[*1]

Civil Court of the City of New York, Bronx County, December 10, 2007

APPEARANCES OF COUNSEL

Law Offices of Teresa M. Spina, Woodbury (Emilio A. Cacace of counsel), for defendant. Leon Kucherovsky, New York City (Alan Goldstein of counsel), for plaintiff.

{**18 Misc 3d at 723} OPINION OF THE COURT

Sharon Aarons, J.

Relief Requested

Defendant moves for an order, pursuant to CPLR 2221 (e), granting defendant leave to renew and ordering a new trial based upon a change in law. Defendant’s motion is granted. Written opposition was submitted. Defendant’s motion for leave to renew is granted and upon renewal this court’s decision/order, dated October 31, 2006, is vacated, and plaintiff’s motions in limine for preclusion and for a directed verdict are denied.

Procedural Background[*2]

Plaintiff assignee brought this action against defendant, the assignor’s no-fault carrier, to recover for health services rendered to the assignor on December 10, 2004 in the nature of medical equipment supplied following the motor vehicle accident on October 28, 2004. Defendant contends that the medical equipment for which the plaintiff submitted a bill seeking $1,152 was not medically necessary.

Factual Background

On October 31, 2006 the parties appeared for trial of this action. They entered into a written stipulation, in writing and on the record, that plaintiff’s submission of the bill for services, the assignment of benefits and defendant’s denial of claim form (collectively admitted as plaintiff’s exhibit 1) would meet plaintiff’s burden of proof establishing its prima facie case. The parties further stipulated the timeliness and mailing of defendant’s denial of claim form. At the trial of this action, plaintiff made a motion in limine to preclude the peer review doctor from testifying and to preclude the defendant’s defense of lack of medical necessity on the grounds that the defense of lack of medical necessity was not preserved because the defendant’s denial of claim form, while asserting the defense of lack of medical necessity, neither specified the factual basis nor the medical rationale, and a copy of the peer review was not sent to the plaintiff. The court granted the plaintiff’s motions for preclusion and for a directed verdict in favor of the plaintiff and against the defendant in the amount of $1,152 with interest from August 2, 2005. The court’s granting of plaintiff’s motions was based upon the authority of the Appellate Term, Second{**18 Misc 3d at 724} and Eleventh Judicial Districts, rendered in A.M. Med. Servs., P.C. v Allstate Ins. Co. (12 Misc 3d 144[A], 2006 NY Slip Op 51426[U], *3 [2006]), which stated that

“this court has repeatedly held that where a denial of claim form fails to set forth with sufficient particularity the factual basis and medical rationale for its denial based upon lack of medical necessity, the defendant is precluded from asserting said defense. In the instant case, defendant’s denial of claim forms with respect to said claims, and the accompanying explanation of benefits forms, merely advised plaintiff that the claims were denied pursuant to a peer review report and that a copy of said report would be sent to plaintiff under separate cover. Since there is no evidence that the peer review was sent to plaintiff under separate cover within the 30-day claim determination period, and the denials of claims were otherwise devoid of any factual basis for the denials, defendant is precluded from asserting lack of medical necessity as a defense to said claims and plaintiff is entitled to summary judgment upon said claims” (citations omitted).

On November 3, 2006 the defendant served upon plaintiff a notice of appeal from the court’s decision/order and filed same with the Clerk of the Court on November 17, 2006.

Discussion and Analysis

The 1999 amendment of CPLR 2221 codified the rules pertaining to reargument and [*3]renewal motions. CPLR 2221 (e) (2) makes clear that a motion to vacate or modify a prior order on the ground that there has been a change in the law that would change the prior determination is a renewal motion. While the 1999 amendment set forth a specific time frame for the making of a motion to reargue (30 days after service of a copy of the order determining the prior motion with notice of entry [CPLR 2221 (d) (3)]), a motion to renew contains no statutory time prescription. The issue of the timeliness of a motion to renew under the 1999 statutory amendment was addressed by the Appellate Division, Second Department, in Glicksman v Board of Educ./Cent. School Bd. of Comsewogue Union Free School Dist. (278 AD2d 364 [2000]). In Glicksman the plaintiff’s complaint was dismissed. No appeal was taken from the order/judgment of dismissal. Subsequently, there was a change in the decisional law and seven months later a renewal motion ensued{**18 Misc 3d at 725} pursuant to the then recently amended CPLR 2221 (e) (2). The motion court granted the renewal motion and the Appellate Division reversed. The Appellate Division held that there was no indication in the legislative history of any intent to change the long-standing rule regarding finality of judgments and that a motion to renew may not be made after judgment was entered and no appeal was pending. Glicksman reaffirms that the law remains unchanged and that a motion to renew based upon a change in the law must still be made while the case is sub judice, i.e., still pending in the court system. (See also Daniels v Millar El. Indus., Inc., 44 AD3d 895 [2d Dept 2007]; Matter of Eagle Ins. Co. v Persaud, 1 AD3d 356 [2d Dept 2003].) Plaintiff does not assert that the defendant was untimely in the service or filing of its notice of appeal or that defendant’s appeal was dismissed. Consequently, defendant’s motion is timely since no judgment was entered and an appeal was pending and, as such, the court retains jurisdiction to determine the instant motion.

Subsequent to the issuance of this court’s decision/order and judgment, dated October 31, 2006, the Appellate Division, Second Department, decided the case of A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co. (39 AD3d 778 [2007]). That Court (at 779) stated as follows:

“For the reasons set forth in A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co. (39 AD3d 779 [2007] [decided herewith]), and New York Univ. Hosp. Rusk Inst. v Government Empls. Ins. Co. (39 AD3d 832 [2007] [decided herewith]), we disagree with the Appellate Term’s conclusion that the defendant’s denial of claim forms were insufficient because they failed to set forth with sufficient particularity the factual basis and medical rationale upon which they were based. The applicable regulations provide that if a no-fault claim is denied in whole or in part based on a medical examination or peer review report requested by the insurer, then the insurer shall release a copy of that report to, among others, the applicant or its attorney, upon written request (see 11 NYCRR 65-3.8 [b] [4]). Had it been the intent of the Department of Insurance to require the carrier to set forth a medical rationale in the prescribed denial of claim form (see NYS Form N-F 10; 11 NYCRR 65-3.4 [c] [11]), it would have so provided.”

The Appellate Term, First Department, concurred in A.I.D. Med. Supplies v GEICO Gen. Ins. Co. (15 Misc 3d 140[A], 2007{**18 Misc 3d at 726} NY Slip Op 51044[U] [2007], specifically citing A.B. Med. Servs., PLLC v GEICO Cas. Ins. Co.; see also Andrew Carothers, M.D., P.C. v New York Cent. Mut. Fire Ins. Co., 16 Misc 3d 136[A], 2007 NY Slip Op 51613[U] [App Term, 2d & 11th Jud Dists 2007]; Delta [*4]Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]).

As previously stated, prior applicable law mandated that a denial of claim based upon lack of medical necessity must set forth with sufficient particularity the factual basis and medical rationale for such denial. This could be set forth either in the denial of claim form or in a peer review report attached to the denial of claim form or sent to plaintiff within 30 days of the denial under separate cover. Since this was not done in the case at bar, this court, applying applicable law, held that the defense of lack of medical necessity was not preserved. The decisions of the appellate courts, cited above, subsequently ruled that pursuant to applicable Insurance Department regulations, upon request, an insurer is required to release a copy of the peer review report to the applicant or its attorney; that a denial based upon lack of medical necessity is not insufficient because it fails to set forth the factual basis and medical rationale; and that had it been the intent of the Insurance Department to require the factual basis and medical rationale in the denial it would have so provided. Hence, herein, the fact that the denial of claim form does not state a factual basis or a medical rationale does not invalidate the denial that was timely sent as so stipulated at trial by the plaintiff.

Accordingly, defendant’s motion must be granted.

Conclusion

Defendant’s motion for leave to renew is granted and upon renewal this court’s decision/order, dated October 31, 2006, is vacated, and plaintiff’s motions in limine for preclusion and for a directed verdict are denied. The Clerk of the Court, upon being served with a copy of this order with notice of entry is directed to place this action upon an appropriate calendar for trial and to notify the respective parties herein. Since this action is being restored to the trial calendar as a result of a change in existing law made by the Appellate Division, neither the filing of a new notice of trial nor the payment of any additional fees are required.

Civil Court of the City of New York, Kings County

073321/06

Counsel for Movant-Defendant:

Short & Billy, P.C.

217 Broadway, Suite 300

New York, NY 10007

Tel.: (212) 732-3320

Counsel for Cross-movant-Plaintiff:

Ilona Finkelshteyn, P.C.

2503 65th Street

Brooklyn, NY 11204

Tel.: (718) 382-1266

Peter Paul Sweeney, J.

Upon the foregoing papers, the motion and cross-motion are decided as follows:

In this action to recover assigned first-party no-fault benefits, plaintiff Friendly Physician, P.C. moves for summary judgment and defendant Progressive Insurance Company cross-moves to compel discovery. In opposition to plaintiff’s motion, defendant argues, among other things, that plaintiff did not establish its entitlement to summary judgment inasmuch as the no-fault claim forms underlying the action were not submitted in admissible form.

To prevail on its motion, plaintiff had the burden to demonstrate by admissible proof that the no-fault claim forms underlying the action were submitted to the defendant and that payment of no-fault benefits is overdue (see Insurance Law § 5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2nd Dep’t 2004]; AVA Acupuncture, P.C. v. GEICO General Ins. Co.,17 Misc 3d 41[App. Term, 2d & 11th Jud. Dists]; Amaze Med. Supply v. Eagle Ins. Co., 2 Misc 3d 128(A), 2003 NY Slip Op 51701(U), 2003 WL 23310886 [App. Term, 2d & 11th Jud Dists] ). To meet this burden, plaintiff was required to establish the admissibility of the no-fault claim forms by demonstrating that they are business records within the meaning of CPLR 4518[a] (see [*2]e.g., Dan Medical, P.C. v. New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44, 46 [App Term, 2nd & 11th Jud Dists 2006]; Great Wall Acupuncture v. New York Central Mut. Fire Ins. Co., 14 Misc 3d 142(A), 2007 NY Slip Op. 50364(U)[App Term 2d & 11th Jud Dists]; Bath Med. Supply, Inc. v. Allstate Ins. Co.,16 Misc 3d 135(A), 2007 NY Slip Op. 51602(U) [App Term, 2nd & 11th Jud Dists] ). To do this, plaintiff was required to submit an affidavit or other admissible proof demonstrating that the claim forms were made in the regular course of business and reflect a routine, regularly conducted business activity, needed and relied on in the performance of the functions of the business, that it was the regular course of business to make the claim forms, in other words, that they were made pursuant to established procedures for the routine, habitual, systematic making of such a record, and that the claim forms were made at the time of the acts, transactions, occurrences or events described therein, or within a reasonable time thereafter (see People v. Cratsley, 86 NY2d 81, 89 [1995]; People v. Kennedy, 68 NY2d 569, 579-580 [1986]; Williams v. Alexander, 309 NY 283, 286 [1955] ).

