District Court of Nassau County, Second District

19937/10

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Esqs., 100 Garden City Plaza, Suite 500, Garden City, NY 11530, Attorney for Plaintiff

Freiburg, Peck & Kang, LLP, 49 West 37th Street, 9th Floor, New York, NY 10018

Michael A. Ciaffa, J.

Plaintiff, R.E.G. Flushing Medical, P.C., provided medical services and treatment to Hector Gomez following a June 2009 auto accident. The accident took place in Queens, New York. Pursuant to an assignment obtained from Mr. Gomez, plaintiff sought no-fault payments from Mr. Gomez’ insurer, defendant Integon National Ins. Co. d/b/a GMAC Ins. Co. Mr. Gomez was described on plaintiff’s claim forms as being a resident of Woodhaven, New York. However, his address, on defendant’s records, was in North Carolina, where his vehicle was registered and insured. Defendant denied plaintiff’s claims on the ground that Mr. Gomez “does not meet the definition of an eligible risk under North Carolina statute NCGS 58-2-164.” This no-fault action followed.

By agreement between the parties, they asked the Court to determine the action upon documentary evidence and the legal arguments of counsel. Their attorneys stipulated at trial that plaintiff had established a prima facie case for no-fault benefits through timely submission of bills that defendant had not paid. They further stipulated to the timely issuance of denials by defendant.

The Court was thus asked to decide whether defendant could lawfully avoid paying plaintiff’s no-fault claims pursuant to its denials. At the outset, the Court needs to address which state’s law governs the substantive issues presented. Each claim was filed by a New York based medical provider seeking payment from a North Carolina based auto insurer. The claims were each filed on a New York State no-fault form (NF-3) documenting treatments provided within the State of New York. Although each claim was denied on a New York State no-fault denial of claim form (NF-10), each denial form cited to North Carolina law (NCGS §58-2-164) as the basis for the denial. The cited [*2]section governs “Rate evasion fraud” in North Carolina. It generally applies to circumstances involving alleged misrepresentations by an insured regarding the insured’s residence address, and the places insured motor vehicles are garaged. Id.

Under applicable choice of law principles, the validity of the insurer’s defense to

this action turns upon whether New York or North Carolina has a greater interest in the

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outcome of the case. Under the “grouping of contacts” approach which governs conflict of laws issues in an insurance coverage matter, see Matter of Liquidation of Midland Ins Co., 16 NY3d 536, 2011 NY Slip Op 02716 (decided April 5, 2011), the jurisdiction with the most “significant relationship to the transaction and the parties” will usually be the jurisdiction “which the parties understood was to be the principal location of the insured risk, . . . unless with respect to the particular issue, some other [jurisdiction] has a more significant relationship.” Id, quoting Zurich Ins Co. v. Shearson Lehman Hutton, 84 NY2d 309, 318 (1994), quoting Restatement [Second] of Conflict of Laws §193.

All indications point to North Carolina as “the principal location of the insured risk.” First and foremost, the subject auto policy was issued to Mr. Gomez in North Carolina. The policy lists his address as Wilson, North Carolina. Furthermore, on a page headed “INSURED’S STATEMENT”, Mr. Gomez was asked whether the insured vehicles were “garaged at the address listed.” His answer was “YES.” On another page, headed “APPLICANT’S CERTIFICATION”, Mr. Gomez certified that his “principal residence/place of vehicle garaging is North Carolina ten (10) or more months each year and the principal location of the vehicle is correct.”

The policy goes on to include a provision covering accidents “in any state or province other than the one in which your covered auto is principally garaged.” It includes “Medical Payment Coverage” providing for the payment of “reasonable expenses for necessary medical . . . services because of bodily injury . . . [s]ustained by an insured.” However, a separate provision respecting “FRAUD OR MATERIAL MISREPRESENTATION” states “We do not provide coverage for any insured . . . [i]f a named insured made a material misrepresentation in the application for this policy of insurance.” Another provision allows the insurer to cancel coverage under the policy if the insured became “a nonresident of North Carolina.”

