Civil Court of the City of New York, Kings County

46907/2005

Sylvia G. Ash, J.

Plaintiff, a health care provider, rendered medical services to the assignors in connection with injuries sustained as a result of separate automobile accidents that occurred in September of 2003. At the time of the alleged accidents, Defendant was the first-party no-fault carrier responsible for payment of any claims properly submitted. Plaintiff brought this action to recover first-party no-fault benefits for the medical services rendered to its assignors. A trial on this matter was conducted jointly.^[FN1]. The trial commenced on February 6, 2006 and was heard on consecutive days until its conclusion on February 9, 2006. At issue as to assignor Reggie Delmar, is $484.44. At issue as to assignor Mario Rodriguez is $968.88, for a total of $1,453.32. Based on the credible evidence adduced at trial this Court makes the following findings of fact and conclusions of law.

In accordance with the applicable no-fault rules, Plaintiff submitted the required no-fault claim forms indicating the fact and amount of the loss sustained for each of its assignors, and Defendant timely denied said claims based on the fact that the alleged automobile accidents were not covered.^[FN2]. For each of its assignors Plaintiff submitted claims for the following services, Inclinometry Range of Motion procedures (code 95851), and Manual Muscle Testing procedures (code 95831). Defendant denied said claims. As a basis for its denial of each of these claims Defendant asserted two reasons. First, for the Inclinometry Range of motion procedures, Defendant contends that the “procedure is not listed in the NY state fee schedule for this provider specialty. If reported with an evaluation and management service, this procedure is [*2]inclusive.” Second, for the Manual Muscle Testing procedures, Defendant contends the “procedures referenced by the provider’s office were used more than what is normally expected per visit.” (See Joint Exhibits 1 and 2 in evidence, Defendant’s denial of claim for each assignor respectively).

In light of the parties stipulating to Plaintiff’s prima facie case, and Defendant’s timely denial of the claims submitted, the only remaining issue for this Court to determine is whether the Defendant met its burden by demonstrating that Plaintiff was not entitled to recover for the claims submitted based on the fact that the procedures were not listed in the fee schedule for the provider, and based on the fact that the procedures were used more than what is expected per visit.

To contain the cost of providing medical services to patients treated under New York’s No-Fault law, the state legislature set limits on the fees health care providers may charge patients who sustain injuries in the use or operation of a motor vehicle. The legislature controlled costs by incorporating into the no-fault scheme the fee schedules established by the Worker’s Compensation Board for industrial accidents. Worker’s Compensation fee schedules were divided into various sections, including Medicine, Physical Therapy, Anesthesia, Surgery, Radiology, and Pathology in the medical fee schedule. Each of these sections lists a variety of medical procedures and assigns to each procedure a number known as a Current Procedural Terminology Registry Code (hereinafter “CPT code”). Each procedure listed in the fee schedule is assigned a number representing its “unit value.” To determine the maximum fee a provider may charge for any given procedure, the unit value assigned to that procedure is multiplied by a dollar amount conversion factor. Conversion factors are provider specific. Hence, the conversion factors apply only t the category of health care provider and type of treatment for which they were established (see Introna v. Allstate Insurance Co., 890 F.Supp.161).

The Worker’s Compensation fee schedules are adjusted by the superintendent of the Insurance Department (see Insurance Law §5108). One adjustment made by the superintendent is for health services not set out in the schedules. When a charge for a reimbursable service has not been scheduled by the superintendent, although a fee schedule has been set for the profession of the provider, then the provider shall establish a fee or unit value consistent with other fees or unit values for comparable procedures shown in such schedule subject to review by the insurer (see 11 NYCRR 68.6(a); Studin v. Allstate Insurance Co, 152 Misc 2d 221).

During trial in the instant matter, Plaintiff submitted bills indicating that, Inclinometry Range of Motion procedures (CPT code 95851), and Manual Muscle Testing procedures (CPT code 95831), were performed on the assignors. In its post-trial memorandum of law on this issue, Plaintiff demonstrated by using a chart, the precise method for calculating the charges for the expenses. Specifically, Plaintiff indicated that it did in fact locate the procedures that were performed on the assignors within the Worker’s Compensation schedule, under CPT codes, 95851 and 95831. Plaintiff using the “comparable procedures” method then billed the insurer at a rate comparable for a physical therapists rate for providing these services. Defendant failed to [*3]introduce any evidence on this issue at trial or in its post-trial memorandum of law to establish that the services rendered were in fact not scheduled services, or as the defendant stated in its denial “…not listed in the NY state fee schedule for this provider specialty.”

In addition to reviewing the record and the post-trial memoranda of the parties, the Court conducted an investigation of the fee schedule. Both of the above-referenced procedures listed in the bills submitted by the Plaintiff in this case were in fact listed in the schedule (see Worker’s Compensation Board Fee Schedule of medicine Fees, Page 32). Pursuant to the chart utilized by Plaintiff in its post-trial memorandum of law, the court is satisfied that Plaintiff billed the insurer at the appropriate physical therapist rate of the services rendered, and as such, is entitled to recovery for the expenses. Defendant offered no proof to the contrary, and as such, has failed to maintain this defense.

The Court will now address Defendant’s contention that the “procedures referenced by the provider’s office were used more than what is normally expected per visit,” (see Joint Exhibits 1 and 2 in evidence, Defendant’s denial of claim for each assignor respectively). It is the Court’s position that this defense amounts to one of lack of medical necessity. It is well settled that where Defendant’s timely denial raises the lack of medical necessity defense but fails to support same with an Independent Medical exam (hereinafter “IME”), a peer review, an IME report, or other supporting documentation that is factually sufficient and non-conclusory, this defense will fail )Amaze Med. Supply Inc. v. Allstate Ins. Co., 3 Misc 3d 43 [App Term 2d & 11th Jud Dists. 2004]. As such, Defendant failed to preserve this defense for trial. Assuming arguendo Defendant had preserved this defense for trial, Defendant failed to call any expert witnesses at trial to testify regarding this issue. Nor did Defendant attempt to introduce any documents into evidence regarding this issue. As such, Defendant’s argument fails in its entirety as there is absolutely no basis in the record upon which the Court could make the determination that the procedures referenced by the Plaintiff in its claim forms were “..more than what is normally expected per visit” (see Joint exhibits 1 and 2 in evidence, Defendant’s denial of claim for each assignor respectively).

Based on the foregoing, judgment is to be entered in favor of the Plaintiff in the amount of $1,453.32, plus statutory interest and reasonable attorney fees.

This constitutes the decision and order of this Court.

DATED:Brooklyn, NY

May 30, 2006

_____________________________

SYLVIA G. ASH

JUDGE, CIVIL COURT

Footnotes

Footnote 1: This matter was tried jointly with index numbers 46906/05, 46927/05, 46933/05, and 48354/05.

Footnote 2:The parties stipulated on the record to Plaintiff’s prima facie case and that Defendant issued timely denials. [*4]

Civil Court of the City of New York, Kings County

96268 KCV 2004

Delores J. Thomas, J.

In the instant action plaintiff, a medical supplies provider, sues to recover $2,882.85 for medical supplies provided to its assignor Barry Galleh for injuries stemming from an auto accident on March 3, 2004.

At trial, the parties stipulated to plaintiff’s prima facie case and defendant’s timely denial of claim. The parties further agreed that the only issue for trial would be defendant’s defense of lack of medical necessity. The parties also stipulated the following documents into evidence:

Plaintiff’s Exhibits:

1A – Invoice dated May 20, 2002 for $1,532.85

1B – Invoice dated April 10, 2004 for $ 1,350.00

2A – Prescription from Oleg Barshay, D.C. dated March 5, 2004

2B – Prescription from Oleg Barshay D.C. dated April 19, 2004

3 – April 13, 2004 chiropractic report from Oleg Barshay for Barry Galleh

Defendant’s Exhibits:

A1 – NF10 dated May 10, 2004

A2 – NF10 dated June 1, 2004

B1 – Peer Review dated May 5, 2004

B2 – Peer Review dated May 28, 2004

The supplies at issue were: cervical pillow, Philadelphia tracheotomy cervical collar, TLSO Dorso-lumbar surgical supply, lumbar cushion, bed board, egg crate mattress, thermophone, EMS Unit, EMS accessory Kit, EMS belt, massage and an infra-red heating lamp (Exhibit 1A & 1B).

At trial, defendant called Ronald A. Csillag, a doctor of chiropractic [“D.C.”] the person who performed the per review. Dr. Csillag was qualified without objection as an expert in the practice of chiropractics. Dr. Csillag testified that the cervical pillow prescribed for the assignor is usually prescribed for injuries which are chronic in nature. He described the assignor’s injury as being acute and opined that the pillow was not needed and that the patient could have simply been instructed to roll up a towel and use it with the same benefit. In the peer review report, Dr. Csillag indicated that the effectiveness of cervical pillows in whiplash associated disorders is inconclusive and cites as authority several publications, (i.e. Whiplash Associated Disorders, [*2]Spine 1995, 20 (85); 25-73s Clinical Evidence BMJ Publishing Group, page 232-2003).

With regards to the lumbosacral belt and cervical collar, Dr. Csillag testified and wrote in the peer review report that these supplies were unnecessary because these devices work through immobilization and this type of support is not consistent with the trend in the management of lumbar sprains. He also wrote and testified that current scientific research documents the importance of early range of motion as mobility enhances recovery (see Defendant’s Exhibit B-1, pg. 4). Dr. Csillag cited the text, Physical Medicine and Rehabilitation: State of the Art Reviews: Vol. 9(3) October 1995 as supporting authority(Id.). Dr. Csillag further testified that many of the medical supplies were unnecessary because there was no indication from the treating doctor how to use them or to what areas to apply the device. He further opined that the patient was undergoing physical therapy, chiropractic care, acupuncture, message therapy and adjunctive therapy and that the massager, infrared heating lamps, EMS Unit and associated EMS equipment represented a duplication of services.

Plaintiff did not call a witness but as indicated the report of Dr. Barshay was admitted into evidence as Plaintiff Exhibit 3. The Initial Diagnosis portion of the report indicates:

1. Traumatic cervical sprain/strain with cervical myofascitis and possible radicular involvement, complicated by C4-C5 and C5-C6 bulging disc (MRI finding).

2. Traumatic Lumbar sprain/strain with intermittent radiating sciatic neuralgia, concomitant with Lumbar myofascitis (MRI finding pending).

3. Post traumatic cervicogenic headaches.

4. Head and right knee contusion.

5. Multiple intersegmental functional dysarthroses of the cervical thoracic and lumbar vertebral motor units.

The report also list a patient management plan, to wit: “The treatment in this case was directed toward conservative chiropractic management. This consisted of specific vertebral adjustments to correct functional dysarthroses and adjunctive therapy in the form of manual intersegmental traction. To enhance recovery, manual massage therapy and acupuncture by a licensed therapist was incorporated into the treatment plan. The frequency of treatments is 2-3 times a week. The patient was also advised to wear an orthopedic lumbosacral support and cervical collar to minimize pain and prevent a re-injury. A TENS unit was given to the patient and after a two week trial was proven to be effective for pain management.”

Since the only issue for trial was whether the supplies provided to the assignor were medically necessary, defendant bore the burden of proof on this issue (A.R. Medical Art. P.C. v. State Farm Mut. Auto Ins. Co., 11 Misc 3d 1057 [A][Civ. Ct., Kings Co. 2006]; CityWide Social Work & Psychological Servs. 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]; Fifth Ave. Pain Control Ctr. v. Allstate Ins. Co., 196 Misc 2d 801 [Civ. Ct., Queens Co., 2003]).

A no-fault insurer defending a denial of first party benefits on the ground that the billed for services or equipment/supplies were not “medically necessary” must show that the services or supplies/equipment provided were inconsistent with generally accepted medical/professional practices. The opinion of the insurer’s expert, standing alone, is insufficient to carry the insurer’s burden of proving that the services or supplies/equipment were not “medically necessary”

[*3](CityWide Social Work & Psychological Servs. v. Travelers Indem. Co. , supra at 609; Ultimate Med. Supplies v. Lancer Ins. Co., 7 Misc 3d 1002 [A] [Civ. Ct., Kings. Co. 2004]).

In United Medical Supplies v. Lancer Ins. Co., supra, plaintiff had supplied its assignor with certain medical equipment (i.e. TENS Unit, LSO, etc) pursuant to a prescription. Defendant denied payment based upon a peer review. At trial, the peer review doctor, Dr. Moshkovski, testified that based upon her experience none of the prescribed durable medical equipment was necessary. She cited no authority other than her own experience. Judge Alice Fisher Rubin found it clear that Dr. Moshkovski admitted to never having prescribed any of the subject medical equipment with the sole exception of ice packs, on no basis other than her own opinion. Thus, the court held that such an opinion was biased against the prescribing doctor so as to make the peer review a nullity and not credible.

