[*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

[*1]

Civil Court of the City of New York, Kings County, June 27, 2005

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., for plaintiff. McDonnell & Adels, P.C., for defendant.

OPINION OF THE COURT

Milagros A. Matos, J.

Plaintiff health care provider East Acupuncture, P.C., as assignee of Arkady Derin, Denis Vassiljev, Stella Martyanova, Leonid Petlakh, Vickran Mohabir, Dora Simcha and Leon Diggs, instituted this action to recover first-party no-fault benefits from defendant Allstate Ins. Co. The patients were injured on January 17, 2001, January 17, 2001, June 21, 2001, April 4, 2001, November 20, 2001, and February 9, 2001. Plaintiff moved for an order pursuant to CPLR 3212 for summary judgment. After [*2]appearing for oral argument on the motion before this court, the parties entered into a stipulation of settlement wherein, inter alia, they agreed to settle the above claims as follows:

On all claims, 80% of the outstanding principle plus;

On claims that have been timely denied, 100% of interest beginning from the date plaintiff’s complaint was filed, and

On claims that have no denials, 90% of interest beginning 30 days after insurer received the claim, and

On claims that have not been timely denied, 100% of interest, beginning either from 30 days after insurer received the claim or the date plaintiff’s complaint was filed, to be determined by the court.

This court is asked to determine at what point interest begins to accrue on an untimely denial and/or improper denial under the no-fault regulations. It is plaintiff’s contention that interest on untimely and/or improper denials received by an assignee/medical provider should begin to accrue 30 days after an insurer receives a proper proof of claim. Defendant argues that interest should not accrue until the no-fault claimant requests arbitration or institutes a lawsuit when that claimant has not done so within 30 days after receipt of the denial.

The former insurance regulations, 11 NYCRR 65.15, apply to claims submitted before April 5, 2002. (See King’s Med. Supply, Inc. v Kemper Auto & Home Ins. Co., 3 Misc 3d 131[A], 2004 NY Slip Op 50401[U] [App Term, 2d & 11th Jud Dists 2004].) With regard to the date that interest accrues on an overdue^[FN*] no-fault claim, the applicable provisions of the former insurance regulations require the same analysis as the new regulations.

11 NYCRR 65.15 (h) (11 NYCRR 65-3.9 under the revised regulations), entitled “Interest on overdue payments,” provides:

“(1) All overdue mandatory personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, compounded and calculated on a pro rata basis using a 30-day month. The aforementioned two-percent per-month interest shall also be payable on all overdue additional personal injury protection benefits due an applicant or assignee as a result of an accident occurring on or after January 1, 1982. When payment is made on an overdue claim, any interest calculated to be due in an amount exceeding $5 shall be paid to the applicant or the applicant’s assignee without demand therefor.

“(2) The insurer shall not suggest that the interest due be waived.

“(3) If an applicant does not request arbitration or institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken.”

Under 11 NYCRR 65.15 (h) (3), if “applicant” fails to institute a lawsuit within 30 days after the receipt of a denial of claim form or payment of benefits, interest accrues from the date [*3]plaintiff institutes the lawsuit, not 30 days after the insurer received the proof of claims. In the instant matter, the plaintiff, a medical provider/assignee, did not request arbitration or institute a lawsuit within 30 days after receipt of the denial of claim form. Plaintiff did not file a lawsuit until June 18, 2004, some two years after receipt of defendant’s denial. Nevertheless, plaintiff argues that 11 NYCRR 65.15 (h) (3) does not apply to an assignee, that 11 NYCRR 65.15 (h) (1) should apply to the instant claims, and that plaintiff should be awarded interest from 30 days after the insurer received the proof of claims.

Plaintiff contends that the insurance regulations make a distinction between an “applicant” and an “assignee.” Under 11 NYCRR 65.15 (h) (1), the words “applicant” and “assignee” are both used to describe a beneficiary of statutory interest, yet 11 NYCRR 65.15 (h) (3) uses only the word “applicant.” Plaintiff contends that the Superintendent of Insurance, when promulgating the regulations at issue, specifically and intentionally distinguished between an “applicant” and “assignee.” Under a plain reading of the regulation, plaintiff argues, an “applicant” is meant only to encompass an assignor, the party initially entitled to no-fault benefits before those benefits are assigned. Therefore, it is plaintiff’s contention that since 11 NYCRR 65.15 (h) (3) specifically leaves out the word “assignee,” the limitations on statutory interest imposed by that section do not apply to an assignee such as plaintiff.

Defendant would have this court read the language of 11 NYCRR 65.15 (h) (3) to include an assignee. Defendant argues that an “applicant” and “assignee” are essentially the same entity for the purposes of 11 NYCRR 65.15 (h) (3). Defendant contends that once a claimant for no-fault benefits has knowledge that a denial has been issued, that claimant is under an obligation to initiate the lawsuit should he wish interest to accrue, whether that claimant is an “applicant” or an “assignee.”

Both sides present public policy arguments supporting their positions. Defendant states that the regulation is “clear and unambiguous” and that “common sense dictates that the purpose of the regulation is to preclude a plaintiff from waiting years to submit a claim and then demand interest for those years waited.” It is plaintiff’s position that such precise wording was contemplated and utilized by the Superintendent of Insurance because 11 NYCRR 65.15 (h) (3) would be overly burdensome if applied to a medical provider. Specifically, plaintiff argues that a medical provider/assignee such as the assignee in the instant action, with multiple dates of service to multiple patients/assignors, would be obligated to institute lawsuits after each date of service in order to recover interest.