Finally, the policy’s “Choice of Law” provision states: “This policy is issued in accordance with the laws of North Carolina and covers property or risks principally located in North Carolina. Any and all claims or disputes in any way related to this policy shall be governed by the laws of North Carolina.”

In the face of these indicia, the laws of North Carolina must be applied, unless this Court finds that New York has “a more significant relationship” to the issues presented in this action. [*3]See Matter of Liquidation of Midland Ins. Co., supra; Zurich Ins. Co. v. Shearson Lehman Hutton, supra. On the latter score, the Court acknowledges that New York’s interest in the issues is significant. As Justice McKeon noted in his concurring opinion in AA Acupuncture Service, P.C. v. Safeco Ins. Co. of America, 25 Misc 3d 30, 2009 NY Slip Op 29311 (App Term, 1st Dept), “the practice of

New Yorkers fraudulently registering motor vehicles in foreign states seems to be burgeoning, likely costing our state government, insurance companies and honest consumers significant sums in lost revenue and increased premiums and casting a pall

over the integrity of automobile registry systems in New York and other states.”

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On balance, however, these interests do not outweigh North Carolina’s in determining whether the instant claims are covered by the subject policy. Since defendant maintains that this North Carolina auto insurance policy provides no coverage for the instant claims based upon a specific section of North Carolina’s statutes, the issue will be decided under applicable statutory provisions and caselaw precedents from the State of North Carolina.

The starting point for analysis is the wording of North Carolina’s statute governing “Rate evasion fraud” (NCGS §58-2-164). In pertinent part, it provides: “If an applicant [for auto insurance] provides false and misleading information as to the applicant’s or any named insured’s status as an eligible applicant and that fraudulent information makes the applicant or any named insured appear to be an eligible applicant when that person is in fact not an eligible applicant, the insurer may do any or all of the following:

(1)Refuse to issue a policy.

(2)Cancel or refuse to renew a policy that has been issued.

(3)Deny coverage for any claim arising out of bodily injury or property damage suffered by the applicant. This subdivision does not apply to innocent third parties. (Emphasis added).

NCGS §58-2-164(g).

Two secondary issues are presented respecting the scope and meaning of these provisions. First, did Mr. Gomez provide false and misleading information to the defendant that made it appear that he was eligible for auto insurance coverage under North Carolina law? If he did, defendant contends that such misrepresentations allowed it to deny coverage for plaintiff’s claims under NCGS §58-2-164. Second, can plaintiff avoid defendant’s disclaimer of coverage pursuant to the “innocent third party” exception of NCGS §58-2-164(g)(3)? The issue cannot be decided without determining the meaning and intent of this exception.

The first issue turns, in large part, upon a close examination of the provisions respecting [*4]“eligible applicants” for auto insurance and the definition of “eligible risks.” Under North Carolina law, an “Eligible applicant” is a person who “is an eligible risk” (NCGS §58-2-164[a][3]). For the purpose of obtaining “nonfleet private passenger motor vehicle insurance,” an “Eligible risk” may involve a North Carolina resident who “owns a motor vehicle registered or principally garaged in [North Carolina]” (NCGS §58- 37-1[4][a]). However, an “Eligible risk” can also be presented by “a nonresident” who “owns a motor vehicle registered and principally garaged in [North Carolina].” Moreover, the definition of an “Eligible risk” extends to a North Carolina resident who

“has a valid driver’s license” issued by the State of North Carolina. NCGS §58-37-1 (4a)(b), (d).

Based upon the evidence submitted at trial, defendant failed to prove by a preponderance of evidence that Mr. Gomez was engaged in “Rate evasion fraud” as

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defined in the North Carolina statute. Since the denials relied only on the provisions of the cited statute, this case does not present a broader issue of whether Mr. Gomez made other misrepresentations in connection with the policy application and renewals of the policy. Moreover, the evidence respecting Mr. Gomez’ actual principal residence and the “principal location” of the vehicle was equivocal, at best.