The instant case is at opposite with the facts of United Medical Supplies v. Lancer Ins. Co. supra. Here Dr. Csillag opinion as to whether the various medical supplies were necessary was based not only upon his experience but based upon medical authority cited in the peer review reports (Defendant’s Exhibit B, page 4). Dr. Csillag wrote in his report and testified that the type of lumbar support prescribed was no longer used to manage lumar sprains because it immobilized that portion of the body and the current trend in treatment was to allow mobility because mobilization fostered recovery. Dr. Csillag also testified that the massager, infrared heating lamp, EMS unit and associated EMS equipment was a duplication of services available and provided through the physical therapy, chiropractic care, acupuncture, message therapy and adjunctive therapy that the assignor was to have begun as of the April 13, 2004 report.

Considering the testimony of Dr. Csillag at trial coupled with the contents of the peer review reports of May 5, 2004 (Defendant’s Exhibit B1) and May 28, 2004 (Defendant’s Exhibit B2) the Court finds defendant has proven its defense that the supplies were not medically necessary. The burden now shifts to plaintiff to refute defendant’s evidence.

As previously indicated, plaintiff did not call a doctor but relied upon its cross examination of Dr. Csillag and the report of Dr. Barshay. It is undisputed that a chiropractor may prescribe the supplies which are the basis of this litigation (ABC Med. Mgt. v, GEICO Gen. Ins. Co., 3 Misc 3d 181 [Civ. Ct., Queens Co., 2003]) and such may be justified in light of the patient’s overall condition (Id); herein, however, there is no evidence in the record to refute defendant’s expert witness’ testimony (cf A.R. Med. v. State Farm, supra) and to explain why the medical supplies were necessary.

In A.R. Med. v. State Farm, supra plaintiff also did not call the treating doctor; however, in that case the treating doctor had issued a Letter of Medical Necessity, which was stipulated into evidence, in which he clearly set forth the reasoning and purpose for the conduction of the NCV/EMG test that were at issue.

The April 13, 2004 report from Dr. Barshay merely sets forth what the finding of the patient’s examination were, the diagnosis, a management(treatment) plan and a prognosis. This Court has no way of knowing why these supplies were prescribed. Viewing Dr. Barshay’s report (Plaintiff’s Exhibit No. 3), the only portion that may be read as giving any indication of why the supplies were prescribed appears in the Patient Management section where Dr. Barshay indicated, “The patient was also advised to wear an orthopedic lumbosacral support and cervical collar to minimize pain and prevent a re-injury.” In light of the reasoning set forth in the peer [*4]review and the testimony at trial, plaintiff evidence in rebuttal is insufficient to prove medical necessity for the supplies.

Accordingly, judgment for defendant, the summons and complaint are dismissed.

Defendant shall serve a copy of this decision/order with Notice of Entry upon the appropriate clerk and the plaintiff within 15 days after receipt.

This constitutes the decision and order of the Court.

DATED: May 16, 2006

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court

Civil Court of the City of New York, Kings County

KCV29614/2005

Plaintiff by Baker, Sanders, Barshay, Grosssman, Fass Muhlstock & Newwirth

Defendant by Nicolini, Paradise, Ferretti & Sabella

Richard Velasquez, J.

In this action, plaintiff, Universal Open MRI of the Bronx, PC, seeks to recover first-party no-fault benefits in the amount of $1,842.26 from defendant State Farm Mutual Auto Ins. for health care services rendered to its assignor(s) who were allegedly injured in an automobile accident. Defendant denied plaintiff’s claims on the basis that the alleged injuries “do not arise out of an insured incident.” The trial was held before this Court on February 14, 2006. At the start of the trial, the parties stipulated to plaintiff’s prima facie case and defendant’s denial based on the ground of lack of coverage due to no true accident. Defendant State Farm presented one witness, State Farm Special Investigative Unit (SIU) investigator Don Willsey. Plaintiff did not present any witnesses.

The trial then proceeded on defendant’s defense of lack of coverage. SIU investigator Willsey testified that after receiving the file on Mr. Julio Garcia, assignor herein, he performed a preliminary investigation of the claim and tried to contact the parties involved in the alleged accident, including the insured in this case and the assignor, Mr. Garcia, with no success. In addition, he testified that as part of his preliminary investigation, he reviewed the police accident report and intended to interview the police officer who arrived at the scene, but did not as someone from his office had previously interviewed said officer. Mr. Willsey also testified that as part of his investigation, he obtained information from the National Insurance Crime Bureau (NICB) which serves as a clearing house for data from insurance companies concerning claims made against insurance policies, and State Farm’s Frequency Tracking System, an internal database of all claims made against State Farm policies. As for State Farm’s Frequency Tracking System, he testified that data from prior losses may be retrieved using an individual’s name, social security number, address, date of birth, and vehicle identification number (VIN), to determine any connection between the parties involved in the current claim with prior claims against State Farm. His research concluded that: “the owner of claimant vehicle had a prior claim history; owner and driver of the vehicle were not insured.”

Plaintiff objected to defendant offering this information into evidence and, after voir dire of Mr. Willsey, moved to preclude this testimony on several grounds including [*2]hearsay. This Court ruled in plaintiff’s favor on the hearsay objection to the admittance into evidence of Frequency Tracking System results. Mr. Willsey further testified that he received the file for investigation “shortly” after the alleged accident, sometime in September or October of 2002. When cross-examined about the gap in time (approximately four months) between the incident in question and his receipt of the Garcia file, he stated that a prior investigator had been assigned to the case.

Mr. Willsey also testified that he attempted to interview the parties involved in the incident, but was unable to do so. Having had no success in interviewing the parties, Mr. Willsey recommended to his attorney that Examinations Under Oath (EUO) be scheduled for the parties involved in the incident. According to Mr. Willsey, none of the parties involved in the alleged accident appeared for EUO’s.

Based on all of these factors together with the fact that the insured’s vehicle was not at the accident scene at the time the police arrived, Mr. Willsey determined that the accident was staged and therefore it was not a covered accident. Thus, he recommended the subject claim be denied.

DISCUSSION

Generally, an insured seeking to recover for a loss under an insurance policy has the burden of proving that a loss occurred and also that the loss was a covered event within the terms of the policy. A.B. Medical Services, PLLC v. State Farm Mutual Automobile Ins. Co., 7 Misc 3d 822, 795 NYS2d 843 [Civ. Ct. Kings County 2005] citing Gongolewski v. Travelers Ins. Co., 252 AD2d 569, 675 NYS2d 299 [2d Dept. 1998]. Whatever the risk or loss covered, it has long been the insured’s burden to prove coverage under the policy. A.B. Medical Services, id. at 825. In an action for first-party no-fault benefits, an insured’s proof is relatively simple a properly completed claim by the provider of medical services or supplies makes out a prima facie showing of coverage. Amaze Medical Supply Inc., v. Eagle Ins. Co., 2 Misc 3d 128 (A), 754 NYS2d 918, 2003 NY Slip. Op. 51701[U][App. Term, 2d and 11th Jud. Dists.]. As in the related area of “medical necessity”, the plaintiff’s prima facie showing establishes a “presumption of coverage”. A.B. Medical Services, id at 825. Once the plaintiff makes a prima facie showing, the burden of explanation or of “going forward with the case” falls upon the defendant. Mount Sinai Hosp. V. Triboro, 263 AD2d 11, 699 NYS2d 77 [2d Dept., 1999].

No-fault insurance policies cover only vehicular accidents. A deliberate collision is not a covered accident. State Farm Mutual Automobile Ins. Co. V. Laguerre, 305 AD2nd490, 759 NYS2nd 531 [2nd Dept.2003]; Allstate Insurance Co.v. Massre, 14 AD3rd 610, 789 NYS2d 206 [2nd Dept. 2005]. When a collision is an intentional act, not an accident, there is no coverage “regardless of whether the intentional collision was motivated by fraud or malice.” Government Employees Ins. Co. v. Shaulskaya, 302 AD2nd 522, 523, 756 NYS2nd 79 [2nd Dept. 2003].

Standard of Proof in Summary Judgment Context

The law is well settled in a no-fault summary judgment context that the insurer need only demonstrate to the court that it had a “founded belief” that the alleged accident was intentionally caused in order to survive a summary judgment motion by plaintiff-provider. Amaze Medical Supply Inc. V. Lumbermens Mutual Cas. Co., 10 Misc 3d 127(A), 809 NYS2d 480 (Table), 2005 WL 3115289 citing Central Gen. Hosp. V. Chubb Group of Ins. Cos., 90 NYS2d 195, 199 (1997). However, defendant-insurer’s founded belief is usually [*3]not enough to obtain judgment on its own. To win on its summary judgment motion, defendant must make a prima facie “lack of coverage” showing and if plaintiff does not come forward to rebut defendant-insurer wins. Central Gen. Hosp., id at 199; A.B.Medical Services, PLLC, supra at 825. In addition, this Court recognizes that for the purposes of summary judgment motions, parties are permitted, within limits, to rely on otherwise inadmissible information. Zuilkowski v. Sentry Insurance A Mutual Company, 114 AD2d 453, 494 NYS2d 363 [1985]. However, what is admissible at this stage of litigation will not necessarily be admissible at trial.

Standard of Proof at Trial

At trial, the question remains just how much “admissible evidence” the defendant-insurer must produce to satisfy its evidentiary burden where nonpayment of a no-fault claim is based on a collision being a non-covered event. The second question concerning this Court is whether the elements of fraud must be proved where a claim has been denied based on 11 NYCRR 65-3.8 (e)(2) “circumstances of the accident not covered by no-fault”.

There have been several recent well-reasoned decisions regarding the standards of proof for “fraud” or “no true accident”, as well as a discussion of whether allegations of fraud are necessary in the context of a no-fault denial based on “no true accident”. Three of these decisions have been particularly helpful in analyzing the complexities involved in no-fault cases where the defense against payment of claims is lack of coverage based on allegations of fraud or that the collision was intentionally caused: A.B. Medical Services, PLLC v. State Farm Mutual Automobile Ins. Co., supra ; JSI Expert Service v. Liberty Mutual Ins. Co., 7 Misc 3d 1009(A), 801 NYS2d 235 [Civ. Ct., Kings County 2005]; and V.S. Medical Services, P.C. v. Allstate Insurance Company, 11 Misc 3d 334, 2006 WL 16289 [Civ. Ct., Kings County 2006]. After thorough review and consideration of each of these opinions, this Court has decided that it must determine first whether the tort of common law fraud must be proved where a denial is based on 11 NYCRR§65-3.8(e)(2) “circumstance of the accident not covered by no-fault”; and second, the standard of proof for a staged accident, or “no true accident”.

Should Fraud be Litigated in a No-Fault Trial?

In JSI Expert Service v. Liberty Mutual Ins. Co., supra , the defense raised for nonpayment of claims was fraud.^[FN1] There, citing Rudman v. Cowles Communications, 30 NY2d 1 (1972), Judge Bailey-Schiffman found that “proof of fraud must be made by clear and convincing evidence.” Indeed, the standard of proof for the tort of common law fraud has long been viewed as requiring proof beyond a preponderance of the evidence as will be discussed below. This Court is concerned, however, that proving the elements of common law fraud by clear and convincing evidence where nonpayment of a no-fault claim is based on a collision being an intentional act, is not what 11 NYCRR §65-3.8 envisioned.

The intent of the no-fault law as found at 70A NY Jur.2d Insurance § 1774 (updated March 2006) is as follows:

The purposes of this statute were to remove a vast majority of claims arising from [*4]vehicular accidents from the sphere of common-law tort litigation, and to establish a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of such accidents. [emphasis added].

Our Court of Appeals has upheld the constitutionality of the No-Fault law and in so doing stated, inter alia: …”it was concluded in all reports that the tort system was plagued by long delays in claim payment. The tort system places an inordinate strain on the State’s court systems and judicial resources. The No-Fault law sought to cure these ills by guaranteeing prompt and full compensation for economic losses…and to reduce the long delays experienced under judicial procedures and to lessen the burden on our State Courts.” Montgomery v Daniels, 38 NY2d 41, 378 NYS2d 1, 340 NE2d 444 [1975].

A review of the elements of the tort of common law fraud demonstrates why proving fraud by clear and convincing evidence in a no-fault trial is inconsistent with the purposes of No-Fault law, and why it is not necessary to allege fraud as a defense for refusal to pay a no-fault claim.

