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].

[*1]

Civil Court of the City of New York, Queens County, September 14, 2005

APPEARANCES OF COUNSEL

Alden Banniettis, Brooklyn, for plaintiff. McDonnell & Adels, P.C., Garden City (John E. McCormack of counsel), for defendant.

OPINION OF THE COURT

Anna Culley, J.

In the case at bar, plaintiff, a medical services provider and assignee of claimant Malik Corbin, brings a motion for summary judgment seeking payment for several claims in the aggregate sum of $6,581.38. These claims arise out of medical services allegedly provided to Corbin as a result of an automobile accident which occurred on December 9, 2001, prior to the effective date of the new regulations (11 NYCRR 65-3.16 [a] [12] [eff Apr. 4, 2002]). In support of its motion, plaintiff submits the affidavit of the corporate officer, Aleksander Tverskoy, M.D., as well as the denial of claim forms (NF-10). The NF-10s are sufficient to adequately establish when the defendant received the bills in question (see A.B. Med. Servs. v New York Cent. Mut. Fire Ins. Co., 3 Misc 3d 136[A], 2004 NY Slip Op 50507[U] [App Term, 2d & 11th Jud Dists 2004]). Each of the denials state, in relevant part: “Your claim is denied because you have not provided the verification requested by State Farm’s Special Investigative Unit. If you provide the requested information, State Farm will reconsider its position.”

All of State Farm’s denial of claims are untimely on their face with the exception of one received September 11, 2002 in the amount $1,353.31. The denial is dated September 18, 2002. As has been held by the Appellate Term, Second and Eleventh Judicial Districts, a denial issued before all verification has been provided is not a proper denial, and therefore, defendant insurance carrier has failed to properly deny this claim (11 NYCRR 65-3.8 [b] [3]; see also Shtarkman v Allstate Ins. Co., 8 Misc 3d 129[A], 2005 NY Slip Op [*2]51028[U] [App Term, 2d & 11th Jud Dists 2005]). Accordingly, it appears plaintiff has established its prima facie entitlement to summary judgment as a matter of law.

In this action, defendant cross-moves seeking summary judgment alleging that the plaintiff is not a properly licensed medical corporation as it is not wholly owned by licensed medical doctors. Defendant has demonstrated that plaintiff herein is a professional medical corporation which has shared as much as 65% of its gross revenues with a corporation owned by a nonphysician. Plaintiff does not dispute these facts in its reply papers.

At the time this motion was submitted, the Court of Appeals had ruled on this issue in State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]). In Mallela, the Court of Appeals answered a certified question from the United States Court of Appeals for the Second Circuit. The Court was asked to determine “whether, under our ‘no-fault’ insurance laws, insurance carriers may withhold payment for medical services provided by fraudulently incorporated enterprises to which patients have assigned their claims” (id. at 319 [citation omitted]). In answering the question in the affirmative, the Court based its holding on the Superintendent’s amended regulation declaring fraudulently licensed corporations ineligible for reimbursement. The Court held further that State Farm was precluded from recouping payments made by the carrier before April 4, 2002, the effective date of the amended regulation. The Court expressly declined to reach the issue of the viability of heretofore unpaid claims arising under the old regulation. This court will now decide this issue.

In Matter of Gleason (Michael Vee, Ltd.) (96 NY2d 117, 122 [2001]), the New York Court of Appeals observed:

“In determining whether a statute should be given retroactive effect, we have recognized two axioms of statutory interpretation. Amendments are presumed to have prospective application unless the Legislature’s preference for retroactivity is explicitly stated or clearly indicated (see, People v Oliver, 1 NY2d 152, 157). However, remedial legislation should be given retroactive effect in order to effectuate its beneficial purpose (see, Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; Becker v Huss Co., 43 NY2d 527, 540). Other factors in the retroactivity analysis include whether the Legislature has made a specific pronouncement about retroactive effect or conveyed a sense of urgency; whether the statute was designed to rewrite an unintended judicial interpretation; and whether the enactment itself reaffirms a legislative judgment about what the law in question should be (see e.g., Brothers v Florence, 95 NY2d 290, 299; Matter of OnBank & Trust Co., 90 NY2d 725, 730).”

In 1999, in an effort to combat the widespread abuse in no-fault insurance claims, the Superintendent proposed an amended Regulation 68^[FN*] (see Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854[*3][2003]). Further, section 65-3.16 (a) (12) of the regulation states, in relevant part, that “[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.” “In summarizing the new provision, the department provided its opinion that such a result had previously been required, stating that § 65-3.16 (a) (12) of the new regulations had been added ‘to clarify that a health care provider must be properly licensed to be eligible for reimbursement under no-fault.’ ” (Michael Billy, Jr. and Skip Short, Insurance Department Regulations to Stem Fraudulent No-Fault Claims Upheld by Court of Appeals, 76 NY St BJ 40, 41 [Jan. 2004].)

The Insurance Department’s interpretation of the insurance regulations is entitled to great deference (see Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins. of State of N.Y., 72 NY2d 753 [1988], cert denied 490 US 1080 [1989]). This court must follow the agency’s interpretation of a regulation unless irrational, or unreasonable, or the interpretation runs contrary to the clear wording of a statutory provision (see Matter of John Paterno, Inc. v Curiale, 88 NY2d 328 [1996]).

