fault benefits in the amount of $3,937.33, plus statutory, interest, costs, and attorneys’ fees, for medical services allegedly rendered to their assignor, Marie Boucicaut, following an alleged automobile [*2]accident on April 4, 2003.

Summary Judgment

Defendant contends that the underlying incident was an intentionally caused loss which is not covered by defendant’s insurance policy and seeks summary judgment dismissing the complaint. In support thereof, defendant submits the affidavit of Christopher Howard, an investigator in its Special Investigation Unit who was personally involved in the investigation. Mr. Howard sets forth detailed results of his investigation, all of which certainly tend to show that the underlying incident was staged, and thus not covered by the policy. In opposition, the plaintiff has failed to contradict any of Mr. Howard’s sworn statements or any of the voluminous documents annexed thereto.

Although there are many cases where a court has found that the investigator’s affidavit either is or is not sufficient to defeat a plaintiff’s motion for summary judgment, defendant has failed to cite a single case where summary judgment was granted to a defendant based upon a lack of coverage/staged accident defense supported by an investigator’s affidavit. From the uncontradicted, overwhelming circumstantial evidence in this record, this Court believes that if there were cases where summary judgment could be granted to the defendant, this would be one of those cases; the only evidence more convincing than the circumstantial evidence presented here would be if the driver and passengers admitted under oath that they fabricated their stories and withdrew their claims with prejudice. Unfortunately, this Court is constrained to deny defendant’s motion for summary judgment because it appears that summary judgment is simply unavailable to a defendant denying a claim on the grounds that it involved a staged accident.

Indeed, even when the defendant’s testimony is sufficient to convince the Appellate Term that the defendant’s refusal to pay the claim was based upon its founded belief that the injuries did not arise out of an insured incident, such a finding is only sufficient to create an issue of fact; it is not a basis for granting summary judgment. The Appellate Term, Second Department has spoken on this point in A.M. Medical Services, P.C. v. Nationwide Mut. Ins. Co., 12 Misc 3d 143(A), 824 NYS2d 760 (App Term 2d Dept 2006). There, even though the evidence was compelling in defendant’s favor, that is, the driver and passenger admitted under oath that they faked the accident and withdrew their claims with prejudice, the Appellate Term reversed the trial court’s grant of summary judgment to the defendant.

In A.M. Medical Services, the EUO transcripts showed that when the assignor and [*3]driver were confronted with suspicious facts about their multiple “accidents,” they withdrew their claims with prejudice. The Appellate Term held:

[N]evertheless, the foregoing facts were sufficient to demonstrate that defendant’s refusal to pay the claim was based upon a “founded belief that the alleged injur[ies] do[ ] not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; GPM Chiropractic, P.C. v State Farm Mut. Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op 50861[U] [App Term, 2d & 11th Jud Dists] ). This presented an issue of fact as to whether there was a lack of coverage. Consequently, plaintiff’s motion for summary judgment was properly denied and defendant’s cross motion for summary judgment should have been denied.

Even when the court found the defendant’s evidence convincing and that it was absolutely right to deny the claim based upon a founded belief of a staged accident, the Appellate Term still reversed trial court’s grant of summary judgment on those grounds.

But the Appellate Term’s decision does not stop there. The Court sua sponte ordered a sanctions hearing against the plaintiff’s attorney, and criticized him for pursuing an appeal frivolously:

Despite being advised of [the evidence of withdrawals], and being provided with background information which led to the “withdrawals,” plaintiff’s counsel submitted a reply affirmation wherein he continued to seek summary judgment in favor of his client, After having been unsuccessful [below], and despite being faced with the facts which clearly support a founded belief of fraud, plaintiff’s counsel took an appeal…

Therefore, the Appellate Term refused to affirm summary judgment even though it clearly thought that the plaintiff should not have pursued its claim when faced with the same evidence. If the Appellate Term thought the evidence of a staged accident was strong enough to consider sanctions against the plaintiff’s attorney for pursuing the claim but still refused to grant summary judgment to the defendant, then the only explanation is that there is a per se rule against summary judgment dismissing a claim based on staged accident. Absent a contrary decision in this Department, this Court, following A.M. Medical Services, denies defendant’s motion for summary judgment. Mountain View Coach Lines v Storms, 102 AD2d 663, 664, 476 NYS2d 918 (2d Dept 1984); People v Brisotti, 169 Misc 2d 672, 673, 652 NYS2d 206, 207 (App Term 1st Dept 1966); 545 West Co. v Schachter, 16 Misc 3d 431, 837 NYS2d 549 (Civ Ct, NY Cty, 2007).