To lay the foundational elements through an affidavit, the affiant must aver that he or she had personal knowledge of the business practices and procedures pursuant to which the claim forms were made (see Dan Medical, P.C., 14 Misc 3d at 46, citing Hefte v. Bellin, 137 AD2d 406, 408 [1st Dep’t 1988]; Dayanim v. Unis, 171 AD2d 579 [1st Dep’t 1991]; Midborough Acupuncture, P.C. v. New York Cent. Mut. Fire Ins. Co., 13 Misc 3d 132(A), 2006 NY Slip Op. 51879(U), 2006 WL 2829993 [App. Term, 2d & 11th Jud Dists]. The affidavit must also demonstrate that the preparer of the claim forms had actual knowledge of the events recorded therein or that he or she obtained knowledge of those events from someone with actual knowledge of them and who had a business duty to relay information regarding the events to the preparer (see Capasso v. Kleen All of America, Inc., 43 AD3d 1346 [4th Dep’t 2007], citing Alexander, Practice Commentaries, McKinney’s Cons. Laws of NY, Book 7B, CPLR C4518:1; Matter of Leon RR, 48 NY2d 117, 122-123 [1979]; see also Johnson v. Lutz 253 NY 124, 128 [1930]; Toll v. State, 32 AD2d 47, 49 [3rd Dep’t 1969] ).

Applying these principles, the court finds that the affidavit submitted by plaintiff to show that the no-fault claim forms are business records was woefully insufficient. No details were set forth in the affidavit as to how the claim forms were generated. Certainly, there was no showing that they were made in the regular course of business or that it was the regular course of plaintiff’s business to make the claim forms.

The affidavit does not indicate that the preparer of the claim forms had actual knowledge of the events recorded therein, nor does it indicate that the preparer obtained knowledge of those events from someone with actual knowledge of them and who was under a business duty to report them to the preparer.

Finally, the affidavit did not demonstrate that the affiant possessed personal knowledge of plaintiff’s office practices and procedures. The court refuses to speculate that the affiant had such knowledge simply because the identified herself as plaintiff’s billing manager.

At oral argument, plaintiff’s counsel argued that the holding in Infinity Health Products, Ltd. v. New York Central Mutual Fire Insurance Company, 17 Misc 3d 130(A), 2007 NY Slip Op. 51984(U) [App Term, 2nd & 11th Jud Dists] supports its position that the affidavit at issue is sufficient to demonstrate the admissibility of the no-fault claim forms. In Infinity Health [*3]Products, Ltd., supra., the Appellate Term affirmed an order which awarded summary judgment to a plaintiff medical supplies provider, stating: “[f]or the reasons stated in Dan Medical, P.C. v. New York Central Insurance Co. ( Misc 3d , 2007 NY Slip Op [App Term, 2nd & 11th Jud Dists], decided herewith, the judgment is affirmed (emphasis added).” Plaintiff’s counsel maintained that the affidavit at issue in Infinity Health Products, Ltd. was virtually identical to the affidavit at issue here.

Whether the affidavit in Infinity Health Products, Ltd. is virtually identical to the one now before the court is of no moment. In the Dan Medical, P.C. case ^[FN1] cited by the court in Infinity Health Products, Ltd., the court stated: “[i]nasmuch as defendant raised no issue in the court below or on appeal with respect to plaintiff’s establishment of its prima facie case, we do not pass on the propriety of the implicit determination of the court below with respect thereto (id.).” Thus,it is apparent that in both Infinity Health Products, Ltd., supra. and Dan Medical, P.C., supra, the court never passed on whether the plaintiff established its prima facie entitlement to summary judgment. Thus, Infinity Health Products, Ltd. can not be viewed as appellate approval for the proposition that the affidavit before the court is sufficient to establish the admissibility of the no-fault claim forms.

In sum, inasmuch as plaintiff did not demonstrate that the no-fault claim forms annexed to the motion were business records within the meaning of CPLR 4518[a], plaintiff did not establish its entitlement to summary judgment. Accordingly, the motion must be denied regardless of the sufficiency of the opposition papers (see Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985] ).

For the reasons stated above, it is hereby

ORDERED that plaintiff’s motion for summary judgment is DENIED; and it is further

ORDERED that defendant’s cross-motion, which plaintiff did not oppose, is GRANTED solely to the extent that plaintiff is directed to serve answers to defendant’s interrogatories within 45 days of the service of this order with notice of entry.

This constitutes the decision and order of the court.

Dated: December 3, 2007____________________________________

PETER P. SWEENEY

Civil Court Judge

Footnotes

Footnote 1:The Dan Medical, P.C. case cited in Infinity Health Products, Ltd. should not be confused with the seminal case of Dan Medical, P.C. v. New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44, 829 N.Y.S.2d 404 [App Term, 2nd & 11th Jud Dists 2006] which held that a plaintiff in an action to recover no-fault benefits must submit the underlying no-fault claim forms in admissible form to prevail on a motion for summary judgment.

Civil Court of the City of New York, Kings County

075350/05

Sylvia G. Ash, J.

Plaintiff brought this action seeking recovery of first party no-fault benefits for medical services rendered to its assignors. Plaintiff is a health care provider and Defendant was the no-fault insurance carrier at the time the accident occurred. The amount at issue is $1,791.00. Based on the testimony and evidence adduced at trial, this Court renders the following findings of fact and conclusions of law.

The parties stipulated to Plaintiff’s prima facie case and Defendant’s timely denial of the claim. The only issue to be decided by the Court is whether the magnetic resonance imaging (MRI) tests of Plaintiff’s assignor’s cervical and lumbar spine were medically necessary. Defendant bore the burden of proof on this issue. Therefore, Defendant had the burden to establish by admissible evidence its belief that the services rendered were not medically necessary (11 NYCRR 65.15). If the Defendant sustains this burden, the burden of persuasion shifts back to Plaintiff to submit rebuttal evidence that the services rendered were medically necessary (see, A.B. Medical Services, PLLC v. State Farm Mut. Auto. Ins., Co., 7 Misc 3d 822, 795 N.Y.S. 2d 843; V.S. Medical Services, P.C. v. Allstate Insurance Co., 11 Misc 3d 334; PDG Psychological, P.C., v. State Farm Insurance Co., 12 Misc 3d 1183(A); Citywide Social Work & Psy. Serv. V. Travelers Indem. Co., 3 Misc 3d 608 [Civ. Ct. Kings Co., 2004]; Elm Medical P.C. v. American Home Assurance Co., 2003 NY Slip Op. 51357 (U), 2003 WL 22471156 [Civ. Ct., Kings Co., 2003] Delta Medical Supplies, Inc. v. NY Central Mutual Insurance Co., 14 Misc 3d 1231(A), 836 N.Y.S.2d 492, 2007 NY Slip Op. 50241(U); Williamsbridge Radiology & Open Imagining v. Travelers Indem. Co., 14 Misc 3d 1231(A), 836 N.Y.S. 2d 496, 2007 NY Slip Op. 50224(U)).

At trial, Defendant called Dr. Michael N. Berke, a Chiropractor, as its chief and primary witness. Dr. Berke testified that based on his examination of the assignor and review of the medical records he found no objective findings of spasm, no positive orthopedic tests or radicular complaints to justify the MRIs. The Plaintiff called Dr. Michael Walsh, a Neurologist, as its rebuttal witness. Dr. Walsh testified that he reviewed the treating physician’s medical report and that based on the assignor’s complaints, the MRIs were medically necessary. [*2]

The parties have submitted post trial memorandums. Defendant argued that Dr. Berke examined the assignor one day after the cervical MRI and three days prior to the lumbar MRI; that the assignor had no complaints of radiating pain at that examination; that based on Dr. Berke’s examination and his review of the medical report of the treating physician, Dr. Abbot, the MRIs were not medically necessary at the time when they were performed. Dr. Berke stated that his opinion is based on what is reasonable and customary in the medical field as well as his twenty (20) years of practice as a Chiropractor.

The Plaintiff argued that the assignor’s complaints included radiated

pain from the neck to the head, to the arms and the left lower extremity. ` Dr. Walsh testified that the Spurling test was positive, that there was restricted range of motion and spasm in the cervical spine, that the MRI test is considered as the goal standard to determine injury to the cervical and lumbar spine and therefore, the MRIs were appropriate to determine any possible permanent injury to the spine.

In determining whether services are not medically necessary, the Court is concern with proof demonstrating that the services were not reasonable in light of the patient’s injury, subjective and objective evidence of the patient’s complaints of pain, and the goals of evaluation and treatment of the patient (see, Fifth Avenue Pain Control Center v. Allstate Ins. Co., 196 Misc 2d 801, 766 N.Y.S. 2d 748, [Civ. Ct., Queens Co., 2003]). When a treating physician prescribes necessary medical services, that patient should receive those services promptly without the need of committee or board approval (see, New York Neurology Associates, PC, v. Allstate Insurance Company, 2003 NY Slip Op. 51297( U) citing Tudor v. Metropolitan Life Insurance Co., 143 Misc 2d 180). A review of the history behind No-Fault Law clearly demonstrates a preference for expedient review of claims with an eye towards benefitting the insured (see Fifth Avenue Pain Control Center v. Allstate Ins. Co., supra). Therefore, any uncertainties concerning the reasonableness of the services are to be resolved in favor of coverage (New York Neurology Associates, PC, v. Allstate Insurance Company, supra).

Here, the Court finds that the Defendant’s medical evidence demonstrated that the services were not medically necessary. However, Plaintiff has sufficiently rebutted Defendant’s medical testimony and has demonstrated the medical necessity of its claims. Dr. Walsh testified that based on the assignor’s age, complaints of back and neck pain and the findings of various objective tests, it was medically necessary to perform the MRI to determine if there was structural damage to the assignor’s cervical and lumbar spine.

Accordingly, judgment is entered in favor of the Plaintiff in the amount of $1,791.00 with statutory interest, costs and attorney fees.

This constitutes the Decision and Order of the Court.

Dated: November 27, 2007_____________________________Sylvia G. Ash, J.C.C.

Civil Court of the City of New York, Kings County

044270/04

For Plaintiff: Gary Tsirelman, P.C.

For Defendant: McDonnell & Adels, P.C.

Eileen N. Nadelson, J.

On September 12, 2005, this court granted Plaintiff’s Motion for Summary Judgment on default, awarding Plaintiff $635.00 for first party No-Fault insurance benefits. The judgment was filed and entered on September 16, 2005.

On or about February 13, 2006, Defendant filed a request for a Declaratory Judgment in the Supreme Court to have that court declare that Plaintiff’s assignors had staged the accident subject to the No-Fault claims. Plaintiff was neither named in the Declaratory Judgment nor notified of its pendency.