To sustain a cause of action based on actual fraud, the plaintiff had to establish that (1) the defendant made material representations that were false, (2) the defendant knew the representations were false and made them with the intent to deceive the plaintiff, (3) the plaintiff justifiably relied on the defendant’s representations, and (4) the plaintiff was injured as a result of the defendant’s representations. Cerbanono v.Price, 7 AD3d 479, 775 NYS2d 585 [2d Dept. 2004]. (See also, Giurdanella v. Giurdanella, 226 AD2d 342, 640 NYS2d 211; Matter of Garvin, 210 AD2d 332, 620 NYS2d 400).

Clearly, proving these elements (and proving them by clear and convincing evidence) will consume a significant amount of trial time and could be very costly.

Clear and Convincing Standard vs. Preponderance of the Credible Evidence

While common law fraud must be proved by clear and convincing evidence, as Judge Bailey-Schiffman found in JSI Expert Service, the standard common to most civil cases is a preponderance of the credible evidence. What, then, distinguishes civil cases where a preponderance of the credible evidence standard of proof is sufficient, and those where the issue to be decided must meet the clear and convincing standard?

The case of In the Matter of Father Philip K. Eichner v. Dillon, 73 AD2d 431, 426 NYS2d 517 [2d Dept. 1980] sheds light on the distinction between the two types of civil cases. In Eichner, a priest brought a proceeding to have a religious brother (in a chronic vegetative state) declared incompetent, and to obtain judicial approval for withdrawal of extraordinary life-sustaining measure consisting of a respirator. The Eichner court grappled with the standard of proof necessary to determine whether the Priest, Eichner, had the requisite legal authority to make the decision that life-support should be removed from the religious brother. There the court reasoned:

[W]e cannot abide by the suggestion that a preponderance of the credible evidence’ standard, common to most civil proceedings, would be sufficient here. Rather we elect the [*5]middle tier standard of proof, that of clear and convincing evidence. …[T]his standard is appropriate where the interests at stake are deemed to be more substantial than mere loss of money.’ Similarly, the clear, unequivocal and convincing standard of proof [is used] to protect particularly important individual interests in various civil cases. Id. at 523.

Eichner cites to examples of cases where “the clear and convincing evidence” standard is utilized only where the “interests at stake” are deemed more significant than ordinary”: reformation of a contract (Ross v. Food Specialities, 6 NY2d 336, 189 NYS2d 857, 160 NE2d 618); a filiation proceeding (Commissioner of Public Welfare of City of NY v. Ryan, 238 App. Div. 607, 265 NYS 286); an action based upon a claim against a deceased, (Matter of Cady, 211 App. Div. 373, 207 NYS 385); in deportation proceedings (Woodby v. Immigration and Naturalization Serv., 385 US 278, 87 S.Ct. 483, 17 L.Ed.2d 362); and for a claim of fraud (United States v. American Bell Tel. Co., 167 US 2224, 17 S.Ct. 809, 42 L.Ed. 144).

No-Fault Regulation 11NYCRR 65-3.8(e)(2)

No-fault regulations provide for a denial of a claim for the following reasons:

(1) no coverage on the date of accident;

(2) circumstances of the accident not covered by no-fault; or

(3) statutory exclusions pursuant to section 5103(b) of the insurance law. Id. at 11 NYCRR 65-3.8 (e).(emphasis added)

If an insurer has a “founded belief” that the alleged accident was not a true accident, it can deny the claim based on 11 NYCRR 65-3.8(e)(2). At trial, the insurer must show, through admissible evidence, facts and circumstances leading a trier of fact to conclude that more likely than not, the circumstances of the collision are not covered by no-fault. If this threshold is reached, the burden shifts to the plaintiff to rebut the defendant’s case. Nowhere in the no-fault statute or regulations is there a requirement that in order to prevail on denial of a claim pursuant to 11 NYCRR 65-3.8(e), common law fraud must be proved. In fact, as Judge Jack Battaglia in A.B. Medical Services, PLLC v. State Farm Mutual Automobile Insurance company, supra , and Judge Arlene Bluth in V.S. Medical Services, P.C. v. Allstate Insurance Company, supra , point out: “Damages resulting from a deliberate collision are not covered by no-fault insurance regardless of the existence of fraudulent motivation.” V.S. Medical Services, Id. At 3. Judge Bluth goes on to state: “Put another way, the no-fault policy only covers accidents; it does not cover deliberate incidents. It does not matter whether the incident was a deliberate mugging, an attempted murder, a product of road rage, or a cold calculated scheme to defraud the insurance company. If it was deliberate, it is not a covered incident under the no-fault policy.”

While our appellate courts commonly invoke the term “fraud” when discussing the defense of “staged accident”, it is a “lack of coverage” they are discussing not necessarily fraud. It seems to make no difference why the incident occurred. If it were made to happen, then it is not an accident and therefore not a covered accident. See State Farm V. Laguerre, 305 AD2d 490, 491, 759 NYS2d 531 [2d Dept. 2003].

In the instant matter, defendant contends that the evidentiary burden for defeating a summary judgment motion “founded belief” (incident was staged) should apply in a trial context. This Court disagrees. As mentioned earlier, to win on its own summary [*6]judgment motion, defendant must make a prima facie “lack of coverage” showing and if plaintiff does not go forward to rebut, then summary judgment is granted to defendant-insurer. Central General Hospital v. Chubb Group of Ins. Co.,90 NY2d 195, 199 [1997].. Moreover, this court is concerned that “fact or founded belief” as the evidentiary burden in no true accident cases contravenes the intent of the No-Fault insurance law. Such a minimal showing would allow routine denial of claims by insurers and open the floodgates to permit insurers who have not timely denied a claim to use a “no true accident” defense (understanding that the standard of proof is minimal) and defeat the primary purposes of the no fault law.

As far as the shifting burdens of proof in a no-fault staged accident or intentional collision case, Judge Jack Battaglia provides an excellent analysis in A.B. Medical Services. The bottom line is that in a “staged accident” case, the defendant has the burden of “coming forward” with proof in admissible form that a staged accident occurred; The plaintiff bears the burden of persuasion and rebutting defendant’s evidence, or the plaintiff “succumbs”. This Court finds that the standard of proof is “preponderance of the evidence”, often defined as the existence of the “fact” being more probable than its non-existence. After all the evidence has been presented, the trier of fact must decide whether the evidence preponderates in favor of the plaintiff or defendant.

CONCLUSION

In this trial, defendant failed to come forward with proof in “admissible form” to establish the “fact” or the evidentiary “foundation” to buttress its belief that the injuries alleged by the assignor did not arise from an insured accident. Defendant failed to adduce sufficient admissible evidence to rebut the presumption of coverage that attaches to the plaintiff’s properly completed claim form.

While SUI investigator Willsey’s testimony is entitled to some weight (see Travelers Indemnity Co. V. Morales, 188 AD2d 350, 351, 591 NYS2d 27 [1st. Dept. 1992], it is clear to this Court that much of the information that SUI investigator Willsey relied upon in his testimony was hearsay and was not admissible due to the lack of appropriate foundation. The defendant sought to introduce information obtained from the National Insurance Crime Bureau (NICB) in establishing its case of intentional collision, but failed to lay any foundation or make any showing that would support the admissibility of this information.

In addition, Mr. Willsey testified that as part of his investigation, he utilized State Farm’s Frequency Tracking System to determine any prior loss history of any of the parties and/or any of the vehicles involved in the present incident. His search revealed that the owner of claimant vehicle had a prior claim history with State Farm and that the owner and driver were not insured. Again, this Court concluded that without the requisite foundation, this information is inadmissible hearsay.

Defendant also asserts an inference of intentional collision should be made by the alleged failure to cooperate by the assignor and /or other parties involved in this incident and the fact that the insured vehicle was not at the scene of the accident at the time police arrived. The fact that the vehicle was not at the scene of the accident is not determinative of anything. Even though defendant-insurer may wish to use failure to cooperate as one indicia of “no true accident” instead of as a defense, it did not offer any admissible evidence as to plaintiff’s assignors’ failure to cooperate.

Based upon the testimony at trial and the acts discussed above, this Court [*7]concludes that the defendant has failed to come forward with evidence of a staged accident or that the loss giving rise to this action was intentional, and thus the burden of persuasion was never shifted to plaintiff. Accordingly, judgment for plaintiff in the sum of $1,842.26, together with statutory interest and attorney’s fees. This constitutes the decision and order of the Court.

Dated: May 11, 2006 ________________________________

RICHARD VELASQUEZ, J.C.C.

Footnotes

Footnote 1:“Defendant denied plaintiff’s claims on the basis that [w]e do not provide coverage for any insured’ who has made fraudulent statements or engaged in fraudulent conduct in connection with the accident or loss for which coverage is sought under this policy.'” JSI Expert Service, id at 237.

Civil Court of the City of New York, Richmond County

6195/2005

Peter P. Sweeney, J.

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

Plaintiff commenced this action pursuant to Insurance Law § 5101 et seq. to recover $3,673.07 in assigned first-party no-fault benefits, as well as statutory interest and attorney’s fees, for medical services provided to its assignor. Defendant now moves for an order inter alia striking plaintiff ‘s complaint due to its failure to provide discovery. Plaintiff cross-moves for summary judgment.

In support of its motion to strike plaintiff’s complaint, defendant demonstrated that the plaintiff has not complied with various discovery demands which were served on June 22, 2005. The demands included interrogatories, a notice of examination before trial, a request for expert disclosure, a demand for party statements and a notice for discovery and inspection. Several of the demands sought information regarding plaintiff’s corporate structure and licensing status, and others sought information concerning whether the physicians who treated plaintiff’s assignor were plaintiff’s employees or independent contractors.

Plaintiff opposed the motion and cross-moved for summary judgment. The papers [*2]submitted by the plaintiff established that it submitted the claims, setting forth the fact and the amounts of the losses sustained, and that payment of no-fault benefits was overdue. Plaintiff correctly asserts that its submissions established its prima facie entitlement to summary judgment ( see Insurance Law § 5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists]). Plaintiff maintains that to withstand the cross-motion, it was incumbent upon the defendant to submit competent proof raising a triable issue of fact (Alvarez v. Prospect Park Hospital, 68 NY2d 320 [1986]) and that pending a determination of the cross-motion, defendant’s motion to strike the complaint should be stayed pursuant to CPLR 3212, which in pertinent part, provides: “Service of a notice of motion under CPLR 3211, 3212, or section 3213 stays disclosure until a determination of the motion unless the court orders otherwise.” Significantly, there is no indication in either defendant’s or plaintiff’s papers that plaintiff raised timely objections to defendant’s interrogatories in accordance with CPLR 3133 or timely objections to defendant’s other various demands pursuant to CPLR 3122.

In opposition to plaintiff’s cross-motion for summary judgment, defendant maintained that there are triable issue of fact as to whether the injuries for which plaintiff’s assignor received treatment were causally related to the motor vehicle accident underlying the claims. Defendant asserted this defense in its denial of claim dated August 6, 2003 wherein defendant acknowledged having received the claims on May 5, 2005. Defendant’s denial was therefore untimely as a matter of law. Although defendant’s untimely denial did not preclude the defendant from raising this defense (see, Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; Mount Sinai Hosp. v. Triboro Coach, 263 AD2d 11, 18-19 [1999] ), for the reasons set forth below, the court need not address whether defendant’s submissions raised a triable issue of fact.

Discussion:

In State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313, 319 [2005], the Court of Appeals held that an insurer may withhold payment of a first-party no-fault claim “for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims.” In so holding the Court noted that Business Corporation Law § 1507 provides, “A professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice. . .” (id. at 319 n. 1) and that pursuant to 11 NYCRR 65-3.16(a)(12), “A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement. . .” (id. at n. 2). The Court concluded that a medical corporation that is owned or controlled by non-physicians violates these provisions and therefore can not recover assigned first-party no-fault benefits (id. at 320).