Compelling Discovery

Defendant also seeks the alternative relief, pursuant to CPLR 3124, of an order compelling plaintiffs to respond to defendant’s discovery demands. Nowhere in the seven pages of opposition does plaintiff oppose this relief, nor have either of the plaintiffs ever moved for a protective order. The outstanding discovery includes a notice to take the depositions of Deepak Sachdev, M.D., Stella Ilyaev, M.D., Sanford Yu, L.Ac. and Karen Cinquemandi, D.C. Defendant has set forth uncontradicted documentary evidence that Dr. Sachdev is listed the owner of close to a dozen medical facilities, and has also annexed documents showing that he been arrested for selling prescriptions from one of his facilities in the Bronx as part of a multi-million dollar medicaid fraud ring. (His case is currently pending). The defendant has annexed proof that Dr. Sachdev is also listed on at least two of the bills sued upon herein as the employee of plaintiff Right Care Medical who actually performed the medical services for the assignor.

Plaintiff chose to bring this action, and civil litigants are obligated to abide by the CPLR. According to the CPLR, the defendant has the right to depose the plaintiff. Here, Dr. Sachdev, as the owner of the facility and the practitioner who actually rendered the services, must appear for his deposition. Furthermore, he must bring with him to the deposition the documents he may need to refer to in answering the questions relating to plaintiff’s corporate structure; if he does not bring the documents and he cannot answer the questions, then defendant may bring on a motion for further relief. In addition to the plethora of uncontradicted reasons submitted by the defendant tending to show that plaintiffs may be fraudulently incorporated and thus not entitled to insurance payment, the Court notes that Dr. Sachdev may be unaware of his corporation’s billing practices inasmuch as the bills annexed to the defendant’s motion show the each NF3 for services allegedly provided by Dr. Sachdev state that Dr. Sachdev is a “nerologist;” he is no more a “nerologist” than his counsel is an “attor-knee.” A person who worked so hard to become a neurologist would know how to spell it.

Accordingly, defendant’s motion to compel discovery is granted to the extent of ordering the deposition of Deepak Sachdev, M.D. on or before August 1, 2008 at the offices of defendant’s attorneys. The Court is allowing the deposition outside New York City because it appears that Dr. Sachdev resides in Franklin Square, Nassau County, where defendant’s offices are located. If Dr. Sachdev shows proof (which proof must be shown before July 1, 2008) that he does not reside in Nassau County, then the deposition will be held at the Courthouse, 111 Centre Street, New York, New York on or before August 1, 2008 or at another location within New York City, agreeable to the parties. If Dr. Sachdev fails to appear for the Court-ordered deposition, then the plaintiff Right Care [*4]Medical, P.C. will be precluded from offering any evidence at the trial or upon a motion for summary judgment.

With respect to plaintiff AA Acupuncture Services, P.C., defendant has not shown that Dr. Sachdev is involved in that professional corporation and has not submitted any bills relating thereto. Although the documents annexed to defendant’s papers show that Mr. Yu is a principal in AA Acupuncture Service, P.C., there are no allegations that his corporation may be fraudulently incorporated, nor are there bills to show he performed any of the services billed for herein. In addition, there are no specifics alleged regarding the other two individuals listed in the deposition notice, Stella Ilyaev, M.D. and Karen Cinquemandi, D.C. Accordingly, this Court does not have a basis to order any other depositions at this time.

This is the Decision and Order of the Court.

Dated: May 30, 2008

New York, New York

Arlene P. Bluth

Judge, Civil Court

Civil Court of the City of New York, Richmond County

11810/07

Counsel for Plaintiff:

Law Offices of Emilia I. Rutigliano

2503 65th Street

Brooklyn, NY 11204

718-382-1266

Counsel for Defendant:

Jean Kang, Esq.

Jaffe & Koumourdas, LLP

40 Wall Street, 12th Floor

New York, NY 10005

212-809-7800

Katherine A. Levine, J.

Plaintiff Park Slope Medical and Surgical Supply, Inc.(“plaintiff” or “Park Slope”) brought this action to recover the sum of $817.25 with statutory interest, attorney fees, and costs for medical equipment it provided to its assignor Alicia Marsh (“Marsh”). Park Slope moves for summary judgment on the grounds that it has demonstrated a prima facie case of entitlement to payment for the medical supplies it furnished to Marsh. Defendant cross moves for summary judgment and to dismiss this action on the grounds that Park Slope failed to comply with the two verification requests it mailed on January 18, 2007 and February 17, 2007 wherein it requested the NF-3s, assignment of benefits and the initial narrative report from the referring physician.