Based on the foregoing, improperly licensed providers are precluded from recovering claims submitted prior to the amendment, as the amendment was the clarification of the existing regulation. A retroactive application is appropriate where the regulatory intent of the Superintendent was explicit to remedy widespread abuse and fraud in the filing of no-fault claims by improperly licensed medical providers. To hold otherwise would nullify existing statutory provisions which prohibit a professional medical corporation from being owned and operated by anyone other than licensed medical doctors (Business Corporation Law § 1503 [b]), and bar licensed physicians from sharing fees with nonphysicians (8 NYCRR 29.1 [b] [4]; Education Law §§ 6511, 6530 [19]). Accordingly, defendant’s cross motion for summary judgment is granted and the complaint is dismissed.

Footnotes

Footnote *: Between 1992 and 2001, reports of suspected automobile insurance fraud increased by 275%, the bulk of the increase occurring in no-fault insurance fraud. Reports of no-fault fraud rose from 489 cases in 1992 to 9,191 in 2000, a rise of more than 1,700%. No-fault fraud accounted for three quarters of the 16,902 reports of automobile-related fraud received by the Insurance Department’s Frauds Bureau in 2000, and more than 55% of the 22,247 reports involving all types of insurance fraud. In 1999, the Superintendent established a No-Fault Unit within the Frauds Bureau to focus specifically on no-fault fraud and abuse. By one estimate, the combined effect of no-fault insurance fraud has been an increase of over $100 per year in annual insurance premium costs for the average New York motorist.

Civil Court of the City of New York, Kings County

121508/04

Jack M. Battaglia, J.

Recitation in accordance with CPLR 2219(a) of the papers considered on Plaintiff’s motion for an order granting summary judgment against Defendant; and Defendant’s cross-motion for an order granting summary judgment dismissing the claim:

Notice of Motion for Summary Judgment

Attorney’s Affirmation in Support of Motion for Summary Judgment

(affidavit)

Exhibits A-M

Notice of Cross-Motion

Affirmation in Support and in Opposition

Affidavit

Exhibits A-C

Reply

The parties appeared as follows: Plaintiff by Alden Banniettis, Esq. and Defendant by Netanel Benchaim, Esq. of the Law Offices of Stacy R. Seldin.

These competing motions require the Court to consider the relationship between an opposer’s showing of a triable issue of fact sufficient to deprive the initial movant of summary judgment and the opposer’s prima facie showing of an entitlement to judgment as a matter of law sufficient to warrant summary judgment on the opposer’s cross-motion. This in the context of an action for first-party no-fault benefits after the insurer denied payment for lack of medical necessity.

Bedford Park Medical Practice, P.C. submitted ten bills to American Transit Insurance Company for physical medical and rehabilitation services rendered to its assignor,Sandra Berger, from October 23, 2002 through April 15, 2003. The bills total $6,091.78. At oral argument on the return date, American Transit stipulated that Bedford Park had submitted proper proof of claim for each of the bills, and Bedford Park stipulated that American Transit had made timely denial of each of the bills for lack of medical necessity based upon a medical examination of [*2]Bedford Park’s assignor.

The medical examination of Sandra Berger was conducted on July 9, 2002 by Dr. Irving Liebman, a board-certified orthopedic surgeon, and the findings and opinions of Dr. Liebman are summarized in an affirmed report of the same date. A copy of Dr. Liebman’s report was apparently sent to Bedford Park on July 22, 2003, three months before it rendered the services billed for and subject to this action. Dr. Liebman’s affirmed report is provided by American Transit on its motion. Bedford Park provides no evidence of medical necessity other than its Verification of Treatment forms.

In similar opinions issued on the same day, Appellate Term for the Second and Eleventh Judicial Districts and Appellate Term for the Ninth and Tenth Judicial Districts made clear that the burden of production, at least, on the issue of medical necessity rests on the insurer.

“[A] provider’s proof of a properly-completed claim makes out a prima facie case upon its motion for summary judgment…thereby shifting the burden to the insurer who, if not precluded, may rebut the inference by proof in admissible form establishing that the health benefits were not medically necessary…If not refuted by the no-fault benefits claimant, such proof may entitle the insurer to summary judgment.”(Amaze Medical Supply Inc. v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U], *3 [App Term, 2d and 11th Jud Dists]; Damadian MRI In Elmhurst, P.C. v Liberty Mutual Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51700[U], *2 [App Term, 9th and 10th Jud Dists]; see also A.B. Medical Services PLLC v Lumbermens Mutual Casualty Co., 4 Misc 3d 86, 87 [App Term, 2d and 11th Jud Dists 2004].)

And subsequently:

“[W]here the plaintiff relies solely on its proof of claim to establish a prima facie showing, without any additional submission of proof of medical necessity in admissible form, and, in opposition, the defendant provides proof in admissible form of the lack of medical necessity, summary judgment may, in appropriate circumstances, be awarded to the defendant unless the plaintiff comes forward with admissible proof in reply to create a triable issue of fact.” (A.B. Medical Services v New York Central Mutual Fire Ins. Co., 3 Misc 3d 136[A], 2004 NY Slip Op 50507[U], *2 [App Term, 2d and 11th Jud Dists]; see also CPLR 3212[b].)