Although the Mallela court did not squarely address the issue of whether an insurer ‘s untimely denial of a claim precludes it from asserting the defense that a plaintiff medical corporation was a fraudulently incorporated, in A.B. Medical Services PLLC v. Utica Mut. Ins. Co., 2006 NY Slip Op. 26068[App. Term, 2nd & 11th Jud. Dists.] the court held that an insurer may assert the defense even though it was not asserted in a timely denial of claim. The court in A.B. Medical Services PLLC v. Utica Mut. Ins. Co., supra., further held that where an insured [*3]served demands for discovery seeking information concerning whether the plaintiff medical corporation was a fraudulently licensed (i.e. – information regarding corporate structure and licensing status), which were not palpably improper or privileged and which were not objected to in accordance with CPLR 3122, the insurer was entitled to the discovery (id.) and that until such discovery was provided, a motion for summary judgment made by the plaintiff should be denied as premature pursuant to CPLR 3212(f) (id.). Finally, the court held that the insurer’s discovery demands, to the extent they seek information regarding defenses that the insurer was precluded from raising due to its failure to timely deny the claim, were palpably improper, and that the plaintiff did not have to comply with such demands regardless of whether they were timely objected to (id.).

In accordance with A.B. Medical Services PLLC v. Utica Mut. Ins. Co., supra., this Court finds that defendant is entitled to compliance with its various discovery demands to the extent they seek information regarding plaintiff’s corporate structure and licensing status, and that until such discovery is provided, plaintiff’s cross-motion for summary must be denied as premature.The court further finds that the holding in A.B. Medical Services PLLC v. Utica Mut. Ins. Co. necessarily requires that plaintiff provide responses to defendant’s discovery demands to the extent they seek information regarding other defenses that the defendant is not precluded from raising due to the untimely denial of the claim. These defenses include the defense that a billing provider is ineligible to recover assigned first-party benefits for treatment performed by an independent contractor (see Rockaway Blvd. Medical P.C. v. Progressive Ins., 9 Misc 3d 52 [App. Term, 2d & 11th Jud. Dists. 2005]; A.B. Medical Services PLLC v. New York Cent. Mut. Fire Ins. Co., 8 Misc 3d 132(A), 801 N.Y.S.2d 776 [App. Term, 2d & 11th Jud. Dists. 2005]) and any defense to coverage, including but not limited to the defense that the injuries for which treatment was provided were not causally related to the accident (see Central Gen. Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]; Mount Sinai Hosp. v. Triboro Coach, 263 AD2d 11, 18-19 [1999]) and the defense that the collision underlying the claim was a staged event in furtherance of an insurance fraud scheme (see Central Gen. Hosp., 90 NY2d at 199; Matter of Metro Med. Diagnostics v. Eagle Ins. Co., 293 AD2d 751 [2002]; A .B. Med. Servs. v. CNA Ins. Co., 2 Misc 3d 138[A], 2004 NY Slip Op 50265[U] [App Term, 2d & 11th Jud. Dists.]. There is no logical reason to distinguish an insurer’s entitlement to discovery regarding these non-waivable defenses and the type of defenses recognized in Mallela.

Finally, defendant’s interrogatories and other demands, to the extent that they seek information regarding the defenses defendant is now precluded from raising due to its untimely denial of claim, must be stricken.

Accordingly, it is hereby

ORDERED that plaintiff’s cross-motion for summary judgment is DENIED without prejudice to renewal upon completion of discovery; it is further

ORDERED that defendant’s motion to strike plaintiff’s complaint is granted unless within 60 days of service of this order with notice of entry, plaintiff complies with defendant’s discovery demands to the extent they seek information regarding those defenses that defendant is not precluded from raising due to its untimely denial of claim; it is further

ORDERED defendant’s discovery demands to the extent they seek information regarding defenses defendant is precluded from raising due to its untimely denial of the claim are hereby [*4]stricken; and it is further

ORDERED that if within 15 days of the date of this order, the parties do not agree in writing as to what discovery must be provided pursuant to this order, the parties are directed to contact the undersigned at (718) 390-5429 to arrange for a discovery conference.

This constitutes the decision and order of the court.

Dated: April 5, 2006 ________________________________

PETER P. SWEENEY

Civil Court Judge

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

119841/05

Delores J. Thomas, J.

The above captioned matter is before this Court on petitioner’s petition to vacate a No-Fault Master Arbitration Award pursuant to CPLR § 7511. Respondent submitted a Reply to Petition but the respondent was not present at oral argument therefore the reply was not considered and the decision herein is rendered on default.

Petitioner, a provider of medical services, seeks to recover first party no-fault benefits for medical services provided to its assignor. Petitioner submitted bills totaling $1,764.62 and partial payments were made in the amount of $849.84. When petitioner’s assignor did not receive reimbursement from respondent for the balance of the bill(s) which totaled $914.78 for the medical services provided, petitioner filed a Request for Arbitration. An arbitrator designated by the American Arbitration Association (“AAA”) issued a decision dated May 31, 2004 where the arbitrator found that:

“the applicant has no status to present this claim, as it no longer is

a Corporation registered with the New York State Department,

Division of Corporation. An unlicensed facility may not present

a claim for no-fault benefits. The denial by the respondent is

sustained. The claim is denied in its entirety.” [*2]

Petitioner requested a review by a Master Arbitrator who in a decision dated September 23, 2004 rendered a Master Arbitration Award upholding the lower Arbitration Award. The Master Arbitration Award was mailed to Petitioner on or about September 27, 2004 and less than ninety days have elapsed since Petitioner’s receipt of the Master Arbitration Award.

The issue before this court is whether the Master Arbitrator’s decision was arbitrary and capricious, irrational or having no plausible basis or whether the arbitrator’s award was unsupported by the evidence in his holding that the petitioner could not present a claim for no-fault benefits.

Judicial review of an arbitration award is limited by statute, specifically, CPLR § 7511 (Matter of Petrofsky v. Allstate Ins Co, 54 NY2d 207 [1981]; Matter of Bamoun v. Nationwide Mut. Ins. Co., 75 AD2d 812 [2nd Dept 1980]; aff’d 52 NY2d 957 [1981]). However, in the case of compulsory arbitration, the award may be vacated where the arbitrator’s determination is without rational basis ( Caso v. Coffy, 41 NY2d 153, 158 [1976] the decision is arbitrary and capricious (Id; see generally Petrofsky v Allstate, supra); or if the determination disregards applicable law or is based on an error of law (Brunner v. Allstate Ins. Co., 79 AD2d 491 [4th Dept 1981]).

Courts have held that the Master Arbitrator’s authority to review the award of the lower arbitration is derived from Section 675 of the Insurance Law (Petrofsky v. Allstate, supra at 208). A Master Arbitrator therefore in addition to the grounds set forth in CPLR Article 75 is also authorized to review the award on the grounds set forth in11 N.Y.C.R.R. 65.17 as promulgated by the Superintendent of Insurance.

The role of the Master Arbitrator is to review the determination of the lower arbitrator to assure that the arbitrator reached his decision in a rational manner; and, that the decision was not arbitrary and capricious, or incorrect as a matter of law (Petrofsky v. Allstate Insurance Co., supra). The Master Arbitrator while possessing broader powers of review than the Court, is however like the courts precluded from reviewing factual or procedural errors ((Petrofsky v. Allstate, supra).

In the instant case, the Master Arbitrator found that:

Although the rule stated by the lower arbitrator is overbroad and

would not apply to a corporation dissolved for legitimate personal

or business reasons, I conclude that it applies in the circumstances

of these cases.”

The Master Arbitrator went on to say that:

respondent alleged that the dissolution resulted from governmental

action or pressure predicated on applicant’s fraudulent, unethical and

improper practices. Applicant’s principal refused to comply with

directives that he testify and the arbitrator was within his power in

drawing adverse inference because of such refusal. I find that it would

be contrary to public policy to award benefits to an entity dissolved

and unlicensed as a result of its fraudulent and improper practices in

presenting claims for services. [*3]

Petitioner argues that it is entitled to payment as it submitted a proper proof of claim(s) and that the respondent’s denial of the claim was untimely. In addition, petitioner argues that the lower arbitrator allowed respondent to raise issues at the hearing which were irrelevant to the claim and such issues were precluded because they were not raised in a timely denial. Petitioner further argues that the subsequent status of a corporation has no bearing on such corporation’s ability to collect payment for services which were rendered while such corporation was active.

Defendant argues that the insurance company was entitled to withhold payment for medical services provided by a fraudulently incorporated medical corporation and cites to State Farm Mut. Auto Ins. Co., v. Mallela, 4 NY3d 313 [2005](“Mallela III“) where the Court of Appeals held:

“The Superintendent’s regulation allowing carriers to withhold

reimbursement from fraudulently licensed medical corporations

governs this case. We hold that on the strength of this regulation,

carriers may look beyond the face of licensing documents to identify

willful and material failure to abide by state and local law.

Defendant further argues it submitted sufficient evidence to support the arbitrator’s denial by presenting a certificate from the New York State Department of State, Division of Corporations showing that petitioner was dissolved; that the corporation was dissolved as part of a plea in a criminal matter; and, that the doctor who was served with a subpoena and was to testify as to the relationship between petitioner and a management group refused to appear upon the advice of his attorney.

Before the Court can decide on the whether to vacate the arbitrator and Master’s Arbitration’s award, this Court must first review the question as to whether section § 65-3.16(a)(12) should be applied prospectively only or retroactively. In this case, the services were provided on January 19, 2000. The stated reasons for denial as listed in the June 20, 2000 NF-10 are:

Diagnostic tests denied based upon AAEM recommendations

regarding reasonable numbers of studies to arrive at diagnosis.

Diagnostic tests have been over utilized & therefore were

unnecessary & did not assist in rendering any diagnosis.

Fees not in accordance to fee schedule. EMG supplies are included

in charge of the EMG test.

It is well settled that an insurer must either pay or deny a claim for first party no fault benefits within 30 days after receiving proof of the claim (see, Insurance Law § 5106[a]; 11 NYCRR § 65.15[g][3] now 11 NYCRR § 65-3.5[a]). Failure to timely deny the claim renders the no-fault benefits overdue, and the insurer is precluded from raising any defenses, other than lack of coverage (see, Presbyterian Hosp. v. Maryland Cas. Co., 90 NY2d 274 [1997]). It is clear that the NF-10 on its face shows that the claim was not timely denied ^[FN1] and it does not list [*4]fraud of any kind as the reason for denial. It is also clear that the Court of Appeals said in its holding in Mallela III, that an insurer may deny payment to a fraudulently incorporated provider. The Court of Appeals in Mallela III, however, failed to address the issue of whether § 65-3.16(a)(12) should apply retroactively to payments not yet paid by the insurance carrier.^[FN2] The lower courts have split in their decisions. Several courts have held that public policy concerns warrant denials of payment to fraudulent licensed medical providers and Mallela III should be applied retroactively (see, A.T. Med., P.C. v. State Farm Mut. Ins. Co. 10 Misc 3d 568, 2005 NY Slip Op. 25461 [Civ. Ct, Queens Co., 2005]; Multiquest, PLLC v. Allstate Ins. Co., 9 Misc 3d 1031, 2005 NY Slip Op. 25356 [Civ. Ct, Queens Co. 2005]; Metroscan Imaging PC v. Geico Ins. Co. 8 Misc 3d 829 [Civ. Ct, Queens Co. 2005]). Others courts have held that if the Court of Appeals wanted to apply the Mallela III decision retroactively, it would have said so. In addition, these courts have further held that unless the law or a review of the legislative history specifically state or indicate the law is retroactive in nature, the law is prospective only; therefore those courts have allowed fraudulently licensed providers to collect payments for services rendered prior to enactment of § 65-3.16(a)(12) (see, Multiquest P.L.L.C. v Allstate Ins. Co, 10 Misc 3d 1061[A], 2005 NY Slip Op. 52071[U] [Civ. Ct. Queens Co., 2005]); Multiquest PLLC v. Allstate Ins. Co., 10 Misc 3d 877, 2005 NY Slip Op. 25512 [Civ. Ct., Queens Co, 2005]. There is much debate as to whether a fraudulently licensed medical provider who provided services before April 5, 2002, is entitled to payment and the lower court’s have ruled inconsistently. The Court of Appeals has yet to rule on this issue. It is not this Court’s function nor within this court’s jurisdiction in the instant matter to settle this debate and rule one way or the other as any ruling from this court would simply be another voice in the debate. The review, in this case, is limited to whether the arbitrator or Master Arbitrator’s decisions was arbitrary or capricious or incorrect as a matter of law.

This Court finds that the determination by the arbitrator that fraud may be an issue in the processing of this claim does not constitute an arbitrary or capricious ruling nor is it incorrect as a matter of law. The decision is rationally reasoned based on the facts of this case.

In this case, the arbitrator took a negative inference from several facts that: (1) the applicant, despite the service of a subpoena, did not appear; (2) the corporation was no longer active; (3) such dissolution may have been the result of a plea bargain based upon fraudulent, criminal activity; and (4) the applicant’s representative did not present any information that contradicted respondent’s allegations.

