[*1]

Civil Court of the City of New York, Kings County, March 9, 2005

APPEARANCES OF COUNSEL

Harvey L. Woll for plaintiffs. Shapiro, Beilly, Rosenberg, Aronowitz, Levy & Fox, LLP (Thomas J. Nemia of counsel), for defendant.

OPINION OF THE COURT

Jack M. Battaglia, J.

In this consolidated action for first-party no-fault benefits, five providers of physical therapy, chiropractic, acupuncture, or transportation services seek payment from State Farm Mutual Automobile Insurance Company for services provided to six persons allegedly injured in automobile collisions. There are 197 separate bills, which total $78,987.74.

The only issue for trial was whether the alleged injuries arose from “staged accidents.” In two of the four consolidated cases, plaintiffs’ motions for summary judgment were denied, and the denials were upheld on appeal. (See A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 5 Misc 3d 133[A], 2004 NY Slip Op 51432[U] [App Term, 9th & 10th Jud Dists 2004]; A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., App Term, 2d & 11th Jud Dists, June 22, 2004, No. 2003-1057 KC.) As held by Appellate Term for the Second and Eleventh Judicial Districts in one of the cases, the affidavit of State Farm’s investigator “set forth sufficient facts to demonstrate that [State Farm] possessed a ‘founded belief that the alleged injury does not arise out of an insured accident.’ ” (Id. at SM-2, quoting Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997].) The holding of Appellate Term for the Ninth and Tenth Judicial Districts in the other case is to the same effect. (See A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 2004 NY Slip Op 51432[U], *2.)

In Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]), the Court [*2]of Appeals held that “an insurer, despite its failure to reject a claim within the 30-day period” prescribed by the governing statute and regulations, “may assert a lack of coverage defense premised on the fact or founded belief that the alleged injury does not arise out of an insured incident.” (Id. at 199 [emphasis added].) “[T]he preclusion remedy does not apply to a defense of no coverage at all.” (Id. at 202.)

“A deliberate collision caused in furtherance of an insurance fraud scheme is not a covered accident.” (State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490, 491 [2d Dept 2003]; see also Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 751-752 [2d Dept 2002].) Indeed, when a collision is “an intentional act, not an accident,” there is no coverage (see Westchester Med. Ctr. v Travelers Prop. Cas. Ins. Co., 309 AD2d 927, 928 [2d Dept 2003]), “regardless of whether the intentional collision was motivated by fraud or malice” (see Matter of Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522, 523 [2d Dept 2003]).

The insurer “has the burden to come forward with proof in admissible form to establish ‘the fact’ or the evidentiary ‘found[ation for its] belief’ ” that there is no coverage. (See Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11, 19-20 [2d Dept 1999], quoting Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d at 199; see also Hospital for Joint Diseases v Hertz Corp., 9 AD3d 392, 392 [2d Dept 2004]; St. Luke’s Roosevelt Hosp. v Allstate Ins. Co., 303 AD2d 743, 744 [2d Dept 2003].)

It is not easy for this court to know what to make of the “fact or founded belief” formulation in Chubb. It would seem that either there is coverage, or there is not; that either there was a “staged accident,” or there was not. We generally do not relieve a contracting party from performance under the contract because the party “believes” that performance is not required, whether “founded” or not, if in “fact” performance is required. The formulation does, however, reflect that a determination as to coverage is often a function of circumstance and inference, and the formulation does fairly reflect the evidentiary burdens when there is a dispute as to coverage.

“An insured seeking to recover for a loss under an insurance policy has the burden of proving that a loss occurred and also that the loss was a covered event within the terms of the policy.” (Gongolewski v Travelers Ins. Co., 252 AD2d 569, 569 [2d Dept 1998], quoting Vasile v Hartford Acc. & Indem. Co., 213 AD2d 541, 541 [2d Dept 1995]; see also Dato Jewelry v Western Alliance Ins. Co., 238 AD2d 193, 193 [1st Dept 1997].) Whatever the risk or loss covered, it has long been the insured’s burden to prove coverage under the policy. (See Lavine v Indemnity Ins. Co., 260 NY 399, 410 [1933]; Whitlatch v Fidelity & Cas. Co. of N.Y., 149 NY 45, 48 [1896]; Zuckerberg v Blue Cross & Blue Shield of Greater N.Y., 108 AD2d 56, 61 [2d Dept 1985], affd 67 NY2d 688 [1986]; Washburn v Wholehealth Ins. Network, 196 AD2d 813, 815 [2d Dept 1993]; Glogvics v Preferred Acc. Ins. Co. of N.Y., 245 App Div 817, 817 [2d Dept 1935]; Bracey v Metropolitan Life Ins. Co., 54 Misc 2d 175, 180 [App Term, 2d Dept 1967].) [*3]

In an action for first-party no-fault benefits, “a provider’s proof of a properly-completed claim makes out a prima facie case” (see Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U], *3 [App Term, 2d & 11th Jud Dists]; see also A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86, 87 [App Term, 2d & 11th Jud Dists 2004]). To adopt Appellate Term’s conception in the related area of medical necessity, there is a “presumption of [coverage] which attaches to the claim form.” (See Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 7 Misc 3d 18, 22 [App Term, 2d & 11th Jud Dists 2004].)

As stated, the insurer bears the burden of coming forward with admissible evidence of “the fact” of lack of coverage or of the “found[ation for its] belief” that there is no coverage. (See Mount Sinai Hosp. v Triboro Coach, 263 AD2d at 19-20.) But the burden of coming forward with evidence is not the burden of persuasion. (See McClelland v Climax Hosiery Mills, 252 NY 347, 358 [1930] [Cardozo, Ch. J., concurring].) “Shifting the burden of explanation or of going on with the case does not shift the burden of proof.” (Plumb v Richmond Light & R.R. Co., 233 NY 285, 288 [1922]; Matter of Philip M., 82 NY2d 238, 244 [1993].)

The burden of persuasion stays with the plaintiff, and if the insurer carries its burden of coming forward, “plaintiff must rebut it or succumb.” (See Baumann v Long Is. R.R., 110 AD2d 739, 741 [2d Dept 1985].) Appellate Term appears to have recognized these evidentiary burdens, and their consequences, again in the context of medical necessity.

“[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. Med. Servs. v New York Cent. Mut. Fire Ins. Co., 3 Misc 3d 136[A], 2004 NY Slip Op 50507[U], *2 [App Term, 2d & 11th Jud Dists 2004].)

In this action, the only witness at trial (other than a witness to allow State Farm to attempt to make an evidentiary record as to a rejected defense) was Robert Battista, who is employed as an investigator in State Farm’s Special Investigative Unit. Mr. Battista provided the affidavits submitted on the motions for summary judgment that Appellate Term for both the Second and Eleventh Judicial Districts and for the Ninth and Tenth Judicial Districts found “sufficient . . . to demonstrate that [State Farm] possessed a ‘founded belief’ ” that the “accidents” here were “staged.” (See A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., June 22, 2004, No. 2003-1057 KC, at SM-2.)

Mr. Battista’s testimony at trial essentially tracked the affidavits submitted on the [*4]summary judgment motions, and it may be that Appellate Term has, in effect, determined that his testimony is sufficient to carry State Farm’s burden of coming forward on the question of coverage, with the result that plaintiffs were then required to rebut State Farm’s “founded belief” in order to sustain their burden of persuasion on coverage. “A denial of a motion for summary judgment is not necessarily . . . the law of the case . . . that will be established at trial.” (Sackman-Gilliland Corp. v Senator Holding Corp., 43 AD2d 948, 949 [2d Dept 1974] [emphasis added].) After all, “the evidence may be different at trial.” (See S.L. Benfica Transp., Inc. v Rainbow Media, Inc., 13 AD3d 348, 349 [2d Dept 2004].)

That does not mean that there is no place for the law of the case doctrine after denial of a summary judgment motion. (See Seneca Trucking Co. v D.H. Overmeyer Co., 36 AD2d 894, 894 [4th Dept 1971].) Here, two appellate panels and two trial court judges have concluded, based upon evidence virtually the same as that introduced at this trial, that State Farm had a “founded belief” that the “accidents” were “staged.” The avoidance of “inefficiency and disorder” that is the goal of the law of the case doctrine (see People v Evans, 94 NY2d 499, 503-504 [2000]) would be served by this court’s adoption of the conclusions reached by those who have already considered this case.

The court recognizes that there is case law that would suggest a different allocation of evidentiary burdens for allegations of a “staged accident.” “In an action to recover the proceeds of a fire insurance policy, it is the insurer’s burden to establish the affirmative defense of arson,” and the “measure of persuasion is that of clear and convincing evidence.” (Hutt v Lumbermens Mut. Cas. Co., 95 AD2d 255, 256-257 [2d Dept 1983]; see also 3910 Super K v Pennsylvania Lumbermens Mut. Ins. Co., 219 AD2d 589, 589-590 [2d Dept 1995].) There are important differences, however, between the “affirmative defense of arson” and the issue of coverage for an intentional collision.

The arson defense requires proof of both the incendiary nature of the fire and that it was set by or with the consent of the insured. (See Chenango Mut. Ins. Co. v Charles, 235 AD2d 667, 668-669 [3d Dept 1997]; Ausch v St. Paul Fire & Mar. Ins. Co., 125 AD2d 43, 45 [2d Dept 1987].) That is why proof of financial motive is so important in arson cases. (See Schlegel v Aetna Cas. & Sur. Co., 282 AD2d 516, 517 [2d Dept 2001]; Chenango Mut. Ins. Co. v Charles, 235 AD2d at 669.) It is “because arson is but one form of fraud in making a claim under a policy” that “an inference of arson must be strong and almost inevitable.” (Hutt v Lumbermens Mut. Cas. Co., 95 AD2d at 256-257 [internal quotations marks, brackets and citations omitted].)

With an alleged “staged accident” or other intentional collision, it is the intent that is crucial, not the motive, financial or otherwise, and even the innocent insured is deprived of coverage. (See McCarthy v Motor Veh. Acc. Indem. Corp., 16 AD2d 35 [4th Dept 1962], affd 12 NY2d 922 [1963]; Matter of Progressive Northwestern Ins. Co. v Van Dina, 282 AD2d 680 [2d Dept 2001]; Matter of Aetna Cas. & Sur. Co. v Perry, 220 AD2d 497 [2d Dept 1995].) The appellate decisions dealing with intentional collisions, whether “motivated by fraud or malice” (see Government Empls. Ins. Co. v Shaulskaya, 302 AD2d at 523), characterize the insurer’s “defense” as lack of coverage; there is no indication that the evidentiary burdens and “measure of persuasion” (see Hutt v Lumbermens Mut. Cas. Co., 95 AD2d at 256-257) are to differ when an alleged intentional collision might be motivated by fraud.

Similarly, in Dato Jewelry v Western Alliance Ins. Co. (238 AD2d 193 [1st Dept 1997]), where the insurer was estopped from asserting a “dishonest theft” exclusion from coverage for an alleged jewelry robbery, because the insurer did not deny coverage on that basis (see id. at 193), the jury was properly charged that “the burden was on the insured to prove the robbery was legitimate rather than on the insurer to prove it was staged” (see id.). Generally, an insurer bears the burden of proving an exclusion from coverage. (See Neuwirth v Blue Cross & Blue Shield of Greater N.Y., Blue Cross Assn., 62 NY2d 718, 719 [1984]; Utica Mut. Ins. Co. v Prudential Prop. & Cas. Ins. Co., 103 AD2d 60, 63 [2d Dept 1984].) Lack of coverage is not an exclusion. (See State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d at 491-492.)

