[*1]

Civil Court of the City of New York, Kings County, March 7, 2006

APPEARANCES OF COUNSEL

Marylou A. Paolucci, Smithtown, for plaintiffs. Bruno, Gerbino, & Soriano, LLP, Melville, for defendant.

OPINION OF THE COURT

Karen Rothenberg, J.

In this action to recover no-fault first-party benefits for services provided to its assignor for an accident that occurred on December 8, 2000, plaintiffs establish a prima facie entitlement to summary judgment by proof that they submitted to defendant the statutory claim forms, setting forth the fact and the amount of the losses sustained ($4,427.36, $2,490.78, $1,945.56, $505.50, $208.25, and $500) and that payment of no-fault benefits was overdue (see A.B. Med. Servs. PLLC v Country-Wide Ins. Co., 6 Misc 3d 137[A], 2005 NY Slip Op 50255[U] [App Term, 2d & 11th Jud Dists 2005]). The burden then shifts to the defendant to rebut plaintiffs’ prima facie case by the submission of proof in admissible form sufficient to raise a triable issue of fact (see A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86[*2][App Term, 2d & 11th Jud Dists 2004]).

In regard to the claim of G.A. Physical Therapy in the amount of $208.25, defendant submits evidence of an arbitral award in its favor which denied no-fault benefits to this claimant for a bill dated March 21, 2001. There is no dispute that this is the same bill being litigated in this action. The prior arbitral award should be accorded res judicata effect against plaintiff in this action. It is well settled that res judicata and collateral estoppel are applicable to arbitration awards, including those rendered in disputes over no-fault benefits, and will bar relitigation of the same claim or issue (see Matter of Ranni [Ross], 58 NY2d 715 [1982]; Monroe v Providence Washington Ins. Co., 126 AD2d 929 [3d Dept 1987]). While defendant did not move for summary judgment dismissing this claim on these grounds, the court has authority to grant summary judgment to a nonmoving party if justified by the record. (CPLR 3212 [b].) Accordingly, plaintiff, G.A. Physical Therapy P.C.’s claim for $208.25 is dismissed.

In regard to the bills for services rendered by A.B. Medical Services PLLC, Daniel Kim’s Acupuncture P.C., and Royalton Chiropractic P.C., defendant submits evidence that in December 2001, prior to the commencement of this litigation, plaintiffs submitted these claims to the American Arbitration Association (AAA). Defendant also submits evidence that in August 2003 it received notification from AAA that plaintiffs withdrew these claims with prejudice. Defendant argues therefore that plaintiffs are precluded from maintaining these actions. In reply, plaintiffs’ counsel contends that it was plaintiffs’ intention to withdraw the claims with prejudice only from arbitration and without prejudice to litigation. Counsel’s argument is without merit. Regardless of their intentions, plaintiffs are bound by their election to arbitrate their claims and are precluded from maintaining this litigation.

Pursuant to Insurance Law § 5106 (b) “[e]very insurer shall provide a claimant with the option of submitting any dispute involving the insurer’s liability to pay first party benefits . . . to arbitration pursuant to simplified procedures to be promulgated or approved by the superintendent.” Once the election is made to arbitrate a claim for first-party no-fault benefits, the right to litigate future claims arising out of the same accident is foreclosed (see Roggio v Nationwide Mut. Ins. Co., 66 NY2d 260 [1985]). In Roggio (supra), the Court of Appeals dismissed the plaintiff’s complaint for first-party benefits holding that a claimant, denied recovery in arbitration as to certain medical bills, cannot then resort to the courts to seek recovery of later medical bills that arise out of the same accident. The Court’s rationale being to prevent claimants “flit[ting] between forums for the resolution of issues or items of damage arising from a single injury . . . [which] would represent an intolerable drain on our resources for dispute resolution, senselessly prolonging controversies and inviting inconsistent adjudications.” (Roggio at 263.) The Court further reasoned that by providing claimants “an option to litigate after disappointments in arbitration [would] obviously [be] inconsistent with [the] legislative purpose” of the No-Fault Law. (Roggio at 264.)

After Roggio, courts have invariably held that the election to arbitrate a claim for first-party benefits, waives the right to litigate all subsequent claims that arise out of the same [*3]accident (see Cortez v Countrywide Ins. Co., 17 AD3d 508 [2d Dept 2005]; Gaul v American Employers’ Ins. Co., 302 AD2d 875 [4th Dept 2003]; Gibeault v Home Ins. Co., 221 AD2d 826 [3d Dept 1995]).

In Roggio, and the other cited cases, the issue involved litigation of subsequent claims after an arbitral award on an initial claim. In this matter the issue involves litigation of claims originally submitted to arbitration where no arbitral award was made. Nevertheless, in this judicial district, at least, it appears that once the claim is submitted to arbitration, it must be adjudicated in that forum. In Rockaway Blvd. Med. P.C. v Progressive Ins. (2003 NY Slip Op 50938[U] [App Term, 2d & 11th Jud Dists 2003]), the plaintiff’s claim at arbitration was dismissed without prejudice to plaintiff renewing its application for arbitration upon production of a proper assignment. Instead, the plaintiff commenced litigation of the claim. The court, citing Roggio, dismissed the complaint and held that “once a claimant chooses arbitration, it cannot resort to the courts.” (At *2.)

In light of the above, this court is reluctant to limit Roggio to its precise facts. Accordingly, once a claim for first-party benefits is submitted to arbitration, the claimant is bound by that election and cannot reopt for litigation, even if the merits of the matter were not reached. Accordingly, while defendant did not move to dismiss these claims, the court, after review of the record, is awarding summary judgment to the defendant dismissing these plaintiffs’ claims for bills in the amounts totaling $4,427.36, $2,490.78, and $505.50.

The remaining bills submitted by D.A.V. Chiropractic P.C. in the amounts of $189.54, $302.12, and $1,999.12, and Square Synagogue Transportation Inc., in the amount of $500, were not the subject of a prior arbitration. As to these bills, defendant’s denials, except for the bill in the amount of $1,999.12, are untimely on their face. Defendant contends that these claims were properly denied based upon the assignors’ failure to attend independent medical examinations (IMEs). Defendant however, fails to produce competent proof in admissible form that it made timely verification requests for IMEs, extending the 30-day period within which it must pay or deny the claims (see Ocean Diagnostic Imaging P.C. v New York Cent. Mut. Fire Ins. Co., 9 Misc 3d 138[A], 2005 NY Slip Op 51772[U] [App Term, 2d & 11th Jud Dists 2005]). The affidavit of defendant’s no-fault claims representative, Cathy Symonds, is deficient and fails to establish that requests for IMEs were timely mailed to the assignors (see Careplus Med. Supply Inc. v Gen. Assur. Co., 7 Misc 3d 126[A], 2005 NY Slip Op 50429[U] [App Term, 9th & 10th Jud Dists 2005]). Even assuming that defendant submitted proper proof of mailing of the initial IME requests, defendant has failed to demonstrate that it complied with a timely follow-up request (see New York Hosp. Med. Ctr. of Queens v Country-Wide Ins. Co., 295 AD2d 583 [2d Dept 2002]). In light thereof, defendant is precluded from asserting its defense of the assignors’ nonappearance at scheduled IMEs for these three claims. In regard to the bill in the amount of $1,999.12, it is undisputed that defendant timely denied the claim. This denial, like the others, was based upon the assignors’ nonappearance for IMEs. Although the denial was timely, the defendant’s failure to follow up its request for verification, makes the denial “ineffective to avoid preclusion” (see King’s Med. Supply Inc. v Kemper Auto & Home Ins. Co., 7 Misc 3d 128[A], 2005 NY Slip Op 50450[U], *3 [App Term, 2d[*4]& 11th Jud Dists 2005]).

Based on the foregoing, plaintiffs’ motion for summary judgment is granted in part and denied in part. Judgment shall be entered in favor of plaintiffs, D.A.V. Chiropractic P.C. in the amounts of $2,490.78 and Square Synagogue Transportation in the amount of $500, plus statutory interest and attorney’s fees as provided by Insurance Law § 5106 (a) and the regulations promulgated thereunder, as well as costs and disbursements. Defendant is awarded summary judgment dismissing the remainder of the claims.

[*1]

Civil Court of the City of New York, Kings County, February 8, 2006

APPEARANCES OF COUNSEL

Baker, Strauss, Barshay & Grossman for plaintiff. Rubin & Fiorella, LLP, for defendant.

OPINION OF THE COURT

Eileen N. Nadelson, J.

This matter presents an issue of first impression with respect to civil procedure in New York. The question concerns the ability of a court to declare a mistrial sua sponte over a party’s objections when it becomes impossible for the trial judge at a bench trial to continue hearing the matter.

The instant action was commenced as a first-party claim for benefits under New York’s No-Fault Insurance Law. Although the original claim involved multiple bills, during the proceedings all but one bill were settled out by the parties. After the close of plaintiff’s case-in-chief, during a recess in the proceedings for the end-of-year holidays, the presiding judge was informed by the Office of Court Administration (OCA) that she was being reassigned from civil to criminal court, and that all pending matters were to be turned over to the supervising judge of the civil court for reassignment to other judges. This reassignment was unexpected and unanticipated.

Because evidence had already been heard, the judge was given permission to remain in civil court for an extra week to complete the trial; however, despite the best efforts of all the participants, it was impossible to conclude the case. The trial judge was then required by OCA to assume her duties in the criminal court. A mistrial was then declared by the court.

CPLR 4402 states that “[a]t any time during the trial, the court, on motion of any party, may order a continuance or a new trial in the interest of justice on such terms as may be just.”