In Stephen Fogel Psychological, P.C. v Progressive Casualty Ins. Co. (7 Misc 3d 18 [App Term, 2d and 11th Jud Dists 2004]), an opinion addressing the effect of an insured’s failure [*3]to attend a pre-claim medical examination, the court stated that the failure to attend “negates the presumption of medical necessity which otherwise attaches to [the provider’s] claim forms” (Id., at 22-23).

There is no appellate decision that explicitly addresses the burden of persuasion on medical necessity in the no-fault context, and one court’s survey of decisions rendered under general medical insurance policies did not reveal any that explicitly addressed the question. (See Oceanside Medical Healthcare, P.C. v Progressive Ins., 2002 NY Slip Op 50188[U], *15-*16 [Civ Ct, Kings County]; but see Igor Shtarkman, Neurologist, P.C. v Allstate Ins. Co., 2002 NY Slip Op 50568[U][App Term, 9th and 10th Jud Dists]). Although this Court once held otherwise (see Elm Medical, P.C. v American Home Assurance Co., 2003 NY Slip Op 51357[U], *8-*9 [Civ Ct, Kings County]), the Court is now of the view that the insured / provider bears the burden of persuasion on the question of medical necessity. Specifically, once the insurer makes a sufficient showing to carry its burden of coming forward with evidence of lack of medical necessity, “plaintiff must rebut it or succumb.” (See Baumann v Long Island Railroad, 110 AD2d 739, 741 [2d Dept 1985].)

Courts have recognized, however, that a proffer that is sufficient to raise a triable issue of fact may not be sufficient to establish an entitlement to judgment as a matter of law. (See American Honda Finance Corp. v Progressive Casualty Ins. Co., 290 AD2d 850, 852 [3d Dept 2002]; Ocean Diagnostic Imaging P.C. v State Farm Mutual Automobile Ins. Co., 7 Misc 3d 130[A], 2005 NY Slip Op 50535[U][App Term, 9th and 10th Jud Dists]; Ocean Diagnostic Imaging, Inc. v Utica Mut. Ins. Co., 6 Misc 3d 131[A], 2005 NY Slip Op 50081[U][App Term, 2d and 11th Jud Dists].) This Court is unaware of an explicit articulation of the difference, except where a triable issue might be found by reason of the more “flexible” evidentiary requirements imposed on the opposer. (See Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Kwi Bong Yi v JNJ Supply Corp., 274 AD2d 453, 453 [2d Dept 2000]; A.B. Medical Services PLLC v State-Wide Ins. Co., 7 Misc 3d 136[A], 2005 NY Slip Op 50785[U], *2 [App Term, 2d and 11th Jud Dists].)

On a provider’s motion for summary judgment, the insurer may meet its burden of production with “affirmed reports based upon independent medical examinations (IMEs) conducted by the [the insurer’s] physicians, which sufficiently raise issues of fact as to the necessity of the medical services and treatment provided.” (Park Health Center v Prudential Property & Casualty Ins. Co., 2001 NY Slip Op 40650[U], *2 [App Term, 2d and 11th Jud Dists].) Presumably, the medical examination report must, like a peer review report submitted for the same purpose, “set forth a factual basis and medical rationale” for the claim’s rejection. (See S & M Supply Inc. v Kemper Auto & Home Ins. Co., 2 Misc 3d 134[A], 2004 NY Slip Op

50209[U], *1 [App Term, 2d and 11th Jud Dists].)

Here, Dr. Irving Liebman concluded in the report of his July 9, 2002 examination of Bedford Park’s assignor that there was “no necessity for further treatment” and “no necessity for household help or a special transportation allowance.” Specifically, he found “no orthopedic [*4]objective evidence of disability.”

Dr. Liebman notes that x-rays of Sandra Berger’s cervical and lumbar spine were negative, but that an MRI of her left shoulder revealed a “supraspinatus tendinopathy”. He found no muscle spasm in her cervical, dorsal or lumbosacral spine; “full range of motion” throughout the spine; in both shoulders and hips; her elbows, wrists and hands; her knees, ankles and feet; and that the “straight leg raising test was unrestricted bilaterally.” He also reports that there was “no sensory loss” and that “cranial nerves were intact.”

The Court finds sufficient “factual basis and medical rationale” in Dr. Liebman’s report to raise a triable issue as to medical necessity, and to warrant, therefore, denial of Bedford Park’s motion. Does the report, however, establish prima facie that any subsequent treatment was not medically necessary? Are these the “appropriate circumstances” where the provider’s failure to come forward with admissible proof in reply warrant granting summary judgment to the insurer? (See A.B. Medical Services v New York Central Mutual Fire Ins. Co., 2004 NY Slip Op 50507[U], at *2.)

It seems to this Court that, in the absence of any specific direction from the appellate courts, an appropriate reference would be to caselaw describing the insurer’s prima facie burden on a motion to dismiss for absence of “serious injury” as defined in Insurance Law §5102(d). If the evidence submitted on lack of medical necessity would not be sufficient to preclude a claim for non-economic loss, it is difficult to see why it should suffice for cessation of benefits. After all, the no-fault scheme is intended to provide “prompt payment for basic economic loss…in exchange for a limitation on litigation to cases involving serious injury.” (See Pommells v Perez, 4 NY3d 566, 571 [2005].)