Arson may be established by circumstantial evidence (see Stone v Continental Ins. Co., 234 AD2d 282, 283 [2d Dept 1996]), as may fraud generally (see Booth v Bunce, 33 NY 139, 159 [1865]; Hickok v Cowperthwait, 134 App Div 617, 618 [2d Dept 1909]). “Circumstances insignificant in themselves may acquire probative force as links in the chain of circumstantial proof.” (Van Iderstine Co. v Barnet Leather Co., 242 NY 425, 435 [1926].) It may be that in a case like this, where the only admissible evidence on whether the collision was intentional is that submitted by the insurer, the evidentiary burdens and standard of proof will not determine the result.

The court recognizes, however, that some of the information that Mr. Battista relied upon in his affidavits was hearsay that was not rendered admissible by appropriate foundation, and that those opposing a motion for summary judgment are, within limits, permitted to rely on otherwise inadmissible information. (See Phillips v Kantor & Co., 31 NY2d 307, 311-312 [1972]; Kwi Bong Yi v JNJ Supply Corp., 274 AD2d 453, 453 [2d Dept 2000]; Chubb & Son v Riverside Tower Parking Corp., 267 AD2d 128, 128 [1st Dept 1999].) The Appellate Term opinions here do not specify the information that the respective panels found admissible and sufficient and the information, if any, that was not considered. It is this court’s view that, even without the inadmissible information that was submitted on the motions, State Farm sufficiently established at trial its founded belief that there is no coverage.

Three of plaintiffs’ assignors—Cindy Toledo, Kimberly Toledo and Joseph Murray—were allegedly injured on December 7, 2001 when the vehicle in which they were riding, a 1987 Pontiac Bonneville, was rear-ended by a 1987 Chevy Caprice. The vehicle in which plaintiffs’ assignors were riding was owned by Marianna Manoylo, and was insured by State Farm. Coverage for the Manoylo vehicle was obtained pursuant to the assigned risk program. Although the policy was written in May 2001, it was changed only four days before the collision to cover Ms. Manoylo’s Bonneville. The coverage was canceled less than two months after the collision [*5]because of nonpayment of the premium.

The other three of plaintiffs’ assignors—Yuriy Ozerov, Nathan Shylakh and Marlen Belyavsky—were allegedly injured on February 10, 2002 when the vehicle in which they were riding, a 1991 Ford Tempo, was rear-ended by a 1989 Plymouth Voyager. The vehicle in which plaintiffs’ assignors were riding was owned by Mr. Ozerov, and was insured by State Farm. Coverage for the Ozerov vehicle was obtained pursuant to the assigned risk program approximately one month before the collision, and was canceled one month after the collision because of nonpayment of the premium.

In addition to the similarities between the December 2001 collision and the February 2002 collision that are apparent from the above recitation, two of the persons riding in the State Farm-insured vehicle at the time of the February 2002 collision had relationships with persons who were involved in the December 2001 collision. Marlen Belyavsky’s mother is Svetlana Manoylo, and they both resided with Marianna Manoylo. And Nathan Shylakh resided with Oksana Shylakh, who was a passenger in the Chevy Caprice that rear-ended the Manoylo vehicle. Moreover, Nathan Shylakh and Yuriy Ozerov, the owner and driver of the State Farm-insured vehicle, were involved in another collision approximately one year earlier.

State Farm obtained examinations under oath of Cindy Toledo and Kimberly Toledo (Dec. 2001 collision) and of Yuriy Ozerov, Nathan Shylakh and Marlen Belyavsky, the latter with his mother, Svetlana Manoylo (Feb. 2002 collision). At the examinations, all three of the assignors who were involved in the February 2002 collision purported to withdraw the claims that had been submitted to State Farm, an effort that was ineffective. (See 11 NYCRR 65-3.11 [d].)

In addition to the circumstances recited so far, based upon evidence admitted at trial, in disclaiming coverage State Farm relied on other circumstances, based upon documents not properly admitted into evidence. State Farm pointed to discrepancies and other problems revealed by the transcripts of the examinations under oath of Cindy Toledo and Kimberly Toledo, but State Farm did not lay any foundation or make any other showing that would support the admissibility of the transcripts.

State Farm also pointed to information obtained from the National Insurance Crime Bureau (NICB), which serves as a clearinghouse of sorts for data from insurance companies concerning claims made against all types of policies. Certainly, such “loss histories” were material to the issues to be determined. (See Rickert v Travelers Ins. Co., 159 AD2d 758, 760 [3d Dept 1990].) But State Farm did not lay any foundation or make any other showing that would support the admissibility of this NICB information. State Farm did cite People v Veloz (273 AD2d 259 [2d Dept 2000]) as authority for the admissibility of NICB information, but the Court there merely stated that “the National Insurance Crime Bureau records were properly admitted into evidence as business records,” without any description of the “records” admitted or of any foundation that may have been laid for admittance (see id. at 259). [*6]

In the interest of completeness, the court notes that the NICB information offered by State Farm indicated a significant insurance claim history for Marianna Manoylo, Svetlana Manoylo and Oksana Shylakh. The information also revealed that the owner and driver of the second vehicle involved in the February 2002 collision, Ediberto Olavarria, had been involved in a collision on December 29, 2001 together with a David Fich, and that Mr. Fich had been in a collision on April 30, 2001 together with Svetlana Manoylo. Again, this information is inadmissible hearsay.

In addition to the inferences arising from the facts and circumstances related to the collisions, State Farm argues that the purported withdrawal of claims by the assignors involved in the February 2002 collision evidences a “consciousness of guilt” that constitutes an “admission by conduct,” at least as to those assignors. (See Nowack v Metropolitan St. Ry. Co., 166 NY 433, 437, 439, 442 [1901]; Kamenov v Northern Assur. Co. of Am., 259 AD2d 958, 959 [4th Dept 1999]; Bazza v Banscher, 143 AD2d 715, 716 [2d Dept 1988].) Since State Farm is not offering the purported withdrawal to divest plaintiffs of their title to the claims sued upon (see Tierney v Fitzpatrick, 195 NY 433, 434 [1909]; Dinnebeil v Ringer, 101 Misc 658, 663-664 [App Term, 1st Dept 1917]), the inference that arises from the assignors’ conduct appears to be admissible against plaintiffs (see Leon Sylvester, Inc. v Aetna Cas. & Sur. Co., 227 AD2d 212 [1st Dept 1996]; see also Kamenov v Northern Assur. Co. of Am., 259 AD2d at 958-959). Since the withdrawal of the claims, however, is not unequivocally referable to “guilt,” the inference here has some, but not substantial, probative value.

Although an insurer’s “founded belief” that a collision was “staged” cannot be based upon “unsubstantiated hypotheses and suppositions” (see A.B. Med. Servs. v Eagle Ins. Co., 3 Misc 3d 8, 9-10 [App Term, 2d Dept 2003]; Amstel Chiropractic v Omni Indem. Co., 2 Misc 3d 129[A], 2004 NY Slip Op 50088[U], *1-2 [App Term, 2d & 11th Jud Dists 2004]), of necessity in most cases it will be established by circumstantial evidence (see State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d at 491; A.B. Med. Servs. PLLC v State Farm Mut. Auto. Ins. Co., 4 Misc 3d 83, 84-85 [App Term, 9th & 10th Jud Dists 2004]; Matter of Progressive County Mut. Ins. Co. [McNeil], 4 Misc 3d 1022[A], 2004 NY Slip Op 50998[U], *2 [Sup Ct, Nassau County 2004]; Matter of National Grange Mut. Ins. Co. v Vitebskaya, 1 Misc 3d 774, 775-777 [Sup Ct, Kings County 2003]). Mr. Battista testified that the facts and circumstances that he relied upon in reaching his conclusion that the two collisions here were “staged” are recognized as probative in the field of insurance fraud investigation, but State Farm made no attempt to introduce any documents or other evidence of that.

Mr. Battista’s trained opinion is entitled to some weight (see Matter of Travelers Indem. Co. v Morales, 188 AD2d 350, 351 [1st Dept 1992]), but, at least in this action, the strength of the inferences must be measured by “common sense” and the “logic of common experience itself” (see Schneider v Kings Highway Hosp. Ctr., 67 NY2d 743, 744-745 [1986]). So measured, the court considers the evidence sufficient to carry State Farm’s burden of coming forward with a “founded belief” that the collisions were “staged.” [*7]

This conclusion is buttressed by the failure of plaintiffs to call any of the assignors to testify at trial. The assignors would have been expected to give testimony that was material and noncumulative, and, most importantly, testimony that would be favorable to plaintiffs. (See People v Savinon, 100 NY2d 192, 197 [2003].) Plaintiffs made no showing that any of the assignors was “unavailable,” either in fact or on a plea of privilege (see id. at 197-199), and no explanation was offered for their not having been subpoenaed to testify (see id. at 199-200). It may be that even “Herculean lengths” (see id. at 199) would not have produced any of the assignors in court, but on this record the court takes a “permissive adverse inference” (see id. at 201) that they would not have helped plaintiffs’ cause.

Plaintiffs introduced no evidence to rebut the inferences supporting a conclusion that the State Farm policies provide no coverage for the December 2001 and February 2002 collisions. Any statements by the drivers that the investigating officers noted in the respective police accident reports were, in the context of this action, inadmissible to establish that an “accident” occurred. (See Cover v Cohen, 61 NY2d 261, 274 [1984]; Bates v Yasin, 13 AD3d 474, 474 [2d Dept 2004]; Hoffman v Eastern Long Is. Transp. Enter., 266 AD2d 509, 510 [2d Dept 1999].)

Counsel ably attempted, by cross-examination of Mr. Battista and argument, to weaken the strength of State Farm’s showing. One may accept, for example, that older vehicles will often be insured pursuant to the assigned risk program. And one could agree that it is more likely for an older vehicle damaged in a collision not to be repaired, and for its insurance to be allowed to lapse. But, here, we have two collisions that occurred within a short window of insurance coverage, with four vehicles each more than 10 years old, and relationships linking an owner or at least one occupant of three of the vehicles. In each of the collisions, moreover, the State Farm vehicle was rear-ended when stopped, and, according to the police accident reports, the drivers of the vehicles that hit them were particularly accommodating in acknowledging fault.

The court is mindful that there was no direct evidence that any of the plaintiffs here knowingly participated in any insurance fraud scheme, or even suspected one. But “[w]here a loss is caused by the fraud of a third party, in determining the liability as between two innocent parties, the loss should fall on the one who enabled the fraud to be committed.” (Fidelity Natl. Tit. Ins. Co. of N.Y. v Consumer Home Mtge., 272 AD2d 512, 514 [2d Dept 2000].) Although any fraudulent conduct of the assignors might not be “properly imputed” to plaintiffs (see id.; see also A&S Med. v Allstate Ins. Co., 196 Misc 2d 322, 324 [App Term, 1st Dept 2003], affd 15 AD3d 170 [1st Dept 2005]), plaintiffs would be among the “primary beneficiaries of [the] fraud” (see Chubb & Son v Consoli, 283 AD2d 297, 299 [1st Dept 2001]). And, generally, “[a]n assignee stands in the shoes of the assignor” (see Arena Constr. Co. v J. Sackaris & Sons, 282 AD2d 489, 489 [2d Dept 2001]).

