District Court of Nassau County, First District

CV-012361-12

Fred J. Hirsh, J.

Defendant State Farm Mutual Automobile Ins. Co., (“State Farm”)moves for summary judgment dismissing this action. Plaintiff Advanced Neurological Care, P.C. (“Advanced”) opposes the motion and cross-moves for summary judgment.

BACKGROUND

This motion raises issues regarding what is an appropriate and sufficient affidavit to establish mailing of verification requests.

Advanced commenced this action seeking to recover first party no-fault benefits for MRI’s it performed on Daisha Sylvester on January 17, 2012 and other treatment provided on January 24, 2012.

Advanced mailed the claims for the services proved on both dates to State Farm at a post office box in Ballston Spa, New York. State Farm acknowledges receipt of the claim relating to the testing provided by Advanced on January 24, 2012 at its Ballston Spa office on February 6, 2012. State Farm acknowledges receipt of the claim for the services provided on January 17, 2012 at its Ballston Spa office on February 9, 2012.

Precisely what happened to the claim after it was received by State Farm in Ballston Spa is not clear.

Laura Brooks (“Brooks”), a State Farm Claims Representative sent a verification request to Advanced dated February 24, 2012 seeking a letter of medical necessity for the MRI. This verification request relates to the MRIs performed on Sylvester by Advanced on January 24, 2012. The letter does not indicate which State Farm office at which it was prepared and mailed. The return address on the letter is “State Farm Claims, P.O. Box 106107, Atlanta, Georgia 30348-6107.”

Brooks sent a follow-up verification request dated March 1, 2012 again seeking a letter of medical necessity for the MRIs. This request has the aforementioned Atlanta, Georgia return address.

State Farm sent a second verification request to Advanced dated March 1, 2012 over the signature of Jessalie Smith (“Smith”), Claim Processor advising Advanced the processing of the claim was being delayed because State Farm had not yet received an [*2]Application for No-Fault Benefits from Sylvester and requesting Advanced provide State Farm with handwritten/typed office notes. This verification request relates to the treatment provided to Sylvester by Advanced on January 17, 2012. The record does not reflect which State Farm office in which Jessalie Smith works. The return address on this letter is “State Farm Claims, P. O. Box 106017, Atlanta, Georgia 30348-6107”.

Smith sent a “Second Request” to Advanced dated April 9, 2012 again requesting Advanced’s handwritten/typed office notes and advising Advanced the it had not yet received an Application for No-Fault Benefits from the Sylvester. This letter also reflects the Atlanta, Georgia address.

The affidavit made in support of the motion attesting to the practices and procedures of State Farm regarding the preparation and mailing of the verification requests is made by Monique Rivas (“Rivas”). Rivas avers she is employed by State Farm as a No-Fault Claims Representative. Rivas states this claim has been assigned to State Farm’s Lakeville, New York office.^[FN1] Rivas affidavit does not state which State Farm office she worked at when the claim was received or the verification requests were prepared or mailed. Rivas affidavit does not state which State Farm office prepared and mailed the verification requests.

Rivas states the February 24, 2012 verification request would have been mailed on that day. Rivas avers since State Farm did not receive a response to its February 24, 2012 letter, Brooks issued a second request for this information six (6) days later by Brooks, March 1, 2012 letter.^[FN2]

Rivas avers that Smith’s March 1, 2012 verification request would have been mailed that date. Rivas avers since Advanced did not respond to Smith’s March 1, 2012 verification request, Smith issued her follow up letter of April 9, 2012. Rivas avers the April 9, 2012 letter would have been mailed that day.

Rivas does not indicate in which State Farm office Brooks or Smith work or the basis of her familiarity with the practices and procedures of that office for preparing, addressing and mailing verification requests. In fact, Rivas affidavit does not truly discuss State Farms procedures for preparing, addressing and/or mailing verification requests. Rivas affidavit primarily address State Farm’s practices and procedures used to prepare, address and mail denials.

State Farm supplements the Rivas affidavit with an affidavit of George Perry, a Claims Support Supervisor in State Farm’s Ballston Spa office. His affidavit also [*3]primarily addresses State Farm’s procedures for preparing, addressing and mailing Denials of Claims, the NF-10. His affidavit states the same procedures used to prepare, issue, address and mail an NF-10 is used for all other correspondence issued by State Farm in connection with no-fault claims including verification requests almost as an afterthought,

Perry’s affidavit does not state in which State Farm office Brooks and/or Smith work, where the verification requests they issued prepared, addressed and/or mailed and if the procedures in that office are the same as those described by Perry for documents prepared, addressed and/or mailed from State Farm’s Ballston Spa office.

Advanced cross-moves for summary judgment on the grounds State Farm did not pay or deny the claim within 30 days of submission. Advanced submits affidavits from Enrique Escala attesting to the mailing of the claim for $1758.38 on February 1, 2012. In addition to submitting the No-Fault Claim Form, Advanced also sent a copy of the MRI reports for the MRIs of the left shoulder and cervical spine and the required assignment.

Advanced submits an affidavit from Kerin Hausknecht, M.D. establishing the claims forms and other documents submitted in connection with the claim are records and documents prepared in the regular course of Advanced’s business. Dr. Hausknecht asserts the claims were neither paid nor denied. Payments of the claims is now overdue.

In opposition to defendant’s motion for summary judgment, plaintiff submits an affidavit from Maureen Cronin. Her affidavit states Advanced’s claim was submitted to State Farm by Israel, Israel & Purdy, LLP, plaintiff’s attorney. The claim is accompanied by a letter advising State Farm any requests for verification including requests for medical records should be should be forwarded to Israel, Israel & Purdy, LLP who will make arrangements for providing the requested verification. Cronin’s affidavit describes her office practices and procedures for processing and responding to verification requests received in connection with no-fault claims. She states a review of the office file establishes Israel, Israel & Purdy, LLP never received the verification requests alleged to have been mailed by State Farm.

State Farm did not pay or deny the Advanced claims. State Farm moves for summary judgment on the grounds the claims are premature because its time to pay or deny the claims has not yet begun to run because Advanced has not responded to the verification requests.

Advanced moves for summary judgment on the grounds it timely submitted the claim and the claim was not paid or denied within 30 days of submission.

DISCUSSION

An insurer has 15 business days form receipt of a claim to request additional verification of a claim. 11 NYCRR 65-3.5(b). If the material or documentation sought by way of verification is not provided to the insurer within 30 calendar days of the original request, “…the insurer, shall, within 10 calendar days, follow up with the party from whom verification was requested.” 11 NYCRR 65-3.6(b).

An insurer’s time to pay or deny a claim it tolled or extended until it receives all timely and properly requested verification. Hospital for Joint Disease v. New York Central Mutual Fire Ins. Co., 44 AD3d 903 (2nd Dept. 2007); and 11 NYCRR 65-3.5(c); [*4]and 11 NYCRR 65-3.8(a)(1). An insurer does not have to pay or deny a claim until it receives all timely requested verification. St. Barnabas Hosp. v. American Transit Ins. Co., 57 AD3d 517 (2nd Dept. 2008); Mount Sinai Hosp. v. Chubb Group of Insurance Companies, 43 AD3d 899 (2nd Dept. 2007); and New York & Presbyterian Hosp. v. Progressive Cas. Ins. Co., 5 AD3d 569 (2nd Dept. 2004): and 11 NYCRR 65-3.5(c).

Even though State Farm did not comply with the provisions relating to follow-up verification in regard to the verification requests prepared by Laura Brooks, Advanced failure to respond to the original verification request would ordinarily result in the court dismissing the action as premature. St. Vincent’s Medical Care, P.C. v. Country Wide Insurance Co., 80 AD3d 599 (2nd Dept. 2011); and Infinity Health Products, Ltd. v Eveready Ins. Co., 67 AD3d 862 (2nd Dept. 2009).

In order to obtain summary judgment, the insurer must establish timely mailing of a properly addressed verification request. Timely mailing can be established by submitting an affidavit or affidavits from the claims representatives and insurance company employees who actually prepared and mailed the verification request. South Nassau Orthopedic Surgery and Sports Medicine, P.C. v. Auto One Ins. Co., 32 Misc 3d 129(A) (App.Term 2nd, 11th & 13th Jud. Dists.); Friendly Physicians, P.C. v. Geico Ins. Co., 29 Misc 3d 128(A) (App.Term 2nd, 11th & 13th Jud. Dists. 2010); and Points of Health Acupuncture, P.C. v. Geico Ins. Co., 25 Misc 3d 140(A) (App.Term 2nd , 11th & 13th Jud. Dists. 2009). In this case, State Farm has not submitted an affidavit from either Laura Brooks or Jessalie Smith attesting to the preparation of the verification requests or affidavits from anyone attesting to the actual mailing of those requests.

Timely mailing can also be established by an affidavit from an employee with knowledge of the party’s standard office practices and procedures designed to ensure the items were properly addressed and timely mailed. St. Vincent’s Hosp. of Richmond v. Government Empls. Ins. Co., 50 AD3d 1123, 1124 (2nd Dept. 2008).

While the Appellate Term has frequently and repeatedly cited St. Vincent’s, there is little in the Appellate Term’s decisions indicating precisely who can or should be making the affidavit and what information must be contained in the affidavit establishing the verification request has been timely prepared. properly addressed and timely mailed. In almost all instances, the decisions of the Appellate Term on the issue of mailing simply state the affidavit attesting to the insurer’s practices and procedures was sufficient to demonstrate the verification request or denial was properly addressed and timely mailed. See, e.g. Khodadadi v. Clarendon Ins. Co., 37 Misc 3d 130(A) (App.Term 9th & 10th Jud. Dists. 2012); Brownsville Advanced Medical, P.C. v. Kemper Independence Ins. Co., 36 Misc 3d 146(A) (App.Term 9th & 10th Jud. Dists. 2012); All County, LLC v. Unitrin Advantage Ins. Co., 31 Misc 3d 134(A) (App.Term 9th & 10th Jud Dists. 2011); Crescent Radiology, PLLC v. American Transit Ins. Co., 31 Misc 3d 134(A) (App. Term 9th & 10th Jud. Dists. 2011); Elmont Open MRI & Diagnostic Radiology, P.C. v. Travelers Indemnity Co., 30 Misc 3d 126(A), (App. Term 9th & 10th Jud. Dists. 2010).

If the person making the affidavit attesting to the timely mailing of the verification request is not the person who actually prepared, addressed and mailed the verification request, that person attesting to the insurer’s mailing practices and procedures must establish a familiarity with the practices and procedures used in the office in which the [*5]verification notice was generated, the standard office practices and procedures used for mailing the notice from the office at which it was generated including how the mail was picked up during the work day, when the mail would be delivered to or picked up by the Postal Service and what steps would be taken if the letter was returned as undeliverable. Lenox Hill Radiology, P.C. v. Tri-State Consumer Insurance Co., 31 Misc 3d 13 (App.Term 1st Dept. 2010); See also, Orthotech Express Corp. v. MVAIC, 37 Misc 3d 128(A) (App.Term 1st Dept. 2012).

In this case, neither the Rivas nor Perry affidavits establish at which State Farm office the verification requests were generate or mailed. Neither Rivas nor Perry aver to having personal knowledge regarding the preparation, addressing or mailing of these verification requests. Rivas and Perry work in different offices State Farm offices several hundred miles apart. Neither of their affidavits explain why the verification requests have an Atlanta, Georgia return address. Neither appear to work for State Farm in the office that prepared the verification notices or are personally familiar with the practices and procedures in place in the office at which these notices were mailed for ensuring the notices were properly addressed and properly mailed. In the absence of proof establish a familiarity with the practices and procedures employed by the office generating and mailing the verification request, summary judgment the affidavits are insufficient to establish “…designed to ensure that items were properly addressed and mailed (citations omitted)”. St. Vincent’s Hosp. of Richmond v. Government Empls. Insurance Co., supra at 1124; and Orthotech Express Corp. v. MVAIC, supra.

If a claimant fails to respond to the original verification request within 30 calendar days after the original request, the insurer must send out a follow up request within10 calendar days. 11 NYCRR 65-3.6(b). The follow up request must advise the claimant and the claimant’s attorney of the reasons why payment of the claim is being delayed by identifying the in writing the missing verification. Id. State Farm knew the Advanced was represented by an attorney. Brooks follow up letter does not indicate is was sent to Advanced’s attorney.

Smith’s follow up letter indicates a copy was mailed to Israel, Israel & Purdy.

The Cronin affidavit submitted by Advanced raises questions of fact regarding the mailing of this follow up verification request. Cronin’s affidavit establishes her offices practices and procedures for receiving, processing and responding to verification requests. She further states that based upon her review of the office records, her office never received Smith’s follow up verification request.

Mere denial of receipt of a verification request is insufficient to overcome the presumption of mailing. Darlington Medical Diagnostics, P.C. v. Praetorian Ins. Co., 32 Misc 3d 142(A) (App.Term 1st Dept. 2011); and Pomona Medical Diagnostics, P.C. v. Travelers Ins. Co., 31 Misc 3d 127(A) (App.Term 2nd, 11th & 13th Jud. Dists. 2011). However, if an insurer can establish through an affidavit of any employee attesting to the insurer’s practices and procedures for processing and timely mailing verification requests or denials, a provider should be able to establish non-receipt of a verification request by providing an affidavit detailing the providers practices and procedures for receiving, acknowledging receipt and responding to verification requests. See, St. Vincent’s Hosp. of Richmond v. Government Empls. Ins. Co., supra.

Brooks was advised by the letter transmitting the claim verification requests [*6]should be sent to Israel, Israel & Purdy. Despite being so advised, Brooks and State Farm did not send the original verification request to Israel, Israel & Purdy. Brooks March 1, 2012 follow-up verification request is not addressed to or copied to Israel, Israel & Purdy. Therefore, questions of fact exist as to whether the verification requests were properly addressed.

Smith also was or should have known verification requests were to be mailed to Israel, Israel & Purdy in addition to the provider. Despite this, the original verification request was sent only to Advanced. While Smith’s follow-up verification request was mailed to the provider and copied to Israel, Israel & Purdy, Cronin’s affidavit detailing Israel, Israel & Purdy’s practices and procedures for receiving, logging-in and responding to verification requests raises questions of fact regarding whether the follow-up verification request was properly addressed and timely mailed to the parties required by the regulations. See, 11 NYCRR 65-3.6(b).

The court also notes State Farm offers no explanation for why the claim was being handled by two different claims representatives in the same office or why the first verification request did not advise Advanced Sylvester had not filed an application for no-fault benefits while the later verification request does.

Since questions of fact exist regarding whether the verification requests and follow-up verification requests were properly addressed and timely mailed, defendant’s motion for summary judgment is denied.

Plaintiff has established a prima facie entitlement to judgment as a matter of law. The affidavits submitted by plaintiff coupled with State Farms acknowledgment of the receipt of claims within 45 days of the date the service were provided are sufficient to establish timely submissions of the claim. A.B. Medical Services PLLC v. Utica Mut. Ins. Co., 10 Misc 3d 50 (App.Term 2nd & 11th Jud. Dists. 2005); and 11 NYCRR 65-1.1. The Hausknecht affidavit establishes the documents submitted in support of the claim were business records of Advanced. Art of Healing Medicine, P.C. v. Travelers Home & Mar. Ins. Co., 55 AD3d 644 (2nd Dept. 2008); Bath Medical Supply, Inc. v. Utica Mutual Ins. Co., 23 Misc 3d 141(A) (App. Term, 2nd, 11th and 13th Jud. Dists. 2009); and Bajaj v. General Assurance Co., 18 Misc 3d 25 (App.Term 2nd & 11th Jud. Dists. 2007). The claims were not paid or denied within 30 days of receipt. 11 NYCRR 65-3.8(a).

Since questions of fact exist regarding whether State Farm timely mailed, properly addressed verification requests and follow-up verification requests, the court cannot grant plaintiff’s cross-motion for summary judgment, As discussed above, if the court were to ultimately find the verification requests were properly addressed and timely mailed, the action would be dismissed as premature.

For the foregoing reasons, defendant’s motion and plaintiff’s cross-motion are denied.

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge [*7]

Dated: November 26, 2012

cc:Israel, Israel & Purdy, LLP

Robert T. Lau & Associates

Footnotes

Footnote 1:Lakeville, New York is located in Livingston County. The court may take judicial notice of location of communities. Prince, Richardson On Evidence 11th Ed. §2-204(a) (Farrell 1995). Even though Lakeville, New York is located in Livingston County, Rivas affidavit is notarized by a notary qualified Nassau County.