It is fundamental that a court, in interpreting a statute, should attempt to effectuate the intent of the Legislature, or in this case the Superintendent of Insurance. “Because the statutory text is the clearest indicator of legislative intent, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof.” (Matter of Jansen Ct. Homeowners Assn. v City of New York, 17 AD3d 588, 589 [2d Dept 2005].) Furthermore, “the No-Fault Law is in derogation of the common law and so must be strictly construed.” (Presbyterian Hosp. in City of N.Y. v Atlanta Cas. Co., 210 AD2d 210, 211 [2d Dept 1994].)

Under a strict interpretation of the regulation at issue, 11 NYCRR 65.15 (h) (3) does not [*4]apply to assignees. The decision of the Superintendent to omit the word “assignee” within 11 NYCRR 65.15 (h) (3) is a clear indication that the Superintendent intended to exclude assignees from this section’s application. (See McKinney’s Cons Laws of NY, Book 1, Statutes § 74 [“A court cannot by implication supply in a statute a provision which it is reasonable to suppose the Legislature intended intentionally to omit”].) Evidence of the Superintendent’s intention to exclude assignees from 11 NYCRR 65.15 (h) (3) lies in the language of other sections of the regulations. The most relevant, 11 NYCRR 65.15 (h) (1), clearly distinguishes, twice, the entities that may claim interest under this section as either an “applicant” or “the applicant’s assignee.” The Superintendent could have included the word “assignee” in the language of 11 NYCRR 65.15 (h) (3) if it intended to impose the burden of obligating a medical provider/assignee to file a lawsuit within 30 days of receipt of the denial. Further, 11 NYCRR 65.15 (h) (3) under the former regulations and 11 NYCRR 65-3.9 under the revised regulations both omit the word “assignee.” This court cannot assume that the omissions from 11 NYCRR 65.15 (h) (3) and its revised version were merely an oversight by the Superintendent.

Defendant offers no reasonable explanation for the Superintendent’s omission. “It remains a basic principle of statutory construction that a court will not by implication read into a clause of a rule or statute for which . . . no sound reason [can be found].” (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 458 [1980] [internal quotation marks omitted].) This court must defer to the Superintendent’s special competence and expertise with respect to the insurance industry. (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854 [2003].) As plaintiff and defendant both contend in their motion papers, the regulations at issue are clear and unambiguous.

Plaintiff’s motion for summary judgment is granted to the extent that statutory interest on the above-settled claims shall be calculated pursuant to 11 NYCRR 65.15 (h) (1).

Footnotes

Footnote *: 11 NYCRR 65.15 (g) (11 NYCRR 65-3.8 under the new regulations) provides that no-fault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, including verification of all of the relevant information requested.

[*1]

Civil Court of the City of New York, Queens County, June 8, 2005

APPEARANCES OF COUNSEL

Teresa M. Spina, Woodbury (Louis F. Chisari of counsel), for defendant. Sanders & Grossman, P.C., Mineola (David M. Barshay and Steven Neuwirth of counsel), for plaintiff.

OPINION OF THE COURT

Bernice D. Siegal, J.

The within action to recover unpaid no-fault benefits came before the court by defendant’s order to show cause moving to stay some 60 pending actions, to consolidate the matters for the purposes of amending the answers to include an affirmative defense of fraud in the incorporation of the provider professional corporation and for such other relief as the court deems just, proper and equitable. As this order to show cause was brought on the heels of the Court of Appeals decision in State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005] [hereinafter referred to as Mallela III]), and given the significance of the court’s determination herein, the matter was set down for oral argument to aid in the court’s deliberation. For the reasons set forth below and in light of the Court of Appeals’ recent pronouncements, based upon the most favorable reading of the facts and the documents submitted by defendant (which, for the purposes of this motion, plaintiff does not at this point dispute), the court grants defendant’s prayer for relief to the extent of consolidating the 61 actions with the within matter for the purposes of amending the answer and setting same down for a framed issue hearing on August 2, 2005 as to whether the plaintiff professional corporations were fraudulently incorporated under Business Corporation Law §§ 1507 and 1508 and Education Law § 6507 (4) (c). The defendant shall amend and serve its answer in the form annexed to defendant’s motion papers as exhibit F together with a copy of this decision within 10 days from date of entry of the within order.

The relevant allegations and arguments are as follows:

Metroscan Imaging P.C., the provider in the instant matter, is one of at least four corporations purportedly incorporated by one Herbert Rabiner, M.D. Dr. Rabiner, on behalf of the professional corporations, entered into a management agreement with Metroscan Resonance Imaging, Inc. and Parkway Magnetic Imaging [*2]Resonance Imaging, Inc. (collectively referred to as the Manager) whereby the medical groups pay for the “management and administrative services, the provision and maintenance of space and equipment, the furnishing of supplies and support personnel and other services” for fees (e.g., $32,000,000 for the first year), and further provided other rights, including a right of first refusal by the Manager when a shareholder of the professional corporation sought to sell. Defendant alleges that “Dr. Rabner [sic] sold his medical license to those entities named above to maintain the appearance that the companies were owned by a physician. When in actuality the corporate entities were owned, controlled and operated by non-physicians.” (Affirmation of Louis F. Chisari, Esq., dated Apr. 4, 2005.) Defendants state that these allegations form, in essence, a “founded belief” that the medical professional corporations were fraudulently incorporated and, if the court finds such fraudulent incorporations, the insurer is under no obligation to reimburse the providers pursuant to the recent Court of Appeals decision in Mallela III. Plaintiff argues that fraud in the incorporation is a defense that does not vitiate coverage (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]) and, in any event, that these claims are not subject to the amended regulations which, concededly, would provide that insurers are not required to reimburse professional corporations that have been fraudulently incorporated (11 NYCRR 65-3.16 [a] [12]).