Plaintiffs, moreover, have remedies available to them that are not available to the millions of New York motorists that pay the additional premium costs that the Court of Appeals has identified as resulting from automobile insurance fraud (see Matter of Medical Socy. of State of N.Y. v Serio, 100 [*8]NY2d 854, 861 [2003]). Service providers may explicitly include in their assignment documents provision for recourse against the assignor if the insurer does not pay because of lack of coverage, and the providers may bring an assignor into any action against the carrier when the carrier defends nonpayment on the ground of lack of coverage.

Plaintiffs have failed to persuade this court that the State Farm policies provide coverage for the claims at issue.

Judgment awarded to State Farm, dismissing the claims.

Civil Court, Kings County

046215/02

Loren Baily-Schiffman, J.

This is an action to recover benefits pursuant to the no-fault provisions of Insurance Law §5106 and regulations promulgated thereunder, 11 NYCRR §65-1.1 and for attorneys fees pursuant to 65 NYCRR §65.17 (b)(6)(v). Plaintiff provider, as assignee of Kate Boglio, Julia DeJesus, Lillia Galicia, Fred Korets, Bertha Louis, Nelson Neton, Mozeik Perkins, Shawn Perkins, Maxim Savelyev, and Alexander Yakhshibekov moves this Court for summary judgment. Plaintiff asserts that it is entitled to judgment as defendant has not paid or denied the subject claims within thirty (30) days of receipt and where denials have been made, has not asserted a basis for the denial that is cognizable under the No-Fault Law. Defendant opposes the motion for summary judgment on the following bases: that the motion is premature in that the Court has not yet ruled on defendant’s motion to extend their time to comply with this Court’s [*2]prior discovery Order; the claims concerning Fred Korets, Maxim Savelyn and Alexander Yakhshibekov have been paid; plaintiff lacks standing to recover for its services billed from July 7, 2000 to July 6, 2001 as Michael M. Katz was suspended from practicing medicine during this time; plaintiff lacks standing to recover for its services because it is in violation of Article 15 BCL; a question of fraud exists as to allegedly negligent or fraudulent services provided by plaintiffs, and; plaintiff has failed to establish its prima facie case because the assignments of benefits submitted as part of the claims are not authenticated.

MOTION FOR SUMMARY JUDGMENT

In a motion for summary judgment, the moving party must make out a prima facie case of entitlement to judgment as a matter of law, offering sufficient evidence to establish the absence of any material issues of fact. Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). After making out a prima facie case, the burden shifts to the party opposing the motion to present sufficient evidence to show that there are material issues of fact in controversy which require a trial. Id. In a claim for no-fault benefits by a provider, the Plaintiff’s prima facie case is established by “the submission of a complete proof of claim and the amount of the loss. (See Insurance Law §5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701{App Term, 2d & 11th Jud Dists])”. Ocean Diagnostic Imaging PC v. State Farm Mutual Automobile Insurance Company, NYLJ, Sept 24, 2004, p. 28, col. 5 (App Term 2d & 11th Jud Dists, 2004).

Pursuant to the Insurance Law and regulation, an insurer must either pay or deny a claim for no-fault benefits within thirty (30) days of receipt. The thirty (30) day period may be extended by an insurer’s request for verification of the claim within ten (10) business days for claims covered by the regulations in effect prior to April 5, 2002 and fifteen (15) business days for claims covered by the regulations that came into effect on April 5, 2002. 11 NYCRR 65.15 (e)(old regs); 11 NYCRR 65-3.5(b)(new regs). If any insurer fails to timely deny a claim, the insurer is precluded from raising any defenses to the claim other than lack of coverage and fraud by the assignor. Presbyterian Hosp. v. Maryland Cas. Co., 90 NY2d 274, 278 (1997); Presbyterian Hosp. v. Aetna Cas. & Sur. Co., 233 AD2d 433 (2d Dept, 1996); Central Hospital v. Chubb, 90 NY2d 195 (1997); Mt. Sinai v. Triboro Coach, 263 AD2d 11 (2d Dept 1999). An insurer’s failure to raise objections within the ten (10) or fifteen (15) day verification period constitutes a waiver of any defenses based thereon. Id.

Plaintiff asserts that it submitted the following proofs of claim for the aforementioned assignors:

AssignorDate of Date Claim Date of Reason for

ServiceReceivedDenialDenial

[*3]Boglio9/8/002/14/017/27/01Investigation Pending

DeJesus2/10/003/23/004/13/00Investigation Pending

Galicia2/10/003/21/004/26/00Investigation Pending

Korets2/2/00unknownNo denial received

Louis9/14/9910/28/9911/2/99Investigation Pending

9/21/9910/28/9911/2/99Investigation Pending

Neton2/10/004/3/005/2/00Investigation Pending

M.Perkins8/11/004/10/016/6/01Investigation Pending

8/18/004/10/016/6/01Investigation Pending

9/6/004/10/016/6/01Investigation Pending

S. Perkins4/30/997/25/9911/19/99Investigation Pending

5/11/997/25/9911/19/99Investigation Pending

5/28/998/3/9911/19/99Investigation Pending

Savelyn2/1/00unknownNo denial received

Yakhshibekov10/3/005/14/015/21/01Investigation Pending

10/26/005/14/015/21/01Investigation Pending

A.Claims Previously Paid

Defendant asserts that the claim for services provided to Fred Korets was settled and payment made. In support its assertion of payment, defendant submits a copy of a cancelled check in the amount of $1488.40, dated April 22, 2003, payable to plaintiff. The check indicates the name of the claimant as Fred Korets and the claim number listed on the check is the same as on the claim form annexed to plaintiff’s motion. The amount of the check is in excess of the amount of the claim listed on the claim form. However, Plaintiff’s reply papers do not in any way challenge defendant’s assertion that this claim was paid. Accordingly, the Court rules that defendant has submitted sufficient support for its assertion that the claim for services provided to Fred Korets has been paid.

Defendant asserts that the claims for services provided to Maxim Savelyn and Alexander Yakhshibekov also have been paid. In support of this assertion, defendant submits copies of cancelled checks issued to plaintiff which have the name of the claimant and the claim number that corresponds to the information provided by plaintiff in its papers. The Court notes that as to the claim for services provided to Maxim Savelyn, the amount of the check and the claim number are the same as for the claim concerning Fred Korets. The Court also notes that the amount of the check issued for services provided to Alexander Yakhshibekov is in excess of the amount of the claim. Plaintiff’s reply does not challenge defendant’s assertion that the claims for services provided to Maxim Savelyn and Alexander Yakhshibekov have been paid. Accordingly, the Court rules that defendant has submitted sufficient support for its assertion that the claims for services provided to Maxim Savelyn and Alexander Yakhshibekov have been paid.

B.Timeliness of the Denials [*4]

The Affirmation of Gilbert Lee, Esq., defendant’s counsel, acknowledges that “defendant issued untimely and/or defective denials with respect to seven of the ten claims identified in Plaintiff’s suit”. Lee Affirmation at ¶7. Neither Mr. Lee nor the Affidavits of Sandra DiSanto or Dietra Tripp in opposition to plaintiff’s motion indicates which claims they admit to having untimely denied, however reference to the above chart of claims leads the Court to the conclusion that the denials of claims concerning services provided to the following assignors were beyond the 30 day period provided for in 11 NYCRR §65.15: Boglio, Galicia, M. Perkins and S. Perkins.

Defendant takes the position that despite the untimeliness of its denials, it should not be precluded from raising its defenses to these claims because its defense is based on a lack of coverage. Defendant cites Central General Hospital v. Chubb Group of Ins. Companies, 90 NY2d 195 (1997) and Metro Medical Diagnostics, PC v. Eagle Insurance Co., 293 AD2d 751, (2 Dept.,2002) for this proposition. Each of these cases is improperly cited for the position that fraud by a provider is a “coverage” defense which can be asserted more than thirty (30) days after a claim is received.

While the Second Department in Central General Hospital, supra, does state that a “coverage” defense may be asserted beyond the thirty (30) day period, it clearly states that claims of fraud by the provider such as excessive billing are not “coverage” defenses. Id at 199. Similarly, Metro Medical, supra is inapplicable to the case at bar because it concerns an allegedly staged accident and not the allegation of fraud by a provider. More recently, Courts have clarified the differences between these two types of fraud allegations as they apply to the timeliness of denials and preclusion of defenses.

In Melbourne Medical, PC v. Utica Mutual Insurance Co., 4 Misc 3d 92 (App. Term 2nd & 11th Jud. Dists., 2004) the Appellate Term stated the following:

With regard to the fraud allegation, raised for the first time in defendant’s motion for summary judgment, defendant did not specify whether the fraudulent conduct was a staged automobile incident or the provider’s unilateral scheme to obtain no-fault benefits for unnecessary or excessive medical treatment. If the latter is the case, the purported defense is precluded by defendant’s untimely claim denial (Central Gen. Hosp. v Chubb Group of Ins. Cos. 90 NY2d 195, 199 [1997]; Presbyterian Hosp. in City of NY v Maryland Cas. Co., 90 NY2d at 285). If the former is the case, the defense survives preclusion (Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 752 [2002]) and would, if substantiated, constitute a complete defense to the action (Matter of Government Empls. Ins. Co. v Shaulskaya, 302 AD2d 522 [2003]).

4 Misc 3d 92 at 94. This decision clearly differentiates between fraud by an assignor which implicates the coverage issues that would permit an insurer to submit its denial beyond the thirty [*5](30) day period without waiving its defenses, from fraud by the provider which must be asserted in a timely denial in order to avoid being precluded from asserting the defense.

This issue was determined with even more clarity in PSG Psychological, PC v. State Farm Ins. Co., 6 Misc 2d 1002(A); 2004 NY Slip Op. 51701 (Civ. Ct. Kings Co., 2004). There the Court stated that

[t]he fraud which defendant is claiming as a defense to payment of this claim is fraud by the plaintiff medical provider. Although an untimely denial permits a defendant to assert a defense of fraud by the assignor, a claim of fraud by the assignee must be asserted in a timely denial (Melbourne Medical, PC v. Utica Mutual Ins. Co., 4 Misc 2d 92 [2d Dept 2004]).

See also Careplus Medical Supply Inc. v. State Farm Mutual Auto. Ins. Co., NYLJ 10/13/04, p. 21, col. 1 (Civ. Ct. Kings Co., 2004). Clearly, the law in this Department is that a defense of fraud by the provider does not go to the issue of coverage and, therefore, must be asserted in a timely denial.

C.Propriety of Denial Based On “Pending Investigation”

Each of the claims for which a denial was submitted was denied on the basis of a pending investigation. Plaintiff asserts that the “no-fault regulations” prohibit such a denial but does not cite the Court to any specific regulation. There is case law in the 2nd and 11th Judicial District which supports plaintiff’s view that a denial based on a pending investigation is ineffective.

In AB Medical Services v. Prudential Property & Casualty Ins. Co., 2005 NY Slip Op 25032 (App Term 2nd & 11th Jud. Dists, 2005) the Appellate Term held that a delay letter does not extend the insurer’s time to pay or deny a claim. Similarly, the same Appellate Term held in Melbourne Medical v. Utica Mutual Ins. Co., supra, that an insurer may not rely on a letter informing a claimant that the claim is delayed pending an investigation to effect an extension of time to pay or deny the claim, even if that letter is denominated a verification request. Id at 94. In Sehgal v. Royal Ins. Co. of America, 1999 WL 1074313 (App Term, 2d & 11th Jud. Dists, 1999) the Court held that an insurer’s submission of a claim to peer review is not a request for verification and does not extend the insurer’s time to pay or deny the claim.