In the instant matter, neither party moved for a new trial or a mistrial, and the determination that a mistrial was necessary was made by the court. With respect to motions for mistrials, the law is clear that the decision as to whether or not to grant a new trial lies in the [*2]discretion of the court, when it appears that owing to some accident or surprise, defect of proof, unexpected and difficult questions of law, or like reason, a trial cannot proceed without injustice to a party. (Matter of Bank of N.Y. v Assessor of Vil. of Bronxville, 4 Misc 3d 1014[A], 2004 NY Slip Op 50874[U] [Sup Ct, Westchester County 2004].) Unfortunately, there are no judicial decisions, with regard to civil law matters, that provide guidance as to which circumstances would require or permit a court to declare a mistrial on its own initiative. However, there are several criminal law cases that do address this knotty problem.

In People ex rel. Brinkman v Barr (248 NY 126 [1928]), the New York Court of Appeals permitted the court to declare a mistrial when the judge before whom a criminal case was pending became too ill to appear in court or continue the trial. The request for the mistrial came from the judge himself. Therefore, it appears a judge’s physical incapacity may be a valid basis for the court to declare a mistrial.

In Matter of Romero v Justices of Supreme Ct., Queens County (237 AD2d 292 [2d Dept 1997]), the court was permitted to declare a mistrial when a juror failed to return for deliberations and could not be contacted. The appellate court stated that the trial court could not reasonably be required to order an indefinite continuance, but was justified in concluding that there was no acceptable alternative to a mistrial. In this instance, because the trier of fact was unavailable to complete the trial, a mistrial was deemed to be the appropriate course of action.

Pursuant to Federal Rules of Criminal Procedure rule 25, if by reason of death, sickness or other disability the judge before whom a jury trial has commenced is unable to proceed with the trial, any other judge regularly sitting in or assigned to the court, upon certifying familiarity with the record, may proceed with and finish the trial.

New York has no rule comparable to this federal rule. However, according to section 21 of the Judiciary Law, a judge “shall not decide or take part in the decision of a question, which was argued orally in the court, when he [or she] was not present and sitting therein as a judge.”

This section of the Judiciary Law has been interpreted, with respect to criminal matters, to prohibit a substitution of judges at hearings where testimony is presented, not to a jury, but to the court, and the substituted judge is called upon to render a decision based on an evaluation of testimony which he or she did not hear. (See, e.g., People v Cameron, 194 AD2d 438 [1st Dept 1993].) Consequently, it would appear that the Judiciary Law would prevent a substitution of judges after evidence has begun at a nonjury trial. (People v Thompson, 158 Misc 2d 397 [Sup Ct, Queens County 1993].) [*3]

In the instant case, because it is a bench trial, it would be seemingly improper for a substituted judge to render a decision based on evidence he or she did not hear, given by witnesses whose credibility he or she could not evaluate. Therefore, because a different judge could not be allowed to continue the trial, the only question is whether the trial judge’s reassignment constitutes a sufficient unexpected disability to warrant the declaration of a mistrial.

At least one court has determined that the fact that the court’s term was shortly to end did not require the declaration of a mistrial, because there were several other courses of action available. (That court failed to enumerate exactly what those courses of action might be.) That court stated that in order to declare a mistrial, a court must find a manifest necessity not founded upon its own convenience. (Matter of Delcol v Dillon, 173 AD2d 704 [2d Dept 1991].) This case is distinguishable from the instant matter, in which the trial judge requested to remain with the case but was unable to do so because of administrative exigencies.

In the case at bar, the trial judge was able to stay her reassignment for one week, which the parties asserted would be a sufficient amount of time in which to conclude the presentation of all of the evidence. Unfortunately, the parties were mistaken, and the trial could not be completed within this time frame. No other judge could be substituted, it was not possible for the judge to further delay her duties in a different court, although she was willing to do so, and an indefinite continuance until the judge might be reassigned back to civil court would be impracticable. As a consequence, in the interests of justice, the court had no alternative but to declare a mistrial.

Civil Court of the City of New York, Bronx County

74244/03

Lizbeth González, J.

The plaintiff is a medical provider who seeks payment for no-fault medical services rendered to the assignor. The claim was rejected by the defendant-insurer on the ground of lack of medical necessity. At trial, the plaintiff’s bills were not accepted into evidence pursuant to CPLR 4539(b) because its computer copies, unlike the originals, were unsigned. The defendant’s interrogatories, however, establish that the plaintiff’s bills were received and that a deficiency in the amount of $1261.81 remains outstanding. The defendant, which produced no witnesses, argues that the claim should be denied because the plaintiff failed to introduce into evidence an assignment of benefits as part of its prima facie case. This Court is compelled to follow the authority of the Appellate Term, First Department, which recently held that an insurer’s failure to object to the adequacy of a plaintiff’s no-fault claim form within 10 days of receipt waives any defenses based thereon, including any deficiencies in the assignment of benefits. (Laufer v Lumberman’s Mutual Casualty Co., NYLJ, Oct. 17, 2005, at 27, col. 1 .) The defendant, which failed to introduce its denial into evidence, concedes that no objection to the plaintiff’s omission of its assignment was raised.

After careful consideration, this Court determines that the plaintiff met its prima facie burden by a preponderance of the credible evidence. The Clerk of the Court is directed to enter judgment for the plaintiff in the amount of $1261.81 together with statutory interest, attorney’s fees and costs.

This constitutes the decision and judgment of the Court.

Dated:January 5, 2006

So ordered,

_________________________________

Hon. Lizbeth González

Civil Court of the City of New York, Kings County

095837/04

Delores J. Thomas, J.

Petitioner, a medical services provider seeks to vacate a master arbitration award pursuant to CPLR § 7511.

Petitioner alleges that the lower arbitrator denied its claim in a decision rendered on or about March 29, 2004. Thereafter, petitioner sought to have that determination reviewed and in a decision dated June 17, 2004, the Master Arbitrator denied the request for review on the basis that the appeal was untimely. Specifically, the Master Arbitrator found that petitioner’s Notice of Appeal was postmarked April 20, 2004 (evidenced by the post mark on the envelope sent to defendant enclosing petitioner’s April 13, 2004 Notice of Intent to Appeal the lower arbitrator’s decision) and stamped received by the American Arbitration Association (“AAA”) on April 26, 2004. The Arbitrator found that as the lower award was mailed to the parties on March 29, 2004, both the April 20th mailing and the April 26th receipt date by AAA were past the twenty one (21) calendar days time frame in which the appeal had to be filed (11 N.Y.C.R.R.§ 65-4.10 [d] [2]).

Attached to the Notice of Petition is an affirmation from petitioner’s legal counsel. Counsel argues that the Notice of Appeal was timely “deposited” on April 19, 2004 and that the case should be determined on the merits. The remainder of petitioner’s counsel’s affirmation concerns the standard for reviewing arbitration awards, the necessary prima facie showing for health benefit claims and the effect of late or unsubstantiated denials by insurance carrier.

Respondent opposes the Notice of Petition and seeks its denial on several basis. First, the [*2]papers are defective in that there is no petition in support of the Notice of Petition; second, petitioner has failed to set forth valid grounds under CPLR § 7511 to review and vacate the decision; third, petitioner accepted partial payments rendered by the lower arbitrator (i.e. accord and satisfaction); and fourth, petitioner has not exhausted its administrative remedies and offers no excuse as to why it filed a late intent to appeal. In the alternative, respondent argues that in the event the lower arbitrator’s award can be reviewed, there is no basis to disturb it as the finding of facts was neither arbitrary or capricious and was supported by the weight of the evidence.

Regulations promulgated under New York State Insurance law require any request for review of an arbitration award by a Master Arbitrator be made “within 21 calendar days of the mailing of the appealable award” (11 N.Y.C.R.R. §65.-4.10[d][2]. The regulations provide that: “[t]he parties shall accept as delivery of the [arbitrator’s] award the placing of the award or a true copy thereof in the mail, addressed to the parties or their designated representatives at their last known address, or by any other form of service permitted by law. The AAA shall note on such award or transmittal letter thereof the date of mailing and keep a record of same” (11 N.Y.C.R.R.§ 65.17[b][5][xix]; see also, Calandro v. Home Insurance Co., 199 AD2d 262 [2d Dept 1993]).

Undeniably, the Master Arbitrator must initially determine if a request for review was timely made (see, Calandro v. Home Insurance Co., supra; Custen v. General Accident Fire and Life Ins. Co., 126 AD2d 256 [2d Dept. 1987]; Better Health Medical, P.C. v. M.V.A.I.C., 6 Misc 3d 1021 [A][Civ. Ct., Kings Co., 2005]; see also, Berent v. Erie County, 86 AD2d 764 [4th Dept. 1982]) and, if it was not timely, the Master Arbitrator must deny the request for review (Id.).

Since the Master Arbitrator clearly has the authority to deny the request to review upon the ground that it is untimely, in such a case “the Master Arbitrator shall in lieu of rendering an award, deny the request for review” (see, Berent v. Erie County, supra). Therefore, a precondition to judicial review pursuant to CPLR Article 75 is review of a no-fault arbitrator’s award by a Master Arbitrator (see, Ins. Law 5106[c]; Custen v. General Accident Fire and Life Ins. Co., supra). Furthermore, the Courts have recognized that the failure of a party to a “no-fault” arbitration to timely appeal to a Master Arbitrator constitutes a failure to exhaust his or her administrative remedies thereby precluding that party from obtaining judicial review of the arbitrator’s award (Custen v. General Accident Fire and Life Ins. Co., supra).

In the instant case, prior to issuing his decision, the Master Arbitrator via letter dated May 11, 2004 (Affirmation In Opposition, Exhibit E) gave petitioner an opportunity to submit a legal basis for extending the time requirements set forth in 11 N.Y.C.R.R. § 65-4.10(d)(2). Petitioner’s response was a letter dated May 26, 2004 (Affirmation In Opposition, Exhibit F) in which petitioner set forth no legal basis for extending the time or made any allegation that the request to review/appeal was mailed other than the date indicated by the post mark on the envelop submitted to the Master Arbitrator. Instead, petitioner argued a lack of authentication as to the date the lower arbitration decision was dated. More specifically, petitioner responded, “…there is no evidence to suggest that the Appellant in this case did not comply with the applicable no-fault regulations.”