Footnote 2:February 24, 2012 was a Friday. If the letter was mailed on Friday, it is unlikely the letter was received by Advanced until the next business day, Monday February 27th. Even if Advanced had received and mailed out a response, it is unlikely the response would have been received and processed by State Farm by the time it sent out the follow-up, second request on March 1, 2012.

[*1]

District Court of Nassau County, First District, August 17, 2012

APPEARANCES OF COUNSEL

Gullo & Associates for defendant. Friedman, Harfenist, Kraut & Perlstein LLP for plaintiff.

{**37 Misc 3d at 803} OPINION OF THE COURT

Fred J. Hirsh, J.

Defendant New York Central Mutual Fire Insurance Company (NYCMFIC) moves for summary judgment dismissing this action to obtain payment of first-party no-fault benefits on the ground the action is premature because defendant’s time to pay or deny the claim has not run because plaintiff Elmont Open MRI & Diagnostic Radiology, P.C. failed to respond to defendant’s verification requests.

Background

Abdelghani Kinane sustained injuries in a motor vehicle accident that occurred on June 8, 2008.

On August 27, 2008, Elmont performed a brain MRI on Kinane. Kinane assigned his no-fault benefits for this test to Elmont.

Elmont submitted the claim for payment to the defendant NYCMFIC. While the exact date NYCMFIC received the claim is not clear, the claim was received on or before September 23, 2008 because by letter dated September 23, 2008, NYCMFIC requested verification from Elmont, to wit: copies of the MRI films and invoicing for the MRI films in accordance with the Workers’ Compensation Board radiology fee schedule ground rule 8.

NYCMFIC claims it never received a response to its September 23, 2008 verification request. NYCMFIC sent a follow-up verification request to Elmont dated October 27, 2008. NYCMFIC’s October {**37 Misc 3d at 804}27, 2008 letter states it had not received a response to its September 23, 2008 request and requests Elmont provide the information previously requested.

NYCMFIC avers it never received the requested verification. NYCMFIC never paid or denied the claim.

On September 22, 2011, Elmont commenced this action seeking to obtain payment of what it alleged was overdue, unpaid first-party no-fault benefits.

In opposition to NYCMFIC’s motion, Elmont submits an affidavit from Brijkumar Yamraj. Yamraj is Elmont’s billing collection supervisor and is responsible for the day-to-day operation of Elmont’s billing department. Yamraj’s responsibilities include responding to and complying with verification requests received in connection with no-fault claims.

Yamraj acknowledges Elmont received NYCMFIC’s verification requests. Yamraj avers that, on November 12, 2008, he mailed a copy of the brain MRI films and other requested information to NYCMFIC from the Meacham branch of the Elmont post office. The mailing is confirmed by a certificate of mailing issued by the Meacham branch of the Elmont post office on November 12, 2008.

Discussion

A no-fault insurer must pay or deny a claim for no-fault benefits within 30 days of receipt of the claim. (11 NYCRR 65-3.8 [a].) An insurer that fails to pay or deny a claim within 30 days is precluded from asserting any precludable defenses not asserted in a timely denial. (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997], rearg denied 90 NY2d 937 [1997].)^[FN1]

An insurer may toll or extend its time to pay a claim by timely demanding verification. (Kingsbrook Jewish Med. Ctr. v Allstate Ins. Co., 61 AD3d 13 [2d Dept 2009]; Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2d Dept 2007]; 11 NYCRR 65-3.5 [c]; 65-3.8 [a] [1].) An insurer does not have to pay or deny a claim until it has received all timely requested verification. (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 [2007]; New York & Presbyt. Hosp. v{**37 Misc 3d at 805} Countrywide Ins. Co., 44 AD3d 729 [2d Dept 2007].) As long as the verification is requested before the insurer’s time to pay or deny the claim has expired, the insurer’s time to pay or deny the claim is tolled or extended. (Id.)

An initial verification request must be made within 10 business days of receipt of the claim. (11 NYCRR 65-3.5 [a].) Additional verification must be requested within 15 business days of receipt of the initial verification material. (11 NYCRR 65-3.5 [b].)

If the provider does not respond to the initial verification request within 30 calendar days of the request, the insurer shall follow up within 10 calendar days by advising the party from whom the verification was requested that processing of the claim is being delayed by the failure of the party to provide verification. (11 NYCRR 65-3.6 [b].)

NYCMFIC asserts that since it timely requested verification and since Elmont has not responded, its time to pay or deny the claim has not yet begun to run. As a result, Elmont’s action is premature. The action must be dismissed.

Elmont submits the Yamraj affidavit in opposition to the motion in which Yamraj avers to having received the requested verification and having mailed the requested verification to NYCMFIC on November 12, 2008.

Because so many issues in actions to recover first-party no-fault benefits are related to mailing and the timeliness of mailing, a rather significant body of case law has developed relating to mailing issues and what must be proved to establish timely mailing. As the Appellate Term, First Department, noted in Lenox Hill Radiology, P.C. v Tri-State Consumer Ins. Co. (31 Misc 3d 13 [2010]):

“we would be remiss in failing to note that the facts and circumstances of this action do much to illustrate the disturbing reality that first-party no-fault benefits litigation has become the antithesis of what was supposed to be an expeditious and simplified process for the payment of medical costs for injuries sustained in motor vehicle accidents. Too often, lawsuits with a value akin to a small claims action become bogged down by an insistence by one party or another that mailing of routine forms be established with scientific precision.” (Id. at 15 [citation omitted].)

In this court, the issues relating to mailing most often arise in the context of motions for summary judgment and involve{**37 Misc 3d at 806} whether the proof submitted by the moving party, generally the defendant insurer, is sufficient to establish proper and timely mailing of a verification request, a notice requesting an appearance for an examination under oath or an independent medical examination, or a denial.

Proof of mailing can be established by submitting an affidavit from the person who actually mailed the document averring to the mailing. (South Nassau Orthopedic Surgery & Sports Medicine, P.C. v Auto One Ins. Co., 32 Misc 3d 129[A], 2011 NY Slip Op 51300[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011]; Friendly Physician, P.C. v GEICO Ins. Co., 29 Misc 3d 128[A], 2010 NY Slip Op 51770[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2010]; Points of Health Acupuncture, P.C. v GEICO Ins. Co., 25 Misc 3d 140[A], 2009 NY Slip Op 52445[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009].) Timely mailing can also be established by an affidavit from an employee with knowledge of the party’s standard office practices and procedures designed to ensure the items were properly addressed and timely mailed. (St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123, 1124 [2d Dept 2008].)

Once a party has submitted proof in admissible, evidentiary form establishing mailing through either of the aforementioned methods, conclusory denial of receipt is insufficient to raise triable issues of fact regarding the mailing. (Darlington Med. Diagnostics, P.C. v Praetorian Ins. Co., 32 Misc 3d 142[A], 2011 NY Slip Op 51634[U] [App Term, 1st Dept 2011]; Pomona Med. Diagnostics, P.C. v Travelers Ins. Co., 31 Misc 3d 127[A], 2011 NY Slip Op 50447[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2011].)

The affidavit submitted by NYCMFIC in support of the motion is a St. Vincent’s affidavit in that it attests to NYCMFIC’s office practices and procedures established to ensure notices such as the verification requests in question were properly addressed and timely mailed.

Receipt of the verification requests is not in issue because in the Yamraj affidavit Elmont acknowledges receipt of the verification requests.

The Yamraj affidavit supported by the certificate of mailing establishes actual mailing of the requested verification information and material.

NYCMFIC did not submit any proof in admissible form contesting Yamraj personally mailed the brain scan MRI films{**37 Misc 3d at 807} to NYCMFIC on November 12, 2008. While the affidavit of Nicki Jasper goes into great detail to establish how NYCMFIC prepares and mails verification requests, this affidavit states in a conclusory manner in its final sentence that she has reviewed NYCMFIC’s records and they do not reflect having received the films.

The Yamraj affidavit is sufficient to establish Elmont responded to NYCMFIC’s verification requests. Therefore, NYCMFIC’s motion for summary judgment must be denied.

However, the question remains whether the Yamraj affidavit and certificate of mailing coupled with the conclusory denial of receipt requires the court to search the record and grant summary judgment to a non-moving party without the necessity of a cross motion. (CPLR 3212 [b].) The court may search the record and grant summary judgment to a non-moving party if such relief is appropriate. (See Lindstedt v 813 Assoc., 238 AD2d 386 [2d Dept 1997], lv dismissed 90 NY2d 1007 [1997], rearg denied 91 NY2d 867 [1997].)

Plaintiff establishes a prima facie cause of action to recover first-party no-fault benefits by establishing timely submission of the claim and the claim has not been paid or denied within 30 days of receipt by the insurer. (Westchester Med. Ctr. v AIG, Inc., 36 AD3d 900 [2d Dept 2007]; New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512 [2d Dept 2006]; 11 NYCRR 65-3.8 [a] [1].) The Yamraj affidavit establishes the documents submitted by Elmont to NYCMFIC are business records. (Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2d Dept 2008]; Bath Med. Supply, Inc. v Utica Mut. Ins. Co., 23 Misc 3d 141[A], 2009 NY Slip Op 51030[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2009]; Bajaj v General Assur., 18 Misc 3d 25 [App Term, 2d Dept, 2d & 11th Jud Dists 2007].)

NYCMFIC’s verification request is an acknowledgment and admission the claim was received within 45 days of the date the services were provided. (See Delta Diagnostic Radiology, P.C. v Country-Wide Ins. Co., 13 Misc 3d 132[A], 2006 NY Slip Op 51877[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2006]; 11 NYCRR 65-1.1.)^[FN2]

Plaintiff has established it timely submitted the claim, it responded to defendant’s verification requests and the claim{**37 Misc 3d at 808} was not paid or denied within 30 days of receipt of the requested verification. Since Elmont submitted papers sufficient to establish a prima facie entitlement to judgment as a matter of law, the burden shifted to NYCMFIC to establish the existence of triable issues of fact. (Zuckerman v City of New York, 49 NY2d 557 [1980]; Davenport v County of Nassau, 279 AD2d 497 [2d Dept 2001]; Bras v Atlas Constr. Corp., 166 AD2d 401 [2d Dept 1990].)

NYCMFIC failed to offer any proof in admissible form controverting or questioning Elmont’s proof it mailed the requested verification material to NYCMFIC on November 12, 2008. In view of the affidavit of actual mailing coupled with a certificate of mailing, NYCMFIC’s conclusory assertion it never received the material is insufficient to raise questions of fact necessitating a trial on the issue of mailing.

Under these circumstances, it is appropriate for the court to search the record and grant summary judgment to the non-moving party.

For the foregoing reasons, defendant’s motion for summary judgment is denied. Upon searching the record, summary judgment is granted to the non-moving party, the plaintiff.

The clerk is directed to enter judgment in favor of the plaintiff and against the defendant in the sum of $874.44 together with interest and legal fees in accordance with the no-fault law and regulations and costs and disbursements as taxed by the clerk.

Footnotes

Footnote 1: There are numerous non-precludable defenses, none of which are relevant to this action or motion.

Footnote 2: The claim is for an MRI performed on August 27, 2008. The initial verification request is dated September 23, 2008.

[*1]

District Court of Nassau County, First District, June 4, 2012

APPEARANCES OF COUNSEL

Epstein, Gialleonardo, Frankini & Grammatico, for defendant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, for plaintiff.

{**36 Misc 3d at 569} OPINION OF THE COURT

Fred J. Hirsh, J.

Defendant moves for summary judgment dismissing this action to recover first-party no-fault benefits. Plaintiff cross-moves for summary judgment.

Background

This action involves another variation of what has become an increasingly common and troublesome development in the area of claims to obtain payment of first-party no-fault benefits—insurers requesting a claimant provider furnish as verification information about the claimant provider’s corporate structure and ownership. When the claimant provider fails or refuses to provide the information and commences an action to recover first-party no-fault benefits, the insurer moves for summary judgment dismissing the action on the grounds the claimant provider has not responded to verification requests.{**36 Misc 3d at 570}

These motions raise issues that have been addressed in the no-fault statute (Insurance Law art 51) or the no-fault regulations (11 NYCRR part 65) and which had not previously been addressed in the case law, to wit:

(1) Can a provider object to a verification request?

(2) What is the effect of the objection to the verification request?

Victory Medical Diagnostics, P.C. (Victory) performed a neurological consult and diagnostic testing on Miguel Rojas on March 9, 2011. Rojas assigned his no-fault benefits to Victory. Victory submitted the claim for payment to defendant Nationwide Property and Casualty Insurance Company (Nationwide).

Nationwide received the claim and by letter dated April 5, 2011 requested verification including a copy of Victory’s SS-4, taxpayer identification number (TIN) and completed W-9, copies of any lease agreements or other agreements relating to the use or rental of the facility and/or equipment where the services were rendered, names and addresses of the owners of any past and present billing/management company used by Victory, copies of any written contracts with such company or, if the agreement is oral, a summary of the agreement including the date of commencement and a letter of medical necessity explaining why [*2]the testing was required including an explanation as to how the testing would help aid in developing a treatment plan or change the treatment plan.

Victory responded to Nationwide’s request by providing Nationwide with a copy of its SS-4, TIN acknowledgment, a W-9, a copy of the medical license of Ahmed Adel Elsoury, the physician who performed the diagnostic tests, Dr. Elsoury’s registration certificate indicating he is licensed as a physician in New York through July 31, 2012, a copy of Victory’s certificate of incorporation that lists Dr. Elsoury as Victory’s sole, original shareholder, director and officer and a copy of the certificate of filing acknowledging that Victory’s certificate of incorporation was filed with the Secretary of State on January 3, 2011. Victory did not provide a letter of medical necessity, the leases or the management agreements.

By letter dated May 5, 2011, Nationwide acknowledged receipt of the SS-4, Internal Revenue Service (IRS) TIN, W-9 and other corporate documents. Nationwide’s letter reiterated Nationwide’s request for copies of lease agreements regarding the premises and/or equipment where the services rendered in connection{**36 Misc 3d at 571} with this claim were provided, the name and address of any billing or management company used by Victory and copies of any written agreements between Victory and the billing or management company or a summary of the agreement if the agreement was oral.^[FN1] The letter further advised Victory an insurer may demand verification of the claim and does not have to pay or deny the claim until all requested verification is received. Nationwide advised Victory it would not pay or deny the claim until the remaining items requested by way of verification have been provided. Even though Victory had not provided a letter of medical necessity, Nationwide’s May 5, 2011 letter did not request a letter of medical necessity.

Victory responded to Nationwide’s May 5, 2011 letter by letter dated July 26, 2011. The letter advised Nationwide that Victory considered this verification demand as overly burdensome and an abuse of the verification process. The letter cited the provisions of 11 NYCRR 65-3.2 that state insurers should not request verification unless there is a good faith basis for doing so, claims should be paid promptly and fairly and an insurer should not treat the claimant as an adversary.

The letter requested Nationwide provide Victory with “a detailed explanation of how and why this information is essential to this particular claim as well as a detailed explanation of what has prompted this request pursuant to 11 NYCRR section 65-3.2(e) and section 65-3.16(a).” The letter further requested Nationwide provide an explanation of its good cause basis for requesting this information as well as an itemization of all acts “tantamount to fraud.” The letter then reminded Nationwide of its obligation under 11 NYCRR 65-3.2 (f) to promptly respond to all communications from applicants.

Nationwide responded to Victory’s July 26, 2011 letter by letter dated August 30, [*3]2011. Nationwide’s letter cited to the provisions of the Business Corporation Law that prohibit any person other than a licensed professional from having an interest in the professional corporation and the provision of 11 NYCRR 65-3.5 (c) that grants insurers the right to demand “all items necessary to verify the claim.” The letter stated “Mallela v State Farm Ins. Co. (US District Ct. March 29, 2005)” granted {**36 Misc 3d at 572}insurers the right to look behind the certificate of incorporation’s statement indicating the physician is the owner.^[FN2]

The letter stated Nationwide needed copies of the leases and management agreements to verify that Victory is a legally formed professional corporation. The letter did not advise Victory of Nationwide’s basis for the request or its basis for suspecting Victory was improperly incorporated. The letter concluded by advising Victory the claim will not be considered until the requested material has been provided.

Victory did not respond to Nationwide’s August 30, 2011 letter or provide Nationwide with copies of the leases for the facilities and equipment, management agreements or, if oral, a summary of the management agreements. Nationwide did not pay or deny the claim. Victory commenced this action seeking to recover the unpaid claim.