On March 15, 2006, the Supreme Court granted Defendant’s Declaratory Judgment on the default of the named assignors and issued a stay of all proceedings. The court’s order stated that Defendant had no duty to pay claims for No-Fault benefits to the named assignors and that the accident subject to these claims was to be deemed “intentionally staged fraudulent and therefore uncovered event.”[sic]

On March 30, 2006, Plaintiff, who was never served with a copy of the Supreme Court order, served Defendant with the Notice of Entry of the Civil Court’s order of September 12, [*2]2005. On May 3, 2006, Plaintiff proceeded to enter judgment on the default, and on May 12, 2006, Defendant’s new counsel advised Plaintiff of the Supreme Court stay. On July 27, 2006, the Civil Court clerk entered the Default Judgment against Defendant.

On September 14, 2006, Defendant filed this instant Order to Show Cause to enforce the Supreme Court stay and to vacate the Notice of Entry of the Civil Court Default Judgment. In its papers, Defendant asserts that Plaintiff is collaterally estopped from enforcing the Default Judgment based on the Supreme Court’s Declaratory judgment.

In support of its assertion, Defendant cites Mulverhill v. State, 257 AD2d 735, 682 NYS2d 478 (3d Dept. 1999), which states, in pertinent part:

The doctrine of collateral estoppel…precludes a party from re-litigating in a

subsequent action or proceeding an issue clearly raised in a prior action or

proceeding and decided against that party or those in privity…. Only two

elements need be established; first, that the identical issue was necessarily

decided in the prior action and is decisive in the present one, and, second,

that the party to be precluded had a full and fair opportunity to contest the

prior determination.

Plaintiff opposes Defendant’s arguments. The Declaratory Judgment was brought against Plaintiff’s assignor to have the alleged accident deemed a staged event not covered by the No-Fault law. Plaintiff maintains that it cannot be collaterally estopped to enforce the No-Fault award because Plaintiff was not a party to the Supreme Court action and therefore had no opportunity to defend against Defendant’s assertions.

In analyzing the definition of collateral estoppel as stated above, this court believes that the requisite elements to hold Plaintiff estopped in the instant proceeding may not exist. First, the No-Fault action preceded the Declaratory Judgment action, and therefore the issue is not being re-litigated in a subsequent proceeding. Second, Defendant was not named in or notified of the Declaratory Judgment action, and therefore had no opportunity to contest the determination. And third, even though Plaintiff stands in privity with the persons named in the Declaratory Judgment, that decision was rendered on default of those persons. The court has no information as to the reason for such default, which could, in fact, be lack of service. If such be the case, that would negate the assumption that they were afforded the opportunity to contest and simply chose to decline.

However, regardless of our analysis of the collateral estoppel argument, this court lacks the jurisdiction to review the decision of the Supreme Court. Any argument Defendant may posit with respect to the underlying appropriateness of the Supreme Court decision must be made before that tribunal. At this point this court is obligated to give full effect to the Declaratory Judgment insofar as it stays all proceedings arising out of the alleged accident with respect to the instant assignor. Since the Entry of Judgment was filed after the Declaratory Judgment was [*3]issued, this court must find the Entry of Judgment of the No-Fault Summary Judgment to be a nullity. This is true even though Plaintiff acted innocently and without knowledge of Declaratory Judgement.

Having determined that the Entry of Judgment is a nullity, the court is faced with the fact that the Summary Judgment in favor of Plaintiff still stands since it predates the Declaratory Judgment. As a consequence, should the stay eventually be lifted, the judgment could be entered at that time. Therefore, this court feels compelled in the interests of efficient administration of justice to determine whether Defendant has provided sufficient grounds to vacate its default of the original No-Fault Motion for Summary Judgment.

Section 5015 of the CPLR provides the grounds upon which a default may be vacated. Simply stated, in order for a defaulting party to have the judgment vacated, within one year of entry of judgment, it must provide the court with a reasonable excuse for its default and evidence of a meritorious defense. In the instant case Defendant has provided absolutely no reason why it never appeared for the argument on the Summary Judgment motion. However, the Supreme Court’s decision on the Declaratory Judgment, even though rendered on default, does provide some evidence of a meritorious defense.

In F & C General Contractors Corp. v. Atlantic Mutual Mortgage Corp., 202 AD2d 629, 612 NYS2d 871 (2d Dept. 1994), the Appellate Court stated that “it is well established that, independent of statutory provisions, the court rendering a judgment, in its inherent power and control over its own proceedings, may vacate that judgment where it appears that substantial justice will be served and injustice prevented thereby.” In this case the court did not adhere to the one year statutorily imposed time limit.

Further, in Lane v. Lane, 175 AD2d 103, 572 NYS2d 14 (2d Dept. 1991), the Appellate Court exercised its discretion in permitting a person not even a party to the underlying action to bring a motion to vacate a judgment. The person seeking the vacatur was directly impacted adversely by the judgement he sought to vacate. The court stated that the default judgment was vacated in the interests of justice because “substantial justice will be subserved and injustice prevented.”

With respect to the instant motion, this court feels obligated to exercise its discretion in favor of vacating its initial Default Judgment in the interests of the efficient administration of the judicial system. As a general principle, the court prefers issues to be decided after a full hearing on the merits rather than by default. This is especially true in the instance of No-Fault claims in which assertions of staged accidents have become commonplace. Despite the fact that Defendant did not appear for oral argument on the Summary Judgment motion, the court notes that Defendant did submit opposition papers in which it posited the argument that the accident that was subject of the claim was staged and therefore not a covered event. This court would prefer to err on the side of caution and justice to make sure that fraudulent claims are not given the imprimatur of judicial sanction simply because a party fails to appear for oral argument. [*4]

Therefore, after deliberating on all of the arguments presented by both sides, the court grants Defendant’s motion to the extent of vacating the Entry of Judgment based on the Supreme Court stay, and further vacates its initial Default Judgment because the Supreme Court order, along with the facts alleged in Defendant’s opposition papers to the original motion, raise a question of fact that precludes summary judgment. CPLR 3212, See generally Gilson v. Metropolitan Opera, 5 NY3d 574, 807 NYS2d 558 (2005). In reaching this conclusion, the court is not making a determination of the collateral estoppel effect of the Declaratory Judgment on Plaintiff; rather it is simply denying Plaintiff’s Motion for Summary Judgment because questions of fact exist.

This constitute the decision and order of the court.

Dated: November 23, 2007

__________________________

EILEEN N. NADELSON, J.C.C.

[*1]

Civil Court of the City of New York, Kings County, November 6, 2007

APPEARANCES OF COUNSEL

Edward Shapiro, P.C., Wantagh (Kim Rasin of counsel), for plaintiff. De Martini & Yi, Williston Park (Dana M. Koos of counsel), for defendant.

{**17 Misc 3d at 950} OPINION OF THE COURT

Genine D. Edwards, J.

{**17 Misc 3d at 951}At the outset of this trial to recoup no-fault benefits, the parties stipulated that plaintiff’s prima facie case was established, the defendant’s denial of claim forms were mailed on the date indicated on each denial, the peer review report and the documents reviewed were in evidence, and that the defendant’s witness was an expert. The defendant proffered the testimony of its peer review physician, John P. Russo, D.C.; the plaintiff did not proffer any witnesses.

After the bench trial of this matter, in conjunction with a case with the index number 19685/06, regarding assignor Connie Brady, this court, via correspondence dated August 7, 2007, required the parties to submit posttrial memoranda with respect to plaintiff’s motion in limine regarding the time for scheduling an examination under oath. Plaintiff’s memorandum was due on September 11, 2007 and defendant’s memorandum was due on October 11, 2007. Plaintiff failed to provide a memorandum, therefore the defendant did not provide a memorandum, but instead requested that plaintiff’s motion in limine be denied for failure to comply with this court’s briefing schedule.

The plaintiff orally argues that the defendant’s request for an examination under oath did not toll defendant’s time to pay or deny plaintiff’s claims because the examination under oath was scheduled more than 30 days after receipt of the claim. Plaintiff relies on Insurance Department Regulations (11 NYCRR) § 65-3.5 (d) and 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]). Defendant counters that Regulations § 65-3.5 (d) only relates to medical examinations, while subdivision (e) instructs as to examinations under oath. The defendant argues that subdivision (e) does not direct a date certain or a specific time to schedule the examination under oath; the subdivision only discusses a reasonable time and place for such examination.

After due deliberation of the evidence and arguments asserted, this court finds that the plaintiff’s contentions are correct. Although case law directly on point could not be found, this court must be guided by the legislative intent to resolve no-fault matters expeditiously. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co. (90 NY2d 274 [1997]; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2d Dept 2006]; New York Hosp. Med. Ctr. of Queens v Motor Veh. Acc. Indem. Corp., 12 AD3d 429 [2d Dept 2004]; Fair Price Med. Supply [*2]Corp. v Travelers Indem. Co., 9 Misc 3d 76 [App Term,{**17 Misc 3d at 952} 2d & 11th Jud Dists 2005]; Metropolitan Radiological Imaging v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 675 [Civ Ct, Queens County 2005].) Therefore, the defendant was bound to conduct the examinations under oath within the same time period imposed for the medical examinations, to wit, “within 30 calendar days from the date of receipt of the prescribed verification forms.” (11 NYCRR 65-3.5 [d]; Capio Med., P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 129[A], 2005 NY Slip Op 50526[U] [App Term, 2d & 11th Jud Dists 2005]; S & M Supply, supra.)

However, the plaintiff failed to offer any evidence as to when it received the verification forms. Thus, this court cannot determine whether the examinations were scheduled within the requisite time period. Therefore, plaintiff’s motion is denied.

Since the parties stipulated that plaintiff’s prima facie case was established, the defendant now has the burden of producing the existence of a material issue of fact. The defendant fails at its burden. There is not one scintilla of evidence to prove that the defendant timely mailed the verification requests. (Mega Supply & Billing, Inc. v AIU Ins. Co., 15 Misc 3d 132[A], 2007 NY Slip Op 50687[U] [App Term, 2d & 11th Jud Dists 2007]; Wei Wei Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 14 Misc 3d 144[A], 2007 NY Slip Op 50394[U] [App Term, 2d & 11th Jud Dists 2007]; Oleg Barshay, D.C., P.C. v State Farm Ins. Co., 14 Misc 3d 74 [App Term, 2d & 11th Jud Dists 2006]; Dilon Med. Supply Corp. v State Farm Mut. Auto. Ins. Co., 13 Misc 3d 141[A], 2006 NY Slip Op 52266[U] [App Term, 2d & 11th Jud Dists 2006]; Fair Price Med. Supply Corp. v General Assur. Co., 6 Misc 3d 137[A], 2005 NY Slip Op 50256[U] [App Term, 2d & 11th Jud Dists 2005].) Hence, defendant’s time to pay or deny the plaintiff’s claims was never tolled.