A view of the arbitration award from both the lower and Master Arbitrator shows that there is no basis to vacate the award. Both arbitrators determined that the claim was rejected based upon an allegation of fraud. The issue regarding the relationship of the medical facility and its management group plus the negative inferences surrounding the applicant was a rational basis for denial of this claim. This holding and thus the arbitrator’s award was based upon the resolution of factual and legal determinations reached after reviewing the evidence submitted; such a determination may not be set aside by this Court even were the Court to disagree with [*5]those findings. The Master Arbitrator’s award therefore was neither arbitrary, capricious, irrational or without a substantial or plausible basis. Also, based upon the ruling in Mallela III and lower court cases, the decision is not incorrect as a matter of law.

Accordingly, petitioner’s petition seeking to vacate the Arbitration Award is hereby dismissed. This decision is rendered on default.

This constitutes the decision and order of the Court.

DATED: March 31, 2006

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court

Footnotes

Footnote 1: There is no allegation that defendant asked for addition verification of information pursuant to 11 NYCRR §65-3.5.

Footnote 2: The Court of Appeals in State Farm Mut. Auto Ins. Co., v. Mallela, 4 NY3d 313,322 [2005] did hold that no cause of action for fraud of unjust enrichment would lie for any payments made by the carriers before that regulation’s effective date of April 4, 2002.

Civil Court of the City of New York, Kings County

41550/05

Delores J. Thomas, J.

In this action brought to recover no-fault benefits, plaintiff moves for summary judgment in the sum of $3,383.38 plus statutory interest together with statutory attorney’s fees.

The No-Fault Law provides for payments for medical services provided to a person injured as a result of an accident arising out of the use or operation of a motor vehicle. To recover first-party benefits, a claimant must demonstrate a prima facie entitlement to summary judgment by setting forth proof that it submitted a claim, the fact and amount of losses sustained, and that payment of benefits is overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2d Dept]).

In support of its motion, plaintiff submits an assignment of benefits form, denial of claim forms, and an affidavit from defendant’s billing manager, Yelena Medvedik, stating that the [*2]carrier issued denials more than thirty days after receipt of the bills. The court finds plaintiff has established its prima facie entitlement to summary judgment. Therefore, the burden shifts to defendant to demonstrate a triable issue of fact to withstand summary judgment (see Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]).

An untimely denial precludes defendant from interposing most defenses including the defense of lack of medical necessity (Amaze Med. Supply, Inc. v. Eagle Insurance Co., 2 Misc 3d 139 [A], 2004 NY Slip Op 050279 [U] [App Term, 2d & 11th Jud Dists]). However, an untimely denial does not preclude a defendant from asserting the defense that the injuries do not arise out of a covered accident or a defense premised on staged accident fraud (see Central General Hosp. v. Chubb Group of Insurance Cos., 90 NY2d 195 [1997]; Matter of Metro Med. Diagnostics v. Eagle Insurance Co., 293 AD2d 751 [2002]). To withstand summary judgment, the insurer must come forward with proof in admissible form to establish the basis for its belief that there is no coverage (see Mount Sinai Hospital v. Triboro Coach, Inc., 263 AD2d 11 [2d Dept 1999]). A “founded belief” cannot be based upon unsubstantiated hypotheses and supposition (see A.B. Medical Services v. Eagle Ins. Co., 3 Misc 3d 8 [App Term, 2d & 11th Jud Dists 2003]).

The denial of claim forms state as the reason for denial: “Our investigation, including the results of a low impact study conducted by this company, has shown that the injuries you allege are not related to the motor vehicle accident of March 23, 2003, and are inconsistent with a collision of this nature. Therefore, our company hereby denies your entire no-fault claim based on the fact that the personal injuries do not arise out of the auto accident referred to above. The medical necessity of services provided has not been established.” To support its claim of a lack of causal nexus between the accident and the injuries allegedly sustained in the accident of March 23, 2003, defendant submits the affidavit of Alfred Cipriani, a technical consultant employed by SEA Limited, a consulting company which prepared an accident analysis report (low impact study) for defendant. The accident analysis report accompanies the affidavit (Exhibit F, annexed to Affirmation in Opposition).

Plaintiff maintains defendant’s proof does not constitute competent evidence sufficient to defeat its motion. Plaintiff argues Mr. Cipriani’s affidavit is not in admissible form as it was executed in Maryland, before a Maryland notary, and fails to comply with CPLR 2309 (c). Furthermore, plaintiff states defendant has failed to offer any evidence that the automobile collision was based on fraud.

One opposing a motion for summary judgment must produce evidentiary proof in admissible form sufficient to raise a triable issue of fact. Here, in opposition to the motion, defendant relies upon an affidavit that is signed and notarized outside of New York and an accident analysis report which is annexed to the affidavit. The low impact study itself is unsworn and appears to incorporate hearsay evidence such as a Police Accident Report and refers to a transcript of a recorded statement of assignor Tumarov which is not annexed to the report.

Pursuant to CPLR 2309 (c):

“An oath or affirmation taken without the state shall be treated as if taken within the state if it is accompanied by such certificate or certificates as would be required to entitle a deed acknowledged without the state to be recorded within the state if [*3]such deed had been acknowledged before the officer who administered the oath or affirmation.”

In Ford Motor Credit Company v. Prestige Gown Cleaning Services (193 Misc 2d 262 [Civ Ct, Queens County 2002]) the court noted the distinction between “a certificate of authentication which certifies the identity and authority of the person who took the acknowledgment of proof” and a certificate of conformity which “certifies that the manner in which the acknowledgment or proof was taken conforms with the laws of the appropriate jurisdiction.” An affidavit that is signed and notarized outside New York State is required to be accompanied by a certificate of conformity (see Discover Bank v. Kagan, 8 Misc 3d 134 [A], 2005 NY Slip Op 51171 [U] [App Term, 2nd & 11th Jud Dists]; Citibank (S.D.) N.A. v. Suen, 11 Misc 3d 126 [A], 2005 NY Slip Op 52262 [U] [App Term, 2d & 11th Jud Dists]; Boai Zhong Yi Acupuncture Services v. New York Central Mutual Fire Ins. Co., 8 Misc 3d 1011 [A], 2005 NY Slip Op 51058 [U] [Civ Ct, Queens County]).

Therefore, this court concurs with plaintiff and finds defendant has failed to submit any competent evidence to support its defense that the injuries are not related to the accident. The affidavit is insufficient pursuant to CPLR 2309 (c). The Accident Analysis Report is inadmissible on its own or as an attachment to the affidavit.

Accordingly, plaintiff’s motion for summary judgment is granted. The clerk is directed to enter judgment in favor of plaintiff in the sum of $3,383.38 together with statutory interest and attorney’s fees.

This constitutes the decision and order of the Court.

Dated:Brooklyn, New York

March 30, 2006

DELORES J. THOMAS

Judge Civil Court

Civil Court of the City of New York, Kings County

36916/03

Arlene P. Bluth, J.

Plaintiff’s instant motion for summary judgment calls upon this Court to clarify what facts a first-party No-Fault plaintiff must set forth in order to establish that its claim is “overdue.”

Plaintiff argues that “overdue” means “not paid,” and so the affidavit in support of the motion must only state that the bills have not been paid. Defendant urges that a bill is “overdue” only if it has not been paid or properly denied, and so the affidavit in support of plaintiff’s motion must so state. [*2]For the following reasons, this Court agrees with defendant, and since plaintiff’s motion did not address the denials, plaintiff has failed to fulfill its burden and the motion is denied.

In this action, plaintiff New York Craniofacial Care, P.C. seeks to recover first-party No-Fault benefits in the amount of $12,253.28, plus statutory interest, costs, and attorneys fees, for healthcare services allegedly rendered to its assignors, Maria Vega, Christopher A. Mendez, Daniel Rodriguez, Marsha Rasin, and Julio Suazo. According to the attorney’s affirmation in support of this motion, plaintiff seeks summary judgment only on the claims pertaining to Ms. Vega, Ms. Rasin, and Mr. Suazo, for the sum of $6,122.75. Plaintiff argues that its claims were submitted to defendant, have not been paid, and are now overdue. Defendant opposes the motion on the grounds that plaintiff has not made out its prima facie case, and that, in any event, defendant timely denied the claims pertaining to Ms. Rasin and Mr. Suazo and settled the claims pertaining to Ms. Vega.

A healthcare provider in a No-Fault case for first-party benefits establishes its prima facie entitlement to summary judgment as a matter of law by submitting proof in admissible form demonstrating that the prescribed statutory claim form, setting forth the fact and amount of the loss sustained, was submitted to the defendant, and that payment of no-fault benefits is overdue. See 11 NYCRR § 65-3.8(a)(1),(c); Careplus Med. Supply, Inc. v Allstate Ins. Co., 9 Misc 3d 128(A), 2005 NY Slip Op 51525(U), [App Term, 2nd & 11th Jud Dists]; Contemp. Med. Diag. & Treatment, P.C. v GEICO, 6 Misc 3d 137(A), 800 NYS2d 344 [App Term, 2d and 11th Jud Dists 2005]. Specifically, subsection 65-3.8(a)(1) of the regulations provides that “No-Fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim . . .” 11 NYCRR § 65-3.8(a)(1). Subsection 65-3.8(c) then states: “Within 30 calendar days after proof of claim is received the insurer shall either pay or deny the claim in whole or in part.” Id. at § 65-3.8(c).

The provider must make out its case in its own moving papers by setting forth the facts entitling the movant to summary judgment. Only if the plaintiff makes out its prima facie case does the burden shift to the defendant to raise a triable issue of fact. See Cugini v System Lumber Co., Inc., 111 AD2d 114, 489 NYS2d 492 [1st Dept 1985]; Victor Gribenko, M.D., P.C. et al. v Allstate Ins. Co., 10 Misc 3d 139(A) [App Term, 2nd & 11th Jud Dists 2005]; A.B. Med. Servs., P.L.L.C. et al. v State Farm Mut. Auto. Ins. Co., 7 Misc 3d 127(A), 801 NYS2d 229 [App Term, 2nd & 11th Jud Dists 2005].

In support of this motion, plaintiff submits two affidavits. In the first, Fenelly Olivares states that he is the person responsible for submitting plaintiff’s No-Fault claims and that he personally mailed the subject claims to defendant on April 3, May 15, and May 23 of 2002. Thus, his affidavit establishes that the claims were submitted to defendant. See Comprehensive Mental v. Lumbermans Mut. Ins. Co., 4 Misc 3d 133(A) [App Term, 9th & 10th Jud Dists 2004]; Amaze Medical Supply Inc. v. Allstate Ins. Co., 3 Misc 3d 133(A) [App Term, 2nd & 11th Jud Dists 2004].

The second affidavit is from Rachael Newton, the person responsible for handling and tracking whatever response is forthcoming from the insurers on the claims. Ms. Newton states that “[d]efendant did not pay plaintiff’s claims that are the subject of this lawsuit within thirty (30) days. [*3]Accordingly, plaintiff’s claims are now overdue and owing.” Although Ms. Newton would know, her affidavit is absolutely silent as to whether plaintiff received any denials, and if so, on which of the claims. These are material omissions because if defendant timely issued a valid denial of plaintiff’s claims, plaintiff would not be entitled to summary judgment simply because the claims remained unpaid. A claim that has been timely (and validly) denied is not due. Of course, if it is not due, it cannot be overdue. If, on the other hand, plaintiff had shown in its moving affidavit that there were no denials, or that the denials were late or otherwise invalid and thus a nullity, plaintiff’s claims would be overdue, and plaintiff would be prima facie entitled to judgment. None of those facts, however, may be gleaned from Ms. Newton’s affidavit.

At oral argument, plaintiff’s counsel urged that plaintiff need not mention anything about denials at all. Rather, counsel argued, all that is necessary is for plaintiff to state that the claims have not been paid and thus are overdue. In support of her argument, counsel relied upon the language of subsection 65-3.8 (a)(1), quoted above, which defines an overdue claim as one that has not been paid within 30 days of submission. See 11 NYCRR § 65-3.8(a)(1). This Court, however, believes that 11 NYCRR § 65-3.8(a)(1) cannot be read in a vacuum. Subsection 65-3.8(c) makes clear that the 30-day rule entails a failure to pay or deny the claim within 30 days. To wit, “[w]ithin 30 calendar days after proof of claim is received the insurer shall either pay or deny the claim in whole or in part.” 11 NYCRR § 65-3.8(c). The problem with plaintiff’s counsel’s approach is that it invites providers to bring disingenuous summary judgment motions alleging that their claims are overdue even when they are well aware that they received valid, timely denials.