Other Courts are in accord with the Appellate Term, 2nd & 11th Judicial Districts. The Appellate Division, Third Department in LaHendro v. Travelers Ins. Co., 220 AD2d 971 (3d Dept 1995) held that an insurer could not extend the time to pay or deny a claim until it received a report from Health Cost Containment Associates. The statutory thirty (30) day period began to run when the insurer received the claim and responses to requests for verification, if any.

District Court, Nassau County, in Atlantis Medical, PC v. Liberty Mutual Ins. Co., 2002 NY Slip Op 40043 (Dist Ct, Nassau Co, 2002) held, relying on LaHendro, supra and Sehgal, supra that once the insurer has received from claimant all of the information necessary to verify the [*6]claim, “any time spent analyzing the claim is on the insurer’s dime” Atlantis Medical, supra..

In the case at bar, each of the claims that defendant denied was denied on the basis that there was a pending investigation. There is no distinction between the above cited cases concerning delays of the determination of claims based upon a continuing investigation and a denial of the claim based on a pending investigation. The conclusion is the same: an insurer may not delay or deny a claim based upon its desire to further investigate the claim, except in compliance with the regulatory verification procedures. LaHendro v. Travelers Ins. Co., supra; AB Medical Services v. Prudential Property & Casualty Ins. Co., supra; Melbourne Medical v. Utica Mutual Ins. Co., supra; Sehgal v. Royal Ins. Co. of America, supra; Atlantis Medical, PC v. Liberty Mutual Ins. Co., supra.

D.Authentication of Assignment of Benefits;

Invalid Verification of Treatment Forms

Defendant argues in its Memorandum of Law in Opposition to Plaintiff’s motion that plaintiff has failed to establish its prima facie case because it has failed to authenticate the various assignment of benefits forms and, therefore, has no standing to bring the instant action. Defendant also argues that the verification of treatment forms are unsigned. This issue has long been resolved in this Judicial District. A Plaintiff’s prima facie case is established by “the submission of a complete proof of claim and the amount of the loss. (See Insurance Law §5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U]{App Term, 2d & 11th Jud Dists])”. Ocean Diagnostic Imaging PC A/A/O Jean Baptists Turenne, Johnson Turenne, v. State Farm Mutual Automobile Insurance Company, NYLJ, Sept 24, 2004, p. 28, col. 5 (App Term 2d & 11th Jud Dists, 2004). The defense of invalid assignment must be raised in a timely denial or it is waived. Presbyterian Hosp. v. Maryland Cas. Co., supra.;Presbyterian Hosp. v. Aetna Cas. & Sur. Co., supra; Quality Medical Healthcare, PC v. Lumberman’s Mutual Casualty Co., 2002 NY Slip Op 50098 (App Term 1st Dept, 2002); Inwood Hill Medical OC v. Allstate Ins.Co., NYLJ, Aug. 23, 2004, p. 19, col. 1 (Civ. Ct. Queens Co., 2004).

Here, each claim that was denied was denied because of a pending investigation. As defendant has failed to deny any of the claims on the basis that the authentication is invalid, this defense is waived. Similarly, as defendant has failed to deny any of the claims on the basis that the verification of treatment form is invalid, defendant has waived this defense. Id.

E.Question of Fact as to Whether the Services Billed for Were Provided

Defendant argues in its Memorandum of Law that there is a question of fact as to whether the services billed for and raised in this action were provided. The factual basis for this argument is the suspension of Michael M. Katz’s and Valentino J. Bianchini’s medical licenses. There is no indication in the defendant’s papers that these doctors were the only doctors providing services at plaintiff’s office. Moreover, defendant does not allege that Dr. Bianchini’s license was suspended during a time when services were provided to the assignors in this action. Accordingly, defendant has failed to establish that there is a question of fact sufficient to defeat plaintiff’s motion for [*7]summary judgment as to whether the billed for services were provided.

F.Plaintiff’s Standing to Bring This Action

Defendant argues that plaintiff does not have standing to bring the instant action because Michael M. Katz, the owner of plaintiff corporation, was suspended from practicing medicine from July 7, 2000 to July 6, 2001, surrendered his license on or about November 18, 2003 and the subsequent owner, Valentino J. Bianchini, surrendered his license to practice medicine on or about November 21, 2002. Essentially, defendant is making two arguments: 1) that plaintiff may not be compensated for services provided by an unlicensed medical professional and 2) that a professional corporation that is not properly licensed may not sue to recover no-fault benefits.

Plaintiff opposes defendant’s argument on standing in its reply affirmation of counsel. Plaintiff states that no services involved in this action were provided during a period when the plaintiff or its principal were not properly licensed and that a physician may recover for medical services rendered when it was licensed, even if no longer licensed and/or registered, citing CKC Chiropractic v. Republic Western Ins. Co., 2004 NY Slip Op 24351 (Civ. Ct. Kings Co., 2004) . Defendant has properly raised an issue of fact as to whether the alleged principal of plaintiff corporation was properly licensed when the services sued for herein were provided to assignors Boglio and M. Perkins. These services were provided during a period of time when Dr. Michael Katz, the principal of plaintiff corporation, was allegedly suspended from the practice of medicine. The information provided by defendant is in the form of Orders of the New York Department of Health indicating that Dr. Katz was suspended from practicing medicine for one year from July 7, 2000 to July 6, 2001 and surrendered his license to practice medicine by signed Order, signed by him on November 18, 2003. As to the second standing issue raised by defendant, the only information provided concerning the ownership of plaintiff corporation is a purported copy of a web site listing. The Court holds that the web site information is hearsay and insufficient to establish or even raise a question of fact as to the ownership of plaintiff corporation.

There is no question that medical services must be provided by a licensed professional. The only services provided during the period of Dr. Katz’s suspension that are involved in this action are services provided to Kate Boglio on September 8, 2000 and to Mozeik Perkins on August 11, August 18 and September 6, 2000. As a question of fact has been raised as to whether Dr. Katz performed these services, the Court holds that summary judgment is denied only as to the claims of Kate Boglio and Mozeik Perkins and only on the issue of whether Dr. Katz performed these services. As to plaintiff’s standing to bring this action because of the status of the corporation’s license, its relationship to the corporation’s principal’s license and the ability to collect no-fault benefits, the Court holds that further discovery is necessary on the factual issues that underlie defendant’s argument.

DISCOVERY MOTION

Defendant moves this Court for an extension of the discovery ordered by this court in a discovery Order dated November 20, 2003, approximately three (3) months prior to defendant’s [*8]making their motion. Plaintiff’s opposition to the discovery motion was made five (5) months later. Defendant’s basis for its motion is law office failure: it neglected to timely attend to discovery in this matter after the Court Order on November 20, 2003. It should be noted that the discovery Order provides for discovery of all parties. Neither plaintiff nor defendant conducted any discovery pursuant to the Court’s Order. It should also be noted that defendant’s counsel attempted to resolve the discovery dispute by communicating with plaintiff’s counsel prior to making a motion to the Court. Defendant’s attempt at resolution of the discovery issue was unsuccessful and a motion was then necessary.

Because of the relative timeliness of defendant’s attempt to resolve the discovery dispute and neither party’s compliance with the Court’s Order, the Court is inclined to grant defendant’s motion to a limited extent consistent with the Court’s other rulings contained in this Decision and Order.

Generally, discovery should be completed before a motion for summary judgment is made. In the instant case plaintiff’s motion for summary judgment was made only after defendant moved to extend discovery after unsuccessful attempts to obtain consent from plaintiff’s counsel to do so by stipulation. Plaintiff submitted its motion at the same time as its opposition to defendant’s motion and should have denominated its motion a cross-motion. Defendant properly argues that plaintiff’s motion is premature. However, consistent with the Court’s rulings herein on plaintiff’s motion for summary judgment, the only issues that survive those rulings are related to plaintiff’s standing to bring this action, Further discovery on any other issues would have no effect on the Court’s decision.

The Court rules that the Discovery Order, dated November 20, 2003, is extended for forty-five (45) days from the date of this Decision and Order for discovery solely on the issues of the licensing of plaintiff and plaintiff’s principals and which medical professional performed the services provided to assignors Boglio and M. Perkins. Consistent with the Court’s rulings herein, in the event that plaintiff is found to have standing to bring this action, plaintiff would be entitled to summary judgment on all claims that have not already been paid.

CONCLUSION

Three of the claims brought, for services to assignors Korets, Savelyn and Yakhshibekov, have already been paid and are not considered in this motion. Either because of untimeliness or denials based on pending investigations, defendant has waived its defenses to all of the other claims. Defendant has also waived its defenses on the bases of the authentication of the assignment of benefits and the alleged invalidity of the verification of treatment forms for failure to raise these defenses in their denials. The Court has insufficient information to rule that plaintiff does or does not have standing to bring this action. Accordingly, on defendant’s discovery motion the Court’s prior discovery Order, dated November 20, 2003, is extended for forty- five (45) days from the date of this Order for the parties to engage in discovery solely on the issues of the licensing of plaintiff and plaintiff’s principals and which medical professional performed the services provided to assignors Boglio and M. Perkins. In the event that plaintiff is found to have standing to bring this action, plaintiff is entitled to summary judgment on all claims that have not already been paid. [*9]

This constitutes the Decision and Order of this Court.

DATED:February 17, 2005

______________________________

LOREN BAILY-SCHIFFMAN, J.C.C.

Civil Court, Kings County

056085/04

Loren Baily-Schiffman, J.

This is an action to recover benefits pursuant to the no-fault provisions of Insurance Law §5106 and regulations promulgated thereunder, 11 NYCRR §65-1.1 and for attorneys fees pursuant to 65 NYCRR §65.17 (b)(6)(v). Plaintiff provider, as assignee of patient Roy Antoine, moves this Court for summary judgment. Plaintiff asserts that defendant has not paid the assignor’s claim within thirty (30) days of receipt nor requested verification of the claim and the basis for the denial is insufficiently specific to satisfy the Insurance Law. Defendant opposes the motion on the basis that the Affidavit in support of the motion and the assignment annexed thereto are not in admissible form and the Health Insurance claim form was not signed by the assignor. Defendant moves for partial summary judgment on the basis that its denial is timely. Defendant also seeks to compel a deposition of plaintiff, plaintiff’s assignor and the assignor’s treating physician.

In a motion for summary judgment, the moving party must make out a prima facie case of entitlement to judgment as a matter of law, offering sufficient evidence to establish the absence [*2]of any material issues of fact. Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). After making out a prima facie case, the burden shifts to the party opposing the motion to present sufficient evidence to show that there are material issues of fact in controversy which require a trial. Id. In a claim for no-fault benefits by a provider, the Plaintiff’s prima facie case is established by “the submission of a complete proof of claim and the amount of the loss. (See Insurance Law §5106[a]; Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 [2004]; Amaze Med. Supply Inc. v. Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U]{App Term, 2d & 11th Jud Dists])”. Ocean Diagnostic imaging PC A/A/O Jean Baptists Turenne, Johnson Turenne, v. State Farm Mutual Automobile Insurance Company, NYLJ, Sept 24, 2004, p. 28, col. 5 (App Term 2d & 11th Jud Dists, 2004).