Without hearing live testimony from Mr. Gomez and others, the Court is left with only a cold record, one replete with ambiguities and questions. While Mr. Gomez’s statements to an investigator raised legitimate doubts respecting his claimed North Carolina residence address (which he shared with his mother), defendant never pinned him down with respect to that residence or the vehicle’s principal garaged location between the date defendant first issued a policy for the vehicle (11/03) and the date of his accident (6/3/09). At most, defendant was able to show that Mr. Gomez had significant residential ties to both New York and North Carolina. When asked by defendant’s investigator “where do you live?” he answered “North Carolina.” He further claimed in his statement to defendant’s investigator that he was staying in New York “one week, two weeks” at a time. Although he admitted that he co-owned a grocery business and had a family with two children in New York, he also claimed he would “go back, stay with my mother” in North Carolina where he did “everything” before coming “back here” to his family and children in New York. He continued to maintain a North Carolina driver’s license that he kept current. The vehicle, itself, was always registered in North Carolina. Mr. Gomez also was able to show defendant a utility bill, in his name, bearing the same North Carolina address.

In short, although Mr. Gomez’s conflicting representations about his residence address raised legitimate issues for investigation, defendant’s defense of “rate evasion fraud” (NCGS §58-2-164) was not proven by a preponderance of the evidence submitted. To the contrary, the evidence shows that Mr. Gomez maintained significant, provable ties to the State of North [*5]Carolina, including a long standing North Carolina residence address, a North Carolina driver’s license, and close family ties with his mother in North Carolina. Accordingly, defendant’s evidence fails to establish that Mr. Gomez was not “an eligible applicant” under the definitions of North Carolina law. As a result, defendant remained responsible under the policy for “medical payment coverage” of “reasonable expenses for necessary medical . . . services” that were

provided to Mr. Gomez following an accident that occurred in New York State.

Turning to the second issue, the Court concludes, alternatively, that the defense of “rate evasion fraud” must be rejected on the ground that plaintiff is an “innocent third

party” within the meaning of North Carolina’s “rate evasion fraud” statute. Were this issue to be decided under New York law, the Court would be compelled to follow the lead of the Appellate Term, and to hold that New York’s “innocent third party” doctrine protects “only innocent third parties who are injured” by someone who is guilty of fraudulent procurement of insurance. See A.B. Med. Services PLLC v. Commercial Mut. Ins. Co., 12 Misc 3d 8 (App Term, 2006). Thus, under New York caselaw, a health care provider acts “at its peril” when it accepts an assignment of no-fault benefits, and it

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remains equally subject to a defense that the insurance policy covering the assigned claim was “fraudulently procured” by the insured. Id.

The issue, here, is very similar, but the result ends up differently when analyzed under canons of statutory construction which require a court to give meaning to each part of a statute. As the Courts in North Carolina have recognized: “every part of the law shall be given effect if this can be done by any fair and reasonable intendment.” Huntington Properties, LLC v. Currituck County, 153 NC App 218, 224 (2002), quoting In re Hickerson, 253 NC 716, 721 (1952).

Reading North Carolina’s “rate evasion fraud” law as a whole, the Court cannot envision any class of persons or entities who would fall into the “innocent third party” category, except for the assignees and subrogees of the insured. The statutory “innocent third party exception” comes into play only if an insurer is asked to pay a claim “arising out of bodily injury or property damage suffered by the applicant” (emphasis added). So worded, the “innocent third party” language logically extends those entities who are involved in treating “bodily injuries” or remedying “property damage” that the insured has suffered. Plaintiff, a medical provider, clearly falls into this category. Consequently, the Court sees no basis for limiting the “innocent third party” exception to “innocent third parties who are injured” by the insured. Cf. A.B. Med. Services, PLLC v. Commercial Mut. Ins. Co., supra.

Admittedly, the issue is not free from doubt, and the Court has found no North Carolina cases in point. Nor has it found any illuminating legislative history. But in the absence of [*6]contrary authority from North Carolina, the Court believes that penalizing plaintiff would be unwarranted. The plaintiff is an “innocent third party.” It provided medical services to a person who was insured by the defendant. It took an assignment in good faith, expecting to be paid. If Mr. Gomez committed a fraud, plaintiff was not a

party to it. Accordingly, the Court concludes that plaintiff, as an “innocent third party”,

should not be foreclosed from obtaining payment for its services solely on account of alleged “rate evasion fraud” by the insured.