Plaintiff’s counsel correctly noted that the Appellate Term routinely uses the phrase “that payment of no-fault benefits is overdue” when enumerating the elements of plaintiff’s prima facie case. See, e.g., PDG Psychological, P.C. v Utica Mut. Ins. Co., 2006 NY Slip Op 50246(U) [App Term, 2nd & 11th Jud Dists]; Ocean Diagnostic Imaging, P.C. v Allstate Ins. Co., 10 Misc 3d 145(A) [App Term, 2nd & 11th Jud Dists 2006]; Ocean Diagnostic Imaging, P.C. v AIU Ins. Co., 10 Misc 3d 139(A) [App Term, 9th & 10th Jud Dists 2005]. In the Court’s view, however, that phrase is merely a shorthand for “that the claim has not been paid or denied within 30 days.” Indeed, some Appellate Division cases make that connection clearer. For example, in Mt. Sinai Hospital v Allstate Insurance Co., the Second Department opined that “sufficient evidentiary proof was submitted to establish, prima facie, that the defendant, Allstate Insurance Company . . . did not pay or deny Mount Sinai’s claim for no-fault medical payments within 30 days as required by 11 NYCRR 65-3.8(c).” Mt. Sinai Hosp. v Allstate Ins. Co., 2006 NY Slip Op 00490, —- NYS2d —- [2nd Dept]. Similarly, in Nyack Hospital v General Motors Acceptance Corp., the Second Department found that the plaintiff had “established its prima facie entitlement to summary judgment by demonstrating that the defendants received the subject billing forms, and failed to either pay or deny the claim within the requisite statutory time frame.” Nyack Hosp. v Gen. Motors Acceptance Corp., 2005 NY Slip Op 10107, 808 NYS2d 399, 402 [2nd Dept]. Since a claim is overdue only if it has been neither paid nor properly denied, and plaintiff states only that its claims were not paid, plaintiff has not made out its prima facie case.

By its holding, this Court is not increasing the burden of a plaintiff healthcare provider moving for summary judgment in a No-Fault case. Indeed, once the plaintiff sets forth that its claim has not been paid or timely denied, the defendant must still come forward with competent [*4]proof to rebut that assertion in order to defeat the motion. All this Court is requiring is that the plaintiff make clear in its moving papers that it is entitled to judgment on its claims. The fact that the plaintiff’s claims have not been paid does not, in and of itself, entitle the plaintiff to summary judgment as a matter of law.

The Court recognizes that a statement that “the claim has not been paid or timely denied” is boilerplate, and the absence of such a statement may seem like a mere technicality. But it is not. Every statement in an affidavit is sworn to under the penalties of perjury. If the affiant knows that there was a timely denial of the unpaid claim, then it would be perjurious to state that “the claim has not been . . . timely denied.” Indeed, under that circumstance, it would be improper for the provider to seek summary judgment based on untimeliness of the denial, although it would be free to move based upon some other ground.

By requiring plaintiff to set forth the basis of its entitlement to summary judgment, the Court is merely holding plaintiff to the requirements of CPLR Section 3212. Although amended and recodified over the years, the essence of the moving plaintiff’s burden has not changed since the enactment of Rule 113 of the Rules of Civil Practice, Section 3212’s predecessor, over 85 years ago: Someone with personal knowledge must swear or affirm both to the material facts which entitle plaintiff to judgment and must also address the known defenses. Under Rule 113, the plaintiff had to affirmatively “stat[e] . . . his belief that there is no defense to the action.” ^[FN1] Under CPLR Section 3212(b), the affidavit in support “shall show that there is no defense to the cause of action or that the cause of action or defense has no merit.” CPLR § 3212(b). What the difference may be between “stating” (Rule 113) and “showing” (3212(b)) is an interesting question (see Farrell v Shelby Mut. Ins. Co., 18 Misc 2d 459, 461,189 NYS2d 66 [Sup Ct, Erie County 1959]), but the Court need not determine it here because this plaintiff neglected any mention of a defense at all. Ms. Newton’s affidavit neither states nor shows that there is no defense or that the defenses have no merit. Indeed, since proper denials would constitute a defense to the action, plaintiff’s failure to address whether the claims were denied makes the moving affidavit not only insufficient but disingenuous as well.

Ms. Newton’s affidavit is deficient in several other respects as well. First, according to plaintiff’s counsel’s affirmation, the instant motion relates only to the claims for three of the five assignors in this case, yet the affidavit fails to set forth this material fact. Second, the affidavit fails to specifically reference which of the seven claims from the three assignors it addresses, or the amounts thereof. Third, the affidavit does not make clear whether the ground for the motion is the same, or different, for each of the seven claims from the three assignors. When a suit combines [*5]multiple claims and/or assignors, it is incumbent upon the moving party to identify in the affidavit each claim and/or assignor to which the motion is directed, and the reason the movant is entitled to judgment upon each one. See Smith v City of New York, 288 AD2d 369, 370, 733 NYS2d 474 [2d Dept 2001] (denying summary judgment motion where proponents “fail[ed] to specifically address each separate claim” with appropriate proof). Rather than do so here, plaintiff submitted an affidavit that could have been attached to any motion for summary judgment between these parties.^[FN2]

Based on all of the foregoing, the Court finds that plaintiff has not made out its prima facie case for entitlement to summary judgment as a matter of law. Therefore, the Court need not reach the sufficiency of defendant’s opposition.

Accordingly, plaintiff’s motion is denied.

This is the Decision and Order of the Court.

Dated:

ARLENE P. BLUTH

Judge, Civil Court

ASN by_______ on ________

Footnotes

Footnote 1: Rule 113, which first came into effect in 1921, provided as follows: “Summary Judgment. When an answer is served in an action to recover a debt or liquidated demand arising, 1. On a contract, express or implied. . . the answer may be struck out and judgment entered thereon on motion, and the affidavit of the plaintiff or any other person having knowledge of the facts, verifying the cause of action and stating the amount claimed, and his belief that there is no defense to the action; unless the defendant by affidavit, or other proof, shall show such facts as may be deemed, by the judge hearing the motion, sufficient to entitle him to defend.”

Footnote 2: The affidavit states: “This Affidavit is being submitted in support of NEW YORK CRANIOFACIAL PC’s application for a judgment against ALLSTATE INS. CO.” (emphasis in original).

Civil Court of the City of New York, Kings County

106648 / 04

Jack M. Battaglia, J.

Plaintiff appeared by Gary Tsirelman, Esq, Greg Lansky, Esq., and Massimiliano Valerio, Esq. of Gary Tsirelman, P.C.; Defendant appeared by Robert B. Brown, Esq. and Samuel K. Rubin, Esq. of Picciano and Scahill, P.C.

A licensed acupuncturist is entitled to recover assigned first-party no-fault benefits based upon the “prevailing fee [for licensed services] in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established” by the Superintendent of Insurance. (See 11 NYCRR §68.5[b].) The provider bears the burden of coming forward with evidence of the “prevailing fee” in its geographic location, while the insurer has the burden of coming forward with evidence that the provider’s fee is not “consisten[t] with charges permissible for similar procedures.”

Power Acupuncture, PC is seeking to recover from State Farm Mutual Automobile Insurance Company the total unpaid balance on six bills submitted to the insurer, which amount the parties have stipulated to be $800.24. Each of the bills describes the service rendered as “acupuncture”, and seeks compensation at the rate of $100.00 for each treatment session. The insurer paid on each bill at the rate of $42.84 per session, staing that “[t]his base fee was calculated according to the New York Workers’ Compensation Board Schedule of Medical Fees. (New York Workers’ Compensation Board Schedule of Medical Fees, Page 9.)”

At a trial, of sorts, held on September 16 and September 28, 2005, each party presented one witness. Power Acupuncture offered the testimony of Elyse Josephs, a licensed acupuncturist, who described generally the theory and practice of acupuncture, the training and licensing requirements for acupuncturists, and the certification requirements for physicians and chiropractors who render acupuncture services. (See, generally, Education Law §§8211, 8216[3].) State Farm offered the testimony of Donna Frederick, one of its claims representatives, who described the insurer’s practice of paying for acupuncture services rendered by licensed acupuncturists at the rate provided in the Workers’ Compensation Board fee schedule for [*2]acupuncture services rendered by a physician.

The parties recognized at trial that the resolution of their dispute depended essentially on an interpretation and application of the No-Fault Law (see Insurance Law §5102 et seq.) and the Superintendent of Insurance’s implementing regulations. Specifically, the issue is whether a licensed acupuncturist is entitled to be paid based upon the “prevailing fee” charged by acupuncturists for licensed services, or based upon the fee provided for payment of acupuncture services rendered by a physician. The parties agreed to submit briefs arguing their respective views of the law and regulations. They also agreed, for this case only, that, if the Court determined that Power Acupuncture is entitled to be paid based upon the “prevailing fee”, the fee shall be deemed to be $100.00 per session. This Court has since held in another case that the provider bears the burden of coming forward with evidence as to the “prevailing fee”. (See AVA Acupuncture P.C. v Elco Administrative Services Co., 10 Misc 3d 1079[A], 2006 NY Slip Op 50158[U], *6-*8 [Civ Ct, Kings County].)

Section 5102(a)(1) of the No-Fault Law defines “basic economic loss” as including “[a]ll necessary expenses incurred for…professional health services”, “subject to the limitations of” §5108 of the Law. (See Insurance Law §5102[a][1].) Section 5108 provides that the Superintendent of Insurance “shall promulgate rules and regulations implementing and coordinating the provisions of” the No-Fault Law and the Workers’ Compensation Law “with respect to charges for the professional health services specified in” §5102(a)(2), “including the establishment of schedules for all such services for which schedules have not been prepared and established by the chairman of the workers’ compensation board.” (See Insurance Law §5108[b].) But the “charges for services specified in” §5102(a)(1) “shall not exceed the charges permissible under the schedules prepared and established by the chairman of the workers’ compensation board.” (See Insurance Law 5108[a].)

Under the statute, therefore, if a charge for a covered “professional health service” is found in a Workers’ Compensation schedule, that is the permissible charge under the No-Fault Law; but, if there is no charge for the service found in a Workers’ Compensation schedule, the charge is to be determined by the regulations of the of the Superintendent of Insurance. Some uncertainty arises, however, because the No-Fault Law speaks in terms of covered services, whereas the Workers’ Compensation schedules establish fees according to the licensed status of the provider. As will appear, acupuncture services rendered by a certified physician are compensated at a different fee under the Workers’ Compensation schedules than acupuncture services rendered by a certified chiropractor, and, most importantly for present purposes, there is no coverage under the Workers’ Compensation schedules for acupuncture services rendered by a licensed acupuncturist.

The Superintendent’s no-fault regulations are not entirely successful in dissipating any uncertainty, as this action illustrates. They provide, in the first instance, that “[c]harges for [professional health] services shall be covered pursuant to schedules promulgated under section 5108 of the Insurance Law and Part 68 of this Title (Regulation 83).” (See 11 NYCRR §65-[*3]3.16[a][6].) In Part 68, the Superintendent adopts the “existing fee schedules prepared and established by the chairman of the Workers’ Compensation Board”, and, “[i]f a fee schedule has been adopted for a licensed health care provider, the fee for services provided shall be the fee adopted or established for that licensed health care provider.” (See 11 NYCRR §68.1[a], [b][2].) A “licensed healthcare provider” is defined as a “licensed healthcare professional acting within the scope of his or her license or an entity properly formed in accordance with applicable law and acting within the scope of its license.” (11 NYCRR §68.1[b][3].)

When acupuncture services are rendered by a certified physician or chiropractor, the determination of the permissible charge is relatively clear. There is a Workers’ Compensation Medical Fee Schedule and a Workers’ Compensation Chiropractic Fee Schedule (as well as schedules for podiatry and psychology.) The respective fee schedules provide a “unit value” or “relative value” for described services and a “conversion factor” for each of four geographic regions. The permissible charge is determined by multiplying the relative value for the service by the conversion factor, which is a monetary amount identified by the zip code of the provider. Both the Medical Fee Schedule and the Chiropractic Fee Schedule describe four acupuncture services, two with electrical stimulation and two without, two for the initial 15 minute “one-on-one contact with the patient” and two for additional 15 minutes of contact. The relative values are the same for each of the services in both the Medical Fee Schedule and the Chiropractic Fee Schedule.