Analysis and Conclusions

Heretofore, the Court of Appeals has bowed to the express purposes in the now decades old Comprehensive Motor Vehicle Insurance Reparations Law, commonly known as New York’s No-Fault Insurance Law. (Insurance Law § 5101 et seq.) “No-fault reform was enacted to provide prompt uncontested, first-party insurance benefits. That is part of the price paid to eliminate common-law contested suits.” (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 285 [1997] [citation omitted].) Presbyterian and its progeny continue to limit the options of insurers binding them, not inappropriately nor extrajudicially, with strict deadlines and procedures and, if not adhered to, excluding all but a few diehard defenses as to payment (see Central Gen. Hosp. v Chubb Group, supra [the so-called “lack of coverage” defense]). Trial and appellate courts have charted a course with Presbyterian and Chubb as intractable guideposts, refusing to permit insurers to interpose various defenses at the time of litigation, either pursuant to the Presbyterian exclusion or that the defenses must be based solely upon a clearly worded denial (see General Acc. Ins. Group v Cirucci, 46 NY2d 862 [1979]). Thus, unless provided for in a timely denial, payments must be made except when the insurer could establish “a founded belief” that the injuries were not sustained in a covered motor vehicle accident (see Central Gen. Hosp. v Chubb, supra at 199).

In reaction to what the Superintendent of Insurance perceived, and is unfortunately well documented, as a deluge of fraudulent claims, both as to fraud in the accident and as to the care rendered, amended regulations were promulgated placing increased restrictions on claimants and lessening the burden on insurers by broadening the acceptable reasons to deny claims and strengthening insurers’ muscle in investigating claims. The Court of Appeals unanimously held that Regulation 68 (11 NYCRR part 65), although manifestly altering the way claims [*3]are processed, was well within the lawful authority of the Superintendent of Insurance (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854 [2003]). Regulation 68, among other subsequent amendments, incorporated in the endorsement portion of the regulations the right of the insurer to request that the claimant or insured be subject to an examination under oath (11 NYCRR subpart 65-3) and, significantly, Regulation 68-C, promulgated outside of the policy endorsement, provides 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” (11 NYCRR 65-3.16 [a] [12]). In upholding the amended regulations, the Court of Appeals noted:

“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 1700% . . . By one estimate, the combined effect of no-fault insurance fraud has been an increase over $100 per year in annual insurance premium costs for the average New York motorist.” (Serio, supra at 861.)^[FN1]

Prior to the promulgation of these amended regulations and the ensuing decision in Serio, State Farm Mutual Automobile Insurance Company commenced an action in Federal District Court (State Farm Mut. Auto. Ins. Co. v Mallela, 175 F Supp 2d 401 [ED NY 2001] [Mallela I]) seeking a declaratory judgment that it is not required to reimburse providers who have “willfully evaded New York Law prohibiting [nonlicensed providers] from sharing ownership in [professional] corporations” (Mallela III at 319). After dismissal of that action and the promulgation of the new regulations, a second case was commenced—Mallela II. (State Farm Mut. Auto. Ins. Co. v Mallela, 2002 WL 31946762, 2002 US Dist LEXIS 25187 [ED NY 2002].) In Mallela II, on a motion to dismiss, Judge Sifton found that the amended regulations effective April 2002 were “unlike” the old regulations in 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.” (Mallela II, 2002 WL 3194762, *4, 2002 US Dist LEXIS 25187, *14, quoting 11 NYCRR 65-3.16 [a] [12].) Further, the court noted that the Department of Insurance viewed these regulations as a clarification rather than a new requirement. As the no-fault claims arose under the old regulations, Judge Sifton did not disturb an earlier ruling and concluded that “an insurer may not refuse to pay a benefits claim based upon [*4]an allegation that the provider has a true owner . . . who does not possess a license to practice medicine” (Mallela II, 2002 WL 3194672, *11, 2002 US Dist LEXIS 25187, *38). Significantly, the District Court made no distinction as to whether the claims fell under the old regulations or new ones. In finding State Farm’s argument wanting with respect to the amended regulations cited above, Judge Sifton stated: “I am reluctant to undermine the legislative goal of speedy payment in order to permit insurers such as plaintiff to avoid paying licensed medical service providers for medically necessary services provided to insured individuals by licensed physicians.” (Id.)

The Court of Appeals of the State of New York had no such reluctance when responding affirmatively to the certified question posited by the Second Circuit, that is, whether

” ‘a medical corporation that was fraudulently incorporated under N.Y. Business Corporation Law §§ 1507, 1508, and N.Y. Education Law § 6507 (4)(c) [is] 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’ . . .

“We accepted the certification and now answer that such corporations are not entitled to reimbursement.” (Mallela III, supra at 320.)

Judge Rosenblatt unequivocally tempered the legislative imperative of a speedy claims process underpinning the earlier Court of Appeals’ pronouncements and Judge Sifton’s dismissal by specifically holding 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.” (Mallela III, supra at 321.)

Defendant herein argues that Mallela III informs the current litigation, that is, claims made prior to the promulgation of section 65-3.16 (a) (12), irrespective of the reason for the denial or whether such reason is the basis of a timely denial, are nonetheless subject to this policy choice.