In support of the motion for summary judgment, Nationwide asserts it requested verification because it could not confirm Victory’s tax identification number with Insurance Services Office, Inc. (ISO); the treating physician, Joseph Raia, owns and treats through multiple other entities; Dr. Elsoury is the listed owner of at least two other medical providers; the address at which the services were rendered has at least four other medical providers; Victory’s billing address is the address for several other medical providers; and Great Liberty Funding Inc. and Wilk Real Estate Ltd. use or used 614 Richmond Road, 2nd Floor, Staten Island, New York 10304 as their address.

Discussion

An insurer must pay or deny a claim in whole or in part within 30 days of receipt or receipt of verification. (11 NYCRR 65-3.8 [a].)

An insurer can extend or toll its time to pay or deny a claim by demanding verification within 30 days of receipt of the claim. (Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 [2007].) An insurer does not have to pay or deny a claim until it receives all timely requested verification. (St. Barnabas Hosp. v American Tr. Ins. Co., 57 AD3d 517 [2d Dept 2008]; Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d 889 [2d Dept 2007]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]; 11 NYCRR 65-3.5 [c].){**36 Misc 3d at 573}

The no-fault regulations do not specifically define or limit the information or documentation an insurer may request through verification. An insurer can request “all items necessary to verify the claim directly from the parties from whom such verification was requested.” (11 NYCRR 65-3.5 [c].) The only limitation on verification [*4]contained in the regulations is an insurer should not “demand verification of facts unless there are good reasons to do so.” (11 NYCRR 65-3.2 [c].) Neither the no-fault law nor the no-fault regulations establish a mechanism or procedure by which a claimant provider can contest or challenge a request for verification on the grounds it is improper, unduly burdensome, unfounded, unnecessary or harassing.

The courts have suggested a provider who receives an improper, unduly burdensome, unfounded, harassing and/or unnecessary verification request can preserve the right to object by responding and objecting to the verification request. (See Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [2d Dept 1999] [inaction was not a proper response to “unintelligible” verification requests; the provider should have resolved the confusion through further correspondence]; Crescent Radiology, PLLC v American Tr. Ins. Co., 31 Misc 3d 134[A], 2011 NY Slip Op 50622[U] [App Term, 9th & 10th Jud Dists 2011] [a party waives its right to object to an examination under oath (EUO) if it does not object to the EUO request when the request is received];^[FN3] Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010] [the provider of diagnostic testing should have responded to a verification request seeking a letter of medical necessity by advising the insurer to seek a letter of medical necessity for the diagnostic testing from the referring physician].) These cases suggest a provider can raise and preserve objections to verification requests if the provider advises the insurer it objects to the verification being requested and advises the carrier of the basis of its objection.

The applicant for no-fault benefits should not be treated as an adversary. (11 NYCRR 65-3.2 [b].){**36 Misc 3d at 574}

Mallela material is inherently adversarial. Mallela is the outgrowth of litigation; a declaratory judgment action contesting numerous medical providers’ right to obtain payment of no-fault benefits on the grounds they were improperly incorporated because persons other than those holding the license to practice medicine were the de facto owners of the professional corporation. Mallela information does not assist an insurer in determining whether it should pay the claim. Mallela information is requested to determine if the provider is ineligible to receive payment of no-fault benefits not simply for the claim in question but for all claims.

Insurers should raise Mallela issues and request Mallela information only for good cause where the insurer “can demonstrate behavior tantamount to fraud.” (State Farm Mut. Auto. Ins. Co. v Mallela at 322.) Therefore, before a claimant provider should be required to produce Mallela material, the insurer must have and articulate a good faith and factual basis for seeking the information.

Verification is permitted to investigate the claim (11 NYCRR 65-3.5 [c]). Mallela [*5]material does not involve the investigation of the claim; it involves an investigation of the claimant. The ultimate determination of a successful Mallela action or defense will not determine one specific claim. A successful Mallela action or defense will result in the determination the claimant provider is ineligible to obtain payment of no-fault benefits from any carrier for any claim. (State Farm Mut. Auto. Ins. Co. v Mallela, supra; Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno Gerbino & Soriano, LLP, 26 Misc 3d 448 [Civ Ct, Richmond County 2009].)

Nationwide’s reasons for requesting copies of Victory’s leases and management agreements by way of verification do not hold up when scrutinized.

Victory provided Nationwide with a copy of form SS-4 issued by the Internal Revenue Service which contains the employer identification number issued to Victory by the IRS on January 5, 2011. The only reason to verify the information contained on this document on IRS letterhead would be if Nationwide believed this document was a forgery or a fake.

Nationwide does not indicate where ISO obtains the taxpayer identification numbers contained in its database. Nationwide also does not indicate how up-to-date the ISO database is. Victory was incorporated and its taxpayer identification number was issued only three months before the claim in question was{**36 Misc 3d at 575} submitted. It is entirely possible if not likely that a taxpayer identification number issued to a newly formed professional service corporation would not be in the ISO records.

Nationwide claims the treating physician was Joseph Raia, M.D. Nationwide claims Dr. Raia owns and treats under numerous other entities including Socrates Medical Health, M.D. The record before the court does not contain any entries made by Dr. Raia. The claim form submitted and all the other documents appear to be signed by Dr. Elsoury.

Nationwide offers no proof of Dr. Elsoury’s association with any other medical providers. A doctor may be the principal in more than one medical professional service corporation.

The address at which the services were provided, 82-11 37th Avenue, Jackson Heights, New York is a multistory office building. There is nothing unusual about several medical practices having offices in a multistory office building.

Nationwide did not provide the court with the names of any of the other medical providers that maintain offices at 82-11 37th Avenue, Jackson Heights, New York. Nationwide did not establish that any of these other providers have ever submitted a no-fault claim to Nationwide or any other insurer or if these other providers did submit claims, the claims reflected the medical services were provided in the same office, Room 402, at which Victory provided the services to Rojas.

Nationwide’s claim that Victory has the same billing address as numerous other medical facilities and nonmedical facilities is not supported by the record. Nationwide does not provide the court with evidence that it received no-fault claims from any other medical providers that used 614 Richmond Road, 2nd Floor, Staten Island, New York 10304 as a billing address. Nationwide did not provide the court with any evidence any other medical provider used or uses this address for any purpose.

The records of the Secretary of State indicate there are eight different “Wilk Realty” or “Wilk Real Estate” entities. None of them use 614 Richmond Road, 2nd Floor, [*6]Staten Island, New York 10304 as their address for service of process. Additionally, the Secretary of State’s records indicate Wilk Real Estate Ltd. was dissolved on December 1, 2008, more than two years before Victory was incorporated.

Great Liberty Funding, Inc. was dissolved on July 28, 2009. The records of the Secretary of State indicate Great Liberty{**36 Misc 3d at 576} Funding did not use 614 Richmond Road, 2nd Floor, Staten Island, New York 10304 as its address for service of process. The only currently active corporation using Great Liberty in its name is an active domestic corporation whose principal place of business is in Dutchess County and whose address for service of process is in Wingdale, New York.

Nationwide did not provide evidence establishing Wilk Realty and/or Great Liberty Funding ever used the address 614 Richmond Road, 2nd Floor, Staten Island, New York 10304 for any purpose. Nationwide also fails to establish any relationship between Victory and/or Wilk Realty and Great Liberty Funding.

If the court were to grant Nationwide summary judgment in this situation, the court would be permitting an insurer to request any verification, relevant to the claim or not, and to obtain summary judgment when the provider who had objected to the verification request fails to provide the material to which it objected. A provider must have a method by which it can object to a verification request and preserve the propriety of that request for judicial determination.

If the provider objects to the request for verification, then the issue of whether the requested verification material and the objection were proper are preserved and become questions of fact for the trier of fact. If the insurer can establish it had a reasonable, good faith, factual basis for requesting the verification, then the failure of the claimant provider to furnish the material will result in the dismissal of the action. If the insurer cannot establish a reasonable, good faith, factual basis for requesting the verification, then the insurer will be required to pay the claim.

Nothing herein should be read to preclude Nationwide from asserting a Mallela defense or commencing a declaratory judgment action seeking Mallela relief and obtaining Mallela material in discovery should the insurer have a good faith basis for doing so.

A Mallela defense is nonprecludable. (Lexington Acupuncture, P.C. v General Assur. Co., 35 Misc 3d 42 [App Term, 2d, 11th & 13th Jud Dists 2012].) An insurer who does not request Mallela material by way of verification is not precluded from raising it as a defense in the action or obtaining appropriate discovery should the insurer demonstrate a good faith basis for believing the medical provider is improperly incorporated or if nonprofessionals are the de facto owners of the professional corporation. (Midborough Acupuncture, P.C. v State Farm Ins. Co., 21 Misc{**36 Misc 3d at 577} 3d 10 [App Term, 2d & 11th Jud Dists 2008].) This procedure will make Mallela discovery part of the litigation and will give a claimant provider the ability to object to the production of Mallela material by moving for a protective order (CPLR 3103 [a]), by timely objecting to a demand for Mallela material (CPLR 3122 [a]) or by establishing the material requested is palpably improper. (Five Boro Psychological Servs., P.C. v AutoOne Ins. Co., 27 Misc 3d 89 [App Term, 2d, 11th & 13th Jud Dists 2010].) This procedure will also give the court the opportunity to direct an in camera review of the material to determine if there is a basis for requiring a provider to produce material [*7]relating to its corporate structure and operation, material that would otherwise be irrelevant to an action seeking to obtain payment of no-fault benefits.

Plaintiff’s cross motion for summary judgment is denied. As part of its prima facie proof, plaintiff is required to establish the documents it submitted in connection with its claim for no-fault benefits are business records. (Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2d Dept 2008]; Bath Med. Supply, Inc. v Utica Mut. Ins. Co., 23 Misc 3d 141[A], 2009 NY Slip Op 51030[U] [App Term, 2d, 11th & 13th Jud Dists 2009]; Bajaj v General Assur., 18 Misc 3d 25 [App Term, 2d & 11th Jud Dists 2007].) Plaintiff did not establish the documents submitted in connection with this claim are business records. (CPLR 4518 [a].)

For the foregoing reasons, defendant’s motion and plaintiff’s cross motion are denied.

Footnotes

Footnote 1: The bill submitted in connection with this claim states Victory’s billing address as 614 Richmond Road, 2nd Floor, Staten Island, New York 10304. The claim reflects the services for which Victory was seeking payment were provided at the facilities of 32nd Avenue Medical P.C., 82-11 37th Avenue, 4th Floor (Room 402), Jackson Heights, New York 11372.

Footnote 2: The proper citation to the action is State Farm Mut. Auto. Ins. Co. v Mallela (4 NY3d 313 [2005]).

Footnote 3: Crescent Radiology raises other issues regarding objections to an EUO. In Crescent Radiology, the medical provider’s claims were denied and its action to recover no-fault benefits was dismissed because the assignor failed to appear for an EUO. The assignee would not have been able to object to the requested EUO of the assignor because the insurer would not have provided the assignee with notice that the insurer was requesting an EUO of the assignor.

District Court of Nassau County, First District

CV-019332-11

Marcotte & Associates, P.C.

McDonnell & Adels, PLLC

Fred J. Hirsh, J.

The following named papers numbered 1 – 6

submitted on this motion on February 14, 2012 Papers NumberedNotice of Motion and Affidavits Annexed1-2

Notice of Motion and Affidavits Annexed3-4

Affirmation in Opposition to Defendant’s Motion5

Replying Affidavits6

Defendant moves for summary judgment. Plaintiff moves to compel discovery.^[FN1]

BACKGROUND

Concourse Chiropractic, PLLC (“Concourse”) sues as assignee of Odalis Guzman (“Guzman”) seeking to recover first party no-fault benefits for chiropractic treatment it provided to Guzman.

Concourse submitted bills for treatment it provided to Guzman for the period 8/5/09 to 8/13/09 in the sum of $150, 9/2/09 in the sum of $33.70, 9/23/09 in the sum fo $33.70 and 11/18/09 in the sum of $33.70. Defendant State Farm Mutual Insurance Company (“State Farm”) acknowledges timely receipt of these bills.

Concourse also submitted bills for the treatment rendered to Guzman for the period 11/13/08 to 12/18/08 in the sum of $425.44. State Farm asserts it paid these bills in full with applicable interest and attorney’s fees on August 22, 2011.

State Farm’s special investigation unit (“SIU”) has been investigating the operation of Concourse since 2006. Concourse is owned by Mitchell Zeren, D.C. (“Zeren”). Concourse operates out of 2676 Grand Concourse, Bronx, New York.

State Farm has commenced a civil RICO action against CPT Medical Services, P.C. (“CPTMS”) and its owner Dr. Huseyin Tuncel and other medical providers who State Farm [*2]claims are regularly prescribing and performing unnecessary Current Perception Threshold testing (“CPT testing”). During discovery in the civil RICO action, State Farm learned that Zeren was a practitioner who was referring patients to CPTMS for CPT testing. The record before this Court does not reflect how often or how many times Zeren referred patients to CPTMS for CPT testing. The record also does not reflect whether State Farm denied payment for those tests and if it did, whether actions were brought to recover payment of no-fault benefits for these tests and the outcome of those actions.

The record also does not reflect whether Concourse referred Guzman for CPT testing.

Zeren is also listed as the owner of MZJR Chiropractic Care, P.C. which he co-owns with Jeffrey Rauch, D.C., Mitchell Zeren, P.C., Zeren Chiropractic, P.C. and Zeren Family Chiropractic, all of which are located at 2676 Grand Concourse in The Bronx.

Zeren has also submitted bills to State Farm for treatment provided at Kingsbridge Chiropractic.

Vista Medical and Rehab, P.C. (“Vista”), Blue Sky Acupuncture. P.C. (“Blue Sky”) and Complete Medical Care Services of NY also submit bills with a billing and treatment address of 2676 Grand Concourse in The Bronx.

State Farm claims it receives bills from Concourse that reflect Concourse is providing treatment to patients three to four times a week. These same patients are also receiving physical therapy treatment from Vista and acupuncture from Blue Sky at the same time. The progress notes submitted by Concourse, Vista and Blue Sky do not reflect the concurrent care regimens.

Bills submitted by Concourse, Vista and Blue Sky use not only the same address but also use the same telephone number. This telephone number is also listed as the telephone number for Zeren Chiropractic, Kingsbridge Chiropractic and Complete Medical Care.

Vista is owned by Abiola Olawale Familusi, M.D. (“Dr. Familusi”). Dr. Familusi is associated with Multiviz Health Management Corp. (“Multiviz”). The New York State Department of State records indicate Belle Solomon (“Solomon”) is the CEO of Multiviz. Solomon does not hold any professional licenses.

Concourse, Vista and Blue Sky have previously used Multiviz address as its billing address. The claims in question in this action do not use Multiviz address as a billing address. The claims use Concourse’s Grand Concourse address as the billing address.

State Farm asserts Concourse use of Multiviz address as a billing address, the existence of a protocol scheme involving Concourse, Vista and Blue Sky and other information obtained in the civil RICO action raise concerns about the operation of these entities and suggest that someone other than the licensed professional listed as the owners are actually controlling the operation of these entities.

Despite these concerns, Concourse and the other Zeren related practices do not appear to be defendants in the civil RICO action.

Based upon this factual backdrop, State Farm sent a letter to Concourse dated October 1, 2009 acknowledging receipt of its claim for treatment provided to Guzman during the period August 5 through August 13, 2009 and requesting the Concourse appear for an Examination Under Oath (“EUO”) at the offices of McDonnell & Adels on October 27, 2009 at 10 a.m. In addition to appearing at the EUO, the letter requested Concourse [*3]produce at least seven days prior to the EUO the documents relating to the ownership of the PLLC, the general ledger and tax returns of Concourse for the past 12 months, a list of individuals who provided and/or supervised the health care treatment for which payment was requested identifying the professional license held by that individual and the relationship of that individual to Concourse (e.g., whether the person was an employee or independent contractor), documents relating to entities that rent space and/or equipment to or from Concourse and a completed and signed NF-3 and an assignment of benefits forms that included the 2004 updated fraud language.

Concourse did not respond this EUO letter, did not provide the documentary material requested in the EUO letter and did not appear for the EUO.

Upon receipt of the claim for the services rendered on September 2, 2009, State Farm send a letter dated October 13, 2009 advising Concourse it would not pay this claim until Concourse produced the material requested in the October 1, 2009 letter and appeared for the EUO requested by the October 1, 2009 letter.

By letter dated November 2, 2009, State Farm notified Concourse that Concourse had failed to appear for an EUO. The letter further acknowledges the receipt of the claim for the services provided on September 23, 2009 and advised Concourse it would not pay these claims until Concourse appeared for an EUO and produced the requested documents.

The letter advised Concourse the EUO to appear for an EUO on November 16, 2009 at 10 a.m. at the Garden City offices of McDonnell & Adels.