Based upon the May 26, 2004 response, petitioner never averred as it does now to the Court that the request to review was “deposited” for mailing on April 19, 2004 instead of the April 20, 2004 postmark on the envelope in which the request was mailed to defendant, [*3]therefore, even assuming that this bare self serving assertion was sufficient to raise a question of mailing, this Court could not consider it as evidence because the allegation was not raised before the Master Arbitrator (see generally, Calandro v. Home Ins. Co, supra; Berent v. Country of Erie, supra).

The Court finds that petitioner has failed to demonstrate a ground pursuant to CPLR

§ 7511 to vacate the Master Arbitrator’s decision. The Court further finds that the Master Arbitrator’s determination that petitioner failed to timely appeal the lower arbitration award was not arbitrary or capricious nor a violation of petitioner’s due process rights. As petitioner failed to exhaust administrative remedies by timely appealing to the Master Arbitrator, the Court may not consider whether the lower arbitrator’s award was incorrect as a matter of law (Calandro v. Home Ins. Co., supra; Better Health Medical, P.C. v. M.V.A.I.C., supra).

Accordingly, the petition to vacate the Master Arbitrator’s award is dismissed. Notably as pointed out by respondent the Notice of Petition must be accompanied by a Petition and any supporting affidavits /affirmation’s (see CPLR § 403); however, even assuming petitioner had complied with the statutory requirements, the petition based upon the facts asserted herein would be denied for the reasons stated above; therefore the Court resolves this matter on its stated reasons and need not further address the other arguments raised by respondent.

This constitutes the decision and order of the Court.

DATED: December 22, 2005

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court

Civil Court of the City of New York, Queens County

128116/2004

For Plaintiff: Belesi & Conroy, P.C., by Wayne H. Wink, Jr., Maria Campese Diglio, Kathleen Ann Marshall, Esqs., 1225 Franklin Avenue, suite 400, Garden City, New York 11530

For Defendant: Bruno, Gerbino & Soriano, LLP, by James K. Hogan, Jeffrey S. Siegel, Vincent F. Gerbino, Oko Acquaye, Esqs., 445 Broad Hollow Road, suite 220, Melville, New York 11747

Charles J. Markey, J.

Before this Court are 12 actions seeking no fault first class benefits, involving motions for summary judgment involving plaintiff Multiquest, P.L.L.C. , and assorted cross-motions, all raising principally the same issue: should the decision of the New York Court of Appeals in State Farm v. Mallela, 4 NY3d 313 [2005] [also known in the no fault bar as “Mallela III“] be applied prospectively or retroactively. That case denied no fault benefits to plaintiff providers that were organized fraudulently. This Court has invited briefing, and, in addition to the papers on the various motions and cross motions in the 12 Multiquest actions, studied the various memoranda of law submitted by both counsel, meant to be read in all 12 actions.

In this particular action involving Multiquest, surrounding services provided to Maria Mercedes during 1999, prior to the adoption of 11 NYCRR 65-3.16(a)(12) [effective April 4, 2002]. That regulation hinges reimbursement for services based on compliance and adherence with licensing requirements.

It is a tribute to all the Judges of the Civil Court, Queens County, that although they have reached different conclusions on the issue, their opinions this year have been on the leading edge, setting the contours of the debate. The highly articulate, cogent, and well-written opinion of Judge Anna Culley in A.T. Medical, P.C. v. State Farm Mut. Ins. Co. (___Misc 3d ____, 2005 WL 2837509, 2005 NY Slip Op 254610) reasons that public policy concerns warrant denial of claims made by corporate malefactors who organize their enterprises in violation of existing law (accord, Metroscan Imaging, P.C. v. Geico, 8 Misc 3d 829 [Bernice Siegal, J.]; Multiquest , PLLC v. Allstate Ins. Co., ___Misc 3d ____, 2005 WL 2085966, 2005 NY Slip Op 25356 [Dennis Butler, J.]). Judges Culley, Siegal, and Butler of this Court thus hold that Mallela III should be applied retroactively.

In contrast, my colleague, Judge Joseph Esposito, in Multiquest, PLLC v. Allstate Insurance Co. (____ Misc 3d ___, 2005 WL 3274885, 2005 NY Slip Op 25512), in his characteristic penetrating and tight analysis, concluded that Mallela III should not be applied [*2]retroactively, especially since only a regulation is involved.

The two differing views of my colleagues both deserve attention by students of the issue because of the fine arguments made therein. In the final analysis, the undersigned agrees with Judge Esposito’s recent decision that Mallela III should not be applied retroactively.

In addition to all of the reasons stated by Judge Esposito, this Court believes that if the Court of Appeals had wanted to provide a rule of retroactivity, it was fully informed of the issue at the oral argument of Mallela III and could have determined the issue in its opinion. Of course, many reasons may play into why a court does not discuss a certain argument. Sometimes in the hope of winning unanimity or a majority, compromises are made in forging judicial consensus. Other times, an appellate court will want to see how lower courts treat an issue, thereby benefiting from their thoughts, and to see, by experience, whether any division has, indeed, occurred among lower courts.

In the present case, this Court believes that the Court of Appeals was aware of the fact that, if a rule of retroactivity were to be announced, insurers would be filing motions in thousands of no fault cases, seeking to recapture payments already made. The Court of Appeals probably thought of this possibility and decided not to stimulate such unbridled litigation to already congested motion calendars in the no fault parts.^[FN1]

Second, to apply a rule of retroactivity, in the present circumstance, should not be done lightly. Despite the method of questionable, improper, and even unethical incorporation of a plaintiff provider, services were allegedly furnished, consistent with the public policy of this State, in the expectation that a claim would be filed and that payment would be made expeditiously. Thus, as the undersigned noted in Metropolitan Radiological Imaging, P.C. v. State Farm Mut. Auto. Ins. Co. (7 Misc 3d 675, 677 [NYC Civ Ct Queens County 2005]): “The “No Fault Law” replaced the common law right to seek tort recovery with a statutory system designed to provide a quick, sure and efficient system for obtaining compensation for economic loss suffered as a result of [automobile] accidents’ (Walton v. Lumbermens Mut. Cas. Co., 88 NY2d 211, 214 [1996]).”

For a court to adopt a rule of retroactivity, under the facts of the particular circumstances, would be tantamount to imposing a rule alienating a property right. The rights of plaintiff health care providers that provided services in the expectation of filing a claim under a statutory system for the quick, expeditious handling and processing of claims would be subverted. As shown, resort to public policy principles can be a two-edged sword.

This Court holds that Mallela III should not be applied retroactively. The defendant’s motion for summary judgment is, in all respects, DENIED.

The foregoing constitutes the decision, order, and opinion of the Court.

______________________________[*3]Hon. Charles J. Markey

Judge, Civil Court, Queens County

Dated: Jamaica, New York

December 20, 2005

Footnotes

Footnote 1: In Socrates Psychological Servs., P.C. v. Progressive Cas. Ins. Co. (7 Misc 3d 642, 645 n.1 [NYC Civ Ct Queens County 2005], the undersigned noted that adjournments of routine motions in the specially created No Fault Parts already require waits of almost a year!

Civil Court of the City of New York, Kings County

119832/05

Eric Gil, Esq. of Gary Tsirelman, PC, 4022 18th Avenue, Brooklyn, NY 11218, appeared for petitioners.

Sandy Jainauth-Barone, Esq. of Chesney & Murphy, LLP, 2305 Grand Avenue, Baldwin, NY 11510, appeared for the respondent.

Delores J. Thomas, J.

Petitioner, a provider of medical goods seeks to recover first party no-fault benefits for medical equipment provided to its assignor. Petitioner filed a request for Arbitration. An arbitrator designated by the American Arbitration Association (“AAA”) issued a decision April 12, 2004 with the date of mailing shown as April 26, 2004 whereby the claim was denied without prejudice pending a determination of the issue of employment by the Worker’s Compensation Board.

At issue before the Arbitrator was petitioner’s claim for reimbursement for medical supplies provided to treat its assignor for injuries sustained in an automobile accident on March 4, 2001. At the hearing, respondent, after failing to deny the claim or to make timely evidentiary submission, raised the question as to whether the assignor was working at the time of the accident. Respondent also sought to submit a police accident report. Both parties were given the opportunity to make a post-hearing submission in regards to whether good cause existed to permit respondent’s late submission. Respondent made the submission but petitioner did not.

Upon reviewing the documents submitted by petitioner in support of its claims and those submitted by respondent, the arbitrator determined that the workers’ compensation defense was a [*2]well recognized exception to the rule precluding defenses if not raised in a timely denial of claim. The arbitrator further determined that the evidence presented “at least minimal proof of the indicia of employment (citing Arvatz v. Empire Mutual Ins. Co., 171 AD2d 262 [1st Dept. , 1991] which held that upon proper showing, Worker’s Compensation Board and not arbitration is the proper forum for deciding the issue of whether the insured was injured in the course of employment).

Petitioner, thereafter filed a timely request for review by a Master Arbitrator alleging that the lower arbitrator’s decision was arbitrary, capricious, irrational and without a plausible basis.

In a decision dated September 20, 2004 and showing a mailing date of September 30, 2004, the Master Arbitrator upheld the lower arbitration decision finding that the arbitrator had a sufficient basis to deny the claim pending a determination of the employment issue by the Worker’s Compensation Board. The Master Arbitrator therefore determined that the lower decision had a rational basis and was neither arbitrary or capricious nor incorrect as a matter of law. The lower arbitration decision was affirmed.