The court concurs. The Court of Appeals makes no such distinction, even as the decision has, at its foundation, the new regulation, effective April 4, 2002. Given the procedural posture of the no-fault claims in question in the federal litigation, specifically claims that matured prior to the effective date of the “new” regulations, to read the Mallela III decision as only pertaining to claims maturing post-April 4, 2002 is simply illogical and would negate New York’s highest court’s finding, to wit: “The Superintendent’s regulation allowing carriers to withhold reimbursement from fraudulently licensed medical corporations governs this case.” (Mallella III at 321.)

Contrast the Court of Appeals’ consideration of the second question, that is, “[*5]whether, if the fraudulent corporations were not entitled to reimbursement, [could State Farm] recover money already paid out under theories of fraud or unjust enrichment,” and the Court’s answer to that question: “[N]o cause of action for fraud or unjust enrichment would lie for any payments made by the carriers before that regulation’s effective date” (Mallela III, supra at 322 [emphasis added]).

Again, the court notes that all the claims, which are the subject of the federal litigation, ripened before the effective date of the new regulation, and yet, the only distinction that the Court of Appeals has made is whether payment was made before or after the effective date.^[FN2] Significantly, the Court of Appeals declined to make a specific finding in this matter as the complaint was unclear as to whether State Farm “has paid money to [providers] after the amended regulation took effect.” (Id. [emphasis added].)

Thus, the court finds that 11 NYCRR 65-3.16 (a) (12) applies to the subject actions. “[R]esolution of the critical issues turns on identification and balancing of fundamental components of public policy” (Murphy v American Home Prods. Corp., 58 NY2d 293, 305 n 2 [1983]). In a departure from previous precedent, the Mallela III court placed protection against fraud squarely ahead of speedy resolution of no-fault provider claims. Before Mallela III, the courts in their haste to comply with the “fundamental components” of the legislative imperative behind the no-fault insurance statute failed to identify, let alone balance, competing policy imperatives. The New York Constitution provides that “[t]he protection and promotion of the health of the inhabitants of the state are matters of public concern.” (NY Const, art XVII, § 3.) Illustrative of this important public policy is a decision of the Appellate Division, Third Department, which, in upholding a differential tax code for professional corporations, found that “[p]rofessionals are subject to stricter State supervision and licensing requirements, in order to maintain standards of responsibility for the protection of the public.” (Matter of Manganaro v Tully, 88 AD2d 206, 209 [3d Dept 1982].) Corporations formed specifically to defraud the public and abuse the public trust must not be allowed to reap windfall profits, even in the face of competing compelling public policy.

However, that is not the end of the inquiry as the carriers must “demonstrate behavior tantamount to fraud” (Mallela III at 322) and not merely technical violations (e.g., late filings). Fraud in the incorporation now joins the long-standing Chubb defenses which withstand [*6]exclusion.

The court further holds that the defense is effective only if the insurer initially can show by “fact or founded belief” fraud in the incorporation and, therefore, no reimbursement would be mandated. Defendant herein has articulated a “founded belief” that the health providers, all incorporated by Dr. Rabiner and all subject to a management agreement with nonlicensed professionals, have violated both New York’s Business Corporation Law and Education Law.

Footnotes

Footnote 1: As recently as April 25, 2005, the Court of Appeals chose to use these statistics and their import—abuse of the entire no-fault insurance scheme—in reiterating the tests courts should employ to determine “which [claims] may proceed in court” in personal injury cases arising from motor vehicle accidents under no-fault. (Pommells v Perez, 4 NY3d 566, 571 [2005].)

Footnote 2: Plaintiff herein argues that the court may not impose the new regulations upon claims that arose subject to the “old regulations” (e.g., accidents occurring under a policy that existed prior to April 5, 2002), citing recent decisions on the lack of retroactivity of other “new regulations” such as the requirements of examinations under oath (EUO). That argument is misplaced. The EUO provision is part of the endorsement of the insurance policy (Regulation 68-A) and clearly, when determining the rights and obligations, one must look to the policy endorsement then in effect. (Star Med. Servs. P.C. v Eagle Ins. Co., 6 Misc 3d 56 [App Term, 2d & 11th Jud Dists 2004].) However, the regulation which is the subject of this litigation is not part of the policy endorsement and therefore is not subject to the same restriction.

[*1]

Civil Court of the City of New York, Kings County, May 23, 2005

APPEARANCES OF COUNSEL

Israel, Israel & Purdy (W. Matthew Iler of counsel), for plaintiff. Picciano & Scahill (Patrick Morale of counsel), for defendant.

OPINION OF THE COURT

Eileen N. Nadelson, J.

This action arose pursuant to the provisions of New York’s No-Fault Insurance Law.

Plaintiff submitted a claim to defendant insurer for first-party benefits for an MRI it performed on its assignor’s knee pursuant to a prescription written by a chiropractor. Defendant timely denied the claim based on a peer review by a chiropractor, alleging that the MRI was not medically necessary.

At trial, the question arose as to whether this claim for an MRI of the assignor’s knee performed by plaintiff pursuant to a prescription written by a licensed chiropractor may be recovered under the No-Fault Law from an insurer. Defendant insurer alleges that chiropractors are not permitted to prescribe MRIs for the knee, and therefore any prescription written by a chiropractor for a part of the human body it is not permitted to treat is automatically medically unnecessary. After research and argument, the court finds this is an issue of first impression.