Both the October 1, 2009 letter and November 2, letter advise Concourse that if the date, time and location is inconvenient, Concourse is to contact State Farm to reschedule the EUO at for a date, time and location that was convenient for Concourse. Both letters also advise Concourse that the person appearing for the EUO will be reimbursed for lost earnings and reasonable transportation expenses.

Concourse did not respond to this letter in any way and did not appear for the EUO scheduled for November 16, 2009. As a result, on November 18, 2009, State Farm issued a denial of the aforementioned claims. State Farm also denied a claim submitted by Concourse for treatment provided to Guzman on November 18, 2009 on the grounds Concourse had failed to appear for an EUO.

Concourse motion is a standard motion to compel discovery. Concourse served a demand for interrogatories and a demand for expert information upon State Farm. State Farm has not responded to these demands. Concourse seeks an order striking State Farm’s answer because it has not responded to the discovery demands or alternatively for an order directing State Farm to respond. Concourse does not assert any of the information it demanded by way of discovery is necessary to oppose State Farm’s motion for summary judgment. See, CPLR 3212(f).

DISCUSSION

Plaintiff’s argument that defendant has failed to prove mailing is without merit. All of the cases cited by plaintiff on the issue of mailing were decided prior to St. Vincent’s Hosp. of Richmond v. Government Employees Ins. Co., 50 AD3d 1123 (2nd Dept. 2008). St. Vincent’s established a carrier could prove mailing by either by providing actual proof of mailing or the existence of an office practice and procedure designed to ensure timely and proper mailing of notices. [*4]

In order to overcome the presumption of mailing, plaintiff must establish the person making the affidavit attesting to the mailing or the carrier’s practices and procedures regarding mailing was not employed by the carrier when the notice was mailed and cannot establish the procedures described in the affidavit were in place when the notice was mailed, the carrier did not provide proof in admissible form establish actual mailing of the notice or any other evidence of its standard office practices and procedures for mailing denials and/or notices at the pertinent time. South Nassau Orthopedic Surgery and Sports Medicine, P.C. v. Auto One Ins. Co., 32 Misc 3d 129(A) (App.Term 2nd, 11th & 13th Jud. Dists.); Friendly Physicians, P.C. v. Geico Ins. Co., 29 Misc 3d 128(A) (App.Term 2nd, 11th 7 13th Jud. Dists. 2010);and Points of Health Acupuncture, P.C. v. Geico Ins. Co., 25 Misc 3d 140(A) (App.Term 2md, 11th & 13th Jud. Dists. 2009). In all other cases where mailing has been contested, the Appellate Courts have found proof of mailing to be satisfactory. The Appellate Term has found proof of mailing sufficient even when confronted with an affidavit from plaintiff’s medical biller specifically denying receipt of a verification request. Pomona Medical Diagnostic, P.C. v. Travelers Ins. Co., 31 Misc 3d 127(A) (App.Term, 2nd, 11th & 13th Jud. Dists. 2011).

Therefore, the proof submitted is sufficient to establish the EUO requests were mailed to Concourse.

The case raises again the issue of whether an insurer can demand as part of its EUO request material that would constitute discovery that could be obtained in a properly raised Mallela defense [See, State Farm Mutual Ins. Co. v. Mallela,4 NY3d 313 (2005)] and whether an insurer can request documents be produced seven days prior to a scheduled EUO.

State Farm has established it has a factual basis and a founded belief that Concourse may be subject to a Mallela defense. However, the no-fault regulations do not contain any provisions that permit an insurer to demand production of documents in connection with the an EUO. The regulations do not contain any provisions that require a party to produce such material at least 7 days in advance of the EUO.

Verification is permitted to “verify the claim”. 11 NYCRR 65-3.5(c).

A Mallela defense has nothing to do with the claim. A Mallela defense relates to the status of the claimant and the claimant’s eligibility to obtain payment of no-fault benefits.

While the Court of Appeals uses the language of fraud to describe a Mallela defense, Mallelahas nothing to do with common law fraud. Common law fraud involves “misrepresentation of a material existing fact, falsity, scienter, deception and injury.” Channel Master Corp. v. Aluminum Limited Sales, Inc., 4 NY2d 403, 407 (1958). In reality, Mallela is akin to a piercing the corporate veil. TNS Holdings, Inc. v. MKI Securities, Inc., 92 NY2d 335 (1998) and Matter of Morris v. New York State Dept. of Taxation & Finance, 82 NY2d 339 (1993). Mallela is based upon Business Corporation Law §§1507 and 1508 and Education Law §6507(c)(i) that prohibit anyone who is not licensed to practice the profession for which the professional corporation was formed from having an ownership or controlling interest in a professional corporation.

The factual foundation of a Mallela defenseinvolves proof that persons not licensed to practice the profession for with the professional corporation, limited liability company or limited liability partnership was formed are the actual owner or are actually controlling the [*5]operation of the business. The licensed individual has done little more than permit his or her license to be used as a basis to form the business. The licensed professional turned the operation of the corporation over to the non-professionals by signing management agreements that provided for excessive fees for routine office or practice management services, office and equipment leases that provided for excessive lease payments and in all other respects turn the operation of the professional corporation to the non-professionals. Andrew Carothers, M.D., P.C. v. Insurance Companies Represented by Bruno, Gerbino & Soriano, LLP, 26 Misc 3d 448 (Civil Ct. Richmond Co. 2009).^[FN2]

The court notes that although this has been dubbed a “Mallela defense” the Court of Appeals decision was a result of a action brought by State Farm seeking a declaratory judgment that it was not obligated to pay no-fault claims submitted by Dr. Mallela because his professional corporation was actually controlled by persons not licensed to practice medicine.

The court notes that in dicta in Mallela the Court of Appeals anticipated carriers would delay payment of claims only to pursue investigations for good cause, that the Insurance Department would investigate possible abuses by the carriers and carriers would be able to demonstrate “good cause” only upon a demonstration of conduct tantamount to fraud. The court further notes that Court of Appeals apparently believed that if insurers had good cause to believe a medical provider was “fraudulently incorporated” the insurer would commence a declaratory judgment action seeking to a judgment that the medical provider is not eligible to receive no-fault payments. The court believes that the Court of Appeals did not anticipate an insurer would demand for an EUO and extensive corporate records in connection with a matter in which the carrier has already paid the provider $450 in no fault benefits and the existing dispute involves an unpaid claim for no-fault benefits of $251.

The court notes State Farm paid the no-fault benefits to Concourse after Concourse defaulted in appearing for an EUO. Thus, State Farm paid Concourse no-fault benefits for treatment provided to Guzman even though it had an absolute defense to that claim. See, Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, P.C., 82 AD3d 559 (1st Dept. 2011) – a carrier can deny all no-fault claims retroactive to the date of the accident if a claimant fails to appear for an EUO.

The demand for information in this case is virtually identical to the demand this Court found impermissible and improper in Dynamic Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., 29 Misc 3d 278 (Dist. Ct. Nassau Co. 2010). See, also, Brownsville Advance Medical, P.C. v. Country Wide Ins. Co., 33 Misc 3d 1236(A) (Dist. Ct. [*6]Nassau Co. 2011) – Mallela type material cannot be obtained as verification of the claim.^[FN3]

Requesting an provider to produce voluminous corporate records in order to obtain payment of a no-fault claim is an abuse of the EUO and the entire verification process.

A Mallela defense is non-precludable and can be raised at any time. Lexington Acupuncture, P.C. v. General Assurance Co., -Misc.3d-, 2012 WL 661685 (App.Term 2nd, 11th & 13th Jud. Dists. 2012). The appropriate way to obtain Mallela material is to properly plead it as a defense to an action to obtain payment of no-fault benefits and establish a reasonable basis for requesting the material [Midborough Acupuncture, P.C. v. State Farm Ins. Co., 21 Misc 3d 10 (App.Term 2nd & 11th Jud. Dists. 2008)] or to bring a declaratory judgment action seeking a judgment declaring the provider is not eligible to obtain no-fault benefits because the licensed professional is a front for a professional corporation that is actually owned and controlled by non-professionals. Such a procedure would also have the advantage by having the parties obtain a full and final disposition of the insurer’s assertion the provider is ineligible to obtain payment of no-fault benefits.

The only explanation this court can find for this repeated and repetitive use of a request for an EUO and Mallela verification is the insurer’s hope that the provider will not response thus providing the insurer with an absolute defense to an action that is otherwise indefensible.

For the foregoing reasons, the court finds defendant’s EUO notice palpably improper. Defendant’s motion for summary judgment is denied.

Defendant’s motion for summary judgment stayed discovery. CPLR 3214. Defendant did not oppose plaintiff’s motion to compel discovery. Defendant should now be given the opportunity to oppose plaintiff’s discovery motion.

Therefore, plaintiff’s motion to strike defendant’s answer for failing to respond to plaintiff’s discovery demands is restored to the motion calendar of Civil Part 3, for May 14, 2012 at 9:30 a.m.

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge

Dated: April 16, 2012

cc:Marcotte & Associates, P.C.

McDonnell & Adels, PLLC

Footnotes

Footnote 1:Defendant has also moved to compel discovery. Defendant has withdrawn its motion to compel discovery and requested the court consider the papers submitted in support of its motion to compel discovery as its opposition to plaintiff’s cross-motion to compel discovery.

Footnote 2:The proof at trial in Carothers established the professional corporation was paying monthly lease fees to lease equipment in excess of the cost to purchase equipment. The licensed professional was not a signatory to the corporation bank account. The non-licensed individuals regularly withdrew significant sums of money from the corporate bank account to pay personal expenses. Dr. Carothers was receiving a fixed salary not dependent upon the income of the corporation and had almost no input on the operation of the business. The proof further established Dr. Carothers had limited participation in the medical activity of the professional corporation.

Footnote 3:The practical experience this court having heard and decided cases involving first party no-fault claims for over 3 ½ years is contrary to the expectation of the Court of Appeals when it decided Mallela. State Farm sent the same EUO request to Dynamic Medical in what appeared to be every claim Dynamic filed with State Farm. Over 50 motions identical to the one this Court decided in Dynamic Medical v. State Farm, supra were stayed by this Court pending the Appellate Term hearing and determinating the appeal State Farm took from this Court’s order. This does not include similar motions that were made, heard and decided in the three other civil parts of this Court. The actions were resolved prior to the Appellate Term hearing and deciding the appeal.

In Brownsville, supra, Country Wide repeatedly requested the same information by way of verification from Brownsville even though Brownsville had previously provided the information and even though much of the information Country Wide was requesting could have been obtained or confirmed in a matter of minutes through free, publically accessible web-site data bases maintained by the New York State Department of State and the New York State Department of Education.

District Court of Nassau County, First District

CV-043934-09

Friedman, Harfenist, Kraut & Perlstein

Short & Billy, P.C.

Fred J. Hirsh, J.

The following named papers numbered 1 – 4

submitted on this motion on February 17, 2012 Papers NumberedNotice of Motion and Affidavits Annexed1-2

Order to Show Cause and Affidavits Annexed

Affirmation in Opposition3

Replying Affidavits4

The only issue in this motion for summary judgment is what must a no-fault insurer prove to establish it has an objective basis and an objective justification for requesting an Examination Under Oath (“EUO”) when the insurer suspects the incident was a staged accident.

BACKGROUND

Dykwan Gallop (“Gallop”) and several other people claim to have sustained injuries in a motor vehicle accident that occurred on January 11, 2009 at approximately 11 p.m. in front of 295 Gates Avenue, Brooklyn, New York.

A 1994 Jeep owned by Sephida Artis (“Artis”) and operated by Dion Williams (“Williams”) was pulling out of a parking space when it collided with a 1996 Lexus owned by Jason Anderson (“Anderson”) and operated by Gallop.

Both vehicles were insured by Geico.

Kevin Quarles (Quarles”) was a passenger in the vehicle operated by Williams. Geronimo Wilbert (“Wilbert”) and Lauren Lazare (“Lazare”) were passengers in the vehicle operated by Gallop. [*2]

Because both vehicles were insured by Geico, Geico referred this matter to its Special Investigations Unit (“SIU”) to investigate the possibility that this was a staged accident.

Geico’s SIU investigator attempted to interview the operators and owners of both vehicles and the passengers in both vehicles. He was able to interview only Williams and Lazare.

Lazare’s statement to Geico’s SIU investigator reflects she was a passenger in the front seat of the vehicle being operated by a person she knew as Quan (Gallop). She believed the vehicle was owned by Quan’s cousin. Quan was driving her home when the accident occurred. Wilbert was a passenger in the back seat. She told the SIU investigator she did not actual see the other vehicle before the accident because she was looking at her cell phone and speaking with Wilbert vehicle when the impact occurred. She described the impact between the vehicles as minor. The impact to the vehicle in which she was a passenger was on the passenger side. She told the SIU investigator she did not know the driver or passenger in the other vehicle.

Since the vehicle in which she was a passenger was operational after the accident, Quan drove her home.

Because she had pain in her low back and knee after the accident, she went to see Dr. Boris Kleyman at Flatlands Medical P.C. ( Flatlands”). She received acupuncture, physical therapy and chiropractic treatment for about 4 weeks. She refused neuro-diagnostic testing. He stated she saw Quan and Geronimo treating at Flatlands.

The SIU investigator’s interview with Williams revealed Williams had borrowed the vehicle from a friend. He ran some errands for his parents and met Quarles at the location of the accident. After speaking with Quarles for a few minutes, he began to pull out of the parking space. He stated he looked back to his left two times before he began to pull out of the parking space. As he was pulling out of the parking space, the vehicle he was operating collided with dark colored Lexus.

Williams claims he did not know the operator or any of the passengers in the other vehicle. He told the SIU investigator the Jeep he was operating was not operational after the accident. He took car service home from the scene.

Williams received treatment for the injuries he sustained in the accident at Holistic Health Care on Ocean Avenue and Avenue I in Brooklyn.

The SIU investigator was unable to arrange to interview any of the other parties. He could never contact the owners of either vehicle.

The SIU investigator’s report reflects he went to the address listed as Anderson’s residence on one occasion at approximately 1:25 p.m. on a Wednesday. The premises were a 4 story apartment building. There were no names on the door bells on the exterior of the building and no names on mail boxes in the foyer. The SIU investigator could not gain access to the building to speak with any of the residents of the building to confirm whether Anderson resided in the building. The SIU investigator’s notes reflect he did not make any additional attempts to locate or contact Anderson.

The SIU investigator attempted to call Artis but was unable to reach her. His first call was unanswered and the phone did not have voice mail. When he called a second time, the telephone number was no longer in service.

The SIU investigator made one trip to the address listed as Artis residence address [*3]at 1 p.m. on a Wednesday. The building was a four story apartment building. No names were listed on the mailboxes or door bells of the building. He gained access to the building and knocked on the door of the apartment in which was listed as Artis apartment in Geico’s records. No one answered. He left a letter requesting Artis contact him. Artis did not respond to this letter. He was unable to speak with anyone in the building to confirm whether Artis resided in the building. He made no other attempts to contact Artis or to confirm she actually resided at that location.

The SIU investigator went to Wilbert’s home and met his mother and sister. He left them his business card and asked them to have Wilbert call him. Wilbert never called. The SIU investigator called Wilbert. They made an appointment to meet for an interview on March 12, 2009 at 11 a.m. at Wilbert’s girlfriend’s apartment. Wilbert called the SIU investigator about an hour before the scheduled meeting and cancelled the appointment because he had to attend a funeral. They agreed to meet on March 16, 2009 at 11 a.m. at Wilbert’s mother’s apartment. The SIU investigator called to confirm the appointment about a half an hour before the meeting was to take place. The SIU investigator was advised by Wilbert’s mother Wilbert was not there and was not expected. The SIU investigator asked Wilbert’s mother to have Wilbert call him. Wilbert never called. The SIU investigator made no further attempts to contact or interview Wilbert.

At one point, Gallop was represented by the Law Offices of Barry Richard Feldman (“Feldman”). Geico’s SIU investigator attempted to arrange an interview with Gallop through Feldman. Feldman’s office scheduled an interview of Gallop for March 3, 2009 at Feldman’s office. The interview was cancelled due to an illness in Feldman’s family. On March 11, 2009, the SIU investigator called Feldman’s office to schedule another appointment to interview Gallop. Feldman’s office told Geico’s investigator Gallop had terminated treatment and Feldman’s office was discontinuing its representation of Gallop.