Pursuant to Insurance Law §5101 et seq. and the regulations promulgated thereunder, 11 NYCRR §65.15 (g)(3), an insurer must either pay or deny a claim for no-fault benefits within thirty (30) days of receipt. The thirty (30) day period may be extended by an insurer’s request for verification of the claim within ten (10) business days for claims covered by the regulations in effect prior to April 5, 2002 and fifteen (15) business days for claims covered by the regulations that came into effect on April 5, 2002. 11 NYCRR 65.15 (d) & (e). If any insurer fails to timely deny a claim, the insurer is precluded from raising any defenses to the claim other than lack of coverage and fraud. Presbyterian Hosp. v. Maryland Cas. Co., 90 NY2d 274, 278 (1997); Presbyterian Hosp. v. Aetna Cas. & Sur. Co., 233 AD2d 433 (2d Dept, 1996); Central Hospital v. Chubb, 90 NY2d 195 (1997); Mt. Sinai v. Triboro Coach, 263 AD2d, 11 (2d Dept 1999). An insurer’s failure to raise objections within the ten (10) or fifteen (15) day verification period constitutes a waiver of any defenses based thereon. Id.

Plaintiff’s Prima Facie Case

Plaintiff asserts that it submitted its proof of claim to defendant. Defendant’s NF-10 denial form acknowledges receipt of the claim on December 15, 2003. The NF-10 is dated January 23, 2004, more than thirty (30) days after receipt of the claim. Annexed to plaintiff’s motion papers is a mailing log stamped by the Postal Service on December 11, 2003. It is conceded by defendant that this claim remains outstanding. Through this proof plaintiff has established its burden of showing that the subject claim was submitted to defendant and remains outstanding. The burden then shifts to defendant to prove by submission of evidence in admissible form that there are questions of fact in controversy that require a trial and that plaintiff is not entitled to judgment as a matter of law.

Defendant’s Opposition

Defendant submits that it timely denied the subject claim and that summary judgment should, therefore, be denied. Defendant also asserts that there are defects in plaintiff’s motion papers that preclude the grant of summary judgment. A denial of claim (NF-10) must be sent to the claimant within thirty (30) days of receipt in order to be timely unless the time to deny is extended by virtue of a request for verification or if the claim is based on fraud or lack of [*3]coverage. Presbyterian Hosp. v. Maryland Cas. Co., supra. In order to sustain its burden in opposing a motion for summary judgment where the issue is timeliness, the defendant/insurer must establish by competent evidence that the request for verification and the denial were timely mailed. Here, defendant has provided no competent evidence of the mailing of either the request for verification or the denial. Accordingly, all defenses other than fraud are untimely and the insurer is precluded from raising any non-fraud defenses to the claim. Id.; Presbyterian Hosp. v. Aetna Cas. & Sur. Co., 233 AD2d 433 (2d Dept, 1996); Central Hospital v. Chubb, 90 NY2d 195 (1997); Mt. Sinai v. Triboro Coach, 263 AD2d, 11 (2d Dept 1999).

Fraud Defense

Defendant’s NF-10 states the following as the reason for the denial:

“Our investigation, including but not limited to our SIU investigation, indicates that the alleged injuries were not, and could not have been caused by the alleged accident. Therefore, all no-fault benefits dating back to the alleged date of loss are denied based on a lack of credible proof of claim.”

Plaintiff asserts that the above quoted denial language is insufficiently specific to be effective. General Accident Insurance Group v. Cirucci, 46 NY2d 862 (1979). The court finds that the denial language is sufficient to put plaintiff on notice that the insurer was denying the claim on the basis of fraud. However, at this stage of the litigation, in order not to be precluded from asserting its late denial on the basis of fraud, defendant must present to the Court evidence in admissible form that it had a “founded belief that the alleged injur[ies] do [ ] not arise out of an insured incident”. Central General Hosp v. Chubb Group of Ins. Cos, 90 NY2d 195, supra; Ocean Diagnostic Imaging v. State Farm Automobile Ins. Co., NYLJ, 9/24/04, p.28, col. 5 (App Term, 2d & 11th Jud. Dist., 2004); AB Medical Services, et al v. State Farm Mutual Auto. Ins. Co., NYLJ, 12/24/04, p. 32, col. 2 (App Term, 2d & 11th Jud Dists, 2004).

Here, defendant presented an unsworn “Examination Under Oath Report”, dated December 9, 2003 written on the letterhead of Armienti, DeBellis & Whiten, defendant’s prior attorney; the hearsay Affidavit of Susan Vanditto, a no-fault specialist employed by defendant; and the hearsay Affirmation of defendant’s counsel. None of the information presented in support of defendant’s fraud defense is in admissible form. Defendant, therefore, has failed to raise a triable issue of fact as to whether it had a “founded belief” that the injuries alleged by the assignor do not arise from an insured accident. Accordingly, defendant is precluded from asserting its fraud defense to the instant claim.

As plaintiff has established its prima facie entitlement to summary judgment and defendant has failed to rebut plaintiff’s showing or establish by competent proof that there are material issues of fact in controversy that require a trial, plaintiff’s motion for summary judgment is granted and defendant’s motion for partial summary judgment is denied. The other issues raised by the parties are without merit. Defendant’s motion to compel discovery is denied as [*4]moot.

This constitutes the Decision and Order of the Court.

DATED:February 10, 2005

______________________________

LOREN BAILY-SCHIFFMAN, J.C.C.

Civil Court, Kings County

91337/04

Eileen N. Nadelson, J.

Petitioner, a medical provider, brought this action to vacate a Master Arbitration award rendered in favor of Respondent insurer. The initial arbitration award was affirmed by the Master, both arbitrators concluding that Petitioner lacked standing to institute this claim for first party benefits under New York’s No-Fault Insurance Law.

At the initial hearing, the arbitrator sua sponte raised the issue of Petitioner’s standing to receive no-fault benefits. Petitioner, at the time in question, was a professional corporation authorized under New York law. The sole owner of the corporation was a medical doctor, and the services for which this action was commenced were acupuncture treatments performed by a licensed acupuncturist under the auspices of the professional corporation. The physician who owned the corporation was neither licensed nor certified to perform acupuncture, and no evidenced was adduced to indicate whether the acupuncturist was an employee of the corporation or an independent contractor.

11 NYCRR sec. 63-3.16(a)(12) states 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 [*2]

applicable New York State or local licensing requirement necessary to

perform such services in New York or meet any applicable licensing

requirement necessary to perform such service in any other state in which

such service is performed.

Under New York law, an acupuncturist may only be employed by or contracted to provide licensed services to the public through certain entities, including a licensed or certified acupuncturist or partnership of licensed (or certified) acupuncturists; a professional corporation authorized to practice acupuncture; a limited liability company or partnership lawfully authorized to practice acupuncture; a hospital, nursing home, clinic or HMO. See Advisory Letter from the State Education Department, October 8, 2002.

In order to provide acupuncture services, a professional corporation must be owned, organized and operated by persons who are licensed or certified to practice acupuncture. See generally, New York Business Corporation Law sec. 1503. In the case at bar, although Petitioner’s owner was a licensed physician, he was neither licensed nor certified to practice acupuncture.

Cases in New York have held that proper licensing of a medical provider is a condition precedent to payment of benefits under the No-Fault Law. Valley Physical Medicine and Rehabilitation, P.C. v. New York Central Mutual Insurance Comany, 193 Misc 2d 675, 753 N.Y.S. 2d 289 (2d Dept. 2002). Consequently, if Petitioner was not licensed to perform acupuncture, it may not recover first party No Fault benefits for such services.

In affirming the initial arbitration award, the Master stated that the award was based on the fact that Petitioner, although a licensed physician, presented no proof that such license encompassed acupuncture services. Such evidence was also not presented in the current petition. Therefore, because Petitioner was not licensed nor certified to perform acupuncture, it cannot bill for such services. 11 NYCRR sec. 65-3.16(a)(12).

In its papers, Petitioner focused on the circumstances that permit a court to vacate an arbitration award and specified the minium requirements that a health care provider must supply in order to prevail on a claim for No-Fault benefits. Petitioner completely failed to address the standing issue upon which the arbitration award was based. However, a health care provider’s standing based on licensing requirements is always an appropriate field of inquiry. See generally CKC Chiropractic v. Republic Western Insurance Co., 5 Misc 3d 492, 784 N.Y.S. 2d 350 (Kings County 2004).

Based on the foregoing, the court affirms the award of the arbitrator and Master Arbitrator. The court finds it unnecessary, based on this decision, to address the grounds that may be used to vacate such awards.

This constitutes the decision and order of the court.

[*3]Dated: February 8, 2005

__________________________

EILEEN N. NADELSON, J.C.C.

Civil Court, Kings County

070407/04

Ellen M. Spodek, J.

defendant State Farm Insurance Company moves for an order severing the action brought by plaintiff into separate actions on behalf of the individual assignors.

In this action, plaintiff seeks to recover first party No-Fault benefits with interest and statutory attorneys fees from defendant for alleged medical services provided to its assignors.

Defendant’s motion to sever is hereby denied. The Appellate Division has held that when “claims arise out of a uniform contract of insurance and involves interpretation of the same no-fault provisions of the Insurance Law” severance need not be granted. The Court found that even if the claims involved separate accidents and individuals they do not lose their character as a series of transactions because they occur at different places and times and if they involve a common question of law, as the case at bar does, joinder is proper. ( see Hempstead General Hosp. v Liberty Mut. Ins., 134 AD2d 569 [2d Dept. 1987]). Defendant failed to submit any [*2]documents to demonstrate that the causes of action do not share common questions of law.

Moreover, the instant case involves one plaintiff and one defendant and CPLR 601 permits, and even encourages, joinder with as many claims as one plaintiff might have against one defendant, regardless of whether such claims are related.

Here, this Court finds that joinder of only four assignees does not impose an undue burden on defendant nor would it create confusion for the fact-finder. (see Hempstead, supra )

Lastly, the granting or denial of severance is left to the discretion of the Court. (Sporn v Hudson Transit Lines, 265 App.Div. 360; St. James Realty Corp. Level Realty Corp., 155 N.YS.2d 44; Biltmore Knitwear Corporation v Chalfin, 25 NYS2d 947). Accordingly, defendant’s motion is denied.The foregoing constitutes the decision and order of this court.

E N T E R,

Dated: January 20, 2005 __________________

Hon. Ellen M. Spodek

Judge, Civil Court

Civil Court, Kings County

313390-03

Alice Fisher Rubin, J.

This no-fault action was brought to recover judgment in the amount of $2,517.00, and statutory legal fees and interest from May 2, 2000, for prescribed orthopedic devices provided by Ultimate Medical Supplies to Cedric Wright. Plaintiff provided bills to Defendant, Lancer Insurance Company (Lancer). Defendant denied payment claiming the defense of medical necessity. Plaintiff commenced this action against Lancer by service of a summons and complaint.

A trial was held before this Court on June 8, 2004.and June 9, 2004. At the conclusion of the trial, both parties were advised that the Court would accept post trial memorandums of law to be submitted on or before June 25, 2004. Defendant submitted a timely memorandum; plaintiff did not submit.

Plaintiff’s case consisted of the testimony of Peter Tiflinsky, principal of plaintiff Ultimate Medical Supplies, Inc., and the admission of five exhibits, including three bills, a medical supply invoice, a delivery receipt for a TENS Unit and the comprehensive report of Dr. Opam, together with his letter of May 23, 2001.

Defendant’s case consisted of the testimony of Dr. Francine Moshkovski (the doctor who performed the independent medical examinations and the peer review) and four exhibits, including a delay letter, an NF-10 denial, a subpoena with an affidavit of service upon the claimant/assigner, and a copy of Dr. Moshkovski’ s peer review report.