The basic questions presented in this case concern whether a given diagnostic tool is medically necessary regardless of the medical professional who orders it and the degree of inquiry, if any, a medical supplier must perform regarding the authority of the prescribing doctor to write the prescription in question in order to recover first-party no-fault benefits.

Chiropractors are licensed in this state pursuant to the New York State Education Law. Under section 6551 (1) of the Education Law, the profession of chiropractic is defined as “detecting and correcting by manual or mechanical means structural imbalance, distortion, or subluxations in the human body for the purpose of removing nerve interference and the effects thereof, where such interference is the result of or related to distortion, misalignment or subluxation of or in the vertebral column.”

This section of the statute continues to enumerate various restrictions imposed on chiropractors with respect to the methods of treatment they may employ and the diseases and malfunctions they may or may not treat, as well as the nature of the medicines and medical supplies they may prescribe. The court notes that this portion of the Education Law does not mention the use or prescription of MRIs.

In Bako v Decaro (2002 NY Slip Op 50271[U], *4 [Civ Ct, Richmond County 2002]), the court stated that a licensed chiropractor may use “for diagnostic purposes those clinical laboratory services which are contained within the required coursework of all registered doctoral programs in chiropractic in the State.” The court further noted that the study of MRIs is part of the core curriculum at chiropractic schools licensed in the State of New York. In its decision, the court concluded that section 6551 of the Education Law does not prevent chiropractors from using MRIs as a diagnostic tool. In this case the chiropractor whose bills were in question analyzed MRIs ordered by a neurologist on an area of the patient’s body that went beyond the vertebral column.

In a case of first impression, the court in ABC Med. Mgt. v GEICO Gen. Ins. Co. (3 Misc 3d 181 [Civ Ct, Queens County 2003]) held that a medical equipment supplier can recover no-fault first-party benefits for prescriptions written by a chiropractor.

Based on the provisions of the Education Law and the two above-cited cases, the court concludes that, as a general rule, a medical supplier may recover first-party no-fault benefits for prescriptions for MRIs written by a chiropractor. However, this conclusion does not answer the immediate question, which relates to an MRI prescription written by a chiropractor for a part of the human body not within his licensed ability to treat.

As part of its case-in-chief, defendant called a chiropractor as its expert witness who testified that chiropractors do not prescribe MRIs for a patient’s knee because that joint is not within a chiropractor’s area of expertise and training. Usually, the chiropractor will refer the patient to an orthopedist for treatment and diagnosis of a knee who may then, in turn, order an MRI of the knee. Evidence at trial indicated that the prescribing chiropractor referred the patient to a physician who examined the knee but did not prescribe an MRI.

Defendant’s expert further testified that a chiropractor will use an MRI of the knee as a diagnostic tool because, although vertebral problems do not cause symptoms in the extremities, the opposite is not true, and a problem in a patient’s knee may result in symptoms appearing on the vertebral column. This witness also testified that chiropractors do prescribe MRIs for the vertebral column. [*2]

Based on the testimony of defendant’s expert witness, the court concludes that it is not unusual for a chiropractor to prescribe an MRI of the vertebral column or to use an MRI of a patient’s knee prescribed by another medical specialist as a means of diagnosing a patient’s problem. Therefore, simply because chiropractors do not prescribe MRIs of the knee does not mean that such a diagnostic tool is not medically necessary in a given instance. The court notes that no evidence was proffered that the MRI in question was of no assistance to the treating chiropractor.

The only issue remaining, therefore, is whether there is a legal duty imposed on the medical supplier or provider to investigate the authority of the author of the prescriptions it fills in order to receive first-party no-fault benefits for the services it provides.

This court could find no legal authority on point, either legislative or judicial. The court notes that this situation is different from those in which the provider or supplier is not licensed or authorized to perform the services being billed, for which recovery under the No-Fault Law does not lie. (Valley Physical Medicine & Rehabilitation v New York Cent. Mut. Ins. Co., 193 Misc 2d 675 [App Term, 2d Dept 2002].) In the instant case the assignee supplier is licensed to perform the services rendered, and there is no dispute as to the fact that the services were performed.

Based on the specific facts presented in this case, the court concludes that it was not unreasonable for plaintiff to prepare an MRI prescribed by a licensed chiropractor and that there is no evidence that this MRI was not medically necessary as a diagnostic tool. Therefore, plaintiff may seek recovery for the services it rendered from its assignor’s insurer. This is not a situation in which the prescription would be so unusual or extraordinary so as to raise questions of the authority of the prescribing doctor which might impose a duty of inquiry.

If there were any wrongdoing, it would be the action of the chiropractor, not the plaintiff nor the plaintiff’s assignor. Consequently, there would be no reason to preclude recovery under the No-Fault Law.

Judgment for plaintiff in the amount of $878.67 plus statutory interest, costs and attorneys’ fee.

Civil Court of the City of New York, Kings County

63796/2003

Milagros A. Matos, J.

Facts

Plaintiffs medical providers A.B. MEDICAL SERVICES P.L.L.C. (“A.B. Medical”), LVOV ACPUNCTURE P.C.( “LVOV”), and SOMUN ACUPUNCTURE, P.C. (“Somun”), Assignees of SERGEY MINHUK, instituted this action to recover first party no-fault benefits from defendant insurer NEW YORK CENTRAL MUTUAL FIRE INSURANCE COMPANY (“insurer”). LVOV and Somun were denied payment by defendant insurer for acupuncture treatments performed on the patient/insured Sergey Minhuk. The claims for unpaid acupuncture services by LVOV and Somun were settled at trial, and the actions by LVOV and Somun were discontinued against defendant insurer.