Country-Wide states that its request for copies of the NF-3 and assignment of benefits are still outstanding and that it therefore was not required to pay the claim. The complaint should thus be dismissed because this action was prematurely filed.

Park Slope does not dispute defendant’s assertion that it never provided the above requested information, but asserts as justification that the second verification request was improper because it was made on the 30th day after the first request for verification. Plaintiff argues that Insurance Regulation 11 NYCRR Section 65-3.6 (b) bars the insurance carrier from issuing a second verification request until thirty days have elapsed from the time it made its first verification request, during which time it has received no response to its request.

Pursuant to Insurance Law § 5106(a) and 11 NYCRR 65-3.5, an insurer is required to [*2]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. Mt Sinai Hosp. v. Chubb Group of Ins. Cos., 43 AD3d 889-90 (2d Dept. 2007). See, Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d 274, 278 (1997). An insurer may toll the 30 day period by properly requesting verification within 15 days from the receipt of the bill (11 NYCRR 65.15(d)); Psych. & Massage Therapy Assoc., PLLC v. Progressive Casualty Ins. Co., 5 Misc 3d 723 (Civ Ct, Queens Co., 2004). If the “requested verification has not been supplied to the insurer 30 calendar days after the original receipt, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested….” 11 NYCRR Section 65-3.6(b). “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 569, 570 (2d Dept. 2004). See Insurance Law § 5106(a); 11 NYCRR 65-3.5(c), 65-3.8(a)(1).

As is typical in the area of No-Fault Law, two diametrically opposed decisions have been rendered by the Civil Court on this issue – whether the insurer must wait until thirty days have lapsed before sending its follow-up request or be precluded from offering defenses at trial. In Psych. & Massage Therapy, supra ^[FN1] Judge Agate determined that neither case law nor statutory language required the insurer to wait thirty days before it could submit a follow-up request or be precluded from offering any defenses at trial. Id at 724. Interpreting the predecessor to Regulation 11 NYCRR § 65-3.6 (b) ^[FN2] , the court stated that “(w)hile the regulations require an insurer to submit a follow-up request within 30 days from the date of submission of the request, it does not mandate that the insurer wait 30 days before sending a follow up request. Instead, this time frame is a limit to the amount of time an insurer may wait before sending a follow up request.” Id at 724-25. The court then found that:

penalizing defendant for sending a follow-up request 25 days after its initial request is inconsistent with the goals of the No-Fault Law. The purpose of the No-Fault Law is to allow swift compensation for qualified injured persons from the insurance companies. (citation omitted). The regulations require insurers to act quickly in evaluating insured claims and to avoid prejudicial delays (citation omitted). The verification requirement exists in order for insurers to have their opportunity to promptly investigate and respond to legitimate claims, not to delay payment (citation omitted).

Psych. & Massage Therapy Assoc., PLLC, supra , p.725.

The court further noted that plaintiff’s attempt to penalize defendant for being too prompt [*3]would be totally inconsistent with defendant’s duties under the No-Fault Law to promptly respond to the insured’s claims. Id at 726.Defendant would suffer undue prejudice if a verification request was found improper as it would have to pay for a claim for which it complied with the regulations. Moreover, defendant’s early follow-up verification request did not prejudice plaintiff in any manner, as plaintiff was not under any time restraint to respond to defendant’s verification. Id. On appeal, the Appellate Term stated, without any elaboration, that: “despite defendant’s untimely denial of plaintiff’s claim for the sum of $ 1,360.48, defendant was not precluded from asserting the defense of lack of coverage” Psych. & Massage Therapy Assoc., PLLC v. Progressive Cas. Ins. Co., 2006 NY Slip Op 51351U, 12 Misc 3d 140A, 824 NYS2d 766 (App. Term, 2d Dept. 2006).