After the SIU investigator was advised by Feldman’s office that Feldman was no longer representing Gallop, the SIU investigator made one trip to Gallop’s residence on a

Monday at about noon in an attempt to interview Gallop. Gallop was not home. The SIU investigator left his card with Gallop’s sister and requested that she give the card to Gallop. He asked Gallop’s sister to ask Gallop to call him. Gallop never called. The SIU investigator made no further attempts to contact Gallop to arrange an interview.

Serge Petroff, Esq. initially represented Quarles. Geico’s investigator had arranged to interview Quarles at Petroff’s office on March 12, 2009. Quarles did not appear for the scheduled interview.

Because Geico’s investigator was unable to interview Gallop, Quarles, Wilbert and Artis and/or Anderson, he recommended Geico conduct EUO’s of Gallop, Quarles, Wilbert, Artis and Anderson.

The record does not reflect whether Geico sent EUO demands to Quarles, Wilbert, Artis and/or Anderson and if it did, whether any of these individuals appeared for the EUO. Transcripts of their EUO’s, if they were held, are not attached to the papers.

The Law Offices of Teresa M. Spina sent a letter dated April 15, 2009 by certified mail, return receipt requested to Feldman and Gallop requesting he appear for an EUO on May 8, 2009 at the offices of a court reporting service located on Court Street in Brooklyn. Gallop did not appear for the EUO. The letter was sent to Feldman even though Geico’s SIU investigator’s notes indicate he was advised by Feldman’s office on March 11, 2009, [*4]Feldman was terminating his representation of Gallop.

The Law Offices of Teresa M. Spina sent a follow-up EUO letter dated May 15, 2009 by certified mail, return receipt requested to Feldman and Gallop requesting Gallop appear for an EUO on May 27, 2009 at the offices of a court reporting service located on Court Street in Brooklyn. Gallop did not appear for this EUO.

Although the EUO letters indicated they were mailed to Gallop and Feldman by certified mail, return receipt requested, Geico did not attach the green return receipt cards reflecting whether the EUO letters mailed to Gallop or Feldman were delivered or the original envelopes containing notations the Postal Service attempted delivery and delivery was refused, delivery was attempted and the letter was unclaimed or the letter was returned as undeliverable as addressed.

Geico denied all of the claims submitted by Tarnoff Chiropractic, P.C. on the grounds Gallop failed to appear for an EUO.

Plaintiff sued to recover the unpaid no-fault benefits. Defendant answered and now moves for summary judgment dismissing the action on the grounds it timely denied the claim on the grounds Gallop failed to appear of an EUO.

DISCUSSION

The purpose of the no-fault law and regulations [Insurance Law §5101, et. seq and 11 NYCRR Part 65] is to insure prompt payment of medical claims for medical treatment provide to people injured in automobile vehicle accidents regardless of fault. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 556 (2008); Hospital for Joint Diseases v. Travelers Property Casualty Ins. Co., 9 NY3d 312 (2007); and Presbyterian Hosp. in City of NY v. Maryland Cas. Co., 90 NY2d 274, rearg. denied 90 NY2d 937 (1997).

To meet this purpose, the no-fault regulations provide that insurers should not treat applicants for no-fault benefits as adversaries and should not demand verification unless there is a good reason to do so. 11 NYCRR 65-3.2(b)(c).

Claims must be paid or denied in whole or in part within 30 calendar days of receipt or receipt of properly and timely requested verification. 11 NYCRR 65-3.8(a).Insurers are precluded from asserting at the trial of an action to obtain payment of first party no-fault benefits any precludable defense not asserted in a timely denial. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., supra; and Hospital for Joint Diseases v. Travelers Property Casualty Ins. Co., supra; and Presbyterian Hosp. in City of NY v. Maryland Cas. Co., supra.

Despite this stated purpose, the Civil Court in the City of New York and the civil parts Nassau County District Court are inundated with action being brought to recover first party no-fault benefits.^[FN1]

The requirement that insurers promptly pay claims often provides an insurer with an insufficient amount of time to investigate the claim to determine whether medical treatment [*5]in question is medically necessary, whether the claim is fraudulent, whether the provider was properly licensed and formed, whether the injury or treatment is related to the accident, whether the incident in question was a staged accident.

Insurers who need additional time to investigate the validity of a claim can extend their time to pay or deny a claim by timely requesting verification of a claim. Nyack Hosp. v. General Motors Acceptance Corp., 8 NY3d 294 (2007); Hospital for Joint Disease v. New York Central Mutual Fire Ins. Co., 44 AD3d 903 (2nd Dept. 2007); and 11 NYCRR 65-3.5. A claim does not have to be paid or denied until all timely and properly requested verification has been received. St. Barnabas Hosp. v. American Transit Ins. Co., 57 AD3d 517 (2nd Dept. 2008); and New York & Presbyterian Hosp. v. Allstate Ins. Co., 31 AD3d 512 (2nd Dept. 2006).

An EUO is a hybrid between a condition precedent to coverage and verification. Case law treats appearance at an EUO is a condition precedent to coverage. Richmond Radiology, P.C. v. American Transit Ins. Co., 33 Misc 3d 135(A) (App.Term 2nd, 11th & 13th Jud. Dists. 2011); LDE Medical Services, P.C. v. Encompass Ins., 29 Misc 3d 130(A) (App.Term 2nd, 11th & 13th Jud. Dists. 2010); Crotona Heights Medical, P.C. v Farm Family Cas. Ins. Co., 27 Misc 3d 134(a) (App.Term 2nd, 11th & 13th Jud. Dists. 2010); and 11 NYCRR 65-1.1. If a person fails to appear for a properly requested EUO, the insurer may deny a claim retroactive to the date of loss even if the carrier does not issue a timely denial. Unitrin Advantage Ins. Co. v. Bayshore Physical Therapy, P.C., 82 AD3d 559 (1st Dept. 2011).

Most of the provisions of the no-fault regulations relating to EUO’s are contained in the provisions of the no-fault regulations relating to verification. See, 11 NYCRR 65-3.5. When an insurer demands an EUO “…the verification is deemed to have been received by the insurer on the day the examination was performed.” 11 NYCRR 65-3.8(a)(1). Stated differently, an insurer that conducts an EUO has 30 days from the date the EUO is conducted to pay or deny the claim.

An insurer does not have an unfettered right to request as EUO. An insurer must have an objective basis and an objective justification for requesting an EUO. 11 NYCRR 65-3-5(e).

The stated reason for wanting to conduct an EUO of Gallop was to investigate whether this was a staged accident.

In order to obtain summary judgment on the grounds Gallop defaulted in appearing for an EUO, Geico must substantiate its basis for requesting the EUO. Crescent Radiology, P.C. v. American Transit Ins. Co., 31 Misc 3d 134(A) (App.Term 9th & 10th Jud. Dists. 2011). To substantiate its basis for requesting an EUO where the stated reason for conducting is the incident might be a staged accident, the insurer must demonstrate some fact exists or the insurer has founded belief the incident was staged accident. Webster Diagnostic Medicine, P.C. v. State Farm Ins. Co., 15 Misc 3d 97 (App. Term 9th & 10th Jud. Dists 2007); and Ocean Acupuncture, P.C. v. State Farm Mutual Automobile Ins. Co., 23 Misc 3d 1104(A) (Civil Ct. NY Co. 2009). Defendant must demonstrate more than unsubstantiated hypothesis or supposition that the incident was a staged accident. Webster Diagnostic Medicine, P.C. v. State Farm Ins. Co., supra; and Manhattan Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., 20 Misc 3d 1144(A) (Civil Ct. Richmond Co. 2008). [*6]

In determining whether the Geico had a factual basis or a founded belief the incident involved a staged accident, the court must consider factors such as whether their were multiple accidents involving the same vehicle or vehicles shortly after the policy was issued; whether the policy was cancelled for failure to pay premiums shortly after the accident occurred; were the parties involved in a “ring” that stages accidents to defraud insurers; was the claim reported by an attorney rather than the claimant; did the same claimants make multiple no-fault claims for similar injuries arising from different accidents; the age and condition of the vehicles involved in the accident; the manner in which the accidents occurred; the damage to the vehicles involved in the accident; was the damage to the vehicles consistent with the speed and directions of the vehicles; did statements taken from those involved in the accident contain significant inconsistent or significant differences or do they contain only minor inconsistencies; were the parties uncooperative in the investigation of the matter; did all the claimants receive the same or similar medical treatment for the same injuries from the same medical provider or providers; the lapse in time between the date of the accident and the date the claimant first seeks treatment; are the injuries for which treatment was obtained consistent with the type of incident and the speed and directions of the vehicles at the time of impact; was the treatment excessive taking into account the nature and extent of the injuries. See, Webster Diagnostic Medicine, P.C. v. State Farm Ins. Co., supra; Comprehensive Mental v. Allstate Ins. Co., 14 Misc 3d 130(A) (App. Term 9th & 10th Jud Dists. 2007); A.B. Med. Servs. PLLC v. State Farm Mut. Auto. Ins. Co., 12 Misc 3d 129(A) (App.Term 2nd & 11th Jud. Dists. 2006); A.B. Med. Servs., PLLC v. Eagle Ins. Co., 3 Misc 3d 8 (App Term 2nd Dept. 2003); Manhattan Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., supra; JSI Expert Service v. Liberty Mutual Ins. Co., 7 Misc 3d 1009(A) (Civil Ct. Kings Co. 2005); and A.B. Medical Services PLLC v. State Farm Mutual Auto. Ins. Co., 7 Misc 3d 822 (Civil Ct. Kings Co. 2005). In determining whether there is factual basis or founded belief the incident was a staged accident, the court must consider the existence and/or non-existence of each factor and the weight to be given each factor.

None of these factors other than the unsworn statement of Lazare that she observed Gallop and Wilbert receiving treatment at Flatlands is present in this case and the difficulty SIU investigator encountered in attempting to interview Gallop, Wilbert, Artis, Anderson and Quarles are present in this case.

There is a question of whether the SIU investigator made a good faith effort to locate and interview Anderson or Artis.

He did not have a telephone number for Anderson. He made one trip to Anderson’s residence mid-day on a weekday and was unable to confirm whether Anderson resided at that address.^[FN2] He made no further attempt to locate or contact Anderson.

He made one telephone call to Artis and could not reach her. When he called a [*7]second time, the telephone was disconnected. He made one trip to her residence mid-day on a weekday in an effort to locate her. He could not confirm whether she actually resided as that location.

The SIU investigator made no effort to ascertain whether Anderson or Artis were employed.

The reasons Geico found this incident suspicious was because of the location of the accident, the age of vehicles and the fact it involved two vehicles that were insured by Geico.

Since Geico one of the largest if not the largest automobile insurer in the State of New York [ See, New York State Department of Financial Services 2011 Annual Ranking of Automobile Insurance Complaints], accidents involving two vehicles insured by Geico must occur with some degree of frequency.

Contrary to directive contained in the no-fault regulations [11 NYCRR 65-3.2(b)], Geico appears to have treated this matter as an adversarial situation from the time they received this claim. The SIU investigator’s report states the only basis for referring this matter for investigation as a staged accident was because it involved two Geico insureds.

All no-fault claims in connection with this accident would have been submitted to Geico. Despite this, Geico offers no evidence that anyone other than Gallop received treatment from Tarnoff Chiropractic, P.C. or that any of the people involved in this accident actually received treatment from the same medical providers. Williams and Lazare received treatment from different medical providers at different facilities in different neighborhoods of Brooklyn.^[FN3]

Geico offers no evidence that Gallop received treatment that was inconsistent with the type of injuries one would have sustained in a this type of accident or that the treatment was excessive.

The statements the SIU investigator took from Williams and Lazare are consistent regarding the manner in which the accident occurred.

The SIU investigator’s opinion Williams was a poor witness is not a basis for concluding this was a staged accident. This opinion was premised upon Williams inability to identify the owner of the vehicle he was operating or to provide the SIU investigator with the name and address of his employer.^[FN4] Williams description of the accident is consistent with the description of the accident provided by Lazare and is consistent with the description of the accident contained in the police report.

Geico provided no proof regarding when the policies were issued to Artis or Anderson, when those policies were cancelled or the reasons for their termination or whether any other no-fault claims were made on those policies. [*8]

Geico provided no proof that either of these vehicles had ever been involved in any other accidents. The SIU report indicates Artis had two prior claims with other insurance companies. The report states both claims involved property damage only. No personal injury claims were filed in connection with either claim. The report does not indicate whether these claims involved the same vehicle that was involved in this incident.

The SIU report states Anderson had no prior claims with Geico or any other insurance company.

The unfound belief that this accident involves a staged accident appears to be based upon what could be characterized as insurance racial profiling. The accident occurred in the Bedford-Stuyvesant section of Brooklyn. Anderson, Gallop and Artis residence address are in Bedford-Stuyvesant. Quarles, Lazare and Wilbert residence addresses are in Brownsville. Williams residence address is in Canarsie. The court takes judicial notice that these are sections of Brooklyn which the population is overwhelmingly if not almost exclusively minority. Both vehicles involved in the accident were old. Williams was operating a 1994 Jeep, Gallop was operating a 1996 Lexus. One questions whether Geico would have undertaken a similar investigation had a similar accident involving two Geico insureds occurred in a different neighborhood involving newer models of the same vehicles.The SIU investigator’s own report states based upon his investigation he was unable to determine if this was a staged accident.

The court also questions the need to conduct an EUO in cases such as this where the defense the insurance company is investigating is non-precludable. Central General Hosp. v. Chubb Group of Ins. Cos., 90 NY2d 195 (1997)]; and Allstate Ins. Co. v. Massre, 14 AD3d 610 (2nd Dept. 2005).

EUO’s would have been of little value in preparing a staged accident defense. The testimony taken at the EUO would not have been admissible in evidence at trial. JSI Expert Services v. Liberty Mutual Ins. Co., supra. The action was commenced even though Tarnoff knew the claim had been denied on the grounds Gallop had failed to appear for an EUO.

Taking all of these factors into account, the court finds Geico had an unfounded hypothesis and suspicion that this was a staged accident. Therefore, the request for an EUO was improper. Since the request for an EUO was improper, it cannot serve as a basis for summary judgment.

The court also notes Geico has failed to establish whether the EUO notices mailed to Gallop by certified mail return receipt requested were delivered, returned as undeliverable as addressed or returned as unclaimed. One of the reasons to use certified mail is to confirm delivery or attempted delivery of the item. If the person to whom a letter is mailed is mailed by certified mail, return receipt requested and is delivered, the person sending the mail will receive the green return receipt by return mail. If delivery is attempted and no one is available to sign for the letter, a slip will be left by the letter carrier advising the individual to whom the letter is addressed to contact the post office to pick up the letter or to make arrangements for having the letter delivered on another date. If the person does respond to the notice left by the letter carrier, the Postal Service will make several attempts to delivery the letter. If the letter is not claimed by the addressee, the letter is returned to the sender with a notation, delivery attempted, unclaimed. The envelope will have a stamp indicated the dates delivery was attempted. See, Temple B’nai Shalom of [*9]Great Neck v. Village of Great Neck Estates, 32 AD3d 391 (2nd Dept. 2006); lv. dnd. 8 NY3d 813 (2007); cert. dnd. – U.S. -, 128 S.Ct. 1241 (2008). If the addressee does not reside at the address to which the letter is addressed, it will either be forwarded to the addressee at his or her new address provided one is on file with the Postal Service or returned to the sender with a notation, undeliverable as addressed.

While St. Vincent’s Hosp. of Richmond v. Government Employees Ins. Co., 50 AD3d 1123 (2nd Dept. 2008) established an insurer can prove mailing by establishing it has a practice and procedure in place designed to ensure timely and proper mailing, when an item is mailed by certified mail, the insurer has or should have actual proof of mailing and actual proof of delivery or proof the reason the mail was not delivered or received by the addressee. When such proof is available, it should be provided to the court as proof of actual mailing. See generally, “Return to Sender? Presumption of Receipt in Certified Mail Cases” by Michael C. Rosenberger and Jason Moroff, NYLJ 3/4/10, p.4 col. 1;

see generally, Harner v. County of Tioga, 5 NY3d 136 (2005); and L & J Plumbing & Heating Co., Inc. v. Gateway Demolition Corp., 176 Misc 2d 277 (Sup.Ct. Queens Co. 1998).

For the foregoing reasons, defendant’s motion for summary judgment is denied. `

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge

Dated: April 12, 2012

Footnotes

Footnote 1:Over 50% of the cases that appeared on the calendar in Civil Part 3 of the District Court Nassau County in the past month involve actions to recover first party no-fault benefits. Over 40% of the civil appeals decided by the Appellate Term, Second Department in 2012 involve actions commenced to recover first party no-fault benefits.