A physician, however, will be entitled to a higher fee for each of the described services, because the conversion factors for physicians range from $6.49 to $8.45 across the four regions, whereas those for chiropractors range from $4.44 to $5.78. For example, when the relative value for an initial 15 minute contact for acupuncture without electrical stimulation rendered by a physician, i.e. 3.55, is multiplied by the conversion factor for physicians in Region IV (where Power Acupuncture is located), i.e. $8.45, the permissible charge is $30.00, whereas when the same relative value is multiplied by the conversion factor for chiropractors in Region IV, i.e. $5.78, the permissible charge is $20.52. The difference presumably reflects the relative market values for the services in various geographic areas.

But what about acupuncture services rendered by a licensed acupuncturist, for whom there is no “dedicated” Workers’ Compensation fee schedule. In a section of the regulations titled “[e]stablishment of certain health provider schedules”, the Superintendent of Insurance “establishes fee schedules for professional health services referred to in” §5102(a)(1) “for which schedules have not been prepared and established by the chairman of the Workers’ Compensation Board.” (11 NYCRR §68.2[a].) Those schedules are to be found in Appendix 17-C. (See id.) In Appendix 17-C, the Superintendent establishes fee schedules for various dental, social work, therapy, optometric, and thermographic services, but not for any acupuncture services.

In a section titled “[h]ealth services not set forth in schedules”, the Superintendent prescribes the method for determining the permissible charge for such services, first for when the Superintendent “has adopted or established a fee schedule applicable to the provider” (see 11 [*4]NYCRR §68.5[a]), and then for when the Superintendent has not done so (see 11 NYCRR §68.5[b]). For our purposes, the Superintendent has not “adopted” a fee schedule applicable to licensed acupuncturists, since none has been established by the chairman of the Workers’ Compensation Board, and the Superintendent has not as yet “established” a fee schedule applicable to licensed acupuncturists, as was done in Appendix 17-C for other providers that were not covered by a Workers’ Compensation Fee Schedule.

In such circumstances “the permissible charge for such service shall be the prevailing fee in the geographic area of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent.” (11 NYCRR §68.5[b].) Indeed, in two opinions, dated, respectively, January 5, 2004 and October 6, 2004, the Office of General Counsel of the New York State Insurance Department reaches the same conclusion. (See also Great Wall Acupuncture, P.C. v Geico General Ins. Co., 8 Misc 3d 1019(A), 2005 NY Slip Op 51199[U], *2 [Civ Ct, Kings County].)

State Farm argues nonetheless that the statute and regulations “are clear that where there is a scheduled service (acupuncture) but an unscheduled provider (licensed acupuncturist) the provider is limited to the fee identified for the scheduled service absent a showing of unusual procedures or unique circumstances.” (See Defendant’s Trial Memorandum of Law, at 7.) In doing so, State Farm characterizes the Insurance Department’s opinions as “erroneously perpetuat[ing] a mistake and application of [its own] regulation.” (See id., at 14-15.) In this latter regard, State Farm’s position is clearly and seriously at variance with the mandate that we give deference to the opinions of the Superintendent. (See Medical Society of State v Serio, 100 NY2d 854, 863-64 [2003].)

On its own merits, moreover, State Farm’s argument ignores the reasonably clear fabric of the Superintendent’s regulations, as well as its own failure, if not inability, to explain why, assuming its position were correct, the licensed acupuncturist should be compensated according to the conversion factor for a physician rather than for a chiropractor. The proposition is not self-evident, either logically or legally, and there was no evidence at trial to support it.

It is true, no doubt, that, even under the applicable regulation, the insurer may “review” the acupuncturist’s charges “for consistency with charges permissible for similar procedures already adopted or established by the superintendent.” (See 11 NYCRR §68.5[b].) For a number of reasons, however, that qualification to payment on a “prevailing fee” basis cannot help State Farm here. First, that is not the basis on which Power Acupuncture’s charges were reduced, as stated in State Farm’s denials. It is clear from the denials that the “fee was calculated according to the…Schedule for Medical Fees”, and, as has been demonstrated, that was wrong. More importantly, neither in the denials nor at trial was there any showing that, even ignoring the identity and status of the practitioner, the acupuncture services that were rendered were “similar” to the services described in the fee schedule and associated with the particular relative value used in the calculation. [*5]

State Farm contends that “the claimant would have the burden to show that the reduction is not consistent with the fees for such scheduled services.” The contention is inconsistent with both the structure and clear meaning of the governing regulation, which states that the permissible charge “shall be the prevailing fee”, only “subject to review by the insurer.” (See 11 NYCRR §68.5[b].) Whatever effect might be given the results of the insurer’s “review”, the insurer that denies or reduces payment based upon such a review must bear the burden of, at least, coming forward with evidence that the provider’s fee is not “consisten[t] with charges permissible for similar procedures.” (See id.)

To the extent that State Farm is contending that, generally, the fee for a service described in any fee schedule can never be higher than the maximum fee that would be permissible for any provider for whom there is such a schedule, or that, specifically, a licensed acupuncturist is never permitted a fee for any service described in the physician’s fee schedule that is higher than the fee permitted for the physician, those contentions are not supported by either the statute or current regulations. The statute provides only that, when there is an applicable Workers’ Compensation fee schedule, the fee for no-fault benefits may not exceed the amount determined by that schedule, “except where the insurer or arbitrator determines that unusual procedures or unique circumstances justify the excess charge” (see Insurance Law §5108[a]); and, when there is no such applicable fee schedule, the Superintendent need only “consult[]” and “coordinat[e]” with the chairman of the Workers’ Compensation Board in establishing an appropriate fee (see Insurance Law §5108[b]). Although the Superintendent may well have the authority to promulgate regulations that would provide as State Farm contends, that authority has not been exercised.

Specifically, the statute that authorizes a certification program for physicians and others who are not licensed acupuncturists, is subject to the proviso that “such certified acupuncturists do not represent themselves as licensed acupuncturists.” (See Education Law §8216[3].) The statute clearly reflects at least an assumption that the acupuncture services rendered by a certified physician and those rendered by a licensed acupuncturist are not the same. On this record, that statutory assumption is enough to require rejection of State Farm’s practice of automatically reducing bills submitted by licensed acupuncturists to the fees permissible for certified physicians.

Given the conclusions required by this record to resolve this case, it is both unnecessary and inappropriate for the Court to address Power Acupuncture’s other arguments concerning, what it calls, the “Review Clause”, including the questions raised concerning its constitutionality and its meaning and application. (See Post-Trial Memorandum, at 15-32.) The Court notes, moreover, that, although it may have the jurisdiction to pass on most, if not all, of those questions in the context of an action seeking payment of one or more bills, such an action does not appear to this Court to be the most appropriate vehicle for a full exploration and considered resolution of those questions. [*6]

It appears to this Court that those healthcare providers and insurers regularly participating in no-fault first-party benefits litigation have chosen litigation strategies that involve litigating and relitigating the same issues in hundreds, if not thousands, of actions before different Civil Court and District Court judges, crowding out the types of actions the limited-jurisdiction courts were designed to resolve. The Court recognizes and appreciates that, in this action, the parties took a somewhat different tack, and have clearly expended significant effort to brief a wide range of questions that are raised by the statute and regulations as they apply to the services rendered by licensed acupuncturists. It seems true, nonetheless, that a broader-scoped proceeding in Supreme Court one in which a number of providers and insurers might participate would be a more appropriate forum for resolution of the constitutional and other questions raised by this, and other, no-fault actions.

The Court has noted Plaintiff’s counsel’s request for an attorney fee in excess of the limitations generally applied to no-fault disputes. (See 11 NYCRR §65-4.6.) And, again, the Court recognizes the effort made by counsel for both parties. But this case has not been resolved on the issues that attracted much of Plaintiff’s counsel’s attention. In the world of no-fault, moreover, where the parties do not want for creativity in raising new questions for the courts to resolve, there is a real risk that the exception to the limitations will render the rule meaningless.

Judgment is awarded to Plaintiff for $800.24, with statutory interest and attorney fees, plus costs.

March 20, 2006__________________________

Judge, Civil Court

Civil Court of the City of New York, Queens County

108007-02

Howard G. Lane, J.

Plaintiff commenced this action to recover first-party no-fault benefits for medical services rendered to its assignors Sandra Dorsett and Sharon Little, pursuant to New York’s No-Fault Insurance Law § 5101 et. seq., as well as statutory interest and attorney’s fees. Thereafter, plaintiff moved for summary judgment on its claims in the amount of $3,177.54, on the ground that defendant failed to pay or to deny its claims within the statutory 30-day period as required by Insurance Law section 5106 (a).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

Plaintiff maintains that it is entitled to summary judgment because the defendant failed to pay or deny the claims within thirty (30) days of receipt as required by the Insurance Law § 5106 (a). Plaintiff proved that it submitted a timely and proper notice of claim pursuant to the No-Fault statute for medical treatment rendered, which defendant acknowledged receiving, denying and not paying. (See, Capio Medical, P.C. ex rel. Berger v. Progressive Cas. Ins. Co., 7 Misc 3d 129(A), 2005 NY Slip Op 50526(U) [App Term 2nd and 11 th Jud. Dist.]; Park Health Center v. Prudential Insurance Co., 2001 WL 1803364 [App Term 2nd and 11th Jud. Dist. 2001]). The burden then shifted to defendant to show the existence of a triable issue of fact. See, Alvarez v. Prospect Hosp. 68 NY2d 320, 324 (1986).

DEFENDANT’S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

Defendant maintains that it issued timely denials to plaintiff’s claim and in its opposition papers asserts the defense of lack of medical necessity. It is well settled that for an insurer’s denial of claim form to be deemed timely, the insurer must prove that it generated the denial of claim within thirty (30) days of receipt of plaintiff’s proof of claim and that it also mailed the denial to the claimant within the same time period. (See A.B. Medical Services, PLLC v. GEICO Ins. Co., 2 Misc 3d 26, [App Term, 2nd & 11 Jud Dists. 2003]). [*2]

Defendant submits denial of claims form that indicate that the bill was being denied due to a lack of medical necessity. The denials for the bills are timely on their face. In support of its motion defendant submits copies of the denials and purported proof of mailing of its denials (S & M Supply, Inc. v. Geico Ins. Co., 2003 NY Slip Op 51192[U] [2d & 11th Jud Dists 2003]). Specifically, defendant proffers the affidavit of Ms. Joan Rolfe, a claims representative employed by the defendant, and the affidavit of Matt Olmstead, an employee of defendant who is employed as a Senior Operations Staff Analyst at Southwest Output Processing Center.

The two affidavits submitted by defendant do not establish mailing because neither Ms. Rolfe nor Mr. Olmstead state in their affidavits that they had personal knowledge that the denial of claim was actually sent to plaintiff (Presbyterian Hosp. v. Maryland Casualty Ins. Co., 226 AD2d 613 [2d Dept 1996]); nor does either affidavit create a presumption of mailing because neither sufficiently describes the standard operating procedures defendant uses to ensure that its denials and requests for verification are mailed (S & M Supply, Inc. v. GEICO Ins. Co., 3 Misc 3d 136A [2d & 11th Jud Dists 2004]). Although the affidavits provide information on the preparation and mailing of the denial of claims, they do not include sufficient factual information describing how defendant’s regular office practices and procedures for mailing denials are “geared as to ensure the likelihood that [the denial of claim] is always properly addressed and mailed.” Clark v. Columbian Mutual Life Ins. Co., 221 AD2d 227, 228 (1st Dept 1995), quoting Nassau Ins. Co. v. Murray, 46 NY2d 828, 830 (1978).

Specifically, defendant failed to state sufficiently, or describe with particularity the regular office practices and procedures defendant uses to ensure that denials are properly and timely mailed, including, but not limited to the following: (1) whether the NF-10’s generated by computer by the claims representative are compared with the NF-10’s that “[come] into the Southwest Output Processing Center’s job queue;” (2) the specific date that the denial was actually mailed to plaintiff; (3) whether the envelope contained the NF-10’s and that the envelope was correctly addressed; (4) whether any computer printout or record was generated and reviewed which listed the claimants who were allegedly mailed NF-10’s on the date or dates that defendant alleges it mailed the NF-10’s; and (5) whether it was the duty of the claims representative or Senior Operations Staff Analyst to ensure compliance with said office practices and procedures or whether the claims representative or Senior Operations Staff Analyst had actual knowledge that said practices and procedures were complied with. (See, Contemp. Med. Diag & Treatment, P.C. v. GEICO Ins. Co., 6 Misc 3d 137(A), 2005 NY Slip Op 50254 [U] [2d & 11th Jud Dists 2005]).