In Seaside Medical P.C. v. State Farm Mutual, 12 Misc 3d 1127, 819 NYS2d 819(Civil Ct. Richmond Cty 2006), on the other hand, Judge Sweeney credited the plaintiff’s argument that the toll to the defendant insurer’s time to pay or deny the claim was eviscerated when the defendant sent out the second verification request only 28 days after the first verification request had been mailed. After citing to a number of cases which were not on “all fours” with the instant matter because the defendants in those cases did not do any follow up after the plaintiff had failed to comply with the first verification request, Judge Sweeney noted that here the defendant did follow up but not within the 10 day period specified in 11 NYCRR 65-3.6(b). While the defendant acted “diligently,” it did not strictly adhere to the language of the regulation which was fatal since “No -Fault Regulations are in derogation of the common law and must be strictly construed.” 12 Misc 3d at 1130 citing Presbyterian Hosp. in NY. v. Aetna Cas. & Sur. Co., 233 AD2d 431, 432 (2d Dept. 1996) lv. den.. 90 NY2d 802(1997). Since defendant did not comply with the clear language of 11 NYCRR 65-3.6(b) requiring it to follow up with the plaintiff for the verification at least once during the 10 day period specified in the regulation, Judge Sweeney found that the toll “occasioned by defendant’s initial requests for verification dissipated ab initio.” Id at 1131.

While both civil courts correctly noted that no other court has directly dealt with this precise issue, the Second Department found, without any explanation, that the 30 day period in which an insurer must pay or deny a claim is tolled where there was an outstanding follow up verification request that was sent before the 30 day waiting period expired. At issue in New York & Presbyterian Hospital v. American Transit Ins. Co., 287 AD2d 699 (2d Dept. 2001) was the form of the verification letters sent by the defendant insurer, as opposed to the timeliness of the verification requests. The lower court granted summary judgment to the respondent medical provider because the defendant insurer’s request for additional information was not made on the forms prescribed by 11 NYCRR 65.15. In reversing the lower court’s grant of summary judgment, the Second Department stated that if the requested information is not received within 30 days, the insurer must send a follow up letter within 10 days thereafter. The court commented that the defendant insurer had timely requested additional verification of the claim from respondent on October 5, 1999 and when such verification was not received within 30 days, it sent a timely follow up letter dated November 1, 1999 (approximately 27 days after the first request).

In the instant matter, the follow up verification request was sent on the 30th day after the original request for verification was sent. As set forth above, Regulation 11 NYCRR 65-3.6(b) [*4]states: “if any 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…” Does the wording of this statute mandate that the insurer wait until the 31st day before he sends the follow up request or may he send it on the 30th day? The language of NYCRR 65-3.6(b), which must be strictly construed, does not answer this question as neatly as was the case in Sea Side Medical (28 days after the initial request) or Psych. & Massage Therapy (25 days after the initial request).

Where the literal meaning of the statute is unclear, the courts may look to the legislative history of the statute or regulation, as the primary consideration of the court is to ascertain and give effect to the intention of the Legislature. Statutes, §92; Dodge v. Bd. of Educ. Schodack C.S.D., 167 Misc 2d 186 (Sup. Ct. Albany Co. 1996). In construing a statute, a court must look to its “spirit and purpose, and objectives of the enactors must be kept in mind.” Western Regional Off-Track Betting Corp. v. SEIU, 115 Misc 2d 124, 127 (Sup. Ct. Erie Co. 1982). Thus, in construing a law , a court ” will sometimes be guided more by its purpose than its phraseology, whereby a statute is not to be read with a literalness that destroys the meaning, intention, purpose or beneficial end for which the statute has been designed.” Statewide Roofing v. Eastern Suffolk Bd. of Coop. Educ. Servs., 173 Misc 2d 514 (NY Sup. Ct. 1997). See generally, McKinney’s Cons Laws of NY, Book 1, Statutes §96.

It is imperative in ruling upon No Fault insurance matters not to lose sight of the fundamental goal of the regulatory scheme, which is “designed to promote prompt payment of legitimate claims.” Nyack Hosp. v. General Motors Acceptance Corp., 8 NY3d 294, 300 (2007). As the Court of Appeals noted in Medical Society of State v. Serio, 100 NY2d 854 (2003), the most significant changes made by the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65), was a reduction in the time frames applicable to the filing of notices and proofs of claim—a consequence of the Superintendent’s determination that much of the abuse was associated with the lengthy time frames within which claims could be presented to insurers . The Superintendent also concluded that the shorter time frames would better effectuate the legislative purpose of providing prompt compensation “as the loss is incurred, while reducing rampant abuse” 100 NY2d, supra at 862.