For these reasons, the defense set forth in defendant’s denials is rejected, upon the facts and as a matter of law. Judgment is granted to plaintiff. Submit Judgment on Notice.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: June 2, 2011

District Court of Nassau County, First District

25241/09

Attorneys:

Plaintiff – Joseph Henig

Defendant – McDonnell & Adels, P.C.

Fred J. Hirsh, J.

The following named papers numbered 1 – 4

submitted on this motion on March 17, 2011

Papers NumberedNotice of Motion and Affidavits Annexed1-2

Order to Show Cause and Affidavits Annexed

Affirmation in Opposition3

Replying Affidavits4

This action raises questions about the proof that must be adduced by a hospital to establish a prima facie entitlement to judgment as a matter of law in an action for first party no-fault benefits.

BACKGROUND

This action combines two unrelated claims for first party no-fault benefits. The only thing these actions have in common is that Allstate Insurance Company (“Allstate”) is the no-fault carrier for both claims.

This action was commenced in Supreme Court Nassau County and was transferred to the District Court pursuant to CPLR 325(d).

A. Lenox Hill Hospital a/a/o of Eduardo Marrero v. Allstate Insurance Company

Eduardo Marrero (“Marrero”) was admitted to and received treatment at Lenox Hill Hospital (“Lenox Hill”) from July 13, 2009 through July 30, 2009. The treatment he received at Lenox Hill is alleged to be for injuries he sustained in a July 12, 2006 motor vehicle accident.

Marrero assigned his rights to receive payment of no-fault benefits for this treatment to Lenox Hill.

Lenox Hill’s third-party biller, Hospital Receivable Systems, Inc. (“HRS”) prepared and mailed the bill for treatment, the no-fault application (“NF-5”), and the assignment [*2]of benefits to Allstate Insurance Company (“Allstate”), the no-fault insurance carrier.

The hospital bill prepared and issued by Lenox Hill is in the sum of $185,332.92.

Attached to the NF-5 is a document on the letterhead of D.R.G. Master, Inc. designated as a “D.R.G. Master Output Report No Fault Version 8.3R” (“DRG”). The DRG, which is not explained, contains calculations to determine the allowable charges under the No-Fault Law (Insurance Law §5108) for the services rendered to Marrero at Lenox Hill. Based upon the calculations contained in the DRG Lenox Hill submitted a claim seeking payment of $54,167.24 for the services rendered to Marrero.

The assignment contains a notation that payment should be mailed to the Lenox Hills’ attorney at the attorney’s office address.

The aforementioned documents were mailed to Allstate by HRS by certified mail, return receipt requested. The certified mail receipt indicates the documents (NF-5, assignment, bill and DRG) were mailed to Allstate of October 8, 2009 and received by Allstate on October 12, 2009.

The affidavit of Pat Thompson (“Thompson”) of HRS addresses only the mailing of the of the documents to Allstate. This affidavit states Thompson is an employee of HRS. The affidavit does not discuss who prepared the NF-5, the hospital bill and/or the DRG, who provided HRS with the information contained in the documents and the relationship between Lenox Hill and HRS other than to state HRS is a Biller and Account Representative for Lenox Hill.

Lenox Hill alleges more than 30 days have elapsed since the bill was received and the bill has not been paid. Therefore, Lenox Hill is entitled to summary judgment.

Allstate asserts summary judgment should be denied because it timely denied this claim by mailing a denial to Lenox Hill dated October 30, 2009. The denial states the claim was denied based upon the Independent Medical Examination (“IME”) of Michael J. Katz, M.D. (“Dr. Katz) performed on 9/27/06. Dr Katz rendered a report dated 9/27/06 that stated Marrero had made a full recovery from the injuries he sustained in the July 12, 2006 motor vehicle accident. Dr. Katz report states Marrero is no longer in need of any medical care or treatment and does not need surgery.