Assuming, arguendo, that the defendant met its initial burden of timely mailing, this court finds that the defendant’s expert’s testimony was unpersuasive. Dr. Russo testified that the equipment was not against accepted medical protocol, but he would not have recommended the equipment in these cases. This evidence fails to prove that the durable equipment prescribed to Debra and Connie Brady was not medically necessary.

Accordingly, judgment is in favor of the plaintiff in the amount of $822 for each case, as well as statutory interest and attorney’s fees.

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

74577 CVN 2006

Plaintiff represented by: Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, by Shayna E. Sacks, Esq., 150 Herricks Road, Mineola, NY 11501, Tel: 516-741-4799.

Defendant represented by: Law Offices of Karen C. Dodson, by Jerry Marti, Esq., 485 Lexington Avenue, 7th Floor, New York, NY 10017, Tel: 917-778-6509.

Shlomo S. Hagler, J.

In these two actions to recover first-party no-fault benefits, defendant Travelers Insurance Company (“Travelers” or “defendant”) makes two virtually identical motions for orders pursuant to CPLR § 3212 granting it summary judgment dismissing the complaints. Plaintiff Ray Presutto, L.M.T., P.C. (“Presutto” or “plaintiff”) opposes the motions. Both motions are consolidated herein for disposition.

Background

Miguel A. Villatoro (“Villatoro” or “assignor”) allegedly suffered personal injuries as a result of a motor vehicle accident on September 2, 2002. Villatoro allegedly assigned to Presutto his right to recover benefits from Travelers for health care services rendered to him. Presutto allegedly provided treatment to Villatoro for the periods of May 1, 2003 through May 28, 2003 ($61.60), May 27, 2003 through June 12, 2003 ($61.60), and June 28, 2003 through July 3, 2002 ($61.60).

Presutto allegedly mailed Travelers claim forms or bills in the aggregated amount of $184.80. At Travelers’ request, on January 29, 2003, Dr. Lawrence B. Miller, D.O., a board certified orthopedic surgeon, conducted an Independent Medical Examination (IME”) of Villatoro. Dr. Miller conducted various objective tests on Villatoro and concluded in his affirmed report dated January 29, 2003, that “orthopedic treatment is not indicated or warranted at this time, including physiotherapy or any other type of rehabilitative therapy/treatment. Furthermore, diagnostic testing, [*2]surgical intervention , household help, durable medical equipment or special transportation services are not medically necessary.” (Exhibit “C” to the Motions.) On August 18, 2003, Travelers denied all claims based on Dr. Miller’s IME and report dated January 29, 2003. (Exhibit “D” to the Motions.)

As a result of defendant failing to pay first-part no-fault benefits, plaintiff commenced these two actions by service and filing of a summons and complaint. (Exhibit”A” to the Motions.) Defendant interposed answers to the complaints. (Exhibit “A” to the Motions.)

Summary Judgment

The movant has the initial burden of proving entitlement to summary judgment. Winegrad v N.Y.U. Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985). Once such proof has been offered , in order to defend the summary judgment motion, the opposing party must “show facts sufficient to require a trial of any issue of fact.” CPLR § 3212; Zuckerman v City of New York, 49 NY2d 557, 427 NYS2d 595 (1980); Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 416 NYS2d 790 (1970); Friedman v Chemical Construction Corp., 43 NY2d 260, 401 NYS2d 176 (1977); and Spearmon v Times Square Stores Corp., 96 AD2d 552, 465 NYS2d 230 (2d Dept 1983). “It is incumbent upon a [party] who opposes a motion for summary judgment to assemble, lay bare and reveal his proofs, in order to show that the matters set up in [its pleading] are real and are capable of being established upon a trial.” Spearmon v Times Square Stores Corp., 96 AD2d at 553, 465 NYS2d at 232 (quoting DiSabato v Soffes, 9 AD2d 297, 301, 193 NYS2d 184, 189 [1st Dept 1959]). If the opposing party fails to submit evidentiary facts to controvert the facts set forth in the movant’s papers, the movant’s facts may be deemed admitted and summary judgment granted since no triable issue of fact exists. Kuehne & Nagel, Inc. F. W. Baiden, 36 NY2d 539, 369 NYS2d 667 (1975).

Proof of Mailing

There are three distinct methods to demonstrate proof of mailing. The first and simplest method is to provide an affidavit from an individual with personal knowledge of the actual mailing. The second is where an acknowledgment by the adverse party that it received the subject document serves as an admission. A.B. Medical Services a/a/o German v New York Central Mutual Fire Ins. Co., 3 Misc 3d 136(A), 787 NYS2d 675(Table) (App Term, 2d & 11th Jud Dists 2004); Fair Price Medical Supply Corp. a/a/o Graham v Elrac Inc., 12 Misc 3d 119, 820 NYS2d 679 (App Term, 2d & 11th Jud Dists 2006). The third and most common method is where the party provides proof of a standard office procedure, which ensures that documents are properly addressed and mailed. Pardo v Central Cooperative Insurance Company, 223 AD2d 832, 636 NYS2d 184 (3d Dept 1996). The first and second methods are straight-forward. However, the third method is vexing as there is a dearth of authority that addresses the specific requirements to adequately set forth a standard office practice and procedure.

The courts discuss the sufficiency of proof of mailing in several contexts. These include cancellation notices sent by insurers to insureds, and denials of claims or requests for verification by insurers to healthcare providers. The standard of proof necessary to establish that a proper mailing was executed appears to be the same for each of these circumstances. See, e.g., Contemp. Med. Diag. & Treatment, P.C., a/a/o Boone and Villafane v Government Employees Ins. Co., 6 Misc 3d 137(A), 899 NYS2d 344 (App Term, 2d & 11th Jud Dists 2005) (holding that standard of proof [*3]for mailing of verification requests are the same as for denial of claims, as per Hospital for Joint Diseases v Nationwide Mutual Ins. Co., 284 AD2d 374, 726 NYS2d 443 [2d Dept 2001], and insurance cancellation notices, as per Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 729 NYS2d 776 [2d Dept 2001]). “Generally, proof of proper mailing gives rise to a presumption that the item was received by the addressee.” Residential Holding Corp., 286 AD2d at 680, 729 NYS2d at 778. However, “in order for the presumption [of mailing] to arise, office practice must be geared so as to ensure the likelihood that a notice . . . is always properly addressed and mailed.” Nassau Ins. Co. v. Murray, 46 NY2d 828, 830, 414 NYS2d 117, 118 (1978).

To establish proof of mailing, an affidavit should detail standard office policies and procedures regarding the processing of claims and it must also contain a statement of the affiant’s personal knowledge that those policies and procedures have been followed in the instant case. See Contemp. Med. Diag. & Treatment, P.C., a/a/o Boone and Villafane v Government Employees Ins. Co., supra . However, in Delta Diagnostic Radiology, P.C. a/a/o Philogene v Chubb Group of Ins., 17 Misc 3d 16, 18 (App Term 2d & 11th Jud Dists, 2007), the Appellate Term clarified its prior ruling in Contemp. Med. Diag. & Treatment, P.C., supra , as follows:

We note that our prior holding in Contemp. Med. Diag. & Treatment, P.C. v. Government Empls. Ins. Co., 6 Misc 3d 137(A), 2005 NY Slip Op. 50254[U], 2005 WL 494360 [App. Term, 2d & 11th Jud. Dists.] should not be interpreted as requiring that an affidavit of mailing must state either that it was the affiant’s duty to ensure compliance with the insurer’s standard office practice or procedure with regard to mailing or that the affiant possessed personal knowledge of such compliance. Rather, as the Appellate Division has repeatedly noted, it is sufficient for the affiant to set forth that he or she possessed personal knowledge that the mailing occurred or describe the standard office practice or procedure used to ensure that items were properly addressed and mailed (see e.g. New York & Presbyt. Hosp. V. Allstate Ins. Co., 29 AD3d 547, 814 NYS2d, 687 [2006]; Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679, 729 NYS2d 776, supra ; Hospital for Joint Diseases v. Nationwide Mut. Ins. Co., 284 AD2d 374, 726 N.Y.S. 443 [2001]).

(Emphasis Added).

Furthermore, there should be “testimony about office procedures relating to the delivery of mail to the post office, whether a practice existed of comparing the names on the mailing list with the names and addresses on the envelopes for accuracy, or whether anyone routinely checked that the total number of envelopes matched the number of names on the mailing list.” Matter of Lumbermens Mutual Casualty Co. (Collins), 135 AD2d 373, 375, 521 NYS2d 432, 434 (1st Dept 1987). By inference, the affiant should state the following necessary details to show office practice and procedure including: (1) whether anyone complied a list of intended recipients; (2) whether anyone checked that a corresponding envelope containing a verification request or a denial of claim form was properly addressed for each recipient; and (3) whether anyone established a procedure for affixing the appropriate postage and delivering the mail to the post office. The failure to properly allege some of the above details have resulted in courts holding that the showing was insufficient because the affiant’s affidavit was conclusory. New York and Presbyterian Hospital, a/a/o Udland v Allstate Ins. Co., 29 AD3d 547, 814 NYS2d 687 (2d Dept 2006).

While plaintiff challenges the adequacy of the proof of mailings, defendant’s director of [*4]operations at its centralized mail facility located in Norcross, Georgia (“Data Service Center”), Stephen H. Howard, has provided a sufficient description of Travelers’ standard office practice or procedure used to ensure the denials were properly addressed and mailed as detailed below:

7.For the Court’s present purposes, the operation commences when a TRAVELERS employee completes an NF-10 denial, a verification request, or a delay letter from his or her desk top computer terminal, and executes the send and archive option provided. That action will cause the document to be electronically transmitted to the Data Service Center in Norcross. Following that transmission, and on that date, the document is printed. It is then mailed as indicated below.

8.Any document electronically forwarded is batched, printed, and then mailed on the day after it is transmitted. In other words, documents which are electronically transmitted are accumulated, processed and produced in the same out put job. An out put job number is assigned and utilized for tracking purposes, as further described hereafter.

9.Once transmitted, the documents are electronically batched and printed. When the documents are printed, they contain encoded information which identifies the particular batch they were processed in. The documents are electronically counted so that the numbers can be justified against the expected number of documents which are to be contained in any particular batch. When the numbers are reconciled, a notation is made on a tracking sheet for the batch. This tracking sheet is utilized at each stage of the mailing process, further described below, so as to ensure that the mailing, in fact, occurs.

10.Once printed and batched, the documents are placed into a machine designed to fold the documents and insert them into a window envelope where the address of the recipient is shown. The envelope is sealed, completing this part of the process. The machine counts the number of documents and envelopes processed. When the batch has been completed, the actual number is justified against the expected number, and the tracking sheet is documented. The control therefore establishes that all mail in a particular batch has gone through this step in the process. As a further control, a visual inspection is performed to ensure that the address of the recipient appears visible in the envelope window.