Accordingly, a court must interpret and apply the No-Fault Regulations in a manner leading to the prompt payment of valid, documented claims. In light of the aforesaid principles of statutory construction and the purpose behind the No-Fault Regulations, this Court finds that defendant’s sending the follow up verification request on the 30th day after the original request for verification was timely and in accordance with the regulations. Since Country-Wide has established that the verification request in this action was unsatisfied, its time period to pay or deny the claim has not elapsed. See Vista Surgical Supplies, Inc. v. General Assurance Co., 12 Misc 3d 129(A), 819 NYS2d 214 (App Term, 2nd & 11th Jud Dists, 2006). Therefore, this action is premature and must be dismissed Doshi Diagnostic Imaging Services v. State Farm Insurance Co., 16 Misc 3d 42 (App Term, 2nd Dept., 2007).

Accordingly, defendant’s motion to dismiss the complaint is granted in its entirety and plaintiff’s motion for summary judgment is denied.

This constitutes the decision and order of the court.

Date: May 27, 2008

____________________________________

Hon. Katherine A. Levine

Judge, Civil Court

Staten Island, NY

Appearances

Footnotes

Footnote 1: The only difference between the instant matter and Psych & Massage Therapy, supra is that in the latter case the second verification request was sent 25 rather than 30 days after the submission of the first verification request.

Footnote 2:The pertinent regulation in effect for policies renewed prior to April 5, 2002 was 11 NYCRR 65.15(e)(2).

[*1]

Civil Court of the City of New York, Kings County, May 27, 2008

APPEARANCES OF COUNSEL

Edward Shapiro, P.C., Wantagh, for plaintiff. Freiberg & Peck, P.C., New York City, for defendant.

{**20 Misc 3d at 554} OPINION OF THE COURT

Peter P. Sweeney, J.

{**20 Misc 3d at 555}In this action to recover assigned first-party no-fault benefits, on January 31, 2008 the parties agreed to a trial on stipulated facts and to the admission into evidence of various exhibits. The question presented is whether the failure of plaintiff’s assignor to appear for an examination under oath (EUO) constituted a valid basis for denial of the claim. For the reasons that follow, the court answers this question in the negative.

Factual Background

Plaintiff All-Boro Medical Supplies, Inc. submitted a claim to defendant Progressive Northeastern Insurance Company for first-party no-fault benefits in the amount of $442.50 for durable medical equipment that it had provided to its assignor, Tony Stringer. Defendant received the claim on February 14, 2005. The motor vehicle accident in which Mr. Stringer was allegedly injured occurred on January 5, 2005.

On January 28, 2005, before it received the claim, defendant had sent Mr. Stringer a letter directing him to appear for an EUO on April 21, 2005. Mr. Stringer failed to appear for the EUO on that date. On April 22, 2005 defendant sent a second letter to Mr. Stringer, rescheduling the EUO for May 3, 2005. Again, Mr. Stringer failed to appear. On May 18, 2005 defendant denied the claim on the ground that Mr. Stringer failed to appear for the EUO.

Discussion

As a condition to coverage under the revised Personal Injury Protection Endorsement, which is required to be included in automobile insurance policies issued or renewed after April 5, 2002, “the eligible injured person . . . shall . . . as may reasonably be required submit to examinations under oath by any person named by the [insurer] and subscribe the same” (Insurance Department Regulations [11 NYCRR] § 65-1.1 [d] [Sec I, Conditions, Proof of Claim (b)]). Inasmuch as the policy period for newly issued and renewed automobile insurance policies is one year (Insurance Law § 3425 [a] [8]), it can be assumed that the automobile insurance policy applicable in this case contained the endorsement since the underlying motor vehicle accident occurred after April 2003 (see Eagle Chiropractic, P.C. v Chubb Indem. Ins. Co., 19 Misc 3d 129[A], 2008 NY Slip Op 50525[U] [App Term, 9th & 10th Jud Dists 2008]).

Another condition to coverage under the endorsement is that an “eligible injured person shall submit to medical examination{**20 Misc 3d at 556} by physicians selected by, or acceptable to, the [insurer], when, and as often as, the [insurer] may reasonably require” (11 NYCRR 65-1.1 [d] [Sec I, Conditions, Proof of Claim]). In Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co. (35 AD3d 720, 721 [2d Dept 2006]), the Court interpreted this language to mean that an insurer may require an eligible injured person to appear for a medical examination either “before the claim form is submitted or after the claim form is submitted.” The court stated that such interpretation furthers “the policies underlying no-fault insurance, including, inter alia, the expeditious processing of claims” (35 AD3d at 722 [citations omitted]). There is no reason to apply a different rule to EUOs.