Defendant’s post-trial memorandum listed five issues involved in this matter. Those issues include: Receipt of Dr. Moshkovski ‘s testimony; the failure of the Plaintiff to prove a valid assignment; the failure of the Plaintiff to prove any evidence as to the necessity for a LSO; the contested evidence as to the medical necessity; and the evidentiary effect of the failure of the Claimant/assignor to appear subject to subpoena.

The Court will address each of the issues in the order listed.

1. Dr. Francine Moshkovski’s Testimony

It is well established law that one testifying as an expert “should be possessed of [*2]the requisite skill, training, education, knowledge or experience from which it can be assumed that the information imparted or the opinion rendered is reliable.” Marrot v Ward, 48 NY2d 455, 459, 423 NYS2d 645. Dr. Moshkovski testified that she was a graduate of a medical school, received post-graduate training in the field of physical medicine and rehabilitation, and was qualified as a diplomat of the American Board of Physiatrists. She further testified that her medical speciality dealt with the treatment of muscular-skeletal and neuro injuries and conditions, and the relief of pain. She has practiced and taught in her field for 17 years. Furthermore, after stating her qualifications, the witness testified without objection.

It is also established law that the Trial Judge need not “certify” the witness as an expert. People v Gordon, 202 AD2d 166, 608 NYS2d 192, lv den 83 NY 911. It is the Court’s opinion that Dr. Moshkovski met the standards to qualify as an expert.

2. The Plaintiff’s Prima Facie Case

Defendant, in its closing statement and in its post-trial memorandum, argues that Plaintiff has not established a prima facie case. Two essential elements in maintaining an action seeking the recovery of first party no-fault benefits are proof of assignment and proof that the claim was mailed to the insurer. Advanced Medical Rehabilitation P.C. v Travelers Property Casualty Insurance Co. N.Y.L.J. March 25, 2004, p. 19, col. 3. The second element was stipulated to and is not an issue. Despite Defendant’s contention that there was no assignment, there was a concession made by Defendant during the testimony of Plaintiff witness, Peter Tiflinsky. Plaintiff had offered a delivery receipt into evidence (Plaintiff No.1). Mr. Tiflinsky testified that he witnessed the assignor, Cedric Wright, sign the document. Plaintiff moved the document into evidence. Defendant objected. Additional questions were asked of the witness. At the conclusion of the round of questions, Plaintiff offered the document into evidence again, stating: “I offer this document into evidence once again in so far as the witness testified that he observed the assignee signing this document.” (P. 16). Defendant asked “for what purpose?”: Plaintiff responded, “verifying his signature on the assignment we are standing to sue here today.” Defendant’s responded: “I have no problem with it going in as an assignment, your Honor.” At the time of trial, the Court ruled Plaintiff had met the requirements of establishing its prima facie case. Upon review of the transcript and the evidence, the Court stands by its ruling.

3. The failure of the Plaintiff to prove any evidence as to the necessity for a LSO .

It was stipulated that all bills were sent timely and a verification request was made timely and a narrative from the referring physician and a letter of medical necessity for a custom fitted LSO was submitted timely. The denials were based on the peer review ‘s lack of medical necessity.

Dr. Moshkovski testified that she can find no support in the medical reports furnished to her by the Plaintiff for a prescription for a Lumbosacaral support. However, Plaintiff’s evidence #

5, the report of Metropolitan Multi-Special Medical Center P.C., dated February 20.2001, p. 4. Indicates that a cervical pillow, lumbar support, massager, car seat and ice packs were prescribed. [*3]

Defendant’s post-trial memorandum indicates that Dr. Moshkovski’s Peer Review Evaluation indicated that the prescription was signed by Dr. Schwartz. There is no testimony from Dr. Moshkovski, (but there was mention of Dr. Schwartz in her Peer Review Report which was in evidence), or anyone else to determine who Dr. Schwartz is. Nonetheless, there is no question in the Court’s mind that Dr. Opam had recommended such a device and indicated in his report that such a device had been prescribed.

4. The contested evidence as to the medical necessity.

Dr. Moshkovski testified that based on her experience none of the prescribed durable medical equipment are necessary. She cited to no authority other than her own experience. More telling as to her bias was her response to Plaintiff’s question on cross-examination where she was asked: “I’ m asking you, isn’t it a fact that you took the tests that were in the report that worked for you and included them in your peer review and left out the ones that went against you?” Yes or no? (p. 75, L. 14-17)

Dr. Moshkovski’s response: “I’ll say yes” . (P. 15 L. 18)

It is clear to the Court that Dr. Moshkovski admitted to never prescribing any of the medical equipment, with the sole exception of ice packs, on no basis other than her own opinion. Such an opinion is biased against the prescribing doctor as to make the peer review a nullity and not credible.

5. The evidentiary effect of the failure of the Claimant/assignor to appear subject to subpoena.

Defendant argues in his post-trial memorandum that the Plaintiff stands in the shoes of the assignor, Cedric Wright. Plaintiff’s only benefits are based upon the rights that have been assigned to him by Mr. Wright. It is Defendant’s contention that since there is no proof of an assignment; therefore the Plaintiff has no standing to sue and the case should be dismissed. The court has ruled, both at trial and in this decision, that Plaintiff has met the burden of establishing a prima facie case. Therefore, the motion to dismiss is denied.

A subpoena was served upon Mr. Wright, which was ignored. Defendant, therefore, wishes the court to consider Mr. Wright a missing witness and infer that the testimony of Mr. Wright would not support the contentions of Plaintiff. The burden is on the party who seeks the benefit of the inference to establish that there is a witness who can give material evidence, Fremont v Metropolitan S. R. Co., 83 App Div 414, 82 NYS 307. Also, the party seeking the charge has the burden to notify the court as soon as practicable, and to establish that there is an uncalled witness believed to have knowledge on a material issue; that the witness can be expected to testify favorably to the opposing party, and that such party has not called the witness, Papa v New York, 194 AD 527, 598 NYS2d 558. Other than moving the subpoena into evidence without objection, there was no offer of proof to satisfy the requirement of notification to the Court about this witness. The other requirements of a missing witness charge, had this been a jury trial were also unsatisfied since there was no discussion on the record, other than the offering of the subpoena into evidence and the arguments made in the post-trial memorandum. Therefore, the Court declines to infer negative testimony would be elicited had Mr. Wright appeared. [*4]

Based on all of the foregoing items, the Court hereby directs the clerk of the court to enter judgement in favor of the Plaintiff and against Defendant, in the amount of $2,517.00, plus statutory legal fees and interest from May 2, 2000.

This constitutes the decision and order of this Court.

Court Attorney to notify.

Dated: Brooklyn, New York

December 17, 2004

_______________________________

ALICE FISHER RUBIN,

Judge of the Civil Court

Civil Court, Kings County

58916/04

Alice Fisher Rubin, J.

Plaintiff commenced this action against the defendant to recover first party no-fault benefits for medical services rendered, pursuant to CPLR 5102(a)(1) of the Insurance Law and Regulation of the New York State Insurance Department (11 NYCRR Sect. 65-1.1 et. seq.).

Defendant moves for an order granting disqualification of the plaintiff’s law firm, Israel, Israel & Purdy, LLP, and/or for a hearing relating to the law firm’s representation of the plaintiff.

Plaintiff cross-moves for an order denying defendant’s motion and awarding plaintiff attorneys’ fees and sanction for defendant’s filing of a frivolous motion.

Defendant moves for the disqualification of plaintiff’s attorneys on the grounds that the law firm has established a joint business venture with various no-fault medical providers, and in violation of the Code of Professional Responsibility, DR5-102, codifies as 22 NYCRR Section 102. Defendant alleges that the plaintiff’s law firm has taken over all billing functions for said medical providers, prepares correspondence, submits no-fault bills and responds to demands for verification on behalf of said medical providers. Defendant also argues that as a result of the law firm’s role in taking over all billing functions for the medical providers, the firm would be required to testify and substantiate that the law firm itself maintains the medical provider’s records; that the payment for such bills has been demanded by the law firm; that no further request for verification information has been received by the law firm; and that no denial or payment has been made within the statutory period.

The defendant further argues that it is impermissible for the law firm to become a witness and an advocate in the same proceeding. In support of its argument, defendant cites the Code of Professional Responsibility, DR 5-102, codified as 22 NYCRR Section 1200.2.

In opposition to defendant’s motion, plaintiff argues that there is no violation of the statute, court rule or decisional authority, but only a perceived violation of DR5-102. Plaintiff also argues that disqualification may be required only when it is likely that the testimony to be given by the witness is necessary, and that the testimony would harm the plaintiff. Plaintiff further argues that the defendant has failed to allege that the testimony of any lawyer in plaintiff’s attorneys’ law firm would be prejudicial to its client. Plaintiff’s attorney also states that trial counsel will not appear as a witness, and that if necessary there are other attorneys at the firm that can be called as a witness.

After careful review of the moving papers, cross-motion and supporting documents, the court finds that the defendant’s motion is without merit. There is no basis for disqualification of the plaintiff’s law firm. The defendant has not demonstrated a violation of the Code of Professional Responsibility DR5-102. There has been no showing that the trial attorney would be called as a necessary witness in this action, or that such testimony would be adverse. In any event, the law firm may still continue to represent its client when one of its attorneys may be called as a witness. See, Talvy v. American Red Cross in Greater New York, 205 AD2d 143, 618 N.Y.S.2d 25 [1st Dept., 1994]. If there are other attorneys that can act as advocates for the client, then disqualification of the law firm as a whole would not be warranted.

Next, as a result of having to defend the motions for disqualifications, plaintiff’s attorneys have moved for an order imposing sanctions against defendant’s attorneys in the amount of $500.00, as well as ordering the defendant to pay an appropriate sum to the Clients’ Security Fund, as punishment for the filing of a frivolous motion. The court takes judicial notice

of the fact that the defendant law firm has made identical motions in other counties, as well as this county, and has not prevailed on its arguments that the plaintiff’s law firm should be [*2]disqualified. In fact, there has been a recent ruling in this County, by the Hon. Manuel Mendez on the exact same issue in NYC Medical & Neurodiagnostic, P.C. v. Republic Western Ins. Co., N.Y.L.J., 11/26/04, p.22, c. 3. Judge Mendez found no basis to disqualify the plaintiff’s law firm.

The court finds that imposition of sanctions is warranted on the basis that the motions, are redundant, abusive and frivolous. The motions were made in other counties and the courts’ decisions were in favor of the plaintiff’s law firm, holding that disqualification of the law firm was not warranted under DR5-102.

Accordingly, defendant’s motion is hereby denied in its entirety, and plaintiff’s cross-motion is hereby granted. The defendant is hereby directed to pay $500.00 to plaintiff’s counsel, as sanctions to deter such frivolous motion practice in the future.

This constitutes the decision and order of this Court.

Court Attorney to notify.

Dated: November 29, 2004

Brooklyn, New York 11201

______________________________

ALICE FISHER RUBIN,

Judge of the Civil Court

[*1]

Civil Court of the City of New York, Richmond County, November 22, 2004

APPEARANCES OF COUNSEL

Joseph Sparacio, Staten Island, for plaintiff. Bruno Gerbino & Macchia, LLP, Melville, for defendant.

{**6 Misc 3d at 580} OPINION OF THE COURT

Judith R. McMahon, J.