The court finds the assertions of Ms. Rolfe and Mr. Olmstead conclusory and such assertions fail to specify either that it was the duty of either one of them to ensure compliance with said office procedures or that either one had actual knowledge that said procedures were complied with. (See, Contemp. Med. Diag & Treatment, P.C. v. GEICO Ins. Co., 6 Misc 3d 137(A), 2005 NY Slip Op 50254[U] [2d & 11th Jud Dists [*3]2005]). As defendant’s papers in opposition to plaintiff’s motion for summary judgment do not contain an affidavit of someone with personal knowledge that its denial was actually mailed, or describe the standard office practices or procedures used to ensure that such denials were properly addressed and mailed (see Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d [2d Dept 2001]), defendant failed to establish by competent evidence that it timely mailed its denials, and therefore, defendant is precluded from offering all of its defenses in the instant matter.

Accordingly, plaintiff’s motion for summary judgment is granted. Judgment shall be awarded in favor of plaintiff in the amount of $3,177.54, together with statutory interest and attorneys fees.

_____________________

3/15/06 HOWARD G. LANE

DateJudge of the Civil Court

[*1]

Civil Court of the City of New York, Queens County, March 9, 2006

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola (David Barshay of counsel), for plaintiff. Peter X. Dodge, P.C., Uniondale, for defendant.

OPINION OF THE COURT

Bernice D. Siegal, J.

Background

The plaintiff, a health care provider, brought the within action, by service of a summons and complaint upon defendant insurer on August 16, 2002 to recover for services rendered under no-fault, to Albert Mullakandov, Alik Mullakandov and Djabrail Moukhtarov, relating to injuries allegedly arising out of a motor vehicle accident in which Albert and Alik were passengers in an automobile owned and operated by policyholder Djabrail and occurring on October 12, 2001.

Trial of this action was commenced in this part on December 6, 2005 and was continued through December 8, 2005, with the parties stipulating, with respect to plaintiff’s case, as to the submission by plaintiff to defendant of the underlying NF-3 proofs of claim, the execution of the assignments of benefits from Albert and Alik to plaintiff on November 12, 2001 and December 3, 2001; and as to defendant, the timely issuance by defendant of its NF-10 denials. After plaintiff rested and in the course of defendant’s case-in-chief, defendant sought to introduce into evidence certified transcripts of the examinations under oath (EUOs) of Albert and Alik taken on November 5, 2002. Plaintiff’s counsel objected to their admission and the trial was adjourned to December 22, 2005 for the submission of legal memoranda and for oral argument before the court.

On the latter date, plaintiff’s counsel argued, regarding the admission into evidence of the EUOs, that the assignors/deponents were nonparties and that the requirements for the admissibility of nonparty depositions, as provided by CPLR 3117 (a) (3), have not been met in this case and further, in any event, under long-standing case law (the “New York rule”), the declarations of an assignor, whether made before or after the assignment, are inadmissible as against the assignee. Defense counsel, in response, argued that the plaintiff, as assignee, is bound by the statements of its assignors, that the EUO transcripts, properly certified, are akin to certified examination before trial (EBT) transcripts and may be used at trial and in the same manner as provided under CPLR 3117. The court [*2]reserved decision thereon and further adjourned the case for trial.

The primary issue, therefore, presented to this court for its adjudication in the matter at bar is: Whether defendant is precluded, by operation of either the “New York rule” or the provisions of CPLR 3117 governing the admissibility of nonparty depositions.

Findings of Law

At the outset, as the EUOs of the two particular above-mentioned nonpolicyholder/assignors were taken in November 2002, after both the execution of the assignments in November and December of the preceding year and also three months after the institution of the within action, the court’s application of any and all relevant statutory and/or case law are necessarily limited to the facts of this case.

The so-called “New York rule” is a venerable doctrine, its antecedents going back to the middle of the nineteenth century, to wit, Paige v Cagwin (7 Hill 361 [NY Sup Ct 1843]), and long before the advent of our State’s no-fault insurance statutes and regulations. One of the very few decisions directly on point is the recent one of Judge Baily-Schiffman in JSI Expert Serv. v Liberty Mut. Ins. Co. (7 Misc 3d 1009[A], 2005 NY Slip Op 50513[U], *3-4 [Civ Ct, Kings County 2005]), wherein she discussed the New York rule and its application to the admissibility of the EUOs of plaintiff’s assignors, quoting Prince, Richardson on Evidence § 8-242 (Farrell 11th ed) as follows:

” ‘In New York declarations of a vendor or assignor of a chattel or chose in action, whether made before or after the transfer, are inadmissible to affect the claim or title of a subsequent transferee for value’ . . .

“This rule stems from the decision in Paige v Cagwin . . . Except where the statements were made by the real party in interest, such as a decedent, the New York doctrine will apply and the statements of the former . . . assignor will not be admissible to affect . . . the claim of the subsequent . . . assignee.” (See also Prince, Richardson on Evidence § 8-243 [Farrell 11th ed].)

Pursuant to this doctrine, Judge Baily-Schiffman reversed her previous trial ruling permitting the admission of testimony as to the assignors’ EUO statements (which defendant insurer had sought to introduce as admissions probative of its affirmative defense that the underlying accident was “staged”), and ordered that such testimony be stricken.

As stated in Richardson § 8-243 (at 550-551), the doctrine first enunciated in Paige (supra) “is inapplicable when the admissions of a former owner of personal property are offered [*3]against a person who claims through representation, such as an executor, administrator, heir or trustee in bankruptcy. The former owner’s admissions are receivable against such a person.” In the case at bar, the court finds that plaintiff assignee has not brought the action in the capacity as the representative of the aforementioned assignors (e.g., as executor, administrator or other such capacity referred to in section 8-243). Thus, the above exception to the New York rule is not applicable here.

Plaintiff has also cited several cases in support of its contention that an assignor is a nonparty rather than a real party-in-interest, among them Inwood Hill Med., P.C. v General Assur. Co. (10 Misc 3d 18 [App Term, 1st Dept 2005]), and the court finds that the assignors cannot be considered as real parties-in-interest.

Defendant countered with authority the court finds inapposite to the case at bar. In Dlugosz v Exchange Mut. Ins. Co. (176 AD2d 1011, 1012 [3d Dept 1991]), the transcripts of the EUOs of the plaintiff and her husband were held to be admissible as containing “statements of a party to the lawsuit and as extrajudicial admissions of a party.” However, the court finds significant that the deponent husband was also an extra insured under the subject policy and, therefore, it is clear to this court that he was a party united in interest. Another action which this court finds distinguishable involves a homeowner’s insurance policy in which defendant insurer asserted an arson defense (Kamenov v Northern Assur. Co. of Am., 259 AD2d 958 [4th Dept 1999]). There, the Court held that the trial court had erred in precluding the admission into evidence of portions of the EUO testimony of plaintiff’s husband as to the insurance claim. However, in that matter, the husband was also found to be the plaintiff’s agent. Therefore, unlike the case law relied upon by the defense, the court finds that the assignors herein are neither in privity with plaintiff, nor otherwise real parties-in-interest. Nor can the plaintiff assignee here be found in any manner to have brought the instant action in a representative capacity.

Nonetheless, this court is also cognizant of the long-established principle, asserted by defendant herein, that an “assignee stands in the shoes of the assignor and takes the assignment subject to any preexisting liabilities” (Arena Constr. Co. v Sackaris & Sons, 282 AD2d 489, 489 [2d Dept 2001]). That general principle remains alive and well today in no-fault actions, albeit modified and refined by the limited nature of no-fault claims assignments and by operation of New York State’s Insurance Law and no-fault regulations promulgated thereunder. (See A & S Med. v Allstate Ins. Co., 196 Misc 2d 322 [App Term, 1st Dept 2003], affd 15 AD3d 170 [1st Dept 2005].) Further, a thorough reading of the “forefather” of the New York rule (Paige v Cagwin, supra) reveals that the rationale for the court’s decision was primarily an evidentiary determination that the proffered evidence in that case—out-of-court statements made by a third party offered against the plaintiff endorsee of a promissory note—was inadmissible hearsay. Specifically, the court there stated:

“[T]he note . . . is subject to the same defence in the hands of the endorsee as when it was in the hands of the endorser; but it by no means follows that the mere declarations of such endorser can affect the rights of the endorsee. The means of proving a defence may be affected, but the right to make it is not impaired. [*4]The defence still exists; but it must be established by testimony and not by mere declarations.” (7 Hill at 379-380.)

This court finds it also significant that Paige v Cagwin, though finding such statement to be inadmissible hearsay as it was proffered by a third party, does not preclude a defense, so long as it may be proven by other than inadmissible out-of-court declarations. Therefore, as applicable to no-fault actions, while it is well established that the statements made by an assignor (though a nonparty) in an EUO may be offered by a defendant insurer against a provider/assignee to prove a lack of coverage defense (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]) in opposition to a summary judgment motion^[FN*] despite being hearsay (see Bond v Giebel, 14 AD3d 849 [3d Dept 2005]; Kwi Bong Yi v JNJ Supply Corp., 274 AD2d 453 [2d Dept 2000]), EUO statements are nonetheless hearsay. As such, such statements are inadmissible at trial unless, for example, they are used for impeachment purposes upon cross-examination in the event such declarant/assignor testifies.

However, even assuming arguendo that this court would have held that the “New York rule” does not apply to the case at bar, the court finds, for the reasons discussed below, that the result must be the same. The applicable no-fault regulations provide that “upon request by the Company [i.e., the insurer], the eligible injured person or that person’s assignee or representative shall: . . . as may reasonably be required submit to examinations under oath by any person named by the Company and subscribe same” (11 NYCRR 65-1.1 [d] [Conditions] [Proof of Claim. Medical, Work Loss, and Other Necessary Expenses]).

However, the no-fault regulations offer little, if any, guidance pursuing a defense through litigation. As was stated by our state Court of Appeals, “If more harmony and clarity are to be achieved, we earnestly invite the Legislature to study and remedy the Rube-Goldberg-like maze” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 286 [1997]). The experience in the trial courts attempting to reconcile the rules of evidence and civil practice with regulations promulgated which are more suited to arbitration should now be a sufficient signal to the Legislature that some action on its part is required. This is particularly true given the avalanche of no-fault litigation threatening to crush the court system, which is the exact opposite of the purposes of New York’s No-Fault Insurance Law, to wit: “to remove the vast [*5]majority of claims arising from vehicular accidents from the sphere of common-law tort litigation, and to establish a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of such accidents” (Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 214 [1996]), while “still allow[ing] carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices” (Presbyterian Hosp. v Maryland Cas., supra at 285).

Moreover, it is not insignificant that in the instant case the EUOs were requested and held after the within action had been commenced. The use of EUOs is a device utilized for verification of proof of claim, in accordance with the regulations in effect as of April 5, 2002, such verification to be requested in accordance with strict guidelines (11 NYCRR subpart 65-3). It is noteworthy, however, that compliance with a request for an EUO was not mandated under the regulations in effect during the claim process herein. Additionally, the provisions in effect under the “new” regulations, with respect to the use of EUOs, lack the protections found in article 31 of the CPLR governing the use of EBTs (e.g., subpoena of a nonparty witness with such subpoena served upon the adversary—CPLR 3106 [b]). It is clear to the court that defendant’s use of EUOs was improper, as it could not be considered as a device for verification of proof of claim, as permitted under the regulations not yet in effect when the underlying claim arose; and, secondly, even if viewed as allowable under 11 NYCRR 65-1.1 (d), as the kind of “red-tape dilatory” practice referred to in Presbyterian (supra at 285), in light of its use some three years after the submission of the underlying claims. As the defendant here chose to forgo the use of EBTs and rather opted (and improperly so) to utilize EUOs, it appears that a conscious effort was made to circumvent the CPLR.

Therefore, although an EUO can be used as a shield by an insurer against payment of a no-fault claim where an assignor has failed to comply with a properly noticed EUO request, given the strictures of New York rules of evidence, this court reaches the opposite conclusion when seeking to admit an EUO transcript into evidence at trial.

Accordingly, the court finds that the defendant is precluded from introducing into evidence at trial and to the extent set forth above the EUO testimony of the assignors, Albert Mullakandov and Alik Mullakandov, as against the plaintiff.

Footnotes

Footnote *: The court finds, parenthetically, that such EUO transcripts may be admissible in opposition to a motion for summary judgment (see A.B. Med. Servs. PLLC v Prudential Prop. & Cas. Ins. Co., 7 Misc 3d 14 [App Term, 2d Dept 2005]; see also Chin v Ademaj, 188 AD2d 579 [2d Dept 1992]; Ratut v Singh, 186 Misc 2d 350 [Civ Ct, Kings County 2000]).