The court thus finds that defendant acted within its rights under the endorsement in scheduling an EUO of Mr. Stringer before it had received the claim. Indeed, had the defendant not received the claim form on February 14, 2005, Mr. Stringer’s failure to appear for the EUO would have constituted a valid ground for denying the claim “retroactively to the date of loss” (35 AD3d at 722). While this court agrees that when an EUO is requested as additional verification of a claim, the insurer is required to schedule the EUO within the same time period as medical examinations, to wit, within 30 calendar days from the date of receipt of the prescribed verification form (see All-Boro Med. Supplies, Inc. v Progressive Northeastern Ins. Co., 17 Misc 3d 950, 952 [Civ Ct, Kings County 2007, Edwards, J.]; see also S & M Supply v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 130[A], 2004 NY Slip Op 50693[U] [App Term, 9th & 10th Jud Dists 2004]), there is no such requirement for the scheduling of preclaim EUOs.

While defendant acted within its rights under the endorsement in scheduling Mr. Stringer for a preclaim EUO for April 21, 2005, once defendant received the claim from the plaintiff, the defendant was required to adhere to the statutory and regulatory scheme for the processing of no-fault claims. Thus, defendant was required to pay or deny the claim within 30 calendar days of its receipt (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 278 [1997]) or request additional verification of the claim (11 NYCRR 65-3.5). Generally, a request for additional verification of a claim must be made within 15 business days of receipt of one of the prescribed verification forms (see 11 NYCRR 65-3.5 [b]). Where an insurer makes a{**20 Misc 3d at 557} timely and proper request for additional verification, the 30-day period in which it has to either pay or deny a claim does not begin to run until all demanded verification has been provided (11 NYCRR 65-3.8 [a] [1]).

Here, while defendant had already scheduled Mr. Stringer’s EUO for April 21, 2005 before it had received the claim, if defendant insisted upon conducting the EUO before deciding whether to pay or deny the claim, it had no choice but to reschedule the EUO to a date within 30 calendar days from February 14, 2005, the date it received the claim (see All-Boro Med. Supplies, Inc., supra; S & M Supply, supra). As a matter of law, by failing to reschedule the EUO, defendant could not assert Mr. Stringer’s failure to appear for the EUO as its basis to deny the claim (see King’s Med. Supply Inc. v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450[U] [App Term, 2d & 11th Jud Dists 2005]; Ocean Diagnostic Imaging P.C. v Allstate Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50140[U] [App Term, 2d & 11th Jud Dists 2006]).

Since plaintiff established its entitlement to judgment as a matter of law by demonstrating that the necessary billing documents were mailed to and received by the defendant and that payment of the no-fault benefits was overdue (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742-743 [2d Dept 2004]; New York & Presbyt. Hosp. v Countrywide Ins. Co., 44 AD3d 729, 730 [2d Dept 2007]) and defendant has failed to establish a viable defense to the action, it is hereby ordered that judgment be entered in favor of the plaintiff in the amount of $442.50, together with interest and attorneys fees pursuant to Insurance Law § 5106 and regulations promulgated thereunder, plus costs and disbursements.

[*1]

Civil Court of the City of New York, New York County, May 21, 2008

APPEARANCES OF COUNSEL

Barry & Associates, LLC, Plainview, for defendant. Baker, Sanders, Barshy, Grossman, Fass, Muhlstock & Neuwirth, Mineola, for plaintiff.

{**20 Misc 3d at 434} OPINION OF THE COURT

Arlene P. Bluth, J.

{**20 Misc 3d at 435}Defendant’s motion for summary judgment is granted and the complaint is dismissed.

Plaintiff commenced the instant action to recover first-party no-fault benefits in the amount of $2,670.39, plus statutory interest, costs and attorneys’ fees, for three MRI studies it allegedly conducted for its assignor, Nila Sokol. Two were allegedly performed on June 7, 2007 for which plaintiff billed defendant $879.72 and $912, and a third on June 12, 2007 for $878.67.

Plaintiff’s attorneys submitted each bill to defendant with a form cover letter on the attorneys’ letterhead. In that letter, the attorneys introduce themselves and state no less than three times that defendant was to deal with the attorneys from then on. (“Accordingly, please forward all future correspondence to our attention . . . Please make this payment payable to the above-referenced provider, C/O this office . . . All correspondence including payment, EOB’s, verification requests, etc. must be mailed directly to this office. Failure to do so may result in unnecessary litigation.”) The clear import of this repetitive direction—to be followed under threat of “unnecessary litigation”—is that plaintiff’s attorneys are its agents for all purposes related to the bill, and defendant must deal directly with plaintiff’s attorneys. In addition, the end of the letter contains the representation that any enclosed bills, forms, “doctor’s reports, notes and narratives were prepared solely by the above-referenced provider.” Clearly, then, the plaintiff did not submit any documents from the referring physician; there was no MRI referral form or prescription submitted with any of the bills.