In this case, the Court finds that Dr. Liebman’s report would not establish prima facie the absence of “serious injury”, in that it fails to describe the “objective tests” he performed that support his findings and opinions, including his findings that Ms. Berger exhibited “full range of motion”. (See Edwards v New York City Transit Authority, 17 AD3d 628 [2d Dept 2005]; Korpalski v Lau, 17 AD3d 536 [2d Dept 2005]; Hanna v Alverado, 16 AD3d 624 [2d Dept 2005]; Nembhard v Delatorre,16 AD3d 390 [2d Dept 20005]; Remekie v Atileh, 6 Misc 3d 134[A], 2005 NY Slip Op 50191[U][App Term, 2d and11th Jud Dists].) Moreover, Dr. Liebman does not describe the significance of the MRI finding of “supraspinatus tendinopathy” in Ms. Berger’s left shoulder.

Under these circumstances, the “presumption of medical necessity which…attaches to [the provider’s] claim forms” (see Stephen Fogel Psychological, P.C. v Progressive Casualty Ins. Co., 7 Misc 3d at 22-23), in particular that attaches to the treating doctor’s order for additional treatment, is not sufficiently rebutted to establish prima facie that the insurer is entitled to judgment as a matter of law. As in the “threshold” cases, even in the absence of specific, additional evidence of medical necessity, American Transit’s motion must be denied. (See Hanna v Alverado, 16 AD3d 624; Nembhard v Delatorre,16 AD3d 390; Qu v Doshna, 12 AD3d 578 [2d [*5]Dept 2004].)

Plaintiff’s motion for summary judgment is denied. Defendant’s cross-motion for summary judgment is denied.

Defendant shall serve a copy of this order with Notice of Entry upon Plaintiff within 20 days after entry.

August 12, 2005

Judge, Civil Court

Civil Court of the City of New York, Kings County

66089/2001

Arlene Bluth, J.

This is an action to recover first-party no-fault benefits, interest, and attorney’s fees pursuant to New York’s Insurance Law and no-fault regulations. Plaintiff Citywide Social Work & Psychological Services, P.L.L.C. (“plaintiff”) billed defendant Allstate Insurance Company (“defendant”) a total of $1,061.63 for psychiatric/psychological services rendered to plaintiff’s assignor, Gloria Zuhne (“assignor” or “patient”). The bill contained separate charges for (1) psychiatric evaluation of records and other accumulated data for diagnostic purposes, (2) psychiatric diagnostic interview examination, (3) psychological testing, including psychodiagnostic assessment with interpretation and report, and (4) explanation and interpretation of results to primary physician. All of the services were performed on June 8, 2001 with the exception of the explanation and interpretation of results to primary physician which was performed on June 15, 2001. Defendant denied all portions of plaintiff’s claim on the ground that the services rendered were medically unnecessary.

At the outset of the August 8, 2005 trial, the parties stipulated and agreed that plaintiff had submitted a proper proof of claim and that defendant had made a timely denial. The parties further stipulated and agreed to the following documents in evidence: Plaintiff’s Exhibit 1: plaintiff’s claim form with cover letter, Dr. Fischer’s letter of medical necessity, psychological evaluation, Narrative Report, Assignor’s self-referral consent and authorization form, assignment of benefits form, addendum to NF-3, attendance form, and patient’s consent for plan of care; plaintiff’s Exhibit 2: defendant’s explanation of bill payment, NF-10, and summons and complaint; defendant’s Exhibit A: peer review by Laurence Abelove, Ph.D.

The only issue for trial, then, was the medical necessity of the billed-for psychiatric and psychological services, an issue on which defendant bore the burden of proof (A.B. Med. Servs., P.L.L.C. v GEICO Ins. Co., 2 Misc 3d 26, 27, 773 NYS2d 773 [App Term, 2nd Dept 2003]; Nir v Allstate Ins. Co., 7 Misc 3d 544, 546, 796 NYS2d 857 [Civ Ct, Kings County 2005]; Behavioral Diagnostics v Allstate Ins. Co., 3 Misc 3d 246, 248, 776 NYS2d 178 [Civ Ct, Kings County 2004]).

Defendant called as its witness Dr. Laurence Abelove, a licensed psychologist since 1987 who qualified as an expert without objection. Dr. Abelove, who performed the peer review upon [*2]which defendant based its denial of claim, testified that the billed-for work was not medically necessary and that even if it were, there was a lack of documentation to substantiate that it was done properly. Specifically, Dr. Abelove testified that the documents did not support a determination that there was a true review of records (billing code 90885), as the only document provided to plaintiff by another medical professional was the referral; the other record was a self-assessment form that plaintiff had given the patient that day, the review of which does not qualify for the billing code used. Dr. Abelove testified that plaintiff’s evaluation of records for medical diagnostic purposes was medically unnecessary because such a review is performed as part of the initial psychiatric diagnostic interview examination and, therefore, should not be charged as a separate, stand-alone service on plaintiff’s bill for services rendered.

Dr. Abelove also testified that plaintiff did not perform a thorough intake interview and thus should not have billed for one (billing code 90801). To support his conclusion, Dr. Abelove pointed to, among other things, the lack of information regarding the accident itself in plaintiff’s reports and the lack of a detailed history with respect to the assignor’s following histories: marital, occupational, prior psychological and medical treatments, place of birth, ages of children, etc. As well, the records lacked a thorough pre- and post-accident comparison of the assignor’s symptoms. Accordingly, Dr. Abelove concluded that the comprehensive interview required by the billing code was not done.