A.B. Medical was denied payment by defendant insurer for psychotherapy sessions and neurological testing performed on the patient/insured Sergey Minhuk. The patient was injured in an automobile accident on May 25, 2002. In June and July, 2002, Dr. Jeffery Schwartz, a doctor at A.B. Medical, examined the patient and conducted Electromyography and Nerve Conduction Velocity (EMG/NCV) tests and Somatosensory Evoked Potential (SSEP) tests to determine whether the patient suffered nerve injury from the accident. In July and August, 2002, Dr. Alexander Braver, a doctor at A.B. Medical, performed psychotherapy sessions on the patient.

At the time the services were rendered, the patient Sergey Minhuk was insured under a no-fault insurance policy issued by defendant. The no-fault benefits were properly assigned to A.B. Medical, who submitted claim forms to defendant totaling $6,150.11. Defendant insurer made a partial payment to A.B. Medical in the amount of $1972.08 due to a late denial of claim, leaving a balance of $4,187.03. Defendant denied the remaining claims based upon a denial form and peer review report stating that the sessions and tests were not medically necessary. Before trial the parties stipulated that the only issue for determination by the court was whether the diagnostic testing was medically necessary as defined by Insurance Law § 5102[a][1], and [*2]thus whether or not defendant properly denied payment of the claim. The bills at issue are as follows:

Psychotherapy

8/7/02 bill for diagnostic interview ($218.35) performed on 5/30/02 and 8 psychotherapy sessions ($960.00) performed on 5/31/02-7/31/02 totaling $1,178.35;

7/23/02 bill for a psychotherapy session performed on bill date for $156.32;

9/17/02 bill for 2 psychotherapy sessions performed on 8/7/02 and 8/14/02 totaling $240.00;

Neurology

8/12/02 bill for SSEP testing performed on 6/13/02 totaling $604.24;

8/13/02 bill for EMG/NCV, motor nerve and reflex testing performed on 7/11/02 totaling $1,999.12.

The court conducted a full trial of this matter on March 22, 2005. At trial, both sides presented the testimony of physicians. For the psychotherapy bills, defendant presented Dr. Martin Lipschutz, the doctor that had authored the peer review report upon which the denial was based. Dr. Lipschutz testified that the psychotherapy sessions were not medically necessary due to insufficient information on file justifying ongoing psychotherapy sessions. Plaintiff did not present a witness on the psychotherapy bills, but claimed that Dr. Lipschutz did not adequately review available records to determine lack of medical necessity.

For the Neurology bills, defendant presented Dr. Peter Gastaldi, a chiropractor. He found that the tests were medically unnecessary because the treating doctor provided no objective or subjective findings warranting neurological testing for this patient. Plaintiff presented Dr. Jason Schwartz, the treating neurologist. Dr. Schwartz testified that EMG/NCV testing and SSEP testing is appropriate when there is a diagnostic suspicion of further nerve damage and also to localize such damage.

Discussion

At trial, defendant must establish a factual basis and medical rationale for the lack of medical necessity of plaintiff’s services in order to sustain its burden of proof. (Nir v. Allstate Ins. Co., ___ NY2d___, 2005 WL 562739 [Civ Ct, Kings County 2005]; see also Citywide Social Work & Psy. Serv. P.L.L.C. v. Travelers Indemnity Co., 3 Misc 3d 608, 2004 NY Slip Op 24034 [Civ Ct, Kings County 2004]; Inwood Hill Medical P.C. v. Allstate Ins. Co., 3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U][Civ Ct 2004].) Defendant’s medical rationale may be insufficient if not supported by evidence of the “generally accepted medical/professional practice.” (Nir v. Allstate Ins. Co., supra.) “Generally accepted practice is that range of practice that the profession will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling.” (Citywide Social Work & Psy. Serv. P.L.L.C. v. Travelers Indemnity Co., 3 Misc 3d at 616, supra.)

1. Psychotherapy sessions

Defendant’s peer review doctor, Dr. Lipschutz, testified that the limited information [*3]presented by patient’s treating physician did not justify the need for a psychiatric referral. Dr. Lipschutz testified that the psychotherapy was unwarranted because of A.B. Medical’s “generic” paperwork, which lacked sufficient details of the accident, patient’s symptoms, social factors behind treatment, or objective findings by the treating physician. On cross examination, plaintiff showed that A.B. Medical’s paperwork detailed the accident, the patient’s psychiatric history, current medical condition, medications, social history, results of the physical examination, and diagnosis. Dr. Lipschutz could not support his assertion, that plaintiff’s paperwork was inadequate and therefore psychotherapy sessions were medically unnecessary, with any evidence that plaintiff’s paperwork deviated from generally accepted practice, standards, or values in the field. Therefore, Dr. Lipschutz’ opinion and defendant’s medical rationale to deny payment for lack of medical necessity are insufficient to sustain defendant’s burden of proof.