Petitioner argues that the lower arbitrator erred in allowing respondent to raise at the hearing the defense that the assignor was working at the time of the accident where petitioner had established its prima facie case, i.e. proper submission of its bills and respondent had failed to timely deny the bills. Petitioner argues respondent was therefore precluded from raising that defense at the hearing.

In its Affirmation in Opposition and Notice o Motion to Dismiss the Petition, respondent argues that its defense that the assignor was injured while engaged in employment is a denial of coverage defense and therefore not precluded by the fact that it failed to timely deny the claim. Respondent further asserts that as issues of employment must first be decided by the Worker’s Compensation Board, the lower arbitrator acted properly in determining that it had presented sufficient proof to require that the claim be denied pending a determination of the issue by the Worker’s Compensation Board. Respondent further argues that the Master Arbitrator’s award affirming this decision was based upon a proper exercise of discretion and was grounded on a rational application of the law and the decision was neither arbitrary or capricious.

Judicial review of a Master Arbitrator’s award “is restricted, by the terms of the statute, to the grounds for review set forth in article seventy five’ of the CPLR, specifically § 7511 (Petrofsky v. Allstate Insurance Company, 54 NY2d 207 [1981]).

Section 7511 (6) sets forth the following grounds for vacating an award:

(i)corruption, fraud or misconduct in procuring the award; or

(ii)partiality of an arbitrator appointed as a neutral; except where the award was by conversion; or

(iii)an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

(iv)failure to follow the procedures of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect [*3]and without objection.

In cases of compulsory arbitration, such as no-fault claims, the court has held that CPLR Article 75 includes review of whether the award is supported by evidence or other basis in reason (Mount St. Mary’s Hosp. of Niagara Falls v. Catherwood, 26 NY2d 493, 508 [1970]); arbitrary and capricious (Caso v. Coffy, 41 NY2d 153, 158 [1976]) ; and whether the decision was rational or had a plausible basis (Caso v. Coffy, supra ).

Unlike the court, a Master Arbitrator in reviewing the award rendered by the lower arbitrator is not limited to the grounds set forth in CPLR § 7511 but may look to rules promulgated by the Superintendent of Insurance in 11 N.Y.C.R.R. 65.17 and developed by case law (see, Petrofsky v. Allstate Ins. Co., supra ; Mount St. Mary’s Hosp. of Niagara Falls v. Catherwood, supra ,; Caso v. Coffy, supra ,).

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 ).

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 workers compensation defense was not precluded by respondent’s failure to timely deny the 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 those findings. The Master Arbitrator’s award therefore was neither arbitrary, capricious, irrational or without a substantial or plausible basis.

Accordingly, the petition is dismissed. Respondent’s motion to dismiss the petition is granted to that extent only.

This constitutes the decision and order of the Court.

DATED: December 16, 2005

Brooklyn, New York

DELORES J. THOMAS

Judge Civil Court

[*1]

Civil Court of the City of New York, Queens County, December 1, 2005

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville (James K. Hogan of counsel), for defendant. Belesi, Donovan & Conroy, P.C., Garden City (Wayne H. Wink, Jr., of counsel), for plaintiff.

OPINION OF THE COURT

Joseph J. Esposito, J.

Ordered that upon the foregoing cited papers and after conference, defendant’s motion for summary judgment is denied.

This action was commenced by plaintiff to recover overdue no-fault payments under the provisions of Insurance Law § 5101 et seq., and its implementing regulations. The services that are the subject of this action were provided by plaintiff to its assignor on December 7, 1999 and December 16, 1999.

Defendant moves for summary judgment dismissing plaintiff’s action. The primary basis for such relief asserted by defendant, and the only one for which defendant has submitted any admissible evidentiary support, is the allegation that the plaintiff, Multiquest, PLLC, was fraudulently organized at the time the services were rendered to the assignor and it is therefore not entitled to recover on this claim for no-fault benefits. Defendant’s evidence in support consists of a copy of Multiquest’s articles of organization listing Yeugeny Gorbatov and Kathryn Clark, a licensed psychologist, as “original members and original managers,” as well as other corporate documents and a copy of a certified transcript of the April 26, 2004 examination under oath of Kathryn Clark. Ms. Clark states in her testimony that she was never an owner or member of Multiquest and that her name was used [*2]without her knowledge or consent.

Though not specified by the defendant’s attorney’s affirmation in support of this motion, defendant’s primary argument appears to rely on 11 NYCRR 65-3.16 (a) (12) (eff Apr. 4, 2002) which states:

“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 necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.”

In State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005] [Mallela III]), the New York Court of Appeals was presented with the following certified question from the United States Court of Appeals for the Second Circuit.

“Is a medical corporation that was fraudulently incorporated under N.Y. Business Corporation Law §§ 1507, 1508, and N.Y. Education Law § 6507 (4) (c) entitled to be reimbursed by insurers, under New York Insurance Law §§ 5101 et seq. and its implementing regulations, for medical services rendered by licensed medical practitioners?” (State Farm Mut. Auto. Ins. Co. v Mallela, 372 F3d 500, 510 [2004] [Mallela II].)

The Court of Appeals, relying on 11 NYCRR 65-3.16 (a) (12), answered the certified question in the negative, stating, “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.” (Id. at 321.)

The Court of Appeals however left unanswered the question of whether 11 NYCRR 65-3.16 (a) (12) is applicable to claims accruing prior to the effective date of this section. The Mallela III decision addresses this issue only to the extent of stating that “[b]ecause we rest our holding on the Superintendent’s amended regulation declaring fraudulently licensed corporations ineligible for reimbursement, no cause of action for fraud or unjust enrichment would lie for any payments made by the carriers before that regulation’s effective date of April 4, 2002.” (Id. at 322.) This statement by the Court of Appeals addresses only whether an insurer would have a cause of action to recover payments already made to the illegally incorporated medical provider, but leaves open the question of whether the section is applicable to unpaid claims that accrued prior to April 4, 2002.

It is this court’s determination that 11 NYCRR 65-3.16 (a) (12) is not retroactively applicable to any claim for treatment provided prior to April 4, 2002. The Mallela II court discusses but does not decide this issue. (See State Farm v Mallela, 372 F3d 500, 508 [2004].) “Retroactivity is not favored in the law. Thus . . . administrative rules will not be construed to have retroactive effect unless their language requires this result.” (Matter of Good Samaritan Hosp. v Axelrod, 150 AD2d 775, 777 [2d Dept 1989], quoting Bowen v Georgetown Univ. Hospital, 488 US 204, 208 [1988].) “There is a presumption that legislative rules are to be applied only prospectively.” (Matter of Linsley v Gallman, 38 AD2d 367, 369 [3d Dept 1972].) Based on the holdings in Good Samaritan and Linsley, and in the absence of any language in 11 NYCRR 65-3.16 (a) (12) suggesting that it should be given retroactive effect, this defense is unavailable for any claim arising from treatment provided prior to April 4, 2002.

The other defenses raised by defendant’s motion papers, specifically allegations of excessive billing [*3]and defects in the assignment of benefits form are unavailable to the defendant as defendant has failed to show that these defenses were properly preserved in a timely denial of the claim (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]) and do not fall within the Chubb exceptions to the 30-day rule (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]).

The court also notes that the defendant’s motion papers are defective in that they do not include a complete copy of the pleadings as required by CPLR 3212 (b). There is no copy of the summons and complaint included within defendant’s moving papers.

Civil Court of the City of New York, Kings County

33857/04

Arlene P. Bluth, J.

Upon the foregoing cited papers and after oral argument, plaintiff moves for summary judgment pursuant to CPLR § 3212. For the following reasons, plaintiff’s motion is denied. [*2]

In this action, plaintiff First Help Acupuncture, P.C. seeks to recover first-party No-Fault benefits in the amount of $3,000.00, plus statutory, interest, costs, and attorneys’ fees, for healthcare services allegedly rendered to its assignor, Zach Glot. Plaintiff argues that defendant failed to timely deny its No-Fault claims. However, because of deficiencies in its supporting affidavit, plaintiff fails to put admissible evidence before this Court sufficient to make out its prima facie case.

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact. See Alvarez v. Prospect Hospital, 68 NY2d 320, 508 NYS2d 923 [1986]. The motion must be supported by an affidavit from a person with knowledge of the facts, setting forth all material facts. See CPLR § 3212(b). If the moving party fails to make such a showing, the motion must be denied, irrespective of the sufficiency of the opposing papers. See De Santis v Romeo, 177 AD2d 616, 576 NYS2d 323 [2nd Dept 1991]. If, however, the moving party sustains its burden, the opposing party must submit evidence of a triable issue of fact in order to defeat the motion. See Rebecchi v. Whitmore, 172 AD2d 600, 568 NYSd 423 [2nd Dept 1991].

In the No-fault context, a healthcare provider establishes 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 NYCRR § 65-3.8(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]. If and only if the plaintiff makes out its prima facie case, the burden shifts to the defendant to raise a triable issue of fact.

In support of this motion, plaintiff submits the affirmation of its attorney and an affidavit from an employee of plaintiff. Also annexed to the motion are various bills and an assignment of benefits for the assignor, and two NF-10 denial forms. These documents are critical to plaintiff’s prima facie case: First, plaintiff needs to submit its completed proof of claims that it alleges have not been paid or timely denied. See Amstel Chiropractic, P.C. v. Omni Indem. Co., 2 Misc 3d 129(A), 784 NYS2d 918 [App Term, 2d and 11th Jud Dists 2004]; Triboro Chiropractic and Acupuncture P.L.L.C. ex rel. Tacopino v. Electric Ins. Co., 2 Misc 3d 135(A), 784 NYS2d 924 [App Term, 2d & 11th Jud Dists 2004]. Second, plaintiff must establish that it actually mailed its claims to defendant. Absent direct proof of mailing, defendant’s denials once properly before the Court are an admission by the insurer that it received the bills, and thus are proof that the bills were mailed. See A.B. Med. Servs. P.L.L.C. v. New York Cent. Mut. Fire Ins. Co., 3 Misc 3d 136(A), 787 NYS2d 675 [App Term, 2nd & 11th Jud Dists 2004]; Willis Acupuncture, P.C. v. GEICO, 6 Misc 3d 1002(A), 800 NYS2d {6 Misc 3d 1002(A)} 359 [Civ Ct, Kings County 2004].