The defendant’s claims examiner, Cinnamon Houston, states that defendant received the first bill (for $879.72) on June 26, 2007 and timely sent a verification request on July 10, 2007. That request was sent directly to the plaintiff’s attorneys and requested two items: a letter of medical necessity from the referring physician and a claim form with a valid provider’s signature. There can be no dispute that plaintiff’s attorneys received this request because they responded thereto by letter dated July 17, 2007. Their response, even though titled “Verification Compliance,” completely ignored the bona fide request. Instead, it said, in essence, “whatever we gave you was good enough and this provider is not giving you anything else. If you need something from someone else, go ask them. Now pay the bill.” In addition, the attorneys state: “Any further requests to this provider are deemed unnecessary and in violation{**20 Misc 3d at 436} of 11 NYCRR 65-3.2 (c).” This section states an insurer should “not demand verification of facts unless there are good reasons to do so.” (Id.) Nevertheless, Ms. Houston sent a follow-up request to plaintiff’s attorneys on August 13, 2007.

Defendant received the second bill (for $912) with the same form cover letter on June 27, 2007, and it sent a request for verification, seeking the same information as sought for the other MRI taken the same date, to plaintiff’s attorneys on July 10, 2007. There can be no dispute that plaintiff’s attorneys received this request, because they responded thereto by letter dated July 17, 2007. Their response was the same form letter referred to above, and Ms. Houston sent a follow-up request on August 10, 2007.

When defendant received the third bill, Ms. Houston timely sent a verification request. This time, plaintiff’s attorneys did not send a response and Ms. Houston sent a follow-up request on August 10, 2007.

In order to prevail on its motion for summary judgment, the movant must make a prima facie showing of entitlement to judgment as a matter of law, through admissible evidence, eliminating all material issues of fact. (Alvarez v Prospect Hosp., 68 NY2d 320 [1986].) Once the movant demonstrates entitlement to judgment, the burden shifts to the opponent to rebut that prima facie showing. (Bethlehem Steel Corp. v Solow, 51 NY2d 870, 872 [1980].) In opposing such a motion, the party must lay bare its evidentiary proof. Conclusory allegations are insufficient to defeat the motion; the opponent must produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact. (Zuckerman v City of New York, 49 NY2d 557, 562 [1980].)

In deciding the motion, the court must draw all reasonable inferences in favor of the nonmoving party and must not decide credibility issues. (Dauman Displays v Masturzo, 168 AD2d 204 [1st Dept 1990], lv dismissed 77 NY2d 939 [1991].) As summary judgment is a drastic remedy which deprives a party of being heard, it should not be granted where there is any doubt as to the existence of a triable issue of fact (Chemical Bank v West 95th St. Dev. Corp., 161 AD2d 218 [1st Dept 1990]), or where the issue is even arguable or debatable (Stone v Goodson, 8 NY2d 8 [1960]).

The court finds Ms. Houston’s affidavit explaining preparation of the verification requests and the mailing procedures with respect to all of the verification requests (the initial three{**20 Misc 3d at 437} and the follow-up requests) sufficient to prove timely and proper mailings. Ms. Houston stated that she personally prepared each mailing, put each in the envelope, checked that it was properly addressed, and put it in her outgoing mail bin. She also stated that the regular office practice is that the mail person comes by at approximately 3:45 p.m. each afternoon, collects and stamps the mail, and then delivers it to the post office that day.

Although plaintiff’s opposition correctly notes that Ms. Houston did not swear that it was her duty to ensure compliance with defendant’s mailing procedures and that she did not herself drop it in the mailbox, it is enough that “the defendant submitted admissible evidence in the form of an affidavit of an employee with knowledge of the defendant’s standard office practices or procedures designed to ensure that items were properly addressed and mailed” (St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123, 1124 [2d Dept 2008], citing New York & Presbyt. Hosp. v Allstate Ins. Co., 29 AD3d 547 [2d Dept 2006], Hospital for Joint Diseases v Nationwide Mut. Ins. Co., 284 AD2d 374 [2d Dept 2001], Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2d Dept 2001], and Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d Dept 2007]). Ms. Houston’s detailed affidavit fulfills this requirement.