With respect to the psychological testing (billing code 96100), Dr. Abelove testified that the diagnosis of the assignor’s psychological condition could have been made following a thorough interview examination and thus the battery of psychological tests was unnecessary. Additionally, the tests were not geared (or “normed”) for the assignor, who had suffered a motor vehicle accident less than a month earlier. Accordingly, Dr. Abelove concluded that the psychological tests, which consisted of the Beck depression inventory, the Beck anxiety inventory, the Beck hopelessness scale, a neuro-psychological symptom checklist (which does not qualify as a test in Dr. Abelove’s opinion), a pain-patient profile, and a mental status profile, were not medically necessary for the purposes of diagnosing the assignor.

Finally, with respect to the final billing code (90887), Dr. Abelove stated that there was no documentary evidence that the reports were discussed with any members of the assignor’s family and there was no indication that the assignor was incapable of understanding the results herself. To the extent that the charge was for reporting to the assignor’s primary care physician, Dr. Abelove testified that sending a copy of such report was a courtesy and not chargeable. Besides, having concluded that psychological testing was not medically necessary, Dr. Abelove also concluded that plaintiff’s explanation and interpretation of those tests to the assignor’s primary physician were also medically unnecessary.

Dr. Bruce Baumgarten, a psychologist licensed in this state who also qualified as an expert without objection, testified on behalf of plaintiff that all the billed-for psychological services were medically necessary. With respect to a review of records (billing code 90885), Dr. Baumgarten indicated that the referral from another doctor was reviewed (see medical necessity letter, bolded language at the bottom of page one). Regarding the intake interview (billing code 90801), Dr. Baumgarten admitted that the details of the accident were particularly skimpy in the reports, but that the other bases for defendant’s objections were trivial; Dr. Baumgarten speculated that the details were probably covered in the interview but possibly not all the [*3]information gathered by the interviewer made it into the report.

Regarding the psychological testing (billing code 96100), Dr. Baumgarten testified that two independent sources of data are needed in order to accurately diagnose a patient’s psychological condition, and that in the absence of two sources, the validity of an initial diagnosis usually cannot be confirmed. Dr. Baumgarten also opined that the psychological testing at issue is useful not only in confirming the validity of a diagnosis, but in planning the assignor’s course of treatment because the testing provides the psychologist with a “longitudinal” view of how the patient has been feeling over a period of time. Thus, Dr. Baumgarten concluded that psychological tests were medically necessary both to confirm the initial diagnosis made following the assignor’s interview examination and to specify her actual level of illness.

Finally, Dr. Baumgarten also testified that the explanation and interpretation of results to the primary physician was medically necessary (billing code 90887), was chargeable, and was not merely a courtesy.

Analysis

Rather than defining medical necessity, the No-Fault Insurance Law merely provides that claimants are entitled to recover for “basic economic loss,” which includes, inter alia, “[a]ll necessary expenses incurred for: (i) medical, hospital (including services rendered in compliance with article forty-one of the public health law, whether or not such services are rendered directly by a hospital), surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services; (ii) psychiatric, physical and occupational therapy and rehabilitation.” (Insurance Law § 5102 [a] [1]; see also Behavioral Diagnostics, 3 Misc 3d at 248). The no-fault regulations likewise provide little assistance to courts attempting to determine, in the face of conflicting expert testimony, whether certain medical or psychological services are medically necessary (see 11 NYCRR § 65.12 [e] [2]; Behavioral Diagnostics, 3 Misc 3d at 249).

In the absence of a statutory standard, courts have been forced to fashion their own definitions of medical necessity. In the context of psychological testing, case law reveals at least three such judicially crafted definitions. The first, which asks “could a psychologist hold an objective and reasonable belief that the tool used will further the patient’s diagnosis and treatment and whether that tool is warranted given the circumstances” was announced in Medical Expertise, P.C. v Trumbull Ins. Co., 196 Misc 2d 389, 395, 765 NYS2d 171 [Civ Ct, Queens County 2003]. The second standard, found in Citywide Soc. Work & Psychol. Servs., P.L.L.C. v Travelers Indem. Co., 3 Misc 3d 608, 613, 777 NYS2d 241 [Civ Ct, Kings County 2004], focuses the court’s inquiry on the “generally accepted medical/professional practice,” while the third holds psychological tests to be medically necessary if “either (1) they are within the standard of care for good and accepted medical practice for all patients in that circumstance; or (2) the treating physician made a reasoned and reasonable judgment, based on the particular circumstances of the patient, that the tests will assist the physician in formulating an accurate diagnosis and an appropriate treatment plan for the patient” (Behavioral Diagnostics, 3 Misc 3d at 251-52).

In essence, though, the question of the medical necessity of psychological testing turns on the credibility of the testifying doctors. Here, both experts agreed that if plaintiff received a [*4]referral from a treating medical doctor because that doctor thought the patient’s psychic pain from the motor vehicle accident needed the attention of a psychologist, the first thing plaintiff should have done is to read why that doctor thought this patient needed help. Both experts agreed that the plaintiff then should have talked to the patient to find out what had happened in the accident and why the patient was having so much trouble coping. The Court credits Dr. Abelove that the next step was to determine, based on plaintiff’s evaluation of the assignor and arrival at a possible diagnosis, which tests, if any, were appropriate to confirm or rule out that diagnosis. Then, armed with two independent sources of information the evaluation interview and the test results plaintiff should have explained and interpreted the results, including the diagnosis and treatment plan, to the assignor’s primary physician, so the referring physician would be apprised as to whether the assignor’s symptoms were the result of a legitimate psychological condition or merely psychosomatic.