11.Once the above step is completed, the batch is brought to another machine. This machine weighs the envelope and places the appropriate amount of postage in accordance with size and weight. This machine also performs an electrical count of the items to be mailed, and the number is justified, against the expected count. The tracking sheet is duly noted for that batch of mail.

12.The mailings in any particular batch are then brought to a sorting machine. The sorting machine separates the individual envelopes in accordance with U.S. Postal guidelines, based upon zip code, for the purposes of facilitating proper and efficient mailings. The pieces going through this aspect of the process are again counted for the purposes of a final justification of the numbers. The sorted and justified mail is then placed into sealed containers and then placed into U.S. Postal Services designated containers. The containers are then delivered to a secure loading [*5]facility where they are picked up by U.S. Postal employees.

13.The final sorting area described above, as well as all other stations, are visually inspected throughout the day to be certain that no mail escaped the vigorous justification processes.

14.The Court is further advised that if at any point during the above described justification processes there is an indication of a missing piece of mail, the process is traced backward until the individual piece of mail is found. In the event a missing piece of mail is not found, an investigation takes place which includes a review of each piece of mail in the entire batch to determine if the particular missing mail can be identified, reprinted, and the batch then processed to completion. In the event identification of the missing piece of mail cannot be made with certainty, the entire batch will be reprinted and reprocessed in accordance with the procedures previously described.

15.Given the above, I can state with a reasonable degree of certainty that the documents described in the accompanying affidavit of Kelly A. Stotz, which had been mailed through the Norcross Data Service Center, were in fact processed in accordance with the procedures described above, and mailed to the identified recipient on the day after the date which appears on the denial and/or delay later.

(Affidavit of Stephen Howard in support of the Motions, sworn to on July 12, 2001, at ¶¶ 7-15).

Medical Necessity

Courts have held that plaintiffs need not demonstrate medical necessity as part of their prima facie case. Dermatossian v New York City Transit Authority, 67 NY2d 219, 224, 501 NYS2d 784, 787 (1986) (“A claimant to receive payment need only file a proof of claim’ . . . and the insurers are obligated to honor it promptly or suffer the statutory penalties . . .”); A.B. Medical Services PPLC a/a/o Sokol v Geico Ins., 2 Misc 3d 26, 27, 773 NYS2d 773, 774 (App Term 2d Dept 2003) (“We have rejected arguments that no-fault benefits claimant is obligated to prove the treatment’s medical necessity, at the claim stage or in support of its motion for summary judgment in a subsequent action on the claim . . .” [citations omitted]). The insurer may raise the defense that a claimed procedure was not medically necessary with a timely denial pursuant to the 30-day rule. Presbyterian Hospital in the City of New York v Maryland Casualty Co., 90 NY2d 274, 282, 660 NYS2d 536, 539-540 (1997). If there is an untimely disclaimer or denial in derogation of the 30-day rule, the insurer’s lack of medical necessity defense is precluded. Id.; Amaze Medical Supply Inc. a/a/o Darlington v Allstate Ins. Co., 2 Misc 3d 134(A), 784 NYS2d 918 (Table) (App Term 2d & 11th Jud Dists 2004).

Furthermore, in support of, or in opposition to, a summary judgment motion or at trial, the defense that the claim was not medically necessary must be supported by sufficient factual evidence or proof and it cannot simply be conclusory. Amaze Medical Supply Inc. a/a/o Bermudez v Eagle Ins. Co., 2 Misc 3d 128(A), 784 NYS2d 918 (Table) (App Term 2d & 11th Jud Dists, December 24, 2003). For instance, a recent Appellate Term decision citing Amaze Medical Supply Inc. a/a/o Bermudez v Eagle Ins. Co., held that where the defendant’s peer review report was sufficient to establish that the services were not medically necessary and the plaintiff failed to come forward with [*6]proof creating an issue of fact requiring a trial, the defendant was entitled to summary judgment dismissing the complaint. Boai Zhong Yi Acupuncture Services, P.C. a/a/o Pistsov v Progressive Casualty Ins. Co., NYLJ, June 6, 2007, p. 30, col. 2 (App Term 2d & 11th Jud Dists). See also Alvarez v Prospect Hospital, 68 NY2d 320, 508 NYS2d 923 (1986).

In this case, Dr. Miller’s orthopedic evaluation and affirmed peer review report on January 29, 2003, based on objective testing, were sufficient to demonstrate that plaintiff’s services rendered to Villatoro were not medically necessary. In response to Dr. Miller’s specifically detailed affirmed peer review report, plaintiff merely submits a terse affidavit from Ray Presutto, a licensed massage therapist, averring that “my office rendered reasonable and necessary medical services to plaintiff’s assignor(s) that were casually related and resulting from said accident.” (Affidavit of Ray Presutto in opposition to the Motions, sworn to on September 18, 2007.) This allegation is conclusory and insufficient as proof in admissible form to create a triable issue of fact requiring a trial as per Boai Zhong Yi Acupuncture Services, P.C. v. Progressive Co., supra .

Conclusion

Both of defendant’s motions for summary judgment dismissing the complaints are granted. The clerk is directed to enter a judgment dismissing both complaints.

The foregoing constitutes the decision and order of this Court. Courtesy copies of this decision and order have been mailed to counsel for the parties.

Dated:New York, New York

October 29, 2007Hon. Shlomo S. Hagler, J.C.C.

Civil Court of the City of New York, Queens County

11430-2004

For the Plaintiff:

The Law Offices of Eva Gaspari PLLC

By Eva Gaspari, Esq.

2300 West 7th Street

Brooklyn, New York 11223

Tel: (718) 266-3009

For the Defendant:

Freiberg & Peck, LLP

By Yilo J. Kang, Esq.

49 West 37th Street, 9th Floor

New York, New York 10018

Tel:(212) 252 -9550

Charles S. Lopresto, J.

The plaintiff’s assignor, Cheryl Brown, was allegedly injured in a motor vehicle accident on January 7, 2003 while driving a vehicle she rented from Budget Rent A Car (hereafter Budget). At the time, Ms. Brown had an insurance policy with Progressive Insurance Company, which covered another vehicle which was not involved in the accident. Ms. Brown received medical equipment for treatment of injuries arising from the motor vehicle accident. The [*2]plaintiff, Ave T MPC, Corp., submitted two separate claims to the defendant, Progressive Insurance Company (hereafter Progressive), for the equipment dispensed on February 6, 2003 and February 22, 2003, in the amounts of $79.99 and $888.00, respectively. The two claims came to a total of $967.99, which, together with interest, costs and attorney fees, reflects the amount sought to be recovered in this case. The plaintiff is now seeking benefits under Ms. Brown’s insurance policy with Progressive for the accident which occurred while she was driving the Budget Rent A Car. Defendant contends that Ms. Brown is not an eligible person for insurance under the policy as she was driving a vehicle other than the vehicle insured by Progressive and thus was not covered.

A trial regarding this matter was held on July 23, 2007. At trial, the parties stipulated that the plaintiff had timely and properly submitted claims for no-fault benefits with respect to the medical equipment at issue to Progressive Insurance Company on behalf of the plaintiff. Given the stipulation of these facts, the plaintiff rested its case. The parties further stipulated that the defendant’s answer would be amended to contain the defense that the event or loss was not covered by the policy of insurance issued by the defendant and the defendant abandoned it’s defense that the claims in dispute had been denied based upon a failure of Ms. Brown to abide by and cooperate in accordance with the terms of the insurance policy. The parties stipulated that the sole issue for the court to determine was if there was a lack of coverage.

The defendant called Tammy Reichel, a senior litigation specialist employed by the defendant, whose responsibilities consisted of reviewing claims which were in litigation. Ms. Reichel testified that Cheryl Brown did have an insurance policy with Progressive Insurance in effect on the date of the accident. The claims presently in dispute had been denied based upon a failure to cooperate as per the terms of the policy. After the claims were received, the defendant repeatedly requested that Ms. Brown cooperate with the coverage investigation and submit to the taking of a recorded statement or otherwise contact the defendant. Various follow up letters were sent to Ms. Brown seeking information with respect to coverage. After receipt of the bills in question from the plaintiff, the defendant advised the plaintiff via a verification request that the benefits were delayed pending the claimant’s cooperation with their requests. After numerous attempts to obtain the recorded statement, the defendant denied the claims in dispute based upon the claimant’s breach of her insurance policy’s cooperation clause for failure to submit to a recorded statement request. While the instant lawsuit was pending, Ms. Reichel testified that the defendant, Progressive, received information from which she identified as an “ISO run” from an ISO computer data base. Ms. Reichel stated that all insurance companies are under a duty to provide information to this data base and she routinely relies upon information obtained from this data base and fully incorporates said information into her records made in the regular course of the defendant’s business. Said information indicated that Budget Rent A Car had received a claim from Ms. Brown for the same accident. Thereafter, a telephone conversation between Allison Saronui of Progressive Insurance Company and Trisha Hopfauf from the Budget Claims Department took place. A fax was sent from Ms. Hopfauf to Ms. Saronui on August 24th, 2007 memorializing this conversation which stated, inter alia, that “Budget was primary for PIP on this loss since this was a NY accident.”. Said fax also contained information acknowledging receipt of a medical bill for Ms. Brown on August 11th, 2003 for services rendered January 10th,2003 to March 13th, 2003, which was denied by Budget on the basis that her claim was untimely. Based upon such information and a police report indicating that the vehicle insured by [*3]the defendant and owned by Ms. Brown was not the vehicle involved in the accident, Ms. Reichel testified that she had a “founded belief” that Progressive was not the carrier liable for the accident and that this accident was not “covered” by the terms of the Progressive policy since the claimant was covered by a policy of insurance other than the one issued by the defendant.

CONCLUSIONS OF LAW

1. Has the defendant established that the loss was not a covered accident?

Generally, an insured who seeks to recover for a loss under an insurance policy has the burden of proving that the loss occurred and that the loss was a covered incident under the terms of the policy. Gongolewski v. Travelers Ins. Co., 252 AD2d 569[2nd Dept 1998], quoting Vasile v. Hartford Acc. & Indem.Co., 213 AD2d 541[ 2nd Dept. 1995]. However, in an action for first-party no fault benefits, which is the case at bar, a provider’s proof of timely submission of a properly completed claim form makes out a prima facie case and there is a presumption of medical necessity. See, Amaze Med. Supply v. Eagle Ins. Co., 2 Misc 3d 128 [ App Term 2d & 11th Jud Dists ]; see also, A.B. Med. Servs. PLLC v. Lumbermens Mut. Cas. Co., 4 Misc 3d 86 [App Term 2d & 11th Jud Dists 2004]. Adopting the Appellate Term’s concept in the related area of medical necessity, it should therefore follow that there is also a presumption of coverage which attaches to the claim form.