In order for plaintiff’s exhibits to be considered by this Court, the supporting affidavit must lay a proper foundation for their admissibility. “Foundation requirements to qualify a document as a business record fully apply on a motion for summary judgment.” A.B. Med. Servs., P.L.L.C. et al. v Travelers Prop. Cas. Corp., 5 Misc 3d 214, 215, 783 NYS2d 244, 246 [Civ Ct, Kings County 2004]. Plaintiff’s bills are a type of medical office records, and “[m]edical office records are admissible under the business records exception to the hearsay rule, provided a proper foundation is laid for their admissibility.” Faust v McPherson, 4 Misc 3d 89, 91, 783 NYS2d 197, 199 [App Term, 2nd & 11th Jud Dists 2004]. See also Hefte v Bellin, 137 AD2d 406, 524 NYS2d 42 [1st Dept 1988].

A business record is admissible upon proof that (1) it was made in the regular course of business; (2) it was in the regular course of such business to make the record; and (3) the record was made at the time of or shortly after the subject event or transaction. See CPLR § 4518(a); People v. DiSalvo, 284 AD2d 547, 727 NYS2d 146 [2nd Dept 2001]. Only a qualified individual can lay the necessary foundation. See Carrion v McNally & McNally, Inc., 18 AD3d 312, 794 NYS2d 339 [1st Dept 2005]; West Valley Fire District No. 1 v Village of Springville, 294 AD2d 949, 743 NYS2d 215 [4th Dept 2002]; People v DiSalvo, 284 AD2d at 548; Hefte, 137 AD2d at 408. “While it is not necessary that the foundation witness have made the records, or even that he or she be familiar with the particular records in question, it must be shown that the witness has had some familiarity with the doctor’s business practices and procedures.” Faust, 4 Misc 3d at 91. See also Careplus Med. Supply, Inc. v Allstate Ins. Co., 9 Misc 3d 128(A), 2005 NY Slip Op 50525(U) [App Term, 2nd & 11th Jud Dists] (holding that the affidavit of plaintiff’s officer and [*3]billing manager sufficiently “sufficiently set forth his duties so as to support the conclusion that the attached exhibits were sufficiently accurate and trustworthy” to be admitted as business records).

In support of the motion, plaintiff presents the affidavit of Andrey Anikeyev. Although the last paragraph of the affidavit recites that the records were made in the regular course of business at the time the services were rendered, and that it is and was plaintiff’s regular course of business to make such records and submit them to the insurer for payment, Mr. Anikeyev does not describe his familiarity with plaintiff’s record-keeping practices and procedures, or explain his role, if any, in the rendering and mailing of bills and the processing of insurance company payments and denials. He does not even provide his job description or actual job title. Mr. Anikeyev simply writes that he is “an employee of Plaintiff.” That is patently insufficient to establish his competency to lay a foundation for the admission of plaintiff’s bills as business records.^[FN1] For all this Court knows, Mr. Anikeyev could be a security guard in plaintiff’s employ.

A court cannot be expected to assume, trust, or infer from an affidavit that the affiant is qualified to lay a foundation for annexed exhibits. The conclusory statement “I have personal knowledge” is not enough particularly where, as here, the affiant is not an individual litigant (i.e., a party to the lawsuit) but an undenominated employee of a party. The witness or affiant must disclose not only what he knows but also the source of his knowledge. See Carrion v McNally & McNally, Inc., 18 AD2d 312, 794 NYS2d 339 [1st Dept 2005]; A.B. Med. Servs., P.L.L.C., et al. v Travelers Prop. Cas. Corp., 6 Misc 3d 53, 791 NYS2d 264 [App Term, 2nd & 11th Jud Dists 2004]; Ocean Diag. Imaging, P.C. v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 141(A), 798 NYS2d 346 [App Term, 9th & 10th Jud Dists 2004]. The affidavit submitted by plaintiff falls short of what is required.

Nor is the affirmation of plaintiff’s counsel to any avail. It is axiomatic that the affirmation of a party’s attorney “who lacks personal knowledge of the essential facts, is of no probative value and is insufficient to support an award of summary judgment . . . .” Peters v. City of New York, 5 Misc 3d 1020(A), 799 NYS2d 163 [Sup Ct, Kings County 2004]. See also Zuckerman v. City of New York, 49 NY2d 557, 427 NYS2d 595 [1980]; Lupinsky v. Windham Constr. Corp., 293 AD2d 317, 739 NYS2d 717 [1st Dept 2002]; Amaze Med. Supply, Inc. v. Allstate Ins. Co., 3 Misc 3d 133(A), 787 NYS2d 675 [App Term, 2nd and 11th Jud Dists 2004]. Plaintiff’s attorney has not claimed any personal knowledge regarding the rendering or mailing of the plaintiff’s bills and the receipt of the denials. Moreover, while an attorney’s affirmation may serve as a vehicle for introducing documents which themselves are in admissible form, such as deposition transcripts (see Zuckerman, 49 NY2d at 563), those are not the circumstances here.

For the foregoing reasons, plaintiff has failed to make out its prima facie case. Therefore, plaintiff is not entitled to summary judgment and 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

[*4]ASN by__________ on __________

Footnotes

Footnote 1: Although the Court need not reach the issue of whether plaintiff has laid a proper foundation to admit defendant’s denials, the Court notes that Mr. Anikeyev cannot possibly be said to have laid a foundation for their admission since his affidavit makes no reference to them. Instead, it merely states: “Defendant failed to issue timely denials and/or timely verification requests.”

Civil Court of the City of New York, Queens County

086471/04

Howard G. Lane, J.

Plaintiff commenced this action to recover first-party no-fault benefits for medical services rendered to its assignor Katina Johnson pursuant to New York’s No-Fault Insurance Law § 5101 et. seq., as well as statutory interest and attorney’s fees. Thereafter, defendant moved for summary judgment on the ground that plaintiff’s claims for No-Fault benefits is not overdue and that this action is premature. Plaintiff cross-moved for summary judgment on its claims in the amount of $759.00, 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].

SUMMARY JUDGMENT STANDARD

The rule governing summary judgment requires the proponent of a summary judgment motion to make a prima facie showing of entitlement to judgment as a matter of law, tendering admissible evidence to eliminate any material issues of fact from the case (Winegrad v. New York University Medical Center, 64 NY2d 851 [1985]; Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]; Tortorello v. Carlin, 260 AD2d 201 [1st Dept 1999]). Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Matter of Redemption Church of Christ v. Williams, 84 AD2d 648; Greenberg v. Manlon Realty, 43 AD2d 968).

If the moving party satisfies those standards, the burden shifts to the opponent to rebut that prima facie showing by presenting evidence in admissible form establishing the existence of triable issues of fact (see, CPLR §3212, subd [b]; Zuckerman v. City of New York, 49 NY2d 557 [1980]; Davenport v. County of Nassau, 279 AD2d 497 [2d Dept 2001]; Pagano v. Kingsbury, 182 AD2d 268 [2d Dept 1992]; Kaufman v. Silver, 90 NY2d 204 [1997]). It is well settled that summary judgment should be denied if there is any doubt as to the existence of a triable issue of fact (Freese v. Schwartz, 203 AD2d 513 [2d Dept 1994]).

When deciding a motion for summary judgment, the court must review the [*2]evidence in the light most favorable to the non-moving party, and must give that party all of the reasonable inferences that can be drawn from the evidence (Louniakov v. M.R.O.D. Realty Corp., 282 AD2d 657 [2d Dept 2001]; SSBSS Realty Corp. v. Public Service Mut. Ins. Co., 253 AD2d 583[1st Dept 1998]).

DEFENDANT’S MOTION AND PLAINTIFF’S CROSS-MOTION FOR SUMMARY JUDGMENT.

Pursuant to both the Insurance Law and the regulations promulgated by the Superintendent of Insurance, within thirty [30] days after a claimant submits proof of the facts and the amount of loss sustained, an insurer is required to either pay or deny a claim for insurance coverage of medical expenses arising from a motor vehicle accident (see, 11 NYCRR §65.15 [g] [3]; Central Gen. Hosp. v. Chubb Group of Ins. Co., 90 NY2d 195 [1997]; Mount Sinai Hosp., v. Triboro Coach, 263 AD2d 11 [2d Dept 1999]; New York Hosp. Med. Center of Queens v. Country-Wide Ins. Co., 295 AD2d 583 [2d Dept 2002]).

The only exception to the 30 day rule is where an insurer’s untimely denial is based upon the defense of lack of coverage, or where a medical condition for which the patient was treated, was not “related to the accident”. Chubb, supra. To withstand a motion based on this defense, the insurer has the burden to come forward with proof in admissible form to establish “the fact” or the evidentiary foundation for its belief that the patient’s treatment was unrelated to the accident (Metro Med. Diagnostics, P.C., v. Eagle Ins. Co., 293 AD2d 751 [2d Dept 2002]).

Within 10 business days after receipt of the completed no-fault application (NF-2), the insurer must forward verification forms for healthcare or hospital treatment (NF-3, NF4 or NF-5) to the injured party or that party’s assignee. After receipt of the completed verification of healthcare or hospital treatment form, the insurer may seek “additional verification” or further proof of claim from the injured party or that party’s assignee within 15 business days thereof. 11 NYCRR §65-3.5(b). Hence, the 30 day period may be extended by a request for verification. See, New York Hosp. Med. Ctr. of Queens v. Country-Wide Ins. Co.,supra; Presbyterian Hosp. in the City of New York v. Maryland Cas. Co., 90 NY2d 279 [1997]).