Even if this Court were to find that Dr. Lipschutz’ opinion was properly supported by evidence of generally accepted practice, his opinion would hold little weight. The short period of time invested, 25 minutes, to review records, come to a conclusion, and complete a report reveals that Dr. Lipschutz did not sufficiently consider the medical necessity of the services provided to the patient. Dr. Lipshutz testified that he reviewed 14 records in preparing his peer review report, including: initial consultation reports, psychotherapy session notes, rehabilitation evaluations, the treating physician’s evaluation, a police accident report, a letter of medical necessity, a narrative report regarding psychological testing, a psychological evaluation, a prescription for medical supplies, MRIs of the right knee, lumbosacral spine, and cervical spine, and electrodiagnostic study reports. He testified that in less than 25 minutes he reviewed the above-mentioned records, came to a conclusion as to the medical necessity of the patient’s psychotherapy sessions, and wrote an extensive three-page peer review report. Plaintiff asserted and this Court agrees that this amount of time is insufficient to carefully determine and detail that a patient does not need the medical services provided by the treating doctor.

Finally, Dr. Lipshutz testified that the psychiatric evaluation performed on 5/30/02 may have been performed by an unlicensed social worker, not a psychiatrist. Although an unlicensed master’s level clinician may not perform psychotherapy sessions, even if supervised by the licensed psychologist (See NYS Educational Law §§ 7600-7606), Dr. Lipschutz’ could not definitively testify that this was the case. On cross-examination, Dr. Lipschutz testified that he did not know what degree of involvement Dr. Braver, the treating psychologist, had in the evaluation. Therefore, defendant could not properly deny payment for the 5/30/02 psychiatric evaluation on that basis.

2. Neurological testing

Defendant offered the testimony of its expert witness, Dr. Gastaldi, a chiropractor. He testified that the electrodiagnostic testing performed by plaintiff would not have served to substantiate the doctor’s findings from the initial physical examination of the patient. Dr. Gastaldi testified that it is generally accepted medical practice to utilize electrodiagnostic testing only to determine whether an injury to a nerve exists and nerve damage had already been diagnosed for this patient. Therefore, the doctor testified, the electrodiagnostic tests were medically unnecessary. [*4]

Plaintiff’s witness Dr. Schwartz, the patient’s treating doctor, rebutted the peer review doctor’s testimony with contrary evidence of generally accepted practice with regard to the use of electrodiagnostic testing. He testified that EMG/NCV and SSEP testing may be utilized even if there is no “diagnostic dilemma.” The plaintiff’s doctor testified that, according to generally accepted medical practice, this testing does not only confirm a doctor’s suspicions of possible nerve damage, but may also assist in localizing the nerve injury.

Contradictory positions have been raised by the testifying witnesses supported by their own testimony of generally accepted medical practice. If the plaintiff medical provider offers evidence that its medical services were consistent with generally accepted medical practice, the defendant insurer may fail to sustain its burden of proof at trial. (Nir v. Allstate Ins. Co., ___ NY2d___, 2005 WL 562739 [Civ Ct, Kings County 2005]; see also Elm Medical P.C. v. American Home Assurance Co., 2003 NY Slip Op. 51357 [Civ Ct 2003].) Plaintiff has offered convincing evidence that the electrodiagnostic testing in this case was utilized to confirm diagnostic suspicions and localize nerve injury. In the face of such evidence, “[I]t is not for a judge to second-guess a doctor who decides that a medical test is necessary for his diagnosis and treatment.” (Alliance Medical Office, P.C. v. Allstate Ins. Co., 196 Misc 2d 268, 2003 NY Slip Op 23633 [Civ Ct, Kings County 2003]; see also Citywide Social Work & Psy. Serv. P.L.L.C. v. Travelers Indemnity Co., 3 Misc 3d 608, 2004 NY Slip Op 24034 [Civ Ct, Kings County 2004].) Defendant’s witness Dr. Gastaldi testified that certain testing listed on plaintiff’s 8/13/02 bill was redundantly billed. Dr. Gastaldi testified that the motor nerve testing, already included in the 8/13/02 bill under one No-fault billing code category, was separately billed under another category, and therefore plaintiff’s bill charged $425.88 in excess. This testimony was not controverted by plaintiff. Plaintiff’s bill of 8/13/02 for $1,999.12 is reduced by $425.88.

Conclusion

Based on the evidence, the Court concludes that defendant did not sustain its burden of proof for the lack of medical necessity of psychotherapy sessions and neurological testing provided to the patient, except for neurological testing redundantly billed on 8/13/02. Plaintiff’s total claim in the amount of $4,187.03 is therefore reduced by $425.88.

Judgment should be entered for the plaintiff in the amount of $3,761.15, plus interest and attorneys’ fees as provided by the Insurance Regulations, together with the statutory costs and disbursements of this action.

This constitutes the Decision and Order of this Court.

Dated: April 29, 2005_________________________

Milagros A. Matos, J.C.C.

Civil Court of the City of New York, Kings County

9422KCV2005

Eileen N. Nadelson, J.

Petition to Vacate a Master Arbitrator’s Award Motion for Summary Judgment

In deciding this matter the court considered the following:

Notice of Petition and annexed Affidavits and Affirmations

Exhibits

Affirmation in Opposition

Memoranda in Support and in Opposition to the Petition

This matter involves the disputed billing of $3947.96 which was denied by the arbitrator based upon the grounds of lack of medical necessity. Petitioner, the medical provider, appealed the arbitrator’s award to a Master Arbitrator, alleging that the arbitrator’s decision was arbitrary, capricious, irrational and without a plausible basis in fact. Based on that argument, Petitioner asked the Master Arbitrator to vacate the award pursuant to CPLR section 7511(b)(1). The Master Arbitrator, however, affirmed the arbitrator’s award.

Petitioner, pursuant to CPLR 7511, now moves this court to vacate the decision of the Master Arbitrator as arbitrary and capricious.