In this case, it was stipulated by the parties that the plaintiff had timely and properly submitted claims for no-fault benefits, which established plaintiff’s prima facie case thus establishing a presumption of coverage. A.B.Medical Services, PLLC v. State Farm Mutual Automobile Ins. Company, 7 Misc 3d 822; New York Massage Therapy v. State Farm Mutual Ins. Co. ,14 Misc 3d 1231 (A). Once the plaintiff makes a prima facie showing, the burden of explanation or of “going forward with the case” falls upon the defendant to show a lack of coverage. Mount Sinai Hosp. V. Triboro Coach Inc., 263 AD2d 11. The satisfaction of this burden would permit the defendant to disprove the presumption of coverage. Palmier v. United States Fidelity and Guaranty Company, 135 AD2d 1057 (3rd Dept. 1987).

In the case at bar, the defendant contends that this burden has been satisfied in that it has established that the defendant had a “founded belief” that the loss in question was not covered by the policy of insurance. In Central Gen. Hosp. V. Chubb Group of Ins.Cos., 90 NY2d 195, the Court of Appeals held that ” an insurer… may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident”. This case dealt with an insurers failure to reject a claim to recover no-fault benefits within the 30 day period prescribed by statute and regulations and held that the insurer would not be precluded from disclaiming when the defense is lack of coverage. The “fact or founded belief” standard discussed in Chubb, which is often used in “staged accident” cases, is inapplicable in this case. The facts in this case are distinguishable from a “staged accident” case. There has been no contention that the accident did not occur; that it was part of a fraudulent scheme or was an intentional act and thus not a covered incident under the policy. It is uncontroverted that a policy of insurance existed in this case which was issued to Ms. Brown by Progressive. Either the accident in question was covered or it was not. A contracting party to an insurance agreement should not be relieved of it’s duties of performance under the contract because a party “believes” [*4]that performance is not required whether that belief is founded or not if in fact performance is required. In order for the court to determine the issue, it is crucial and essential for the court to know what are the terms of coverage contained within the policy. The defendant did not introduce a copy of the policy of insurance that is in dispute. The defendant merely introduced the declarations page of the claimant’s insurance policy indicating that the car involved in the accident that the claimant was driving was not listed as a car insured by the defendant. In this case the defendant has failed to meet it’s burden to show that the policy of insurance issued to Ms. Brown did not cover the loss at issue. The policy may have contained a clause which covered the use of a rental vehicle as a temporary substitute for the insured’s vehicle while being repaired. See, SZ Medical, PC. V. Lancer Ins. Co.. 7 Misc 3d 86. Absent the actual production of the insurance policy the court can only guess and surmise at the terms and conditions therein. This court is well aware of the exclusions set forth in 11 NYCRR§ 65-1.1, in particular, exclusion C which states PIP coverage does not apply to “the named insured or relative occupying … a motor vehicle other than the insured vehicle”. However, said exclusions do not negate the responsibility of the insurance company to produce said policy at trial. Therefore, it is the holding of this court that the insurance company must introduce the policy at trial in order to demonstrate that the loss in question fell outside the terms of the insured’s policy of coverage in order to satisfy it’s burden.

2. Should have defendant submitted the matter to arbitration?

Notwithstanding the foregoing, the case at bar concerns a priority of payment issue. If a priority of payment issue arises as provided in NYCRR section 65-3.2; it is not considered a coverage question and must be submitted to mandatory arbitration. Section 5105 (b) of the Insurance Law establishes mandatory arbitration procedures promulgated by the Superintendent of Insurance for the resolution of disputes arising between insurers concerning their responsibility for the payment of first- party benefits. See Matter of Pacific Ins. Co. V State Farm Mut. Auto. Ins. Co.,150 AD2d 455[ Second Dept.1989]. In Matter of Pacific, thecourt dealt with issues similar to the facts presented in this case. The court held that ” (t)he Supreme Court erred in ruling that the present issue falls outside the jurisdiction of Insurance Law § 5105 and that it is, therefore not subject to mandatory arbitration, contrary to the clear mandate of 11 NYCRR 65.15 (j) (2), which provides that If a dispute regarding priority of payment arises among insurers who otherwise are liable for the payment of first-party benefits, then the first party to whom notice of claim is given… shall be responsible for payment… Any such dispute shall be resolved in accordance with the arbitration procedures established pursuant to section 5105 of the Insurance Law (section 65.10 of this Part)’. In addition, 11 NYCRR 65.10 (a) (5) provides in pertinent part that any controversy between insurers involving the responsibility or obligation to pay first-party benefits (i.e., priority of payment or sources of payment as provided in section 65.15[j] of this Part) is not considered a coverage question and must be submitted to mandatory arbitration under this section'”. In this case, the defendant refused to pay Ms. Brown’s claims when they were first presented with them. That refusal raised a question as to “priority of payments” between the defendant and Budget, which issue must be determined and submitted to mandatory arbitration pursuant to Insurance Law § 5105 and 11 NYCRR 65.10 (a) (5). The record reveals that Progressive received bills from the plaintiff prior to any claim made with [*5]Budget . This raises a dispute of priority of payments as between insurers which must be submitted for resolution by mandatory arbitration and this

court is without jurisdiction. SZ Medical, P.C v. Lancer Insurance Company, 7 Misc 3d 86. Accordingly, the complaint is dismissed.

____________________________

DATE:_______________Hon Charles S. Lopresto

Civil Court of the City of New York, Kings County

97323/04

Lila P. Gold, J.

This Order to Show Cause was brought by the defendant in Special 1 in order to clarify the Court’s Decision and Order dated May 16, 2006 granting Plaintiff’s motion for summary judgment.

The Decision and Order dated May 16, 2006 granted judgment for Plaintiff in the amount of $1714.00 plus statutory interest, attorneys’ fees and costs/fees of $65.00.

Defendant made payment to Plaintiff upon receipt of the Order in the amount of $2,460.16 and $557.03. Plaintiff claims that approximately $450.00 of the judgement amount has not been paid. The discrepancy in the amount due to Plaintiff is the based upon the date from which interest, and attorneys’ fees thereon, begin to accrue. It is Defendant’s position that interest should be calculated from the filing of the summons. Plaintiff’s contends that interest should be calculated from thirty (30) days after Defendant received Plaintiff’s bills for no-fault benefits.

This court is asked to determine at what point interest begins to accrue on an untimely denial and/or improper denial under the no-fault regulations. It is plaintiff’s contention that interest on untimely and/or improper denials received by an assignee/medical provider should begin to accrue 30 days after an insurer receives a proper proof of claim. Defendant argues that interest should not accrue until the no-fault claimant requests arbitration or institutes a lawsuit. Plaintiff and Defendant both presented a civil court decision, East Acupuncture, P.C. v. Allstate Ins. Co., 2005 NY Slip Op 25242, 2 (NY Misc. 2005), which was directly on point regarding this issue. Plaintiff based their position on the holding in East Acupuncture, P.C. (Id.) that interest is to accrue from the thirtieth day after submission of a bill if the Defendant issues a late or improper denial. Defendant’s papers respectfully submitted that the court in East Acupuncture, P.C. erred in its decision.

Subsequent to Defendant’s filing of the Order to Show Cause, the Appellate Term of the Supreme Court for the 2nd and 11th Districts reversed the order of the J. Matos entered June 28, 2005. East Acupuncture, P.C. v. Allstate Ins. Co., 2007 NY Slip Op 27109 (NY Misc. 2007). In this decision, the Appellate Term concluded that “the regulations, read as a whole in accordance with the rules of construction, the deference to be accorded the Superintendent’s assertion of intent, and the undesirable consequences of exempting assignees from the limitation imposed by 11 NYCRR 65-3.9 (c), lead to the conclusion that the reference to “applicant” in 11 NYCRR 65-[*2]3.9 (c) includes an eligible injured person’s assignee.” East Acupuncture, P.C. (Id.) Therefore, concluding that interest does not begin to accrue on an untimely denial and/or improper denial under the no-fault regulations until the no-fault claimant requests arbitration or institutes a lawsuit.

Based upon the foregoing, interest did not begin to accrue on this claim until the filing of the summons.

Accordingly, Defendant’s Order to Show Cause is hereby granted. Marshal’s Notice of Levy and Sale is vacated, Defendant has satisfied the underlying order in this matter dated May 16, 2006.

This opinion constitutes the decision of the Court. A copy of this decision will be mailed to the parties.

Dated:May 30, 2007

____________________________

Lila P. Gold, J.C.C.

Civil Court of the City of New York, Bronx County

79629/02

Nelida Malave-Gonzalez, J.

Plaintiff commenced this action to recover no-fault first party benefits for unpaid medical services provided to Fabio Vargas in the amount of $2, 498.38. In support of its prima facie case, plaintiff submitted a Notice to Admit. Neither plaintiff nor defendant presented any witnesses.

To establish a prima facie case for first party no-fault benefits, proof of a properly submitted statutory claim form or its substantial equivalent is sufficient. The burden then shifts to the defendant to establish the lack of medical necessity. 11 NYCRR §§ 65.3.4(c), 65-3.8(c), CPLR § 5106.The issue before this Court is whether the submission of a Notice to Admit is sufficient to establish a prima facie case to recover no-fault first party benefits for unpaid medical services.

A Notice to Admit is ” . . . a written request for admission . . . of the genuineness of any papers or documents described in and served with the request, or of the truth of any matters of fact set forth in the request, as to which the party requesting the admission reasonably believes there can be no substantial dispute at the trial and which are within the knowledge of such other party or can be ascertained by him upon reasonable inquiry. C.P.L.R. § 3123. Failure to timely respond to a Notice to Admit, either by denial or detailed reason as to why a denial or admission is not possible, shall result in those items requested deemed admitted. However, a Notice to Admit may not be used to elicit an admission of fundamental and material issues or ultimate facts. Meadowbrook-Richman, Inc. V. Cicchiello, (1st Dept. 2000); PDG Psychological, P.C. v. State Farm Ins. Co., 12 Misc 3d 1183(a)(2006).

The issue before the bench is considerably new. A cursory search of New York cases reveals no “on point” appellate decisions which would bind this Court. As such, an analysis of both arguments is worthwhile.

As defined above, a Notice to Admit may be used to settle any fact that is not at issue. A Notice to Admit should not contain any questions that would require that the opposing party concede any material facts. It is for this reason that failure to respond to a notice to admit is deemed as an admission. Conversely, if Notice to Admit is permitted as the sole evidence to [*2]establish a prima facie case, logical reasoning would follow that there was no material issues presented at trial and thus no prima facie case made.

One cannot deem any failure to respond to a Notice to Admit as an admission to a material fact. To allow such would spawn an abuse of this disclosure device and contradict the purpose of the Notice to Admit. Further, it would prevent attorneys from regarding their ethical duty to actively participate in the litigation of each case as well as timely responding to documents submitted by opposing counsel.