After reviewing the exhibits and hearing the testimony, the Court agrees with defendant’s expert, Dr. Abelove, that a comprehensive intake interview was not done and therefore payment for $194.58, billing code 90801, is denied. In the Court’s view, a comprehensive interview for a patient presenting due to a car accident must significantly delve into the accident and the patient’s problems resulting therefrom. From the evidence presented, there is no indication that plaintiff was even aware, for example, of the severity of the accident, how strong the impact, whether anyone was killed, the injuries sustained and the severity thereof, who was at fault, the damage to the vehicles involved, or the financial pressures and setbacks suffered by the patient because of the accident. For example, the patient could have been on the mend from back surgery, and the minor fender bender caused a re-injury, resulting in her recovery regressing and her becoming frustrated. This would be very different from an accident caused by the patient drinking and slamming into a bus stop full of children, causing several deaths and severe injuries. There is no indication of the extent of the patient’s injuries, nor those of her children, nor those of the other driver or passengers, nor any indication of the patient’s feelings with respect thereto. Because the record does not reflect that plaintiff ever asked about these highly relevant facts, this Court concludes that the comprehensive intake interview was never performed.

Since a comprehensive interview was never performed, the battery of tests performed was not medically necessary. This Court credits the testimony of plaintiff’s expert, Dr. Baumgarten, that there is a need for two independent sources of psychological data to accurately diagnose a patient’s condition. However, not every patient should have every test; for example, if the interview revealed psychological symptoms but no chronic, physical pain, then there would be no need to conduct the pain-patient profile test. Since the medical necessity and appropriateness of each of the various tests can only be determined after a comprehensive interview, and no such interview was done here, plaintiff has failed to rebut defendant’s proof that the tests were not medically necessary. Accordingly, the payment for $696.50 for psychological testing (billing code 96100) is denied.

Two more bills must be addressed. The first is the review of records for purposes of medical diagnosis (billing code 90885) in the amount of $67.24. There is no question that plaintiff reviewed something from the referring physician. In the letter of medical necessity (on the bottom of page one), plaintiff lists several symptoms mentioned by the referring physician. [*5]The basis for defendant’s objection to this bill was that only one document was reviewed. However, defendant offered no testimony as to a minimum number of records which must be reviewed in order to qualify for this billing code, or that the referral did not constitute a medical record. Since the Court finds that the defendant has failed to fulfill its burden that it was not medically necessary to review the records, plaintiff is awarded $67.24 on this bill.

Finally, having found that the comprehensive intake was not done and the tests performed were unnecessary, the Court denies payment for $103.31 for billing code 90887, reporting to primary physician.

Accordingly, judgment should be entered in favor plaintiff in the amount of $67.24, together with statutory interest and attorney’s fees and costs.

This is the Decision and Order of the Court.

Dated: August , 2005

ARLENE P. BLUTH

Judge, Civil Court

Civil Court of the City of New York, Kings County

89889/04

Appearing for plaintiff: Gary Tsirelman, Brooklyn, NY; for defendant: Law Offices of Teresa M. Spina, Woodbury, NY.

Arlene P. Bluth, J.

Upon the foregoing cited papers and after argument, plaintiff moves for summary judgment pursuant to CPLR § 3212. For the following reasons, the motion is denied.

In this action, plaintiff Great Wall Acupuncture, P.C. seeks to recover first-party No-Fault benefits in the amount of $789.10 plus statutory, interest, costs, and attorneys’ fees, for [*2]acupuncture treatment it allegedly provided to its assignor, June Jackson, in March through May 2004. Plaintiff argues that defendant improperly reduced its No-Fault benefits: Plaintiff billed defendant $90.00 for each of 13 acupuncture sessions performed by a licensed acupuncturist, for a total of $900.00, and defendant reimbursed only $29.30 per session, for a total of $380.90.

The Workers’ Compensation fee schedules, adopted by the Superintendent of Insurance and used by No-Fault insurers in reviewing claims, lacks a schedule for acupuncture treatment performed by a licensed acupuncturist, such as the treatment rendered here. There are, however, fee schedules for acupuncture treatment provided by physicians and chiropractors, with physicians being reimbursed at a higher rate than chiropractors. The No-Fault regulations provide that “if the superintendent has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee 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.” 11 NYCRR § 68.5(b). Thus, a provider for whose profession there is no applicable fee schedule may charge whatever the prevailing fee is for that profession in that locale, and the insurer may then review the claim to determine if the fee billed is consistent with that for similar procedures provided for in existing fee schedules.