Petitioner originally submitted a claim for $4,354.30 for acupuncture treatments it rendered to the allegedly injured assignor. Respondent insurer made partial payments in the amount of $406.34, and Petitioner filed a request for arbitration.

The initial arbitrator stated that he reviewed the documentation submitted which reflect [*2]that Respondent issued timely denials based on a lack of medical necessity, following a peer review and the assignor’s failure to appear for an Independent Medical Examination. In his conclusion, the initial arbitrator stated that the denials issued by the insurer were of no consequence, and that the crucial fact is the medical necessity of the treatments. The Master Arbitrator, in his affirmation of the initial decision, stated that the initial arbitrator’s statement that the timeliness of the denials was of no consequence was erroneous, but harmless error under the circumstances.

Petitioner alleges that the initial arbitrator required it to prove medical necessity which is an incorrect interpretation of its prima facie burden of proof. Petitioner states that, to meet its burden, it only has to prove that it provided services, mailed a claim, and that the claim was not paid or denied within thirty days. The Master Arbitrator disagreed, and confirmed the arbitration award.

In his decision, the Master Arbitrator states that the initial decision was neither arbitrary nor capricious, and that statutory requirements mandate that a medical provider establish the necessity of its medical treatments. Insurance Law sec. 5102, 11 NYCRR 65-1.1. Further, since the insurer did timely deny the claim, proving such necessity is part of the provider’s burden. Cf In re Regal Imaging aao Ginzberg v. State Farm Insurance Co., Index No. 7450/01 (Sup. Ct. Nassau County August 8, 2001).

CPLR section 7511((b)(iii) provides that an arbitrator’s award may be vacated if it is found that the arbitrator exceeded his power or imperfectly executed it. In Petrofsky v. Allstate Insurance Company, 54 NY2d 207, 445 N.Y.S. 2d 77 (1981), the Court of Appeals held that the role of a master arbitrator in insurance cases is to assure that the arbitrator reached a decision in a rational manner, that the decision was not arbitrary and capricious, incorrect as a matter of law, or in excess of policy limits or in conflict with other designated no-fault arbitration proceedings. Therefore, the question to be decided by this court is whether the decision of the arbitrator, as confirmed by the Master Arbitrator, was arbitrary, capricious, or incorrect as a matter of law.

In Park Radiology, P.C. v Allstate Insurance Company, 2 Misc 3d 621, 769 N.Y.S. 2d 870 (Richmond County 2003), a case involving the claim for first party no-fault benefits, the arbitrator, as in the instant case, found that the insurer failed to pay or deny the claim within the prescribed thirty day period. Nevertheless, the arbitrator found that the medical provider failed to establish a prima facie case that the tests performed were medically necessary and so denied the claim. In affirming the award, the master arbitrator cited the Petrofsky case as limiting his ability to vacate an award that is neither arbitrary nor capricious. However, the Civil Court vacated the master arbitrator’s decision and found for the medical provider, asserting that the arbitrator and master arbitrator misconstrued the law.

The law with respect to the burden of proof in first party no-fault claims was established by the court in Bonetti v. Integron National Insurance , 269 AD2d 413, 703 N.Y.S. 2d 217 (2d Dept. 2000). The Bonetti court stated that, with limited exception, an insurer is precluded from [*3]denying a no-fault claim if it fails to timely deny it. Further, an insurer is precluded from challenging the adequacy of a claimant’s proof of medical necessity if it fails to timely deny the claim for no-fault benefits. Vinings Spinal Diagnostic, P.C. v Liberty Mutual Insurance Company, 186 Misc 2d 287, 717 N.Y.S. 2d 466 (Nassau County 2000). This is true despite a contrary position taken by the New York Department of Insurance.

In a recent decision of this court, Kew Gardens Imaging aao Mary maynard v. Liberty Mutual Ins. Co., 2004 NY Slip Op. 51077(U) (Civ. Ct. Kings County 2004), the decision of a Master Arbitrator was overturned because it was determined that no rational basis existed for the arbitration decision. In that case the insurer failed to pay or deny the claim within thirty days, and the arbitrator based his conclusion on the fact that the provider failed to establish the medical necessity of the treatments. This court found that conclusion to be beyond the scope of judicial authority which precludes an insurer from raising any defense, other than lack of coverage, when it fails to deny a claim within thirty days. Insurance Law sec. 5106(a); New York Medical Center of Queens v. Country-Wide Insurance Co., 295 AD2d 583, 744 N.Y.S. 2d 201 (2d Dept. 2002). However, that case is distinguishable from the instant action.

In the case at bar the insurer did deny the claim within the statutory thirty day period. The Master Arbitrator asserted that the initial arbitrator’s conclusion that the timeliness of the denial was of no consequence was error, although harmless in the instant matter. Because Respondent did timely deny the claim, Petitioner must evidence, as part of its prima facie case, the medical necessity of its treatment. This the arbitrator determined it did not do.

An arbitration award will be upheld if it is supported by the evidence and is not arbitrary and capricious. Eagle Insurance Compnay v. First Cardinal Corp., 8 AD3d 483, 778 N.Y.S. 2d 309 (2d Dept. 2004). The arbitrator’s decision is supported by the record, and there is nothing to warrant the vacatur of the award. State Farm Mut. Automobile Ins. Co. v. Arabov, 2 AD3d 531, 767 N.Y.S. 2d 905 (2d Dept. 2003).

Based on the foregoing, Petitioner’s motion is denied and the Master Arbitrator’s award is affirmed.

Dated: April 18, 2005

__________________________

EILEEN N. NADELSON, J.C.C.