The genesis of this first-party benefits action is a motor vehicle accident that occurred on March 8, 2003. The plaintiff’s assignor, Augusto Espinoza, was involved in this vehicular accident and as a result of his alleged injuries, sought medical treatment from Dr. Lev. Thereafter, Dr. Lev referred Mr. Espinoza to plaintiff, Dr. Hellander, for diagnostic testing, including a paraspinal ultrasound of the cervical paraspinal region, the thoracic paraspinal region, lumbar paraspinal region, and the trapezius muscles bilaterally. Dr. Hellander performed the requested diagnostic modalities on March 26, 2003 and sent a timely bill to Mr. Espinoza’s insurer, the defendant, pursuant to the No-Fault Insurance Law. (See, 11 NYCRR 65-3.11.) At the time of the testing, Mr. Espinoza signed a standard assignment of benefits form and a signature stamp containing Dr. Hellander’s name was affixed to the form.

After receipt of Dr. Hellander’s bill, State Farm Insurance Company issued a timely denial (NF-10). As a result of the denial, plaintiff instituted an action for payment of first-party benefits pursuant to the No-Fault Insurance Law. In its answer, State Farm alleged, inter alia, lack of standing on behalf of the plaintiff and lack of medical necessity of the diagnostic testing performed on March 26, 2003. After a filing of the notice of trial, a nonjury trial was held in this matter on September 20, 2004.

At the time of trial, plaintiff established a prima facie case by submitting into evidence the statutory forms of proof of claim, the amount of the claim and the defendant’s denial form (NF-10) which indicated proof of service upon defendant in a timely fashion. (See Park Health Ctr. v Prudential Prop. & Cas. Ins. Co., 2001 NY Slip Op 40650[U] [2001].)

During the trial, plaintiff attempted to place the assignment of benefits into evidence. Defendant objected based upon the lack of authentication of the assignor’s signature. The burden of proving an affirmative defense of lack of standing should be on the defendant. In the case at [*2]bar, State Farm did not come forward with any evidence to challenge the effectiveness of the assignor’s signature. Merely, upon voir dire of Dr. Hellander, the defendant elicited that the procedure in the office of the plaintiff is that the assignment of benefits form is signed by the patient outside the presence of the doctor. The doctor’s signature stamp is then placed on the form. Further, the plaintiff testified that it was {**6 Misc 3d at 581}the customary procedure in his office that the technician or the technician’s office personnel be present at the time the assignor signs the assignment of benefits form. Therefore, following the holding in Elm Med., P.C. v American Home Assur. Co. (2003 NY Slip Op 51357[U] [2003]) and even assuming, arguendo, that the plaintiff must proffer a proper assignment of benefits, the testimony as to the custom and procedure of this physician’s office established the propriety of the assignment of benefits.

A signature without authentication adequately explained by the physician as being obtained in the ordinary and customary procedure in the office should be sufficient to defeat the claim of lack of standing. The authenticity of the signature, therefore, may be reasonably inferred since the patient signed the assignment of benefits form as part of the usual and customary procedure as detailed by the physician’s testimony and underwent the testing as described in the billing records. “Circumstantial evidence may satisfy the requirement that a writing be authenticated before it may be introduced.” (Elm Med., P.C. v American Home Assur. Co., 2003 NY Slip Op 51357[U], *7; see, Anzalone v State Farm Mut. Ins. Co., 92 AD2d 238 [1983].)

Defendant’s second argument that the testing performed by plaintiff was medically unnecessary is novel since the claim is, not that the test was unnecessary for the complaints and symptomatology presented by the assignor, but, that the particular tests performed by plaintiff are without any clinical benefit in most instances. Specifically, defendant’s denial form (NF-10) states the following:

“According to the American College of Radiology, the American Institute of Ultrasound and Medicine and the American Chiropractic College of Radiology, the use of spinal ultrasound currently has no proven clinical utility as a screening diagnostic or adjunctive imaging tool for the evaluation of pain, fluid in the tissues, nerve disorders, or subtle abnormalities adjacent to the spine. Therefore, this procedure is denied. The named insured is not responsible for payment.”

At the trial, defendant called Dr. William Ross, an internist and gastroenterologist. Dr. Ross, in brief, testified on direct examination that based upon the opinion statement by the American College of Radiology in 1996 that spinal ultrasound has no clinical {**6 Misc 3d at 582}utility, he found the testing performed by plaintiff to be unnecessary. Upon cross-examination, Dr. Ross’ opinion became, at best, equivocal as is revealed in the following portions of testimony:

“Q. Doctor, do you agree or disagree with the following statement contained on page 573 of the 2003 Practice Guidelines, etcetera, which reads: ‘These guidelines are an educational tool designed to assist practitioners in providing appropriate radiologic care for patients,’ do you agree or disagree with that, doctor?

“A. I don’t see why I wouldn’t agree with that.

“Q. Do you agree or disagree with the statement on the same page that goes on to say, ‘they are not inflexible rules or requirements of practice and are not intended, nor should they be used, to establish a legal standard of care,’ do you agree or disagree with that from this book?

“A. Sounds very reasonable” (at 33, lines 1-15).

Dr. Hellander had testified that the tests he performed would, in his opinion, assist the referring physician in making a diagnosis and in formulating a treatment plan.

In the case at bar, plaintiff established a prima facie case by submitting the statutory forms of proof of claim and the amount of the loss. (See Liberty Queens Med., P.C. v Liberty Mut. Ins. Co., 2002 NY Slip Op 40420[U] [App Term, 2d & 11th Jud Dists 2002].) Once plaintiff has established his case, the burden of proof shifts to the defendant on the claim of lack of medical necessity stated in defendant’s affirmative defense. In determining whether services are medically necessary the following analysis has been utilized:

“[F]or treatment or services to be medically necessary, it must be reasonably determined by the health care professional in consultation with the patient, that the treatment or services are consistent with the patient’s condition, circumstances and best interest of the patient with regard to the type of treatment or services rendered, the amount of treatment or services rendered, and the duration of the treatment or services rendered. To find treatment or services are not medically necessary, it must be reasonably shown by medical evidence, in consideration of the patient’s condition, circumstances, and best interest of the patient, that the treatment or services {**6 Misc 3d at 583}would be ineffective or that the insurer’s preferred health care treatment or lack of treatment would lead to an equally good outcome.” (Fifth Ave. Pain Control Ctr. v Allstate Ins. Co., 196 Misc 2d 801, 807-808 [2003].)

Applying the aforementioned standard to the case at bar it becomes clear that defendant’s expert’s testimony is equivocal and does not meet the burden of proof necessary to establish that [*3]the testing done by plaintiff was not medically necessary. In the instant matter, we have here, not a specific symptom, not a specific disease, not a specific complaint that was addressed in a medically ineffective way, according to defendant; rather, according to defendant’s denial form (NF-10) the defendants have a blanket claim that the ultrasound of the paraspinal area is ineffective, regardless of complaint or symptomatology. This court is not willing to find a diagnostic tool utilized by physicians to be ineffective in all forms of complaints concerning the spine based on teetering testimony by defendant’s expert and guidelines instituted by the American College of Radiology which clearly establish that doctors are to use their own judgment in ordering different tests and that their conclusions are not binding upon any medical personnel. Furthermore, we have testimony by the physician, Dr. Hellander, stating that his test would be useful to the referring physician to form a proper prognosis and diagnosis of the patient.

Moreover, in reviewing the standard concerning medical necessity, it is quite clear that this is to be viewed on a patient-by-patient basis and that testing, whether medically necessary or not, should be based upon the symptomatology and complaints and disease entities of the patient/assignor involved.

This does not mean, of course, that this court would not find that a paraspinal ultrasound would not be medically necessary to a particular patient; however, it is not a court’s function based upon the testimony presented in this matter to rule a diagnostic modality ineffective for all spinal treatments when the College of Radiology is perplexed about the effectiveness or ineffectiveness of such. A broad stroke of the brush in such an instance would not be beneficial to the medical profession and, in particular, to the patients they treat. Accordingly, judgment is rendered for the plaintiff in the amount of $1,894.42.

[*1]

Civil Court of the City of New York, Kings County, November 10, 2004

APPEARANCES OF COUNSEL

Meiselman, Denlea, Carton & Eberz, P.C. (Steven L. Barry of counsel), for defendant. Baker, Barshay & Neuwirth, LLP (Gil McLean of counsel), for plaintiff.

{**6 Misc 3d at 275} OPINION OF THE COURT

Manuel J. Mendez, J.

{**6 Misc 3d at 276}Defendant moves for an order disqualifying the firm of Baker, Barshay & Neuwirth, LLP from continuing to represent the plaintiff in this action. Defendant alleges that [*2]the firm is in violation of Code of Professional Responsibility DR 5-102 (22 NYCRR 1200.21) and must be disqualified from representing the plaintiff because one of its members ought to be called as a witness in the proceeding.

Facts

Plaintiff, a medical services provider, provides medical services to individuals and bills the insurance carriers under the state No-Fault Law. Following rendition of the services, plaintiff prepares and generates a bill which is subsequently mailed by the firm to the defendant insurer. The bills are mailed by a “mailroom employee” and are accompanied by a letter, on the firm’s letterhead which states the following:

“Please be advised that this office has been retained by the above referenced medical provider concerning the attached claim. We hereby submit herewith the bill for payment and the claimant’s application for No-Fault benefits (NF-2) as applicable. Accordingly, please forward all future correspondence to our attention.

“Pursuant to New York State Insurance Law, you are required to pay this bill within 30 days of receipt. Please make this payment payable to the above referenced provider, c/o this office.

“All correspondence including payment, EOB’s, verification requests, etc. must be mailed directly to this office. Failure to do so may result in unnecessary litigation.” (Emphasis added.)

The letter is unsigned.

Defendant maintains that the firm engages in the crucial activities of preparing the mailing, effectuating the mailing, maintaining records of the mailing, maintaining records and requests for verification and all other essential facets of “processing” the claim. The only witnesses who can offer testimony sufficient to establish a prima facie case in this matter are from the firm.

The firm counters that the fact that a nonattorney member may be called to testify on plaintiff’s behalf is not a violation of the disciplinary rules disqualifying it from representing plaintiff.

Legal Analysis

DR 5-102, codified as 22 NYCRR 1200.21, reads as follows:{**6 Misc 3d at 277}

“(a) A lawyer shall not act, or accept employment that contemplates the lawyer’s acting, as an advocate on issues of fact before any tribunal if the lawyer knows or it is obvious that the lawyer ought to be called as a witness on a significant issue on behalf of the client, [*3]except that the lawyer may act as an advocate and also testify:

“(1) If the testimony will relate solely to an uncontested issue.

“(2) If the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony.

“(3) If the testimony will relate solely to the nature and value of legal services rendered in the case by the lawyer or the lawyer’s firm to the client.

“(4) As to any matter, if disqualification as an advocate would work a substantial hardship on the client because of the distinctive value of the lawyer as counsel in the particular case.

“(b) Neither a lawyer nor the lawyer’s firm shall accept employment in contemplated or pending litigation if the lawyer knows or it is obvious that the lawyer or another lawyer in the lawyer’s firm may be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony would or might be prejudicial to the client.

“(c) If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer ought to be called as a witness on a significant issue on behalf of the client, the lawyer shall not serve as an advocate on issues of fact before the tribunal, except that the lawyer may continue as an advocate on issues of fact and may testify in the circumstances enumerated in paragraphs (a)(1) through (4) of this section.

“(d) If after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer or a lawyer in his or her firm may be called as a witness on a significant issue other than on behalf of the client, the lawyer may continue the representation until it is apparent that the testimony is or may be prejudicial to the client at which point the lawyer and the firm must withdraw {**6 Misc 3d at 278}acting as an advocate before the tribunal.” (Emphasis added.)