B. Mount Sinai Hospital a/a/o Gregory Bar v. Allstate Insurance Company

Gregory Bar (“Bar”) received treatment for at Mt. Sinai Hospital (“Mt. Sinai”) on September 14-15, 2009 for injuries alleged to have been sustained in a motor vehicle accident of June 20, 2009.

Bar assigned his right to receive payment of no-fault benefits for this treatment to Mt. Sinai.

The bill issued by Mt. Sinai indicates the charges for the treatment as $4990.45.

Mt. Sinai’s third party biller, HRS, prepared and submitted the NF-5 together with a copy of the Mt. Sinai bill and assignment to Allstate for payment. The NF-5 indicates the amount due Mt. Sinai for the treatment or services provided to Bar in accordance with the no-fault schedule is $1515.96. Nothing in the papers explains the difference in the amount stated in the Mt. Sinai bill and the amount claimed to be due on the NF-5.

HRS mailed the NF-5, the assignment and the bill to Allstate on October 5, 2009 by certified mail, return receipt requested. The return receipt indicates the bill was received by Allstate on October 8, 2009. [*3]

The affidavit of Pat Thompson again addresses only the issue of mailing of the claim and other documents. The affidavit does not state who prepared the NF-5, the hospital bill or assignment or where the information contained in these documents was derived. Thompson’s affidavit states HRS is a Biller and Account Representative fo Mt. Sinai.

Mt. Sinai asserts it is entitled to summary judgment because more than 30 days have elapsed since the claim was submitted and claim has not been paid.

Allstate asserts it is not obligated to pay Mt. Sinai’s claim because on October 26, 2009 it sent a verification request to Mt. Sinai. Since Mt. Sinai did not respond to the October 26, 2009 verification request, Allstate sent a second verification request to Mt. Sinai by letter dated November 27, 2009. Allstate asserts Mt. Sinai did not respond to the follow-up verification request either.

DISCUSSION

The party moving for summary judgment must submit evidentiary proof in admissible form sufficient to establish a prima facie entitlement to judgment as a matter of law. Zuckerman v. City of New York, 49 NY2d 557 (1980). If the party moving for summary judgment does not make a prima facie showing of entitlement to judgment as a matter of law, the motion must be denied regardless of the sufficiency of the opposition. Winegrad v. New York University Medical Center, 64 NY2d 851 (1985); 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).

A claim for no-fault benefits must be paid or denied within 30 days of receipt of the claim including all verification. 11 NYCRR 3.8(a).

A hospital makes a prima facie showing of entitlement to judgment as a matter of law by submitting proof the necessary billing forms and documents have been mailed to and received by the no-fault insurer and payment is overdue. New York Hospital Medical Center of Queens v. Country Wide Ins. Co., 82 AD3d 723 (2nd Dept. 2011); Westchester Medical Center v. Countrywide Ins. Co., 45 AD3d 676 (2nd Dept. 2007); and Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742 (2nd Dept. 2004).

A medical provider must establish as part of its prima facie case the billing records submitted for payment are business records. Art of Healing Medicine, P.C. v. Travelers Home and Marine Ins. Co., 55 AD2d 644 (2nd Dept. 2008); and Dan Medical, P.C. v. New York Central Mut. Fire Ins. Co., 14 Misc 3d 44 (App. Term 2nd & 11th Jud. Dists. 2006).