In his affirmation, plaintiff’s counsel argues that the amount billed per session is well within the range of the prevailing fee charged by local licensed acupuncturists. Plaintiff’s counsel also argues that acupuncture performed by a licensed acupuncturist is not at all a “similar procedure” to acupuncture performed by a physician. The difference, according to plaintiff’s counsel, lies in the practitioners’ respective levels of acupuncture training (plaintiff’s counsel asserts that licensed acupuncturists have much more training than physicians), and in the superiority of the science and philosophy of the Chinese medicine practiced by licensed acupuncturists to the Western medicine practiced by physicians performing acupuncture. Plaintiff’s counsel, however, has not qualified as an expert in acupuncture, from the Eastern or Western schools, nor has he established that he is an expert on the billing rates of local licensed acupuncturists; in fact, he has no personal knowledge whatsoever about what he so boldly represents to the Court as fact.^[FN1]

Moreover, the attorney’s entire affirmation speaks only to physicians performing [*3]acupuncture yet defendant here reimbursed plaintiff at $29.30 per session, the fee set for a chiropractor performing acupuncture in plaintiff’s geographic area, not a physician.^[FN2] Plaintiff does not address whether chiropractors practice Western or Eastern medicine, or some combination thereof. More important, however, plaintiff provides no evidence in its own affidavit or in any other form to support the contention that a licensed acupuncturist should receive a higher fee than a chiropractor performing acupuncture. 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) [Sup Ct, Kings Cty 2004]; see also Zuckerman v. City of New York, 49 NY2d 557 [1980]; Lupinsky v. Windham Constr. Corp., 293 AD2d 317 [1st Dept 2002]; Amaze Med. Supply, Inc. v. Allstate Ins. Co., 3 Misc 3d 133(A) [App Term, 2nd and 11th Jud Dists 2004].

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 [1986]. Plaintiff has not met that burden. “Summary judgment is a drastic remedy that deprives a litigant of his or her day in court, and it ‘should only be employed when there is no doubt as to the absence of triable issues.'” Kolivas v. Kirchoff, 787 NY2d 392, 392-93 [2nd

Dept 2005] (citation omitted). Whether acupuncture provided by a licensed acupuncturist is similar to that provided by a chiropractor is clearly a question of fact, and that fact issue has not been resolved by plaintiff’s motion.

Accordingly, plaintiff’s motion for summary judgment is denied. At oral argument, plaintiff conceded the timeliness of defendant’s denial, and therefore the only issue for trial is whether defendant properly reduced the amount billed.

This is the Decision and Order of the Court.

Dated:

ARLENE P. BLUTH

Judge, Civil Court

ASN by__________ on __________

Footnotes

Footnote 1: The attorney’s affirmation gives the erroneous impression that his client’s affidavit contains enough information to support the contents of the affirmation. In paragraph 25 of the attorney’s affirmation, he states: “Plaintiff’s undisputed contention is that the prevailing fee for acupuncture services in New York City ranges between $85 and $100 per session….” This is absolutely false, as plaintiff submits no affidavit of the kind. The only mention of the fee in plaintiff’s affidavit is what was billed and what is allegedly due. Plaintiff’s affidavit does not even state that services were performed by a licensed acupuncturist; the Court determined this by viewing the unsigned NF-3 annexed to the moving papers.

Footnote 2: Under the fee schedule for chiropractors, acupuncture is reimbursed at a rate of between $22.51 and $29.30, depending on the provider’s geographic location. Under the physical medicine fee schedule, physicians performing acupuncture receive between $32.90 and $42.84, depending on geographic location.

Civil Court of the City of New York, Queens County

120335/03

Gerald J. Dunbar, J.

This matter came before the Court on May 20, 2005, by way of Plaintiff’s Motion for Summary Judgment, pursuant to CPLR § 3212, for recovery of unpaid No-fault benefits in the sum of $4,619.33, along with statutory interest at the rate of two (2%) percent, compounded, per month, pursuant to 11 NYCRR 65.15 (g), and statutory attorneys’ fees on behalf of Plaintiff Assignee. The Plaintiff’s assignor was injured in an automobile accident in the City of New York. There is no claim that anything other than the No-Fault Regulations apply to the instant matter.

By way of comment, the Court notes that Counsel for Defendant appears to request, in his Affirmation in Opposition to the above-requested relief, a deposition of Plaintiff. As there is no cross-motion before it, the Court cannot properly address this request. [*2]

A party moving for summary judgment must show, by evidence in admissible form, that there are no material issues of fact in controversy and that they are entitled to judgment as a matter of law. Once that showing is made, the burden shifts to the opponent of the motion for summary judgment to come forward with proof in admissible form that there are material issues of fact in controversy which require a trial. Alvarez v. Prospect Hospital, 68 NY2d320 (1986); Winegrad v. New York University Medical Center, 64 NY2d 851(1985).

In the instant matter, Plaintiff has shown, by admissible evidence, that it was assigned the instant claim and submitted same to Defendant and that said claim was not paid within thirty days of its receipt by Defendant. Mailing of each claim is proven by Defendant’s NF-10, Denial of Claim forms, which admit receipt of Plaintiff’s claims as follows: Claim Number 1, in the sum of $2,664.33, received by Defendant on November 7, 2001(“Claim No.1”); Claim Number 2, in the sum of $1,020.00, received by Defendant on November 26, 2001 (“Claim #

2″); Claim Number 3, in the sum of $680.00, received by Defendant on December 20, 2001 (“Claim #

3″); Claim Number 4, in the sum of $255.00, received by Defendant on January 10, 2002 (“Claim #

4″).