If the requested verification has not been supplied to the insurer within 30 calendar days, after the original request, the insurer shall issue within 10 calendar days of the insured’s failure to respond a follow-up request “either by telephone call, properly documented in the file, or by mail.” See 11 NYCRR §65-3.6(b), now 15 days per 11 NYCRR §65-3.5 [b]; S&M Supply v. Allstate Insurance Co., 2003 NY Slip Op 51191 [U] [App Term, 2d & 11th Jud Dists]. “An insurer shall not issue a denial of claim form . . . prior to its receipt of verification of all of the relevant information requested . . . “(New York Hosp. Med. Ctr. Of Queens v. Country-Wide Ins. Co., supra at 585. Glassman D.C., PC v. State Farm Mut. Auto. Ins. Co., 192 Misc 2d 264 [App Term, 2nd & 11 Jud [*3]Dists 2002]).

A legally valid basis for denying a first party benefit claim would be the provider’s assignor failing to comply with an insurer’s requests for verification. See generally, Lopedote v. General Assurance Company, 2004 NY Slip Op 50593[U] [Kings Co. Civil Ct. 2004]. However, any party required to provide verification information must be afforded adequate and proper notice of the request. See generally, Star Medical Services, P.C. v. Allstate Ins. Co., 5 Misc 3d 785 [Kings Co. Civil Ct. 2004].

Failure to pay or deny a claim within the 30-day period requirement, absent a request for additional verification, renders benefits “overdue,” and precludes the insurer from disclaiming liability based on a breach of a policy condition or a statutory exclusion defense (Presbyterian Hosp. in City of New York v. Maryland Cas. Co., 90 NY2d 274 [1997]). All overdue payments bear interest at a rate of 2% per month, and the claimant is entitled to recover attorney’s fees where a “valid claim or portion” was denied or overdue [see, Insurance Law §5106 [a]; Presbyterian Hosp. in the City of New York, supra.

Plaintiff maintains that it is entitled to summary judgment because the defendant failed to pay or deny its claims within 30 days of receipt as required by the Insurance Law §5106 (a). Plaintiff asserts that it submitted to defendant proofs of claims for medical supplies which defendant admits to receiving, that defendant did not request additional verification and that the claim is overdue and owing.

Plaintiff proved that it submitted a timely and proper notice of claim pursuant to the No-Fault statute for medical supplies provided, which defendant acknowledged receiving, 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 Dists); Park Health Center v. Prudential Prop. and Cas. Ins. 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., supra. Defendant asserts that it received the bills at issue on August 20, 2002, “printed” and then mailed a request for additional verification on August 30, 2002, and after receiving no response from plaintiff, followed up with a second written request on September 30, 2002. Plaintiff did not admit to receiving the request for verification. Defendant asserts that the requests for verification were timely sent to plaintiff and establish defendant’s right to a tolling of the 30-day period by its verification requests.

In support of its motion defendant submits copies of the alleged verification request addressed to plaintiff, and proof of mailing of its request for verification (S & M Supply, Inc. v. GEICO, 2003 NY Slip Op 51192[U] [App Term, 2d & 11th Jud Dists 2003]). Specifically, defendant proffers the affidavit of Linda Phillips, a litigation representative employed by defendant who avers in her affidavit in support of defendant’s motion for summary judgment that “[w]ith respect to the mailing of the . . . [*4]verification requests, my office mailed same in accordance with its normal practice and procedure, followed in the regular course of my office’s business. . .” She further avers that “[s]uch request includes the specific claim information and bears the date that it is printed. It is then placed in a bin for the daily 1:15 p.m. collection by my office’s internal mail room personnel. The same day, a mail room employee prepares a post paid envelope bearing the same address of the entity that submitted the claim and seals the verification request in the envelope. Also the same day, a carrier from United States Post Office collects, with the mail, the envelope containing the verification request form at 3:30 P.M.” Additionally, she avers that “any verification request form that is placed in the bin for mail room collection after 1:15 p.m. is collected during the next business day’s internal mail collection.”

The court finds the assertions of defendant’s litigation examiner conclusory and such assertions fail to specify either that it was the duty of the litigation examiner to ensure compliance with said office procedures or that the litigation examiner had actual knowledge that said procedures were complied with. (See, Contemp. Med. Diag. & Treatment, P.C. v. GEICO, 6 Misc 3d 137(A), 2005 NY Slip Op 50254[U] [App Term, 2d & 11th Jud Dists 2005]). See also, Amaze Medical Supply v. State Farm Automobile Ins. Co., 8 Misc 3d 139(A), 2005 NY Slip Op 51315(U) [2d and 11th Jud Dists 2005]). As defendant’s papers in support of the motion for summary judgment do not contain an affidavit of someone with personal knowledge that its verification requests were actually mailed, or describing the standard office practices or procedures it used to ensure that such requests were properly addressed and mailed (see, Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679 [2d Dept 2001]), defendant failed to establish by competent evidence that it timely mailed its verification requests, and therefore, the 30-day period within which it was required to pay or deny the claim was not tolled (see, S&M Supply Inc. Co. V. Lancer Ins. Co., 4 Misc 3d 131[A], 2004 NY Slip Op 50695[U] [App Term, 2d & 11th Jud Dists 2004]).

Accordingly, defendant’s motion for summary judgment is denied. Plaintiff’s cross-motion for summary judgment is granted and judgment shall be awarded in favor of plaintiff in the amount of $759.00, together with statutory interest and attorneys fees.

The foregoing constitutes the decision and order of this Court.

Dated, October 24, 2005________________________________

Howard G. Lane

Judge, Civil Court

Civil Court of the City of New York, Bronx County

32861/2005

Julia I. Rodriguez, J.

The actions at issue were commenced by plaintiff/medical providers seeking a money judgment against defendant/insurance carrier for recovery of no-fault medical benefits rendered to its assignor, plus statutory interest and attorneys’ fees. [Insurance Law §5106 et seq; 11 N.Y.C.R.R.R. §65-1.1 et seq.; §65.15[h][1] and §65.17[b][6][v]].

*******

After service of the respective summonses and complaints defendant interposed an Answer alleging numerous affirmative defenses. The defenses relevant to the instant motion(s) included:

(1) Plaintiff has materially misrepresented that a licensed physician was the owner of the plaintiff’s practice with the purpose and intent of inducing Defendant to make payments for medical services which the true owners would not be entitled to receive under the no-fault endorsement of the applicable policies.

(2) The Plaintiff is not a properly licensed facility according to the Business Corporation Law and the Public Health Law, and thus has engaged in the unlawful practice of medicine.

(3) The plaintiff lacks standing to bring the within action as it was controlled, owned, managed and supervised by persons who are not licensed or authorized to own a professional service corporation or authorized to practice medicine in violation of the Business Corporation, Education and Insurance Laws.

(4) Plaintiff is engaged in the unlawful practice of fee splitting in violation of 10 N.Y.C.R.R. §600.9 and the Education Law and Public Law §4500 and therefore is not entitled to recover no-fault benefits.^[FN1]

In accompaniment of each Answer, defendant also served a Demand for Verified Written Interrogatories, a Combined Demand and Notice of Examination Before Trial of the

plaintiff, the agents, servants or employees of said parties having knowledge of the subject matter concerning all of the relevant facts and circumstances in connection with the issues alleged in the plaintiff’s verified complaint.

The Combined Demand sought discovery and inspection of various documents, including but not limited to

the assignment, assignor’s application, bills, copies of all checks and other evidence demonstrating payment received from defendant, complete office notes, all sign-in sheets, plaintiff’s curriculum vitae, plaintiff’s Certificate of Incorporation, and the resume and curriculum vitae of each expert upon whose testimony you will rely upon at the time of trial concerning the subject lawsuit.

Plaintiff’s first response to the Demand for Interrogatories was rejected by defendant as “insufficient and nonresponsive.” Simultaneously with this rejection defendant served a Supplemental Demand for Verified Written Interrogatories and Amended Notice of Examination Before Trial. The amended EBT demand specified two individuals to be deposed: (1) Dr. Dipak Nandi – owner/operator, and (2) Ying-Li – medical provider/acupuncturist.

Thereafter, plaintiffs provided defendant with discovery indicating that Dipak Nandi is a licensed physician and certified acupuncturist, and that he is also sole shareholder in each of the plaintiff/medical corporations. After motion practice to dismiss plaintiffs’ actions for lack of disclosure or to compel plaintiffs to comply with defendant’s discovery demands, said motions were resolved by stipulations which read, in pertinent part:

Plaintiff shall provide responses to defendant’s written discovery demands and supplemental demands pertaining to standing within 60 days, to the extent not already provided: and

Defendant to advise plaintiff in writing within 45 days of receipt of plaintiff’s written discovery responses of a deposition of plaintiff’s alleged owner, Dr. Nandi is required.

Plaintiff reserves the right to move for a protective order regarding Dr. Nandi’s deposition.

********

Before the instant court are nine motions where defendant, Travelers Insurance Company, seeks an order pursuant to §3126 dismissing the actions for plaintiffs’ failure to provide Court-ordered discovery, or in the alternative, for an Order compelling plaintiffs to provide all outstanding discovery and produce Dr. Nandi and Ying-Li to ascertain evidence of the entities’ corporate structure and method of payment and sum of salaries.

The court sua sponte hereby consolidates the motions and respective cross-motions for protective orders in the nine above-reference actions solely for purposes of disposition herewith.

********.

In opposition, plaintiffs present that Dr. Nandi was neither the treating acupuncturist or the individual who submitted the bills in these cases. Plaintiffs submit that they have already provided defendant with incorporation documents, licenses, payroll information and complete responses to defendant’s discovery demands, including plaintiffs’ lease agreements. Plaintiffs contend that the discovery establishes that (1) Dr. Nandi is a licensed medical doctor and that both he and the treating acupuncturists are State-certified; (2) that the plaintiff/medical facilities are lawfully incorporated entities; and (3) that Dr. Nandi owns and operates the plaintiff [*3]corporations and other acupuncture clinics which he is qualified to do under State law.