Recently, in Fair Price Medical Supply v. St. Paul Travelers Ins. Co., 2007 NY Slip Op. 27173, the Appellate Division, First Department affirmed a case where interrogatories were admitted to prove plaintiff’s prima facie case. Specifically, to establish that in response to the interrogatories, defendant admitted that it received the no-fault claims and made partial payment on the claims. The case at bar is distinguishable from Fair Price Medical Supply for many reasons. Although both discovery devices, the Interrogatory and a Notice of Admit function quite differently.^[FN1] First, an Interrogatory must be given under oath, where as a Notice to Admit need not be. Further, an Interrogatory may be used to unearth any relevant subject. However, as defined above, a Notice to Admit may not be used to seek answers to material issues to be resolved at trial. Sagiv v. Gamache, 26 AD3d 368 (2nd Dept. 2006).The instant case is further distinguished from Fair Price Medical Supply because that defendant responded to the Interrogatories. The Appellate Division found it contradictory that the defendant now claims that plaintiff’s did not submit proof that the claims were mailed, received or overdue although these issues were admitted under oath in response to the interrogatory. That is not the case here.

Plaintiff’s Notice to Admit requested the following admissions:

1. That the bill(s) attached to the Summons and Complaint was received by the defendant.

2. That said bill(s) was received on or before 12-01-2002.

3. That defendant did not mail a denial of claim form NF-10 to the plaintiff within thirtydays of receipt of said bill.

4. That defendant did not issue any requests for verification to the plaintiff.

5. That the occurrence of the underlying accident is not disputed.

6. That the assignor’s involvement in said accident is not disputed.

7. That there was a policy of insurance in effect covering the accident of 12/21/01.

8. That the injuries claimed were causally related to the motor vehicle accident.

9. That RJ Medical, P.C. is properly licensed in the State of New York.

10. That the assignor complied with all notice requirements.

11. That plaintiff complied with all notice requirements.

12. That the bill submitted was in accordance with the New York State WorkersCompensation Fee Schedule.

Plaintiff did not submit bills or any other documents to this Court to support the Notice to Admit. Defendant did not respond to the Notice to Admit and alleged at trial, that the plaintiff never submitted the requisite bills or forms with the Notice to Admit. Nor were said bills or [*3]forms previously provided. Defendant’s failure to respond to the Notice to Admit would deem the question of whether the bills were previously submitted as an admission and thus conceded at trial. Although technically correct, the requested admissions go to the heart of the matter. The requested admissions are of material issue at the trial. A no-fault first party benefits case requires only that the requisite bills, forms and substantially equivalent documents be admitted to prove a prima facie case. If admitted to by default during discovery, which is what happens when no response to the Notice to Admit is effectuated, it alleviates the plaintiff any burden of moving forward on its prima facie case. Thus, resulting in the plaintiff having established absolutely no material issue at trial upon which this court could hang the proverbial hat.

The plaintiff did not provide any additional evidence at trial and thus is unable to prove through admissible evidence that payment was not made on a timely submitted claim. As such, plaintiff’s action is dismissed.

The foregoing constitutes the Decision and Order of the Court.

Dated:______________________________________________

Hon. Nelida Malave-Gonzalez, J.C.C.

Footnotes

Footnote 1: CPLR 3130(1).

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

64123/05

For plaintiffs:

Christopher McCollum, Esq.

Law Offices of Christopher McCollum

57 W. 57th St., Suite 502

New York, NY 10019

917-407-5690

For defendant:

Allison B. Frischling, Esq.

Bruno, Gerbino & Soriano, LLP

445 Broad Hollow Road, Suite 220

Melville, NY 11747

631-390-0010

Barbara Jaffe, J.

By notice of motion dated January 25, 2007, defendant moves for an order granting it leave to renew and reargue my decision and order of December 6, 2006 granting summary judgment to plaintiffs on their claims for unpaid no-fault insurance benefits, statutory interest, and attorney fees. For the following reasons, the motion is denied.

I. PRIOR DECISION

In granting plaintiffs summary judgment, I held that they had established, prima facie, that their office manager had personally mailed the pertinent no-fault claim forms to defendant and that defendant had failed to deny plaintiffs’ claims timely. Defendant raised no objection to plaintiffs’ prima facie case.

In holding that defendant had failed to establish good cause for seeking discovery relating [*2]to its defenses and plaintiffs’ corporate structure, I found that: 1) in light of plaintiffs’ counsel’s affirmation that plaintiff Devonshire Surgical Facility (Devonshire) was officially converted from a general partnership into a limited liability corporation and notwithstanding the absence of its name from lists maintained on the websites of the New York State Education Department’s Office of Professions and the New York Department of State Division of Corporations, defendant failed to demonstrate sufficiently that at the time the healthcare services were rendered, Devonshire was fraudulently incorporated; 2) defendant failed to demonstrate sufficiently that the revocation of Allen Chamberlin’s license to practice medicine based on conduct he engaged in during 1998 constitutes good cause to believe that his facility, defendant Carnegie Hill Orthopedic Services (Carnegie Hill), was fraudulently incorporated in 2001 when the services in issue were rendered; 3) because the revocation of Chamberlin’s license was based on his excessive and unnecessary treatments and fraudulent billing for services never provided, which are forms of provider fraud, and absent any indication that defendant had interposed a timely denial based on those defenses, plaintiffs are not precluded from seeking reimbursement; and 4) defendant failed to interpose in its answer any contention that an independent contractor had provided the services at issue and that Chamberlin had violated the prohibition against self-referral.

II. RE-ARGUMENT

A motion for leave to reargue “shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion, but shall not include any matters of fact not offered on the prior motion.” (CPLR 2221[d][2]).

A. Defendant’s discovery demands relating to Carnegie Hill’s corporate structure

1. Contentions

Defendant argues that there exists good cause for discovery relating to Carnegie Hill’s corporate structure, again relying solely on the 2005 administrative finding that Chamberlin engaged in fraudulent billing and fraudulent and excessive medical practices in 1998 as evidence that he engaged in those practices in 2001. As Chamberlin’s license was revoked based on conduct he engaged in during 1998, defendant argues, his license must be deemed revoked as of 2001, and if Chamberlin was not authorized to practice medicine in 2001, then Carnegie Hill had issued him shares in violation of Business Corporation Law (BCL) § 1507(a) and was thus fraudulently incorporated in 2001. (Affirmation of Alison B. Frischling, Esq., dated Jan. 25, 2007 [Frischling Aff.]). Defendant thus attempts to avoid preclusion of a defense based on provider fraud by characterizing it as one sounding in fraudulent incorporation.

In opposition, plaintiffs observe that I had rejected the same argument in my December 2006 decision. (Affirmation of Christopher McCollum, Esq., dated Mar. 12, 2007 [McCollum Aff]).

2. Analysis

Pursuant to 11 NYCRR 65-3.16 (a) (12), effective April 4, 2002, unlicensed or fraudulently licensed healthcare providers are ineligible to receive reimbursement for no-fault medical services provided by them. In affirming the dismissal of an insurer’s causes of action for fraud and unjust enrichment, the Court of Appeals held in State Farm Mut. Auto. Ins. Co. v Mallela, that no such causes of action lie for payments made by insurers before April 4, 2002. (4 [*3]NY3d 313, 322 [2005]). The Court also observed that insurers may withhold payment for medical services provided by enterprises incorporated in violation of BCL §§ 1507 and 1508 and Education Law § 6507(4)(c). Pursuant to BCL §1507, a professional service corporation may issue shares only to those individuals who are authorized by law to practice the profession which the corporation is authorized to practice.

Here, it is undisputed that Chamberlin was authorized by law to practice medicine when Carnegie Hill was organized. And, although Chamberlin’s license has now been revoked and he must now disassociate himself from Carnegie Hill (BCL § 1509 [if shareholder of professional service corporation becomes legally disqualified to practice his profession, he must sever all employment with and financial interests in corporation]), absent any indication that the revocation is retroactive or that any of the governing statutes, regulations, or case law requires that lawfully issued shares be invalidated retroactively, there is no basis for finding that Carnegie Hill was fraudulently incorporated when formed merely because Chamberlin’s license was revoked thereafter. (See CKC Chiro. v Republic Western Inc. Co., 5 Misc 3d 492 [Civ Ct, Kings County 2004] [provider may be reimbursed for services rendered when she was properly licensed or registered, even if she subsequently became unlicensed or unregistered]).

I also observe that the conduct underlying the revocation of Chamberlin’s license relates to defenses which, if this action arose in the Second Department, are precluded if not timely denied. (Careplus Med. Supply Inc. v State-Wide Ins. Co., 11 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2005] [fraudulent billing or performance of excessive or unnecessary medical treatment are forms of provider fraud]; Fair Price Med. Supply Corp. v Travelers Indemn. Co., 9 Misc 3d 76 [App Term, 2d Dept 2005] [defense based on fraudulent scheme to obtain no-fault benefits precluded due to untimely denial]; Ocean Diagnostic Imaging, PC v Utica Mutual Ins. Co., 9 Misc 3d 138[A], 2005 NY Slip Op 51745[U], *1 [App Term, 9th & 10th Jud Dists 2005] [alleged irregularities in the treatment and billing process did not support defense that survived preclusion]). Although no appellate court in the First Department has addressed the issue of whether a defense based on services billed but never rendered is subject to preclusion for untimely denial, and a judge in the Eastern District of New York disagrees with the Appellate Term’s decision in Fair Price, 9 Misc 3d 76, that a defense based on services billed but not rendered is subject to preclusion (Allstate Ins. Co. v Valley Physical Med. & Rehab., P.C., 475 F Supp2d 213 [US Dist Ct, EDNY 2007]), here, defendant did not even allege that plaintiffs billed for services that were not rendered.

In any event, evidence that Chamberlin fraudulently or excessively billed or unnecessarily treated patients in 1998 is inadmissible to prove that he engaged in such conduct in 2001. (Prince, Richardson on Evidence § 4-517 [11th Ed Farrell]; see Matter of Brandon, 55 NY2d 206 [1982]; Hand v Stanper Food Corp., 224 AD2d 584 [2d Dept 1996] [evidence that defendant’s principal broke two signs in front of defendant’s premises over five-year period prior to alleged accident, without more, insufficient to support inference that he broke sign at issue]; Kelly v Ryder Truck Rental, Inc., 14 Misc 3d 127[A], 2006 NY Slip Op 52467[U] [App Term 1st Dept 2006] [evidence of prior accident inadmissible to support inference of fraud absent any claim that prior accident was staged]; Maraziti v Weber, 185 Misc 2d 624 [Sup Ct, Dutchess County 2000] [motion in limine granted as to prior findings of Department of Health]). If Carnegie Hill excessively billed for its services or billed for services never rendered, defendant would have had [*4]the means of proving it without relying on inadmissible evidence of a disposition to engage in fraud. Rather, it seeks to rely solely on inadmissible evidence of prior misconduct.