The verification requests were sent to the plaintiff’s law firm. A letter properly mailed is presumed to have been received. (News Syndicate Co. v Gatti Paper Stock Corp., 256 NY 211 [1931].) Although an associate of that law firm submitted an affirmation in opposition to this motion, no attempt to rebut the presumption was made; conspicuously absent from that affirmation is a simple denial of receipt of the requests for verification. In opposing a motion for summary judgment, the nonmoving party must lay bare all of the facts at its disposal regarding the issues raised in the motion. (Zuckerman v City of New York, 49 NY2d 557, 562 [1980].) It is no excuse that the opponent could have submitted such evidence but did not because the opponent believed that the movant’s papers were insufficient. (Mgrditchian v Donato, 141 AD2d 513 [2d Dept 1988].) The affirmant in opposition was in the position to, but did not even attempt to, rebut the presumption that plaintiff’s law firm received the requests for verification shortly after Ms. Houston stated that they were mailed. Therefore, there is no question of fact as to proper mailing of the verification requests.

Having determined that defendant proved its timely and proper mailing of the requests for verification, the court turns{**20 Misc 3d at 438} to the other bases for plaintiff’s opposition. Plaintiff claims that defendant failed to present a “good reason” why further verification was necessary; this court disagrees. This court does not believe that it is unreasonable to ask for a letter of medical necessity before a carrier pays more than $2,500 for three MRIs conducted during the course of one week, approximately six weeks after an alleged accident. Defendant is not required to provide a blank checkbook to plaintiff. Rather, defendant is entitled to find out whether and why each MRI was prescribed; in other words, the carrier is entitled to inquire as to the medical necessity before it pays the bills.

Plaintiff also claims defendant violated 11 NYCRR 65-3.6 (b), which provides:

“(b) Verification requests. At a minimum, if any 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, either by telephone call, properly documented in the file, or by mail. At the same time the insurer shall inform the applicant and such person’s attorney of the reason(s) why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested.”

Plaintiff argues that because defendant did not send the follow-up verification requests both to it and to its attorneys, the requests are defective. This argument lacks merit.

Because the attorney’s cover letter clearly put defendant on notice that the law firm was the agent for the medical provider for all purposes with respect to the bill submitted, sending the verification request to the attorneys was the same as sending the request to the principal. As recently stated in Bauer v CS-Graces, LLC (48 AD3d 922, 924 [3d Dept 2008]): “The law is well settled that, unless obtained confidentially, ‘ “knowledge acquired by an agent acting within the scope of his [or her] agency is imputed to his [or her] principal and the latter is bound by such knowledge” ‘ (Skiff-Murray v Murray, 17 AD3d 807, 809-810 [2005], quoting Center v Hampton Affiliates, 66 NY2d 782, 784 [1985]; see Farr v Newman, 14 NY2d 183, 187 [1964]).”

Accordingly, defendant’s notice to the law firm-agent was notice to the principal-provider as a matter of law. Under the circumstances{**20 Misc 3d at 439} presented here, there was no need for the insurer to send another copy to the principal.

In addition, in interpreting 11 NYCRR 65-3.6 (b), courts have found that the additional notification to the applicant and its attorney is required when the verification is requested from a third party, not when, as here, the verification is requested from the applicant. “Where verification is sought from a party other than the applicant, the applicant is entitled to be timely informed of the nature of the verification sought and from whom it is requested when, after an initial verification request remains unsatisfied, a follow-up request is necessary” (Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42, 44 [App Term, 2d Dept 2007]). This court notes that this very plaintiff advanced the same arguments—that the second verification request was defective because the insurer did not send an additional notification to the attorney’s client-principal—in Lenox Hill Radiology & MIA, P.C. (Dejesus) v Progressive Cas. Ins. (Civ Ct, NY County, 2008, index No. 31019/07); there, albeit after trial, Judge Jeffrey Oing also found the argument to be without merit.

Because plaintiff failed to respond to defendant’s valid and proper verification requests, the 30-day period within which defendant had to either pay or deny the claim did not begin to run. Therefore, plaintiff’s claims for no-fault benefits are not overdue, this action is premature and must be dismissed. (See Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533, 534-535 [2d Dept 2004]; St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338, 340 [2d Dept 2002].)

For the foregoing reasons, defendant’s motion for summary judgment is granted and plaintiff’s complaint is hereby dismissed.