The advocate-witness disqualification rules contained in the Code of Professional Responsibility provide guidance, not binding authority, for courts in determining whether a party’s law firm, at its adversary’s instance should be disqualified during litigation. Courts must consider such factors as the party’s valued right to choose its own counsel, and the fairness and effect in the particular factual setting granting disqualification or continuing representation (see S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., 69 NY2d 437 [1987]). Disqualification may be required only when it is likely that the testimony to be given by the witness is necessary (J. P. Foley & Co. v Vanderbilt, 523 F2d 1357 [2d Cir 1975]), and where the party seeking disqualification clearly shows that the opposing counsel’s projected testimony will be adverse to the client (Toren v Anderson, Kill & Olick, 185 Misc 2d 23 [2000]; S & S Hotel Ventures Ltd. Partnership v 777 S. H. Corp., supra; Broadwhite Assoc. v Truong, 237 [*4]AD2d 162 [1st Dept 1997]).

Courts must apply the factors enumerated in the disciplinary rule on a case-by-case basis to determine if disqualification is warranted. Thus, courts have denied disqualification when an attorney’s projected testimony was not shown to be “sufficiently” adverse to the factual assertions or account of events offered on behalf of the client (Freeman v Kulicke & Soffa Indus., Inc., 449 F Supp 974, 977 [1978], affd 591 F2d 1334 [3d Cir 1979]; Ocean-Clear, Inc. v Continental Cas. Co., 94 AD2d 717 [2d Dept 1983]). Courts have granted disqualification when a member of the law firm representing the defendant will be called to testify at trial concerning the timely rendering of proof of loss and evidence will be offered in opposition to that testimony (Solomon v New York Prop. Ins. Underwriting Assn., 118 AD2d 695 [1986]); when the attorney may be called as a witness by the petitioner and her testimony “may be” prejudicial to her client (Matter of Stober v Gaba & Stober, 259 AD2d 554, 554-555 [2d Dept 1999]); and in an action to recover a real estate commission when plaintiff’s counsel would likely be called to testify with respect to his revival of a contract which was central to plaintiff’s theory of recovery (Bridges v Alcan Constr. Corp., 134 AD2d 316 [2d Dept 1987]).

In each of these cases, the Appellate Division has found the trial court’s decision not to be an abuse of discretion warranting reversal. In such situations, the court’s function is to take such action {**6 Misc 3d at 279}as is necessary to insure the proper representation of the parties and fairness in the conduct of the litigation (Solomon v New York Prop. Ins. Underwriting Assn., supra; Renault, Inc. v Auto Imports, 19 AD2d 814 [1963]), and to avoid placing the attorney in the awkward position of testifying on his client’s behalf and arguing the credibility of his own testimony at trial (Skiff-Murray v Murray, 3 AD3d 610 [3d Dept 2004]).

However, a law firm may continue representing a client even if one of its attorneys ought to be called as a witness (Talvy v American Red Cross in Greater N.Y., 205 AD2d 143 [1994], affd 87 NY2d 826 [1995]). There is nothing in defendant’s moving papers to identify which of the attorneys of the firm would be called to testify or to support the conclusion that any attorney of the firm ought to be called to testify. If such conclusion were to be supported and an attorney identified, that alone would not warrant the court’s granting disqualification. There are other attorneys in the firm that can act as advocates and whose testimony would not be necessary, precluding disqualification of the firm (Matter of Owen & Mandolfo, Inc. v Davidoff of Geneva, Inc., 197 AD2d 370 [1993]; Kaplan v Maytex Mills, 187 AD2d 565 [1992]; Mulhern v Calder, 196 Misc 2d 818 [2003]).

The moving papers make no reference to an attorney of the firm testifying. They only refer to the testimony of an “employee” of the firm whose testimony would be necessary in establishing the elements of plaintiff’s prima facie case.{**6 Misc 3d at 280} This firm employee will testify consistent with plaintiff’s position, not contrary to it (see Toren v Anderson, Kill & Olick, supra; S & S Hotel Ventures Ltd. [*5]Partnership v 777 S. H. Corp., supra; Broadwhite Assoc. v Truong, supra).

Furthermore, a strict reading of DR 5-102 shows that the rule refers to lawyers and not to “lawyers, their agents, servants, or employees.” From this, we may infer that the disqualification rules governing lawyers do not apply to “nonlawyer” employees of a law firm (Mulhern v Calder, 196 Misc 2d at 823, supra).

Conclusion

A clerk employed by the law firm in its mailroom, in charge of the mailing of plaintiff’s bills and proof of claim, will not cause the law firm to be disqualified from representing the plaintiff simply because the clerk’s testimony is necessary in establishing the elements of plaintiff’s prima facie case.

Accordingly, defendant’s motion for an order disqualifying the law firm of Baker, Barshay & Neuwirth, LLP from representing the plaintiff is denied in every respect.

[*1]

Civil Court of the City of New York, Queens County, November 4, 2004

APPEARANCES OF COUNSEL

Freiberg & Peck, New York City, for defendant. Baker & Barshay, Hauppauge, for plaintiff.

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

Augustus C. Agate, J.

{**5 Misc 3d at 724}Plaintiff brought suit to recover payment under the no-fault regulations for medical services it provided to its assignor, an insured of defendant. Defendant moved for summary judgment pursuant to CPLR 3212, arguing that plaintiff’s failure to comply with defendant’s verification requests made the commencement of this action premature. Plaintiff opposed defendant’s motion, arguing that defendant’s follow-up request was untimely, as defendant sent it 25 days after submitting the initial request.

This court finds that defendant’s verification requests were timely and proper under the no-fault regulations. The no-fault regulations require defendant to submit a follow-up verification request if it does not receive a response from plaintiff within 30 days of issuing its initial verification request. As defendant sent its follow-up request on the 25th day, it complied with the requirement of submitting its follow-up within 30 days from the date of the initial request. There is no statutory or case law that requires defendant to wait until the 30th day to issue its follow-up request. To find that defendant must wait 30 days before issuing its follow-up request serves no valid purpose under the No-Fault Law. Moreover, finding defendant’s follow-up request was untimely would be inconsistent with the purpose of the No-Fault Law and would result in unfair prejudice to defendant.

Under the no-fault regulations, an insurer must either pay or deny a claim within 30 days or it will be precluded from offering any defenses at trial. (See 11 NYCRR 65.15 [g]; Presbyterian Hosp. v Maryland Cas. Co., 90 NY2d 274 [1997].) An insurer may toll the 30-day period by properly requesting verification within 15 days from the date of receipt of the bill. (11 NYCRR 65.15 [d] [1].) Upon submitting a proper verification request, an insurer must issue a follow-up request for verification if it does not receive the requested information within 30 days from the date of requesting the verification. (11 NYCRR 65.15 [e] [2].) If it does not receive the verification after its follow-up request is sent, its time to pay or deny the claim is tolled pending submission of the requested information. (11 NYCRR 65.15 [g] [1]; Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [2d Dept 1999].) Further, an insurer may not [*2]issue a denial while its verification request is outstanding. (See Westchester Med., supra.)

While the regulations require an insurer to submit a follow-up request within 30 days from the date of submission of the request, {**5 Misc 3d at 725}it does not mandate that the insurer wait 30 days before sending a follow-up request. Instead, this time frame is a limit to the amount of time an insurer may wait before sending a follow up request. (See Keith v Liberty Mut. Fire Ins. Co., 118 AD2d 151 [2d Dept 1986].) This determination is consistent with the case law and the goals of the No-Fault Law.

There is no case law or statutory authority for the proposition that an insurer must wait 30 days before sending its follow-up request, or it will be precluded from offering defenses at trial. While there are no cases that specifically address this issue, there are cases that address the timeliness of follow-up verification requests. In New York & Presbyt. Hosp. v American Tr. Ins. Co. (287 AD2d 699 [2d Dept 2001]), the defendant requested additional verification on October 5, 1999 and sent its follow-up letter on November 1, 1999, 27 days later. (Id. at 700.) The Court noted that both requests were timely, stating that “defendant did not sit on its rights, but rather promptly requested additional verification of the claim.” (New York & Presbyt. Hosp. v American Tr., 287 AD2d at 701; see 11 NYCRR 65.15 [d] [2]; [e] [2].)

There are also numerous cases indicating the defendants timely sent follow-up verification requests exactly 30 days after sending its initial requests. (See New York Hosp. Med. Ctr. v State Farm Mut. Auto Ins. Co., 293 AD2d 588 [2d Dept 2002]; Boro Med. & Psych Treatment Servs., P.C. v Country Wide Ins. Co., 2002 NY Slip Op 50538[U] [App Term, 2d & 11th Jud Dists 2002]; L.I. First Aid Med. Supply v Progressive Cas. Ins. Co., 196 Misc 2d 258 [Civ Ct, Queens County 2003].)

In the present case, penalizing defendant for sending a follow-up request 25 days after its initial request is inconsistent with the goals of the No-Fault Law. The purpose of the No-Fault Law is to allow swift compensation for qualified injured persons from the insurance companies. (See Presbyterian v Maryland, 90 NY2d at 284.) The regulations require insurers to act quickly in evaluating insureds’ claims and to avoid prejudicial delays. (See Dermatossian v New York City Tr. Auth., 67 NY2d 219 [1986].) The verification requirement exists in order for insurers to have the opportunity to promptly investigate and respond to legitimate claims, not to delay payment. (See id.)

In this case, defendant complied with the no-fault regulations by quickly responding to plaintiff’s claim in the form of a verification request. When it had not received plaintiff’s claim within 25 days, it promptly responded by submitting a follow-up request. {**5 Misc 3d at 726}Plaintiff has not challenged the propriety of defendant’s request, but only challenges defendant’s ability to send a follow-up request earlier than 30 days from the date of the initial request. Essentially, plaintiff seeks to penalize defendant for being too prompt, which is wholly inconsistent with defendant’s duties under the No-Fault Law.

Finally, defendant would suffer undue prejudice if its verification request was found improper. If the court were to accept plaintiff’s argument, defendant would have to pay a claim for which it complied with the regulations and sought proper verification. This result would be unduly harsh, as defendant would be precluded from asserting any defenses to plaintiff’s claim. Furthermore, defendant’s early follow-up verification request did not prejudice plaintiff in any manner, as plaintiff is not under any time frame to respond to defendant’s verification request. [*3]Therefore, the date of defendant’s submission of its follow-up request is irrelevant for the purposes of plaintiff’s response.

It is also undisputed that plaintiff never responded to defendant’s verification requests and has not challenged the propriety of defendant’s requests. Plaintiff’s sole argument is that defendant acted too promptly in seeking verification. However, defendant’s actions were not only permissible but were consistent with the goals of the No-Fault Law in seeking prompt response to insured’s claims. In this matter, plaintiff was able to respond to the verification request, but simply received follow-up notice that it had not done so earlier than the time allotted to defendant by the no-fault regulations. Plaintiff’s failure to respond had no relation to the dates defendant submitted its initial and follow-up verification.

Accordingly, as defendant complied with the letter and spirit of the no-fault regulations, and plaintiff suffered no prejudice from defendant’s expeditious response to plaintiff’s claim, defendant’s verification requests are deemed timely and proper. As plaintiff never responded to defendant’s timely and proper verification requests, defendant was under no duty to issue a denial. (See Westchester Med. Ctr. v Travelers Prop. & Cas. Ins. Co., 2001 NY Slip Op 50082[U] [Sup Ct, Nassau County 2001].) Therefore, plaintiff commenced the action prematurely. As there are no issues of fact in dispute, defendant’s motion is granted.