Footnote 2:The court notes that in the SIU investigator’s report he makes reference to the person he was attempting to located and interview as Jason Alexander. The SIU investigator would have trouble locating Jason Alexander at that location since the person he was attempting to locate and interview was Jason Anderson. Jason Alexander is an actor who played the character George Costanza on Seinfeld.

Footnote 3:Tarnoff Chiropractic, P.C.’s office is located in the Brownsville section of Brooklyn. Holistic Health Care, where Williams received treatment, is located in the Midwood section of Brooklyn. Flatlands Medical, Dr. Kleyman, where Lazare received treatment, is located in the Flatlands section of Brooklyn.

Footnote 4:Williams told Geico’s SIU investigator he borrowed the vehicle earlier on the day of the accident from John Williams and not Artis.

District Court of Nassau County, First District

CV-050076-10

REPRESENTATION:

Abrams, Fensterman, Fensterman, Eisman, Greenberg, Formato & Einiger, LLP

1111 Marcus Ave., Ste. LL08

Lake Success, NY 11042 (5160248-2929

The Law Firm of Kelly & Sheridan, LLP

150 Broadhollow Road

Melville, NY 11747 (631)547-5900

Terence P. Murphy, J.

The following named papers numbered 1 to 2

submitted on this motion

on November 9, 2011

papers numbered

________________________________________________________________ _____

Notice of Motion w/ supporting documents…………………………….1

Affirmation in Opposition w/ supporting documents…………………2

____________________________________________________________________ _

The defendant, State Farm Mutual Automobile Insurance Company, a no-fault insurance provider, moves for summary judgment dismissing the complaint pursuant to CPLR §3212. The plaintiff is the assignee of Rita Munlyn, a covered person under a policy of insurance issued by the Defendant. For the reasons set forth below, the motion is DENIED on the fee schedule issue and GRANTED on the issue of timely denial of claim.

The within law suit alleges that plaintiff’s assignor was involved in a motor vehicle accident on December 30, 2009 and received health services from plaintiff/assignee at its office based surgery facility on May 6, 2010. There is no dispute that this action is one that falls under the “Comprehensive Motor Vehicle Insurance Reparations Act”, New York’s no-fault insurance law (NY Ins Law, Art. 51 et. seq.). Under such authority, a no fault bill was issued by plaintiff in [*2]the amount of $4,791.39 which defendant claims it timely denied. The basis of Defendant’s denial is that the fees claimed were not in compliance with the New York Workers’ Compensation Board Schedule of Medical Fees and/or Regulation 68, Appendix 17-C, in that the plaintiff is not listed as a Public Health Law Article 28 facility. Defendant claims the only basis for reimbursement to the plaintiff for a facility fee is under the New York Workers’ Compensation Board schedule.

The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law. Failure to make such prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers (see Alvarez v. Prospect Hosp., 68 NY2d 320 [1986]; Winegrad v. New York University Med. Ctr., 64 NY2d 851 [1985]). Once the movant has demonstrated a prima facie showing of entitlement to judgment, the burden shifts to the party opposing the motion, to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action (see Zuckerman v. City of New York, 49 NY2d 557 [1980]).

With respect to timely service, the defendant must demonstrate “either proof of actual mailing or proof of a standard office practice or procedure designed to ensure that the items are properly addressed and mailed” (Residential Holding Corp. v. Scottsdale Insurance Company, 286 AD2d 679 [2d Dept 2001]), or one “geared so as to ensure the likelihood that a notice … is always properly addressed and mailed”(Nassau Insurance Company v. Murray, 46 NY2d 828 [1978]). A no-fault insurance carrier may prove timely mailing of the denial of claim form by submitting an affidavit made by the person who actually prepared and mailed the denial attesting to the preparation and mailing of same, or by submitting an affidavit from an employee with knowledge of its office practice or procedures designed to ensure the denial of claim form was timely generated, addressed and mailed and those procedures were followed in connection with the notice involving plaintiff’s claim (St. Vincent’s Hospital of Richmond v. Government Employees Ins. Co., 50 AD3d 1123 [2d Dept 2008]).

Plaintiff’s bill dated June 2, 2010 for its services rendered on May 6, 2010 was received by defendant on June 7, 2010. The defendant alleges that it timely served its NF-10 denial form in response to the plaintiff’s claim for $4,791.39 on June 21, 2010.

Regarding Defendant’s basis for denying the claim, the Defendant annexes two affidavits. In the first affidavit sworn to August 30, 2011 (Exhibit C), Jerold Greenzang, Defendant’s claims representative in the No-Fault Department, indicates that he is fully familiar with the business practices employed by defendant in the routine and regular course of its receiving, reviewing and processing No-Fault claims. He details the regular course of business of the office and states that the bill in the amount of $4,791.39 was timely denied. The Defendant also provides an affidavit of George Perry, sworn to on January 17, 2011 (Exhibit D), a Claims Support Services Supervisor for the defendant’s Ballston Spa, NY claims office. Mr. Perry outlines in detail the general procedure for how claims are prepared for mailing. These affidavits demonstrate that the denial of claim NF-10 form had been timely mailed pursuant to defendant’s standard office practices and procedures. (See St. Vincent’s Hosp. of Richmond v. Government Employees Ins. [*3]Co., 50 AD3d 1123; Delta Diagnostic Radiology, P.C. v. Chubb Group of Insurance, 17 Misc 3d 16). The plaintiff failed to submit evidence in rebuttal sufficient to raise a triable issue of fact with regard to the mailing and receipt of the denial form.

Defendant further submits an affidavit of Mercy Acuna, sworn to September 3, 2011 (Exhibit F), which indicates that she is a certified professional coder employed by Signet Claim Solutions, LLC. She avers that she was requested to conduct a review of the bills listed from plaintiff in the within action and to indicate whether the correct CPT codes were applied and billed correctly. It was her finding that “Under the NY State Workers’ Compensation Board, facility fees are paid under the PAS (Products of Ambulatory Surgery). A fee cannot be assigned since the facility (Upper East Side Surgical PLLC, 62 E 88th St. New York, NY 10128) is not listed with the NY State Workers’ Compensation Board Ambulatory Surgery Center. If Upper East Side Surgical PLLC can produce documentation that the facility is registered, then reimbursement will be in accordance with The Products of Ambulatory Surgery (PAS) classification system.”

Plaintiff acknowledges in its Affirmation in Opposition that it is not listed, registered or certified with the NY State Workers’ Compensation Board Ambulatory Surgery Center, nor does it hold itself out as an Public Health Law Art. 28 facility.

Plaintiff does assert, however, that there is no requirement in the Regulations that NYS Public Health Law Article 28 licensure is a prerequisite to No-Fault Claims reimbursement. The current applicable law, New York’s Office Based Surgery (OBS) Law passed on July 14, 2007 (Public Health Law § 230-d), requires merely that an office-based surgery facility must obtain and maintain full accredited status by a national-recognized accrediting agency approved by the Commissioner of Health. As to proof of same, Plaintiff provides as its Exhibit A, its certification that it was accredited from 02/27/2010 to 02/27/2011 by the American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF), which included the time period of this claim. Under PHL § 230-d, AAAASF, is one of three accreditation entities which has been approved by the Commissioner. No claim is made by the Defendant that the Plaintiff provider is not in full compliance with the required registrations, certifications or accreditations to conduct its office-based surgery business under the applicable laws of New York, particularly PHL § 230-d..

The Court notes that while there is a movement in the New York State Legislature to amend PHL § 230-d to provide authorization for an office based surgery facility to seek reimbursement for a facility fee if the health plan provides for reimbursement when the service is performed at an ambulatory surgery center or hospital, it has not yet been adopted by the Legislature.

The No-Fault Law was enacted to and allows for recovery of basic economic loss to “eliminate the vast majority of auto accident negligence suits,” and, concomitantly, to decrease premiums (Governor’s Approval Mem, Bill Jacket, L 1973, ch 13, at 31, 1973 McKinney’s [*4]Session Laws of NY, at 2335).

Basic economic loss is defined, as pertinent here, as all necessary expenditures incurred for medical and surgical services (Ins Law § 5102[a][1]), with reimbursement limited to the amount permissible under the schedules prepared and established by the chairman of the workers’ compensation board for industrial accidents (Ins Law § 5108[a]).

This Court finds that the Plaintiff is not authorized to be reimbursed for the medical/surgical services it provided to its assignor under the “facility fee” schedule in accordance with The Products of Ambulatory Surgery (PAS) classification system because it is not an Art. 28 facility. Plaintiff is, however, entitled to reimbursement under Insurance Law § 5102(a)(1) for the medical/surgical services it provided to its assignor (c.f. Great Wall Acupuncture v. GEICO Gen. Ins. Co., 16 Misc 3d 23 (App. Tm., 2d Dept, 2007)

The next question for the Court to answer is, “What is the rate of reimbursement?”. The facility fees set forth by the NY State Workers’ Compensation Board are specifically set for facilities that are listed with the NY State Workers’ Compensation Board and certified to perform ambulatory surgery services under PHL Art. 28. Plaintiff concedes in its opposition papers that it is not so listed. Therefore, the fees set forth are not applicable to it, nor are there any fees adopted or established applicable to this plaintiff and its status as an office based surgery facility.

Under 11 NYCRR 68, (Regulation 83) 68.5, subd. 1(b):

If a professional health service is performed which is reimbursable under section 5102(a)(1) of the Insurance Law, but is not set forth in fee schedules adopted or established by the superintendent, and:

* * *

(b) if the superintendent has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent.

Accordingly, inasmuch as no proof has been submitted that the Superintendent of Insurance has adopted or established a fee schedule applicable to the plaintiff/provider, a question of facts exists as to the amount of the charge for services. Moreover, no proof has been submitted as to the local geographic prevailing fee, which plaintiff provider would be entitled to be reimbursed for its services. While in certain instances, the workers’ compensation fee schedules have been utilized to established local prevailing fees, such is not the case with regard to a facility fee for office based surgery facilities, at least as far as the Court can discern. Thus, a trial of the issue is necessary. [*5]

SO ORDERED:

DISTRICT COURT JUDGE

Dated: February 2, 2012

CC:Abrams, Fensterman, Fensterman, Eisman, Greenberg, Formato & Einiger, LLP

Attorneys for the Plaintiff

Kelly & Sheridan, LLP, Attorneys for the Defendant

District Court of Nassau County, First District

CV-013190-10

Friedman, Harfenist, Kraut & Perlstein, LLP

Verrill & Goodstein, Esqs.

Fred J. Hirsh, J.

Defendant moves for summary judgment in this action for first party no-fault benefits.

BACKGROUND

Lawrence Wilkes (“Wilkes”) sustained injuries in a motor vehicle accident that occurred on June 18, 2009.

Tri-State Consumer Insurance Company (“Tri-State”) was the insurance carrier that provided Wilkes with no-fault benefits for injuries sustained as a result of the accident.

All County, LLC (“All County”) performed a thoracic MRI of Wilkes on September 17, 2009. Wilkes assigned his rights to no-fault benefits to All County. All County submitted a No Fault Assignment of Benefits form, an NF-3 and a bill dated September 22, 2009 to Tri-State for payment.

Tri-State acknowledged receipt of the bill on September 25, 2009.

Tri-State issued an NF-10 dated September 29, 2009 denying payment of the claim for the thoracic MRI in full on the grounds all no-fault benefits for orthopedic treatment or testing had been denied effective September 13, 2009 based upon an Independent [*2]Medical Examination (“IME”) conducted by Kenneth Falvo, M.D. on August 18, 2009.

Tri-State does not state whether a copy of the denial of all claims for orthopedic testing or treatment subsequent to September 13, 2009 was provided to Wilkes or if so, when and how such notice was given.

The doctor who ordered the thoracic MRI is not known since a copy of the prescription or referral for the thoracic MRI and/or the MRI report is not contained in the record.^[FN1] The date the MRI was ordered is not stated because the prescription for the test is not contained in the record.

Dr. Falvo’s IME report reflects Wiles chief complaints pain in the neck, back, right knee an both hands. Dr. Falvo’s IME report states Wilkes had been examined by Dr. Goldstein an orthopedist, Dr. Liguori a neurologist, Dr. Stein, a psychologist and Dr. Mondshine a dentist for treatment of TMJ. The report states Wilkes is receiving acupuncture and chiropractic treatment 3 to 4 times a week. The IME report does not state from whom Wilkes was receiving chiropractic or acupuncture treatments.

The IME report reflects Dr. Falvo had received and reviewed a neuro-psychological evaluation and test report prepared by Dr. Stein dated July 3, 2009, a dental evaluation report of Dr. Mondshine dated July 16, 2009 and neurological evaluation report of Dr. Liguori dated June 26, 2009. Even though Dr. Falvo’s IME report reflects Wilkes was examined by Dr. Goldstein on the date of the accident, Dr. Falvo did not receive or review any reports or records from Dr. Goldstein. Dr. Falvo also did not receive or review any reports or records for the chiropractic or acupuncture treatment Wilkes was receiving.

Dr. Falvo examination revealed Wilkes had restriction of motion of the lumbar spine in all planes.

Dr. Falvo makes a diagnosis of cervical sprain, resolved, lumbar sprain resolved, contusion of the right knee, resolved and contusion carpometacarpal joints of both hands, healed. Dr. Falvo’s attributes Wilkes signs and symptoms in part to the June 18, 2009 motor vehicle accident. He attributes the low back injuries and conditions in part to Wilkes longstanding, symptomatic law back condition for which Wilkes was receiving treatment at the time of the June 18, 2009 motor vehicle accident.^[FN2]

The IME report does not state Dr. Falvo examined Wilkes thoracic spine. The report does not contain any mention of an orthopedic or neurological examination of the thoracic spine. The IME report discusses and evaluates Wilkes injuries and complaints relating to his cervical spine, his arms and wrists, his low back and his knees. The IME report does not make mention of the thoracic spine.

The court must start its analysis of this motion as it does with all no-fault claims that [*3]a timely submitted claim creates a presumption of medical necessity. Globe Surgical Supply v. Geico Ins. Co., 59 AD3d 129 (2nd Dept. 2008); Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 (2nd Dept. 2004); and All County Open MRI & Diagnostic Radiology. P.C. v. Travelers Ins. Co., 11 Misc 3d 131(a) (App.Term 9th & 10th Jud. Dists. 2006). All County submitted the claim for the thoracic MRI within five days of the performance of the MRI which is well within 45 days required by the no-fault regulations. 11 NYCRR 65-1.1. Defendant’s denial admits receipt of the claim on September 25, 2009, 8 days after the thoracic MRI was performed. Therefore, the claim is timely submitted thus creating a presumption the thoracic MRI was medically necessary.

Since the claim was timely submitted, the burden shifted to the defendant to rebut the presumption of medical necessity. A.B. Medical Services PLLC v. Utica Mut. Ins. Co., 10 Misc 3d 50 (App.Term 2nd & 11th Jud. Dists. 2005); and AP Orthopedics & Rehabilitation, P.C. v. Allstate Ins. Co., 27 Misc 3d 1098 (Civil Ct. Richmond Co. 2010).

Medical treatment or testing is not medically necessary if the treatment or testing is not in accordance with general accepted medical practices. Nir v. Allstate Ins. Co., 7 Misc 3d 544 (Civil Ct. Kings Co. 2005). Treatment or testing is medically necessary if a reasonably prudent doctor exercising his or her best judgment under the circumstances and in accordance with the standard of care in that community would have provided the treatment or performed or ordered the test. Nestorowich v. Ricotta, 97 NY2d 393 (2002). To determine whether a reasonably prudent doctor exercising his or her best judgment would have ordered a thoracic MRI, the court must consider factors such as who ordered the test, when was the test ordered, what were the patient’s complaints and symptoms when the test was ordered, what treatment was the patient receiving, how was the patient responding to that treatment, how much time had elapsed between the time the injury or condition was diagnosed and the time the test was ordered, what was the diagnosis made by the medical provider who ordered the test, was the test needed for diagnosis and/or to determine appropriate treatment and/or would the results of the test change or affected treatment.

To establish treatment or testing is not medically necessary, the defendant must establish a factual basis and medical rationale for its determination the treatment or testing was not medically necessary. Biobalance Medical, P.C. v. Clarendon National Ins. Co., 34 Misc 3d 134(A) (App Term, 2nd, 11th & 1th Jud. Dists. 2011); and Right Aid Diagnostic Medicine, P.C. v. Geico Ins. Co., 34 Misc 3d 133(A) (App.Term, 2nd, 11th & 13th Jud. Dists.).