In its Repl[ies] defendant does not dispute that it has received the relevant corporate documents, medical and acupuncturists’ licenses. However, defendant argues that still outstanding are Dr. Nandi’s and plaintiff/corporations’ tax returns, salary records for Dr. Nandi and his employees, and facility lease agreements between the medical providers and other entities, presumably, management companies. Defendant further argues that the deposition of Dr. Nandi:

. . . is material and necessary to the defense of this action and goes to the heart of the issue in this case, which is whether [the medical providers were] fraudulently incorporated and thus not entitled to no-fault benefits. The information sought is relevant to resolve the issue of whether the ]plaintiffs are] properly licensed to the New York State Business Corporation Law and Education Law as the plaintiff[s] will not be able to collect benefits under the no-fault law if they cannot establish standing [¶8 of Reply].

***********

Before consideration of whether medical providers were fraudulently incorporated and thus not entitled to no-fault benefits, the first issues for the court are whether defendant preserved a defense premised on fraud in any of its denials, and if it did not so, whether the fraud alleged falls within the category of defenses which are not waived by the insurer despite failure to raise it in a timely denial.

It is now settled that an insurer must adhere to a “timely timed process” of denial or waive defenses which are not asserted within 30 days or tolled by the verification process. Presbyterian Hospital in the City of New York v. Maryland Casualty Co., 90 NY2d 274, 660 NYS2d 536, 683 NE2d 1 (1997). [11 N.Y.C.R.R. §§65.15 et seq, 3.5(b)(d)(e), 65-3..6(b), 65-3.8 (a)(1) et seq.] The only exceptions to the 30-day rule to deny or pay the claim are where the insurer’s basis for denying the payment is based on lack of coverage of the policy. Central General Hospital v. Chubb Group of Insurance Companies, 90 NY2d 195, 199, 681 NE2d 413, 659 NYS2d 246 (1997) (a defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident is a lack of coverage defense which is not precluded by an untimely denial). The seminal language in Chubb reads:

. . . The denial of liability based upon lack of coverage within the insurance agreement . . . is distinguishable from disclaimer attempts based on a breach of a policy condition [cites omitted] . . . Strict compliance with the time requirements of both the statute and regulations may be obviated and the preclusion remedy rendered unavailable when denial of claims is premised on a lack of coverage . . . We would not . . . extend this exceptional exemption to excuse [defendant insurer’s] untimely defense in relation to the treatment being deemed excessive by the insurer. That would not ordinarily implicate a coverage matter and, therefore, failure to comply with the Insurance Law time restriction might properly preclude the insurer from a belated rejection of the billing on that basis.

Central General Hospital v. Chubb Group, supra , 90 NY2d 195 at 199.

In this case, none of the denials issued by defendant prior to commencement of these actions alleged a staged accident or lack of coverage, or any scintilla sounding in fraud. Indeed, [*4]the bulk of the denials herein merely stated:

Per New York State Law Regulation 68, “Upon request by the Company, the eligible injured person or someone on his behalf shall:

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

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

(c) provide any other pertinent information, your entire claim No-Fault Benefits is denied.

[sic] DUE TO: FAILURE TO SUBMIT ALL REQUESTED INFORMATION IN A REASONABLE TIME FRAME, LACK OF VERIFICATION AND NON-COOPERATION. THEREFORE, YOUR BILLS [sic] ARE DENIED.^[FN2]

At this juncture of the analysis, defendant is not entitled to depose Dr. Nandi or the treating acupuncturists for the purposes it proposes, because defendant failed to preserve any defense sounding in fee splitting, improper incorporation or licensing in its denial. However, the next inquiry is whether any of these defenses falls within the narrow exception(s) of defenses which are not waived by an untimely denial.

*******

Defendant argues that it is entitled to depose Dr. Nandi because now “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law.” State Farm Mutual Automobile Co. v. Mallela, et al, 4 NY3d 313, 321, 827 NE2d 758, 794 NYS2d 700 (2005).

Mallela concerned a lawsuit filed by State Farm insurance company in the United States [*5]District Court for the Eastern District of New York seeking a judgment declaring that

it need not reimburse defendants – fraudulently incorporated medical corporations – for assigned claims submitted under no-fault. . . . According to the complaint, the unlicensed defendants paid physicians to use their names on paperwork filed with the State to establish medical service corporations. Once the medical service corporations were established under the facially valid cover of the nominal physician owners, the nonphysicians actually operated the companies. To maintain the appearance that the physicians owned the entities, the nonphysicians caused the corporations to hire management companies (owned by the nonphysicians), which billed the medical corporations inflated rates for routine services. In this manner, the actual profits did not go to the nominal owners but were channeled to the nonphysicians who owned the management companies.

The claim was that the medical providers in Mallela were in violation of §§1504 and 1508 of the Business Corporation Law (BCL). BCL §1504(a) states, in pertinent part, that “no professional service corporation may render professional services except through individuals authorized by law to render such professional services as individuals.” The Superintendent of Insurance had determined that insurance carriers may withhold payment of no-fault claims which had been assigned to those medical providers which were owned or controlled by non-physicians. The Superintendent’s regulation is found in Section 65-3.16(a)(12) of 11 N.Y.C.R.R, which reads:.

Measurement of no-fault benefits. (a) Medical expenses.

(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 to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.

One contention by the medical providers in Mallela was that even if they were not in compliance with corporate licensing requirements, they were entitled to payment because all personnel who actually treated the patients rendered their services within the scope of their licensed specialties, and therefore, this extent of licensing compliance was “within the regulatory framework for reimbursement.” 4 NY3d at 321.

The Mallela Court found the Superintendent’s Regulation [§65-3.16(a)(12)] valid and that it was undermined by the claim that the individual practitioners who treated the patients were properly licensed within their fields:

Where, as here, the Superintendent has properly crafted a rule within the scope of his authority, that rule has the force of law and represents the policy choice of this State.

4 NY3d at 321.

Based upon Mallela, this court holds that the defenses of fraudulent incorporation and unlawful fee splitting are proper exceptions to the 30-day rule because said conduct is specifically barred by statute. Mallella, supra (insurance carriers may withhold payment of claims to medical corporations which are in violation of specific statutes concerning [*6]incorporation and fee splitting with non physicians). Concomitantly, these defenses are not waived or precluded by an untimely denial See also Ozone Park Medical Diagnostic Associates v. Allstate Insurance Company, 180 Misc2d 105, 109, 689 NYS2d 616, 618 (A.T. 2d Dep’t 1999) (where the specific wording a statute [Public Health Law §238-a] prohibits a financial relationship between a referring practitioner and the medical provider, then “it logically follows that the 30-day limitation . . . [rule] would not apply if the instant case fell within the ambit of [the statute]”).

However, in this case defendant fails to demonstrate by “fact or founded belief” that the medical corporations were not properly licensed either at their inception or thereafter, that non-physicians are practicing medicine at plaintiffs’ facilities and/or that the physicians billing for services rendered are not properly licensed in their respective fields. Notably, defendant is in receipt of the Certificate(s) of Incorporation, copies of medical licenses and registrations, and copies of lease and management agreements for several of the plaintiffs herein.^[FN3] Significantly, defendant does not dispute the validity of any corporate registrations and/or medical licenses provided by plaintiff(s), or present legal authority prohibiting Dr. Nandi from owning more than one medical facility. There is no submission by an individual with personal knowledge that any investigation has been conducted at the New York State Department of Education and/or Secretary of State, or other source, which contradicts the corporate and licensing data provided by plaintiffs. Rather, via an affidavit by Kathy Aplin, a manager employed by defendant in its Special Investigative Unit, defendant states it is its “contention” that the 10 [ten] professional medical corporations, including plaintiffs herein, allegedly owned by Dr. Dipak Nandi, a licensed acupuncturist, are in fact owned by non-medical personnel. Ms. Aplin states that evidence collected to date indicates that Dr. Nandi’s facilities are managed, controlled and operated by unlicensed individuals who ultimately profit from these medical facilities in direct violation of the Business Corporations Law and Educational Law of the State of New York. However, Ms. Aplin fails to submit “the evidence collected to date” applicable to the actual medical providers named in the captions herein.

In addition, Ms. Aplin offers information which is unrelated to the plaintiffs before the court. For example, Ms. Aplin alleges that Dr. Nandi was not certified to practice acupuncture in January 2001 when Universal Acupuncture was incorporated. The court deems this information irrelevant because Universal Acupuncture is not a named plaintiff herein, it is undisputed that Dr. Nandi obtained certification to practice acupuncture in 2001 after January 2001, and all claims in the various complaints are for services rendered after 2001.

Ms. Aplin attaches numerous lease agreements between parties that are not related to this lawsuit. As to those lease agreements which involve one of the parties named in the actions before the court, those lease agreements expired in either 2001 or 2002; there is no allegation that said agreements were renewed and their relevance to the no-fault claims at issue. [*7]

Ms. Aplin refers to documents obtained from a lawsuit against Dr. Nandi, but fails to identify the date said lawsuit was commenced, the caption and index number, the court in which it appeared, and the disposition, if any.

Ms. Aplin states that Travelers “became concerned” that many of the bills submitted by plaintiffs were for unnecessary treatment which “was motivated by interests other than the best interests of the patients” [¶24]. However, she cites no specific findings of patients being rendered unnecessary treatment, and none of the denials herein stated medical non-necessity as a ground for denial of plaintiffs’ claims. Cf. A.B. Medical Services PLLC v. State Farm Mutual Automobile Insurance Company, 4 Misc 3d 83, 84, 781 NYS2d 822, 823 (9th & 10th Jud. Dists. 2004) (examinations of the assignors under oath revealed significant discrepancies and raised questions of fact as to whether medical services were rendered after symptoms abated).