As defendant failed to establish that it properly sought discovery from Carnegie Hill based on a non-precluded defense (A.B. Med. Svces., PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [App Term, 2d & 11th Jud Dists 2006]), that it has good cause to believe that Carnegie Hill was fraudulently incorporated, and that Carnegie Hill was required to respond to defendant’s discovery requests on these issues (see A.B. Med. Svces., PLLC, 11 Misc 3d 71 [discovery demands relating to precluded defenses are “palpably improper” and plaintiff healthcare provider need not respond to them]; Devonshire Surgical Facility and Carnegie Hill Orthopedic Services v GEICO, NYLJ, Apr. 7, 2006, at 20, col 1 [Civ Ct, New York County] [defendant may not allege provider fraud if not asserted in denial]), it has failed to demonstrate that I overlooked or misapprehended any matter of fact or law in deciding the prior motion.

B. Defendant’s discovery demands relating to Devonshire’s corporate structure

Defendant claims that discovery relating to Devonshire’s corporate structure is warranted as it may reveal that Devonshire was not a properly licensed entity when the services in issue were rendered. It relies, as it did in its opposition to plaintiff’s motion for summary judgment, on the results of two website searches which do not list Devonshire as a professional medical corporation prior to 2006. (Frischling Aff.). Devonshire denies that defendant’s allegations against it, even if true, constitute a defense of fraudulent incorporation, and claims that a violation of the Business Corporation Law is curable and that Devonshire was and continues to be a properly licensed entity. (McCollum Aff.).

As Devonshire was not incorporated at the time the services in issue were rendered, Mallela, 4 NY3d 313, as well as Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 (1st Dept 2006), are inapposite absent any requirement that an entity offering professional services be incorporated. I observe that BCL §1503(a) merely permits one or more individuals authorized by law to render the same professional service to organize a professional service corporation.

I also observe that only business and not for profit corporations, limited partnerships, limited liability companies and limited liability partnerships, as well as other miscellaneous businesses, are listed on the New York Department of State’s Division of Corporation’s website; general partnerships, sole proprietorships, and limited liability partnerships are expressly excluded from it. Consequently, as the absence of Devonshire’s name from the website list prior to 2006 reflects only that Devonshire was not incorporated as a business or not for profit corporation, limited partnership, limited liability company, or limited liability partnership before that time, it is immaterial.

Pursuant to Education Law § 6507(4)(c), the New York State Education Department is required issue a certificate of authority to a qualified professional service organization organized pursuant to BCL § 1503. As Devonshire was not organized pursuant to BCL § 1503, Education Law § 6507(4)(c) is not applicable.

I also find that defendant’s conclusory allegations that an independent contractor provided the services in issue and that Chamberlin violated the prohibition against self-referral form no basis for discovery as defendant did not plead such defenses and did deny the claims based thereon. Defendant has thus failed to demonstrate good cause to assert, nor has it even argued, [*5]that at the time that Devonshire rendered the services at issue, it was owned, operated, controlled or otherwise involved with unlicensed individuals or entities.

Accordingly, plaintiffs were not required to respond to discovery demands on these issues.For all of these reasons, defendant has failed to establish good cause to believe that Devonshire was fraudulently incorporated before May 2006, and absent such good cause, defendant is not entitled to discovery on this issue. Consequently, defendant has failed to establish that I overlooked or misapprehended any matter of fact or law in deciding the prior motion.

C. Triable issues of fact

Defendant also includes in its motion for leave to reargue a claim that there exist triable issues of fact as to whether Devonshire was ever a properly licensed entity and whether Carnegie Hill improperly issued shares to Chamberlin. It argues, without any explanation, that Devonshire’s registration with the Department of State as a “domestic limited liability company” rather than “professional limited liability company” raises a triable issue as to whether it is a licensed provider. (Frischling Aff.).

I first observe that defendant’s opposition to plaintiff’s motion for summary judgment was based solely on plaintiffs’ failure to respond to its discovery demands. Consequently, these new arguments may not be considered. (CPLR 2221[d][1]; Mariani v Dyer, 193 AD2d 456 [1st Dept 1993] [motion to reargue not appropriate vehicle to assert arguments different from those asserted on original motion]). In any event, defendant cites no authority in support of its proposition that licensed health care providers must be registered only as professional limited liability companies.

I thus find that defendant failed to establish that I overlooked or misapprehended any of its evidence or relevant decisions in granting plaintiffs summary judgment on their claims. For all of these reasons, I adhere to my prior decision and deny defendant’s motion to reargue.

III. RENEWAL

A motion for leave to renew “shall be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination, and shall contain reasonable justification for the failure to present such facts on the prior motion. (CPLR 2221[e][2], [3]).

A. Retroactivity of fraudulent incorporation regulation

In moving to renew, defendant relies on Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 (1st Dept 2006), for the proposition that a provider’s prior fraudulent conduct may be used to prove that the provider conducted itself similarly on a subsequent occasion. Counsel maintains that the First Department held that “a providers [sic] fraudulent conduct can be applied retroactively.” (Frischling Aff.). It maintains that the decision constitutes a change in law which would change my prior determination, and that the regulation applies to the period during which plaintiffs rendered the services in issue. It thus argues that as there is reason to believe, based on the subsequent revocation of Chamberlin’s license, that plaintiffs were fraudulently licensed or had engaged in fraudulent conduct when the services were rendered, plaintiffs may not be entitled to reimbursement for those services. (Id.).

The First Department recently applied Mallela to claims for services rendered prior to April 4, 2002, rejecting a provider’s argument that it was entitled to be reimbursed for claims [*6]relating to services rendered prior to the effective date of the regulation, reasoning that “[t]he very word reimbursement,’ used in the regulation, implies that the services had already been provided . . . [and that] it would be illogical to read [Mallela] as applying only to claims submitted on or after April 4, 2002.” (Belt Parkway, 33 AD3d 407). Thus, unlicensed and fraudulently licensed health care providers and those that are incorporated in violation of BCL

§§ 1507 and 1508 and Education Law § 6507(4)(c) are ineligible to be reimbursed even if their services were rendered prior to April 4, 2002.

While the court applied the regulation retroactively, it did not even address the issue raised by defendant, namely, whether a provider’s fraudulent conduct on one occasion may be utilized to prove that it engaged in fraudulent conduct on another occasion. As noted supra (II.A.2.), evidence of prior misconduct is generally inadmissible to prove later alleged misconduct.

Consequently, the decision in Belt Parkway does not change my determination that defendant failed to establish good cause to seek discovery concerning Carnegie Hill’s alleged fraudulent incorporation.

B. Plaintiffs’ prima facie case

Defendant maintains that recent decisions compel the finding that the affidavit supporting plaintiffs’ motion for summary judgment was insufficient to lay a foundation for the admission in evidence of plaintiffs’ business records or demonstrate that the claims were overdue. (Frischling Aff.). Plaintiffs argue that the supporting affidavit was based on their office manager’s personal knowledge of the contents of the mailings and the mailings themselves. (McCollum Aff.). In reply, defendant argues that the affidavit is insufficient as plaintiffs’ office manager fails to set forth her knowledge of plaintiffs’ business practices and procedures or any specifics concerning the claims at issue, such as the date of the accident, dates of service, and amounts in dispute. (Reply Affirmation of Allison B. Frischling, Esq., dated March 29, 2007 [Frischling Reply Aff.]).Here, plaintiffs’ officer manager swore that she had personal knowledge of the documents, that she personally verified that they were contained in the envelopes, that she mailed the envelopes, and that defendant neither paid nor denied the claims within thirty days. She also stated that she has been plaintiffs’ office manager for more than seven years, that one of her responsibilities is the supervision of all billing procedures and mailing of claim forms, and that based on her personal knowledge and review of the file, the claims forms annexed to the motion papers were made by plaintiffs’ employees who had the obligation to make the record in the regular course of business and who had the actual knowledge of the events recorded or received the information from someone within the business who had actual knowledge and was under a business duty to report the events to the maker of the records, and that the documents were made at the time of the transaction or occurrence or a reasonable time thereafter.

In Dan Medical, P.C. v NY Central Mutual Fire Ins. Co., 14 Misc 3d 44 (App Term, 2d Dept 2006), the plaintiff submitted the affidavit of its corporate officer stating that the documents attached to the plaintiff’s motion papers were its business records. The court held that the plaintiff “failed to demonstrate that the officer possessed sufficient personal knowledge of [its] office practices and procedures so as to lay a foundation for the admission of the annexed documents as business records.” (14 Misc 3d at 46).

Here, plaintiffs’ office manager had personal knowledge of plaintiffs’ business practices [*7]and procedures for creating the claims, as well as personal knowledge that the claims were mailed to defendant. Thus, her affidavit satisfies the requirements for admitting in evidence as business records the claims and annexed documents.

Moreover, plaintiffs’ office manager set forth in her affidavit the amounts plaintiffs billed defendant for the services at issue and the date on which she mailed the claims to defendant, and she states that defendant did not pay or timely deny the claims. She also refers to the claim forms and other documents annexed to plaintiffs’ papers which indicate the dates of service and types of services provided by plaintiffs.

In PDG Psych., P.C. v Ntl. Grange Mut. Ins. Co., 14 Misc 3d 136(A), 2007 NY Slip Op 50242(U) (App Term, 2d & 11th Jud Dists 2007), the court held that the plaintiff’s officers’ affidavit was too vague and conclusory to support plaintiffs’ prima facie case as the officer did not identify what services were rendered, when they were rendered, the amounts which were owed or the dates on which the claims were mailed, but only alleged that the bills were accurate and that proof of mailing was available for inspection.

Here, the affidavit references the annexed documents for which a sufficient evidentiary foundation was laid, thereby providing the specific details of the amounts billed, the dates of service and services rendered, and the date the claims were mailed. Consequently, the affidavit was sufficient to satisfy plaintiffs’ prima facie burden.

I thus find that as defendant failed to demonstrate that there has been any change in the law that would change the prior determination, leave to renew is denied.

IV. SHORT SERVICE

In its reply, defendant claims that plaintiffs did not serve their opposition to its motion by March 16, 2007, the date agreed to in the parties’ stipulation dated February 26, 2007. (Frischling Reply Aff.).

While plaintiffs’ affidavit of service of the opposition papers reflects that the papers were served on March 19, 2007, defendant replied on the merits to the papers and alleges no prejudice. I thus find that it waived plaintiffs’ late service. (See Piquette v City of New York, 4 AD3d 402 [2d Dept 2004] [although motion made on insufficient notice, plaintiffs waived objection to it by opposing it on merits]; Adler v Gordon, 243 AD2d 365 [1st Dept 1997] [petitioner waived right to contest late service of motion by opposing it on merits]).

V. CONCLUSION

Accordingly, defendant’s motion for leave to reargue is granted and re-argument is denied, and defendant’s motion for leave to renew is denied. This constitutes the decision and order of the court.

_______________________________

Barbara Jaffe, JCC

DATED:May 21, 2007

New York, New York [*8]