In this case, defendant has not offered any factual or medical basis for its conclusion the thoracic MRI was not medically necessary. Dr. Falvo’s IME report does not indicate he examined the thoracic spine. His IME report relates to the cervical and lumbar spine, the right knee and the carpometacarpal joints of both hands.

Dr. Falvo’s IME report reflects Wilkes had been examined and was under the care of an orthopedist, a neurologist and a chiropractor. Dr. Falvo’s report does not indicate who ordered the thoracic MRI. Dr. Falvo’s report does not indicate he was aware a thoracic MRI had been ordered. Dr. Falvo’s IME report indicates Wilkes does not need any additional treatment or testing from the viewpoint of an orthopedist for injuries to the cervical and lumbar spine, wrists and knee. The IME report does not state treatment is not needed for injuries to the thoracic spine. [*4]

Dr. Falvo is a board certified orthopedist. He is not a neurologist or a chiropractor. The denial indicates no-fault benefits for orthopedic diagnostic testing had been denied as of September 13, 2009 based upon the IME of Dr. Falvo. However, the IME and denial does not indicate no-fault benefits were being denied for neurological or chiropractic evaluation, treatment and/or testing. The papers before the court do not state who ordered the thoracic MRI. Dr. Falvo’s IME report would not be sufficient to establish the thoracic MRI was not medically necessary is the MRI was ordered by either the neurologist or the chiropractor. See, Shectman v. Wilson. 68 AD3d 848 (2nd Dept. 2009); and Geffner v. North Shore University Hosp., 57 AD3d 838 (2nd Dept. 2009).

Dr. Falvo’s IME report does not state the thoracic MRI was not medically necessary when it was ordered. As noted previously, the IME report does not indicate who ordered the MRI or when the MRI was ordered. Ordinarily, a period of time passes from the date an MRI is ordered and the MRI is performed. A diagnostic radiology facility should not have its claim summarily dismissed if the MRI was ordered prior to the effective date of the denial.

An insurer may not simply deny payment of a timely submitted no-fault claim based upon a “IME cut-off”. In order to obtain summary judgment based upon on IME cut-off, the IME report must present a factual basis and a medical rationale establishing the treatment provided and/or the testing performed was not medically necessary. Amato v. State Farm Ins. Co., 30 Misc 3d 238 (District Ct. Nassau Co., 2010).

In order to obtain summary judgment, the party moving for summary judgment must establish a prima facie entitlement to judgment as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320 (1986); and Zuckerman v. City of New York 49 NY2d 557 (1980).

When deciding a motion for summary judgment, the court’s function is to determine if triable issues of fact exist. Matter of Suffolk County Dept. of Social Services v. James M. 83 NY2d 178 (1994); and Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). Summary judgment should be denied is the court has any doubt regarding the existence of triable issues of fact. Freese v. Schwartz, 203 AD2d 513 (2nd Dept. 1994); and Miceli v. Purex Corp., 84 AD2d 562 (2nd Dept. 1984)

If the party moving for summary judgment fails to make a prima facie showing of entitlement to judgment as a matter of law, the motion must be denied. Cendant Car Rental Group v. Liberty Mut. Ins. Co., 48 AD3d 397 (2nd Dept. 2008); Widmaier v. Master Products, Mfg, 9 AD3d 362 (2nd Dept., 2004); and Ron v. New York City Housing Auth., 262 AD2d 76 (1st Dept., 1999).

Defendant has failed to make a prima facie showing of entitlement to judgment as a matter of law. Questions of fact exist relating to who ordered the MRI, when was the MRI ordered and the condition of Wilkes thoracic spine that resulted in the ordering of the thoracic MRI.

For the foregoing reasons, defendant’s motion for summary judgment is denied.

SO ORDERED:

Hon. Fred J. Hirsh [*5]

District Court Judge

Dated: January 23, 2012

Footnotes

Footnote 1:The name of the medical provider who ordered the MRI can generally be determined by reviewing the MRI report because the report is generally addressed to the medical provider who ordered the MRI.

Footnote 2:The IME notes Wilkes is on Social Security Disability. The report notes Wilkes had a lumbar laminectomy in 1997. The IME report states Wilkes is evaluated by Dr. Goldstein every six months regarding his disability status.

District Court of Nassau County, First District

CV-046441-10

Fred J. Hirsh, J.

Defendant Country-Wide Insurance Company (“Country-Wide”) moves for summary judgment on the grounds the action is premature because plaintiff Brownsville Advance Medical, P.C. (“Brownsville”) failed to respond to Country-Wide’s verification demands.

This motion raises significant issues regarding an insurer’s repeated demand for verification from the same provider where the information demanded has previously been provided or where the information demanded is public record.

BACKGROUND

On March 31, 2010, Brownsville provided medical care and treatment to Alejandro Ramos (“Ramos”) for injuries sustained in a February 1, 2010 motor vehicle accident. Ramos assigned his right to receive no-fault benefits for the treatment provided on March 31, 2010 to Brownsville. Brownsville submitted the claim for treatment to Country-Wide.

Country-Wide acknowledges and admits to receipt of the claim on April 19, 2010.

Country-Wide mailed a verification request to Brownsville dated April 23, 2010. The verification request a completed NF-3 signed by the doctor “no stamps or initials with Q.16 listing of all treating providers & Q.17 listing of all owners” and “corporation with their license number, (Rev 1/04) Assignment of Benefits signed no stamps or initials and medical notes”. Country-Wide asserts Brownsville did not respond or object to this verification request.

Country-wide mailed a follow-up verification request to Brownsville dated May 24, 2010.

Country-Wide asserts Brownsville did not respond or object to the follow-up verification request.

Brownsville claims the repeated verification requests it has received from Country-Wide are unduly burdensome and designed to harass Brownsville. Brownsville asserts Country-Wide has responded to its no-fault claims by demanding identical verification for every claim it submits. Country-wide has mailed an identical verification request to Brownsville in response to at least seven separate claims. Brownsville [*2]claims it should not be required to repeatedly provide the same documentation especially since it has provided this information to Country-Wide previously.

Country-Wide moves for summary judgment asserting the claim is premature because it does not have to pay or deny the claim until Brownsville provides the demanded verification.

DISCUSSION

An insurer has 30 days from the date of receipt of a no-fault claim to pay or deny the claim. 11 NYCRR 65-3.8.

An insurer can toll or extend its time to pay or deny a no-fault claim by making a request for verification within 15 business days of receipt of the claim. Hospital for Joint Disease v. New York Central Mutual Fire Ins. Co., 44 AD3d 903 (2nd Dept. 2007); and 11 NYCRR 65-3.5(b).

If the verification requested by the insurer has not been provided within 30 days, the insurer must follow-up by telephone or mail within 10 calendar days. 11 NYCRR 65-3.6(b).

An insurer does not have to pay or deny a claim until all demanded verification has been provided. St. Barnabas Hosp. v. American Transit Ins. Co., 57 AD3d 517 (2nd Dept. 2008); and New York & Presbyterian Hosp. v. Allstate Ins. Co., 31 AD3d 512 (2nd Dept. 2006).

Verification extends an insurer’s time to pay or deny a claim by permitting the insurer to demand and obtain information needed to establish proof of claim so the insurer can properly determine whether the claim should be paid or denied. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 556 (2008); and 11 NYCRR 65-3.5(b).

Country-Wide demanded as part of its verification a completed NF-3. An NF-3 is the New York Motor Vehicle No-Fault Insurance Law Verification of Physician or Other Provider of Health Services claim form. See, 11 NYCRR Part 65 Appendix 13. This is the form prescribed by the no-fault regulations that all health care providers other than hospitals must submit to the insurer to make a claim for payment of no-fault benefits.

Country-Wide admits in its verification request it received Brownsville’s claim for payment of no-fault benefits, an NF-3, relating to the medical treatment provided to Ramos on March 31, 2010 on April 19, 2010. Country-Wide did not submit a copy of the NF-3 it received from Brownsville regarding its treatment of Ramos with its motion papers. However, the complaint filed with the court upon the commencement of this action contains has a copy of the assignment signed by Ramos and the NF-3 submitted by Brownsville. A review of the copy of the assignment and NF-3 on file with the court indicates Brownsville filed the required form containing all the required information in the required format.Country-Wide offers no explanation regarding any defects in the NF-3 or any reason why it needs any verification regarding this document.

The oft stated purpose of the New York State No-Fault Law is to insure prompt payment of medical claims arising from automobile accidents. Medical Society of the State of New York v. Serio, 100 NY2d 854 (2003). See, Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 556 (2008); and Hospital for Joint Disease v. Travelers Property Casualty Ins. Co., 9 NY3d 312 (2007); and Presbyterian Hosp. in City of NY v. Maryland Cas. Co., 90 NY2d 274, rearg. denied 90 NY2d 937 (1997). [*3]This purpose is not served when an insurer repeatedly request the same verification from the same provider, especially in the situation where the material demanded has previously been provided or is readily obtainable from easily accessible public records.

Country-Wide has repeatedly requested the same verification it demanded from Brownsville in connection with this claim even though Brownsville has provided most if not all of the information to Country-Wide in connection with other claims.

Brownsville has provided Country-Wide a copy of its application for a taxpayer identification number, the document issued by the Internal Revenue Service issuing the taxpayer identification number, a copy of Brownsville certificate of incorporation and a copy of Dr. Tapper’s license in response to discovery demands served in other actions. A provider should not have to repeatedly provide documentation it has already provided unless the insurer can establish a reasonable basis and rational need for demanding this material anew.

The primary reason for seeking verification of the licensing status of a provider and/or the professional corporation making application for payment of no-fault benefits is to determine if the provider and/or the professional corporation is eligible to obtain payment of no-fault benefits. 11 NYCRR 65-3.16(a)(12).^[FN1] Information regarding the corporate status of Brownsville and Dr. Tapper’s license are easily obtained on-line.

A check of the New York State Department of State Corporation and Business Entity publicly accessible, free, web-site data base shows that Brownsville is an active, domestic professional corporation.

A check of the New York State Department of Education Professional Licensing License Verification publicly accessible, free, web-site data base indicates Winston Anthony Tapper is a physician whose current license to practice medicine is valid through May 2012. This web site also contains Dr. Tapper’s license number, information about his education and the date he was first licensed to practice medicine in the New York.

The demand for information relating to a Mallela defense is not obtainable through verification. See, Dynamic Medical Imaging, P.C. v. State Farm Mutual Automobile Ins. Co., 29 Misc 3d 278 (District Ct. Nassau Co. 2010). The no-fault regulations permit an insurer to obtain in verification”…additional verification required by the insurer to establish proof of the claim.” 11 NYCRR 65-3.5(b).

A Mallela defense relates to the claimant, not to the claim. A successful Mallela defense permits an insurer to avoid paying an otherwise valid no-fault claims because the provider is not eligible to obtain payment of no-fault benefits because the entity providing the services is owned or significantly controlled by persons who are not licensed to practice the profession for which the professional business entity was formed. State Farm Mutual Automobile Ins. Co. v. Mallela, supra; and Andrew Carothers, M.D., P.C. v. Insurance Companies Represented by Bruno, Gerbino & Soriano, LLP, 26 Misc 3d 448 (Civil Ct. Richmond Co. 2009). – Dr. Carothers was [*4]denied payment for MRI’s performed by his professional corporation because the professional corporation was operated and controlled by persons not licensed to practice medicine.

Country-Wide’s repetitive verification demands upon Brownsville are contrary to 11 NYCRR 65-3.2(b) that provides an applicant or claimant should not be treated as an adversary and verification of facts should not be requested unless the insurer has a good reason for doing so. In this case, Country-Wide offers no reason why it has repeatedly demanded identical verification from Brownsville, even though the information demanded in the verification requests has previously been provided.

An insurer cannot obtain summary judgment when a provider fails to respond or object to a repetitive verification demand when the verification demand seeks information not relevant to the claim, has previously been provided to the insurer by the claimant, the material demanded can easily be obtained from free, publicly accessible sources and seeks material that cannot be obtained through verification.

Defendant’s motion for summary judgment is denied.

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge

Dated: December 19, 2011

cc:Friedman, Harfenist, Kraut & Perlstein, LLP

Jaffe & Koumourdas

Footnotes

Footnote 1:A provider of medical services cannot obtain payment of no-fault benefits if it does not have the appropriate and required license. See, State Farm Mutual Auto Ins. Co. v. Mallela, 4 NY3d 313 (2005); and 11 NYCRR 65-3.16(a)(12).

[*1]

District Court of Nassau County, First District, November 9, 2011

APPEARANCES OF COUNSEL

Law Offices of Moira Doherty for defendant. Friedman, Harfenist, Kraut & Perlstein for plaintiff.

{**34 Misc 3d at 296} OPINION OF THE COURT

Fred J. Hirsh, J.

Defendant moves for summary judgment. Plaintiff cross-moves to compel discovery.

Background

Plaintiff Total Equipment, LLC (Total) sues as assignee of Latasha James (James) to recover first-party no-fault benefits for durable medical equipment provided to James.

Defendant asserts it is entitled to summary judgment because it timely denied the claim on the ground the medical equipment provided to James was not medically necessary based upon the peer review report of Ronald A. Csillag, D.C.

Dr. Csillag reviewed and relied upon medical reports and records, no-fault claim forms and a police accident report outlined in his report in preparing his peer review report. None of the reports or records Dr. Csillag relied upon in preparing his peer review report have been provided to the court. Dr. Csillag specifically relied upon the information [*2]contained in the medical reports and records he reviewed including James’s complaints, the diagnoses made and the treatment provided as the factual basis for his opinion that the medical equipment supplied was not medically necessary.

Plaintiff cross-moves to compel defendant to comply with its discovery demands. Plaintiff seeks to obtain copies of the medical reports and records reviewed by Dr. Csillag in preparing his peer review. Plaintiff claims that it needs these reports and records to determine whether the factual assertions made in Dr. Csillag’s peer review report are accurate and to have those records and reports reviewed by a chiropractor or other appropriate health care professional so it can possibly obtain an affidavit establishing the medical necessity of the medical equipment Total provided to James.

Discussion

Defendant establishes a prima facie entitlement to judgment as a matter of law by establishing the timely mailing of a denial and the submission of an affirmed or sworn-to peer review which sets forth a factual basis and a medical rationale for the peer reviewer’s conclusion the treatment, testing, and medical equipment were not medically necessary. (Mosad Med., P.C. v Praetorian Ins. Co., 33 Misc 3d 131[A], 2011 NY Slip Op{**34 Misc 3d at 297} 51876[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; Neomy Med., P.C. v GEICO Ins. Co., 32 Misc 3d 137[A], 2011 NY Slip Op 51532[U] [App Term, 2d, 11th & 13th Jud Dists 2011].)

If the defendant tenders such proof, the plaintiff must submit an affidavit from a health care provider that meaningfully refers to and rebuts the conclusions contained in the peer review report. (Bath Med. Supply, Inc. v New York Cent. Mut. Fire Ins. Co., 30 Misc 3d 137[A], 2011 NY Slip Op 50189[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; Vincent Med. Servs., P.C. v GEICO Ins. Co., 29 Misc 3d 141[A], 2010 NY Slip Op 52153[U] [App Term, 2d, 11th & 13th Jud Dists 2010].)

CPLR 3212 (f) permits the court to deny a motion for summary judgment if facts essential to justify opposition may exist but cannot be stated. A motion for summary judgment must be denied where the party opposing the motion has not had a reasonable opportunity to conduct discovery before the motion was made. (James v Aircraft Serv. Intl. Group, 84 AD3d 1026 [2d Dept 2011].)

A party opposing a motion for summary judgment based upon the need for additional discovery must establish the additional discovery might lead to relevant evidence or facts essential to the opposition are within the exclusive control of the defendant. (Davis v Rochdale Vil., Inc., 83 AD3d 991 [2d Dept 2011].)

In this case, the plaintiff has established that it has not had a meaningful opportunity to conduct and obtain discovery. Plaintiff served a demand for interrogatories and a document demand upon defendant on March 16, 2011. Defendant did not respond or object to either the demand for interrogatories or the document demand. Rather than responding to plaintiff’s discovery demands, defendant moved for summary judgment.

One of the items demanded in plaintiff’s document demand is the no-fault file. The defendant’s no-fault file should contain the medical reports and records Dr. Csillag reviewed in preparing the peer review report. The no-fault file may also contain other medical reports and records not reviewed by Dr. Csillag. This material is exclusively in the possession of the defendant.