Clearly, Ms. Aplin’s affidavit is replete with hearsay, conjecture and speculation and, therefore, insufficient to raise an issue of fact as to plaintiffs’ fraudulent corporation or other specific fraudulent conduct.

This court holds that Mallela did not open a valve authorizing full disclosure into corporate licensing matters absent good cause and/or reasonable foundation in no-fault medical provider actions. Significantly, Mallella referred to the role of Superintendent of the Insurance in investigating claims of regulatory breaches, and implied that the insurance carrier would conduct its investigation within the confines of the statutory verification process. Consider, Mallela offered the caveat that the no-fault regulatory scheme

does not permit abuse of the truth-seeking opportunity that 11 N.Y.C.R.R. 65-3.16(a)(12) authorized. Indeed, the Superintendent’s regulations themselves provide for the agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause (see 11 N.Y.C.R.R. 65-3.2[c]. In the licensing context, carriers will be unable to show ‘good cause’ unless they can demonstrate behavior tantamount to fraud.”

The Mallella Court cited to and presumed that carriers follow the “practice principles” enunciated in §65-3.2[c]:

Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.

Consequently, Mallela did not alter the settled rules that (1) an insurer’s lack of coverage defense must be premised on fact or founded belief [General Hospital v. Chubb Group, supra ,], (2) that an insurer must stand or fall upon those defenses raised in a timely denial preserved with tolling mandates [Presbyterian Hospital v. City of New York, supra ; Inwood Hill Medical P.C. v. Allstate Insurance Company, 3 Misc 3d 1110(A), 787 NYS2d 678, 2004 {3 Misc 3d 1110(A)} WL 1381082 (Div. Ct. NY Co. 2004)], (3) that discovery in no-fault actions is tailored by the grounds asserted in the denial [Metropolitan Radiological Imaging, PC v. State Farm Mutual Automobile Insurance Company, 7 Misc 3d 675, 790 NYS2d 373 {7 Misc 3d 675} (Civ. Ct. [*8]Qns. Co. 2005) ; and (4) Mallella did not define, expand or restrict the meaning of “fraud.”^[FN4]

However, while the Mallela Court did not define fraud, it defined “good cause:”

In the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do.

4 NY3d at 322. Thus, a new question is what constitutes “behavior tantamount to fraud?” While this court does not venture to offer an example, defendant’s submission in this case lacks a reliable foundation to infer that the medical providers are engaging in behavior that can be described as “tantamount to fraud.” Consequently, defendant does not demonstrate that it is entitled to the depositions it seeks, since it is axiomatic that Article 31 of the CPLR [Civil Practice Law and Rules] is not to be utilized for ‘fishing expeditions.’

It remains that after Mallela the distinction between denials based on lack of coverage and all others, made in Chubb, supra , is still the prevailing law. Fair Price Medical Supply Corp. v. Travelers Indemnity Company, __ Misc 3d __, __ {9 Misc 3d 76} NYS2d. __, 2005 WL 1994132, 2005 NY Slip O. 25343. (A.T. 2d & 11th Jud. Dists. 2005). In Fair Price the Appellate Term first found that the insurer did not deny the claim within 30 days, and then considered whether the insurer’s claim of fraud was precluded by the untimely denial. Specifically, the insurer claimed that it was not required to pay the medical provider’s claim because the eligible injured person, the assignor, stated he never received the medical supplies. The Appellate Term adhered to Chubb, supra , and held in favor of the medical provider, stating that a:

defense based on a provider’s fraudulent scheme to obtain no-fault benefits [was] precluded by defendant’s untimely claim denial. . . . we are bound by the majority’s unequivocal construction [in Chubb] of the No-Fault Law which limits an insurer’s ability to resist ‘ill-founded, illegitimate and fraudulent claims’ submitted by providers of medical services or medical equipment to the ‘strict, short-leasehed contestable period’ set forth in the verification protocols [cites omitted]. The clear implication is that a defense based on a provider’s alleged fraudulent claim for no-fault benefits is precluded by an insurer’s failure effectively to invoke its remedies in the ‘contestable period,’ one of the ‘tradeoff[s] of the no-fault reform’ which the Legislature recognized as the cost of providing ‘prompt uncontested’ first-party insurance benefits.

After Mallela insurance carriers are still required to make a showing that the defense of fraud is well-founded and in good faith. See KC Ocean Diagnostic Imaging PC v. Utica Mutual Insurance Company, __ Misc 3d ___, N.Y.L.J. 7/18/05, p.37, col. 4 (A.T. 2nd & 12th Jud. Dists.) (“defendant [insurer] is not precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme, despite its untimely denial of the claim” and evidence was sufficient to sustain defense]; cf., Medical Services PLLC, Somun Acupuncture, PC, Square Synogogue Transportation Inc. V. GEICO Casualty Insurance Co., __ Misc 3d __, N.Y.L.J. May 5, 2005, p.31, col.2 (A.T. 2nd & 12th Jud. Dists.) (although defendant/insurer not “precluded from asserting the defense that the collision was in furtherance of an insurance fraud scheme” in an untimely denial, defendant’s evidence “was insufficient to demonstrate that the defense was based upon a “‘founded belief that the alleged injur[ies] did not arise out of an insured incident” [cites omitted]; AB Medical Services PLLC v. Eagle Insurance Co, 3 Misc 3d 8, 9, (A.T. 2nd & 11th Jud. Dists. 2003) (an insurer’s “founded belief” that an accident was staged cannot be based upon “unsubstantiated hypothesis and supposition”).

Cf. Metroscan Imaging PC v. GEICO Insurance Company, 8 Misc 3d 829, 797 NYS2d 737 {8 Misc 3d 829} (Civ. Ct. Qns. Co. 2005), where the court consolidated sixty (60) actions for purposes of permitting amendment of the insurer’s answers to include a defense of fraudulent incorporation, and scheduled a framed hearing on that issue. Apparently, the insurer in Metroscan presented that the doctor and owner of the professional corporations “sold his medical license to [another medical group identified by name] to maintain the appearance that the companies were owned by a physician [also identified] [w]hen in actuality the corporate entities were owned, controlled and operated by non-physicians.” Id. 8 Misc 3d at 831, 797 NYS2d at 739. By contrast, defendant herein does not identify one non-licensed individual who either owns, controls or operates the medical corporations owned by Dr. Nandi, even though defendant has been provided with management agreements and income tax information for certain employees.

For the foregoing reasons, defendant’s motion(s) to dismiss the complaint(s) or, in the alternative, to compel the deposition of Dr. Nandi and Ying Li and/or other treating acupuncturists are denied in their entirety; and plaintiffs’ cross-motion(s) for protective order are granted.

In light of the foregoing, the court declines to address plaintiffs’ further argument that Mallela is limited to claims arising on or after April 4, 2002, deferring that discussion to when that is the pertinent issue before the court. See Multiquest PLLC v. Allstate Insurance Co., __ {9 Misc 3d 76} NYS2d __, 2005 WL 2085966, 2005 NY Slip Op. 25356 (Civ. Ct. NY 2005) (the intent of the Mallela III Court is that payment may be withheld to claims arising prior to April 4, 2002 where the medical providers were incorporated unlawfully).

Dated: Bronx, New York

October 6, 2005

________________________________

Julia I. Rodriguez, Judge of the Civil Ct.

Footnotes

Footnote 1: In the matter of Maple Medical Acupuncture, a/a/o Cathy Mayo, Index 079563/2004, the Verified Answer did not allege any defense related to corporate structure and ownership, licensing or fee splitting.

Footnote 2: In the matter of Maple Medical Acupuncture, a/a/o Cathy Mayo, Index 79563/2004, the first denial dated 5/10/02 reiterates the language noted herein. Inexplicably, there is a subsequent denial dated 7/9/02 which reads: Based on the inconsistencies in the statement obtained from Cathy Mayo, the facts of the loss were not verified. Therefore, your no fault claim is denied. The court notes the both denials omit the date of bill, period of the bill and the date the bill was received by the Insurer. In the matter of Delta Medical Acupuncture, P.C., a/a/o Basilicia Rodriguez, Index 79564/2004 the only denial attached is not dated and merely states: Due to inconsistencies in the statement given, the facts of the loss could not be verified. Therefore, the bill has been denied. In the matter of Delta Medical Acupuncture, a/a/o Kwanza Adams, Index 79565, the denial reads: In accordance with the NYS No-Fault Law, an Independent ACUPUNCTURE [sic] Medical Examination was held on 7/23/01 by Doctor Baron. After completion of exam and review of medical reports submitted, Doctor Baron indicated: THERE WAS NO FURTHER NEED OF ACUPUNCTURE TREATMENT. Therefore, all further ACUPUNCTURE benefits are denied.

Footnote 3: Plaintiff provided defendant with management agreements by Triborough Healthcare Management Corp. a non-party herein, in the matter(s) of : Statewide Medical, a/a/o Raghunandan, Index 32816/05; Continental Medical a/a/o McKenna, Index 77931/04; Continental Medical a/a/o Fernandez, Index 53514/03. Dr. Nandi is the sole owner and shareholder of Triborough Healthcare.

Footnote 4: The fact that Mallela declined to further define fraud was discussed by the court in RDK Medical v. General Assurance, 8 Misc 3d 1025(A), 2005 WL 1936342 at 4 (Civ. Ct. NY Co. 2005), which noted that as of this writing no appellate court has articulated a general “fraud” defense that is not subject to the preclusion rule [cites omitted] . . . the Court of Appeals was given the opportunity to do so in the “fraudulently incorporated enterprises” case [i.e., Mallela], but declined to do so, relying instead on a governing regulation [cites omitted].