The admission of receipt in the Defendant’s NF-10 Denials are adequate admission of mailing and prove that aspect of Plaintiff’s prima facie case. A.B. Medical Services, PLLC v. New York Central Mutual Fire Insurance Company, 3 Misc 3d 136(A), 787 NYS2d 675 [App Term 2nd & 11th Jud Dist 2004]; A.B. Medical Services, PLLC v State Farm Mut. Automobile Ins. Co., NYLJ 2/20/04, p. 26, col. 6. Defendant proves mailing of it’s NF-10 denials by way of the Affidavit of its employee, Justin Barth, a no fault examiner and manager. However, each of the above-referenced claims were denied on April 10, 2002, and are untimely on their face.

As the NF-10 Denials are facially untimely and well outside of the thirty (30) day period established for denial of said claims in accordance with 11 NYCRR 65-3. The burden is, thereafter, on Defendant to show that the thirty (30) day period was tolled by proper verification requests and/or that a Chubb defense exists which falls outside of the thirty (30) day requirement. Defendant has submitted no proof of mailing of the verification requests sent herein, though Defendant submits proof in admissible form, of the mailing of the NF-10 by way of Mr. Barth’s Affidavit, as stated above, Thus, the purported proof of the Verification Requests and follow-up letters “amounted to unsubstantiated hearsay”. Ocean Diagnostic Imaging, P.C. v Lumberman’s Mutual Casualty, 2005 WL 1208401 [App Term 2nd and 11th Jud Dist]

Therefore, Defendant only avoids being precluded from denial of the claim in the event of an allegation of fraud. Therefore, Defendant has waived the defense that inappropriate codes and charges have been assigned to the treatment based upon the untimeliness of the denials as such objections do not “implicate coverage matters” and Defendant is precluded from raising them belatedly. Central General Hospital v Chubb Group of Insurance Companies, 90 NY2d 195, 659 NYS2d 246 [1997].

The remaining questions for the Court are whether the low impact study propounded by Defendant gives rise to a “founded belief that the alleged injury did not arise out [*3]of an insured incident”. PDG Psychological, PC v State Farm Mutual Insurance Co., 6 Misc 3d 1022(A) [2005], and whether said study has been submitted in admissible, evidentiary, form. If the study is submitted in admissible form and has a proper factual basis, it is the bedrock upon which a founded belief shall lie. Ocean Diagnostic Imaging, PC v New York Central Mut. Fire Ins. Co., 7 Misc 3d 132(A) [App Term 2nd and 11th Jud. Dist. 2005]. The basis for the denials, as set forth in the NF-10’s is a “low-impact study” purportedly prepared with respect to the incident complained of, the results of which are alleged to have shown that the assignor’s injuries did not result from the accident in question.

In this particular matter, the Affidavit of Albert Cipriani, and employee of FTI/SEA submits an Affidavit detailing the conclusions purportedly drawn in the low impact study, but fails to submit the study to the Court. Mr. Cipriani’s Affidavit was executed in Maryland, before a Maryland Notary, and said is not in admissible form as the Affidavit fails to comply with CPLR § 2309 ( c ), which requires a certificate of conformity to accompany the out-of-state Affidavit. Citibank (South Dakota) N.A. v. Mosquera, 5 Misc 3d 134 (A) [App Term 2nd and 11th Jud Dist 2004]; Ford Motor Credit Co. v Prestige Gown Cleaning Services, Inc., 193 Misc2d 262, 748 NYS2d 235 [Civ Ct Queens 2002]. Thus, the Affidavit is insufficient to defeat Summary Judgment.

Moreover, the Court in Ocean Diagnostic Imaging, was very specific in finding that the “‘Accident Analysis’ report, referred to by defendant as a ‘Low Impact Study’, together with the sworn certification of the Technical Consultant/Accident Reconstructionist who prepared the report, constituted admissible evidence in support of defendant’s defense of a lack of causal nexus between the accident and the injuries claimed by plaintiff’s assignors, and was sufficient to demonstrate that the defense was based upon a ‘founded belief that the alleged injur[ies] do[] not arise out of an insured incident’.” 7 Misc 3d 132 (A) (emphasis added) (cites omitted).

Even if Mr. Cipriani’s Affidavit were in admissible form and properly sworn, it still would be insufficient to adequately raise an issue of fact as to Defendant’s purported founded belief. Mr. Cipriani fails to assert that he was the person who prepared the report and fails to annex the report to Defendant’s papers submitted herein. Thus, Defendant’s opposition papers are “insufficient to warrant denial of [the] plaintiff’s motion for summary judgment”. A.B. Med. Srvcs., PLLC v Electric Ins. Co., NYLJ 4/20/05, p. 25, col. 5.

Accordingly, the Court finds that Plaintiff has made out its case for breach of contract and for recovery of unpaid no-fault benefits. Plaintiff’s Motion for Summary Judgment is granted in all respects, and Judgment granted as follows: on Claim #

1, in the sum of $2,664.33, with statutory interest from December 8, 2001; on Claim #

2, in the sum of $1,020.00, with statutory interest from December 27, 2001; on Claim #

3, in the sum of $680.00, with statutory interest from January 20, 2002; on Claim #

4, in the sum of $255.00, with statutory interest from February 10, 2002. Interest to be calculated by the Clerk of Court at the statutory rate of two (2%) percent per month, compounded, from the respective dates set forth above, Plaintiff also to have judgment for statutory attorneys fees as per the NYCRR at twenty (20%) percent of the total medical bill plus interest thereon, plus costs and disbursements.

The foregoing constitutes the decision and order of the Court. [*4]

Dated: July 8, 2005

____________________________________

GERALD J. DUNBAR, JCC