These medical reports when reviewed by another health care professional might provide plaintiff with the information needed to oppose defendant’s summary judgment [*3]motion by providing an affidavit or affirmation from a health care provider that meaningfully refers to and rebuts the opinions expressed and conclusion reached by the peer reviewer. Plaintiff could also use{**34 Misc 3d at 298} the information contained in the no-fault file to establish there are errors or shortcomings in the peer review report. (Novacare Med. P.C. v Travelers Prop. Cas. Ins. Co., 31 Misc 3d 1205[A], 2011 NY Slip Op 50500[U] [Nassau Dist Ct 2011].)

This motion raises significant questions regarding the proof a defendant must present to the court when moving for summary judgment in an action brought to recover first-party no-fault benefits where the motion is based upon a peer review report that found the treatment provided, the testing performed or the medical supplies furnished were not medically necessary. More specifically, this motion raises issues regarding the factual basis for the peer reviewer’s medical rationale.

Dr. Csillag, the peer reviewer, submitted a sworn-to peer review report that states he reviewed various medical reports and records and the prescription for durable medical equipment in issue. He summarizes the medical findings contained in those reports and records including the diagnoses of injuries sustained by James. Based upon these facts, Dr. Csillag offers his opinion the medical supplies were not medically necessary for the treatment of the injuries James sustained. Praetorian denied plaintiff’s claim based upon Dr. Csillag’s opinion the medical supplies were not medically necessary for the treatment of the injuries James sustained.

The court was not provided with any of the material Dr. Csillag reviewed because the medical reports and records and other material reviewed by the peer review doctor “are not part of defendant’s prima facie showing.” (Active Imaging, P.C. v Progressive Northeastern Ins. Co., 29 Misc 3d 130[A], 2010 NY Slip Op 51842[U], *2 [App Term, 2d, 11th & 13th Jud Dists 2010].)

A party moving for summary judgment must tender evidentiary proof in admissible form establishing an entitlement to judgment as a matter of law. (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980].)

A no-fault insurance carrier is required to pay all necessary medical expenses incurred by a party injured in a motor vehicle accident, “provided that within one year after the date of the accident causing the injury it is ascertainable that further expenses{**34 Misc 3d at 299} may be incurred as a result of the injury” (Insurance Law § 5102 [a] [1] [iv]).^[FN1]

The term “necessary [medical] expenses” is not defined by the Insurance Law (article 51) or the no-fault regulations (11 NYCRR part 65).

The courts have struggled to find a workable definition of the term “medical necessity.” (See CityWide Social Work & Psychological Servs. v Travelers Indem. Co., 3 Misc 3d 608, 615 [Civ Ct, Kings County 2004].)

While the term medically necessary is regularly used in the appellate decisions involving actions to recover first-party no-fault benefits, the appellate courts have never provided a definition for this term. Thus, the most workable definition of medical necessity is those practices that are in accordance with generally accepted medical standards. (Id.) [*4]

In this case in order to determine if the medical supplies and equipment provided to James by Total were medically necessary, the court must determine whether a reasonably prudent chiropractor would under similar circumstances have prescribed these medical devices for James. (Taormina v Goodman, 63 AD2d 1018 [2d Dept 1978].)

In order to obtain summary judgment based upon a peer review report that finds the treatment, testing and/or medical supplies were not medically necessary, the defendant insurer must provide the court with a sworn or affirmed peer review report establishing a factual basis and a medical rationale for the conclusion that the treatment, testing and/or supplies were not medically necessary. (Alfa Med. Supplies, Inc. v Auto One Ins. Co., 33 Misc 3d 128[A], 2011 NY Slip Op 51851[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; MSSA Corp. v Redland Ins. Co., 32 Misc 3d 141[A], 2011 NY Slip Op 51606[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; Five Boro Psychological Servs., P.C. v Utica Mut. Ins. Co., 31 Misc 3d 150[A], 2011 NY Slip Op 51119[U] [App Term, 2d, 11th & 13th Jud Dists 2011]; Elmont Open MRI & Diagnostic Radiology, P.C. v Travelers Indem. Co., 30 Misc 3d 126[A], 2010 NY Slip Op 52223[U] [App Term, 9th & 10th Jud Dists 2010].)

The first issue the court must confront when deciding a motion for summary judgment based upon a peer review is the “factual basis” of the peer reviewer’s factual basis.{**34 Misc 3d at 300}

The peer reviewer does not have first hand or personal knowledge of the injured party’s complaints, injuries and/or treatment. The peer reviewer has not examined or spoken to the injured party. The peer reviewer’s knowledge of the injured party’s complaints, injuries and treatment is based upon the information contained in the medical reports and records and other documents provided by the insurer.

All of this material and the information reviewed by the peer reviewer and upon which the peer reviewer based his or her conclusion is inadmissible hearsay. (Prince, Richardson on Evidence § 8-101 [Farrell 11th ed].)^[FN2]

The no-fault claim form and the material submitted by the assignee are not admissible in evidence unless the party seeking their admission into evidence establishes the documents are business records. (Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. Co., 55 AD3d 644 [2d Dept 2008]; New York Hosp. Med. Ctr. of Queens v Statewide Ins. Co., 33 Misc 3d 130[A], 2011 NY Slip Op 51863[U] [App Term, 9th & 10th Jud Dists 2011].) Medical records of the other health care professionals reviewed by the peer reviewer would be admissible in evidence if the party seeking their admission establishes the documents are business records. (Wilson v Bodian, 130 AD2d 221 [2d Dept 1987].)

Reports of health care providers prepared for litigation are not admissible in evidence. (Id.; Carter v Rivera, 24 Misc 3d 920 [Sup Ct, Kings County 2009].)

What constitutes good and accepted chiropractic practice is generally beyond the knowledge of the average layperson. (De Long v County of Erie, 60 NY2d 296 [1983]; CityWide Social Work & Psychological Servs. v Travelers Indem. Co., supra.) The court must rely upon the opinion expressed by the peer reviewer to determine whether the services in question are medically necessary. [*5]

Before an expert witness is permitted to offer an opinion, the witness must be qualified as an expert. (Price v New York City Hous. Auth., 92 NY2d 553 [1998]; Caprara v Chrysler Corp., 52 NY2d 114 [1981], rearg denied 52 NY2d 1073 [1981]; Meiselman v Crown Hgts. Hosp., 285 NY 389 [1941].) To qualify as an expert, the witness must possess “the requisite skill, training,{**34 Misc 3d at 301} education, knowledge or experience from which it can be assumed that the information imparted or the opinion rendered is reliable.” (Matott v Ward, 48 NY2d 455, 459 [1979] [citations omitted]; de Hernandez v Lutheran Med. Ctr., 46 AD3d 517 [2d Dept 2007].) Therefore, before the court can consider the opinion, the party whose opinion is being relied upon must be qualified as an expert. (Machac v Anderson, 261 AD2d 811 [3d Dept 1999].) Simply stating one is a licensed professional is not sufficient to establish the peer reviewer is an expert. (See Mustello v Berg, 44 AD3d 1018 [2d Dept 2007]; Postlethwaite v United Health Servs. Hosps., 5 AD3d 892 [3d Dept 2004].) In this case, defendant offered no evidence qualifying Dr. Csillag as an expert.

An opinion must be based upon facts in the record or facts personally known to the witness. (Prince, Richardson on Evidence § 7-308 [Farrell 11th ed].) “An expert may not reach a conclusion by assuming material facts not supported by the evidence and may not guess or speculate in drawing a conclusion (Interstate Cigar Co. v Dynaire Corp., supra, at 700).” (Nyon Sook Lee v Shields, 188 AD2d 637, 639 [2d Dept 1992].) The court questions how it can determine the validity of the peer reviewer’s medical rationale since it is based upon material not in the record and material that would be inadmissible at trial as hearsay. (See Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Misc 3d 140[A], 2010 NY Slip Op 50987[U] [App Term, 2d, 11th & 13th Jud Dists 2010].) The peer reviewer is not using the medical records reviewed in preparing a peer review for the truth of the material contained in those records.

A peer reviewer may use this material to render an opinion provided it is professionally reliable, meaning that it is the type of material “accepted in the profession as a basis in forming an opinion and the out-of-court material is accompanied by evidence establishing its reliability.” (Wagman v Bradshaw, 292 AD2d 84, 87 [2d Dept 2002].) Nothing in the peer review report submitted in this matter establishes the material relied upon by the peer reviewer was material generally accepted in the profession as a basis for forming an opinion or the out-of-court material is accompanied by evidence establishing its reliability.

If the peer review report is based solely upon material that would be inadmissible as hearsay, then the peer review report does not have a factual basis based upon evidentiary material in admissible form. If the peer reviewer is relying upon this hearsay material for his or her medical rationale, then the{**34 Misc 3d at 302} opinion contained in the peer review report cannot be the basis for a grant of summary judgment because it is not based upon facts contained in the record.

Plaintiff cannot determine without those medical reports and records whether the peer review report accurately presents the nature and extent of the claimant’s injuries or treatment without reviewing those records. Without giving the plaintiff the opportunity to obtain and review the full no-fault file, the court cannot determine whether there is material available that would contradict or question the peer reviewer’s opinion. (See Novacare Med. P.C. v Travelers Prop. Cas. Ins. Co., supra.)

Accordingly, defendant’s motion for summary judgment is denied without prejudice [*6]with leave to renew upon the completion of discovery. Plaintiff’s cross motion to compel defendant to comply with its discovery demands is granted. Defendant shall serve answers to plaintiff’s demand for interrogatories and shall serve a response to plaintiff’s document demand within 45 days of service of a copy of this order with notice of entry.

Footnotes

Footnote 1: An insurer is not required to pay no-fault benefits if the motor vehicle is not required to carry insurance or if the accident arises from the use and operation of a motorcycle. (Insurance Law § 5102 [f].)

Footnote 2: Hearsay issues do not generally arise at trial since the attorneys for the parties generally stipulate to the admissibility of the peer review report and the medical reports and records reviewed by peer reviewer.

[*1]

District Court of Nassau County, First District, September 8, 2011

APPEARANCES OF COUNSEL

Marshall & Marshall, Jericho, for defendant. Friedman, Harfenist, Kraut & Perlstein, Lake Success, for plaintiff.

{**33 Misc 3d at 574} OPINION OF THE COURT

Michael A. Ciaffa, J.

Defendant moves for summary judgment dismissing plaintiff’s no-fault action based upon the reports of its peer review doctor, William A. Ross, M.D. Plaintiff opposes the motion and cross-moves for an order compelling defendant to respond to plaintiff’s outstanding interrogatories and requests for discovery.

The issues presented in this case involve an increasingly common practice by no-fault insurers: moving for summary judgment based upon “naked” peer review reports. The reports in question fail to attach copies of the medical records which purportedly provide the factual basis for the peer doctor’s opinion, contesting the medical necessity of three MRIs. Although a defendant need not necessarily submit those records in order to make a prima facie showing on a lack of medical necessity defense (see Active Imaging, P.C. v Progressive Northeastern Ins. Co., 29 Misc 3d 130[A], 2010 NY Slip Op 51842[U] [App Term, 2d Dept 2010]), the opponent can certainly make use of such records in challenging whether the peer doctor’s opinion has a sufficient “factual basis and medical rationale.” (See Novacare Med. P.C. v Travelers Prop. Cas. Ins. Co., 31 Misc 3d 1205[A], 2011 NY Slip Op 50500[U] [Nassau Dist Ct 2011, Ciaffa, J.].) Before the opponent can do so, however, it must first obtain the records. If the records are not records belonging to the provider suing for payment, the records typically are obtainable through discovery. Insurers can and should provide them routinely, upon request. But as this case illustrates, otherwise “routine” requests for discovery are sometimes ignored for many months, with the absence of production coming to a head only when the insurer seeks to have the plaintiff’s case dismissed upon a motion for summary judgment. [*2]

Plaintiff, here, avers that it sought such discovery from defendant more than a year ago, and that it needs to obtain copies of the medical records referenced in the peer doctor’s reports in order to interpose “complete and proper opposition papers.”{**33 Misc 3d at 575} Since plaintiff is a diagnostic facility, its attorneys state that plaintiff is not in possession of the treating doctors’ records. They assert that defendant’s peer review doctor “relied upon approximately 19 different documents when making his determination.” The documents in question include an initial examination report, and a follow-up report from the nonparty treating doctors. Importantly, the latter records appear to provide the factual predicate for the peer doctor’s opinions that certain MRIs performed by plaintiff lacked medical necessity. Furthermore, it appears that the subject tests were ordered by the treating doctors, not the plaintiff, and that the tests were simply performed by plaintiff in reliance upon the treating doctors’ referrals. Counsel for plaintiff goes on to argue: “Without these records, [plaintiff] is unable to . . . determine whether statements made by Dr. Ross are belied by the underlying medical records, or . . . submit the medical records to its own medical expert in order to obtain a rebuttal affidavit on the issue of medical necessity.”

In the instant case, the facts and circumstances at bar clearly warrant giving plaintiff an opportunity to obtain the underlying records that the peer review doctor reviewed. As permitted by CPLR 3212 (f), the court has discretion to deny a defendant’s motion for summary judgment, or to order a continuance to permit plaintiff to pursue disclosure of underlying medical records, when a defendant moves for summary judgment upon a “naked” peer review report that appears to rely heavily upon the content of such records. (See e.g. Total Equip., LLC v State Farm, Nassau Dist Ct, May 31, 2011, Ciaffa, J., index No. 18745/10; Brownsville Advance Med., P.C. v Maya Ins. Co., Nassau Dist Ct, May 25, 2011, Hirsh, J., index No. 15326/10.)

Based upon the court’s experience deciding countless no-fault summary judgment motions and trials, the court has every reason to believe that allowing discovery of the treating doctors’ medical records might “lead to relevant evidence” that may justify opposition to defendant’s motion. (See CPLR 3212 [f].) The outcome of such matters most often turn upon the persuasiveness of the expert opinions and testimony of peer review doctors, when judged in the context of the underlying medical records. Attorneys practicing in the no-fault field know all too well that attacks upon a peer doctor’s opinion frequently depend upon close analysis of the treating doctors’ medical records. Indeed, as this court noted in Novacare Med. P.C. v Travelers{**33 Misc 3d at 576} Prop. Cas. Ins. Co. (at *5), “[i]f the plaintiff can demonstrate, through references to the medical records . . . , that the peer review doctor’s opinion lacks a sufficient ‘factual basis’ and/or ‘medical rationale’ because . . . it fails to address essential factual issues or is based upon disputed or apparently [*3]incorrect facts,” the defendant’s motion can be defeated without the need to obtain opposing expert proof. (Id.)

However, a plaintiff cannot make such an attack without the underlying medical records. Unlike no-fault matters brought by treating doctors, diagnostic facilities (like plaintiff) typically lack “personal knowledge” of the facts which establish (or contradict) the medical necessity of the tests in issue. Consequently, such diagnostic facilities are presumptively entitled to the benefit of CPLR 3212 (f) on the theory that “facts essential to justify opposition . . . [are] exclusively within the knowledge and control” of the nonparty treating physicians and the defendant’s peer review doctor. (See Corwin v Heart Share Human Servs. of N.Y., 66 AD3d 814, 815, 816 [2d Dept 2009] [rejecting argument that summary judgment motion was premature where opposing party “already had personal knowledge of the relevant facts”].)

Finally, unlike the circumstances presented in Elmont Open MRI & Diagnostic Radiology, P.C. v New York Cent. Mut. Fire Ins. Co. (30 Misc 3d 126[A], 2010 NY Slip Op 52222[U] [App Term, 2d Dept 2010]), plaintiff’s counsel demonstrated both the need for such discovery, and that plaintiff requested discovery from defendant back in May 2010, long before defendant made the instant summary judgment motion. It is undisputed that defendant failed to respond to plaintiff’s discovery requests when they were made. Although defendant could have belatedly produced the documents in responding to the cross motion, defendant did not do so. Nor did it seek to excuse its inaction when the failure was raised in plaintiff’s cross motion papers. Instead, defendant merely argues that service of its motion gave rise to an automatic stay of disclosure pursuant to CPLR 3214 (b). While defendant is technically correct with respect to the latter point, the same statute allows the court to “order[ ] otherwise.” CPLR 3212 (f) likewise authorizes court-ordered disclosure where it appears from opposing papers that “facts essential to justify opposition may exist but cannot then be stated.” This is such a case.

In conclusion, to move the matter forward, plaintiff’s cross motion is granted to the extent of directing defendant to provide{**33 Misc 3d at 577} plaintiff’s counsel with copies of the reports and documents reviewed by defendant’s peer review doctor within 30 days of the date of this order. Within 30 days thereafter, defendant may re-notice its summary judgment motion, upon proper notice, allowing plaintiff at least 30 days time to oppose. The re-noticed motion, plaintiff’s opposition, and defendant’s reply (if any) can then be heard and determined on the merits.