All medical providers, other than hospitals, must establish as part of their prima facie proof in an action for first party no-fault benefits the claim forms and bill are business records. See, Viviane Etienne Medical Care, P.C. v. County-Wide Ins. Co., supra – physician’s services; Lenox Hill Radiology v. New York Central Mut. Fire Ins. Co., 20 Misc 3d 851 (Dist. Ct. Nassau Co. 2008) – radiological services; Craigg Total Health Family Health Chiropractic Care, P.C. v. QBE Insurance Corp., 20 Misc 3d 1118(A) (Dist. Ct. Nassau Co. 2008) – chiropractic services; North Acupuncture, P.C. v. State Farm Ins. Co., 14 Misc 3d 130(A) ( App. Term 2nd & 11th Jud. Dists. 2005) – acupuncture treatment; Bayside Rehab. & Physical Therapy, P.C. v. Geico Ins. Co., [*4]24 Misc 3d 542 (Civil Ct. Richmond Co. 2009) – physical therapy treatments; Complete Orthopedic Supplies, Inc. v. State Farm Ins. Co., 16 Misc 3d 996 (Civil Ct. Queens Co. 2007) – durable medical supplies.

The testimony or affidavit of a third party biller is insufficient to lay the foundation necessary to establish the claim form and billing documents are business records. Andrew Carothers, M.D., P.C. v Geico Indemnity Co., 79 AD3d 864 (2nd Dept. 2010: and Viviane Etienne Medical Care, P.C. v. Country-Wide Ins. Co., 31 Misc,3d 21 (App.Term, 2nd, 11th & 13th Jud. Dists. 2011).

The cases regarding hospital and cases regarding all other medical providers have developed on parallel tracks. The cases involving motions for summary judgment relating to hospital admissions do not address or discuss whether the hospital must establish the necessary billing documents ( NF-5, bill, assignment) are business records of the hospital.This Court can find no basis in the no-fault law or regulations why there should be a difference in the proof required of a hospital and the proof required of all other medical providers to establish a prima facie entitlement to judgment as a matter of law. A hospital should as part of its prima facie proof be required to establish the no fault claim, bill and other documentation submitted in connection with a clam to obtain payment of first party no-fault benefits is a business records.

The proof submitted in connection with this case does not establish the bill submitted by either Lenox Hill or Mt. Sinai is a business record of either hospital. William Conover, Inc. v. Waldorf, 251 AD2d 727 (3rd Dept. 1998). The affidavits of Lenox Hill and Mt. Sinai’s third party biller do not even attempt to lay the proper foundation to establish the documents submitted to Allstate were business records of either hospital. Since the plaintiffs have failed to establish a prima facie entitlement to judgment as a matter of law, their motion for summary judgment must be denied.

Allstate’s assertions that it timely denied the Lenox Hill claim and did not have to pay or deny the Mt. Sinai claim because Mt. Sinai did not respond to its request for verification are without merit.

Allstate produced a denial of the Lenox Hill bill dated October 30, 2009 in which it denies the entire claim on the grounds all no-fault benefits for orthopedic treatment had been denied effective 10/16/06 based upon the IME of Dr. Katz.

Except for limited non-precludable defenses, none of which are involved in this action, a no-fault carrier is precluded from raising defenses not asserted in timely served denial. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 556 (2008); and Hospital for Joint Diseases v. Travelers Property Casualty Ins. Co., 9 NY3d 312 (2007). Allstate would be precluded from raising the defense the treatment provided to Marrero by Lenox Hill was not medically necessary unless it established the denial was timely mailed. Bath Medical Supply, Inc. v. Allstate Indemnity Co., 13 Misc 3d 142(A) (App. Term 2nd & 11th Jud. Dists. 2006). The no-fault insurer must establish through proof in admissible form either the actual timely, mailing of the denial or it has “…standard office practices and procedures designed to ensure that items were properly addressed and mailed (citations omitted).” St. Vincent’s Hospital of Richmond v. Government Employees. Ins. Co., 50 AD3d 1123 (2nd Dept. 2008).

Allstate did not provide an affidavit or any other proof establishing actual mailing

of the denial to Lenox Hill. The affidavit of Allstate’s Litigation Claims Representative [*5]does not state Allstate’s standard office practices and procedures for preparing, addressing and/or mailing denials.

An insurer does not have to pay or deny a no-fault claim until it has received all timely demanded verification. Hospital for Joint Diseases v. New York Central Mut. Fire Ins. Co., 44 AD3d 903 (2nd Dept. 2007); an 11 NYCRR 65-3.8(c). The insurer has 10 business days from receipt of the claim to request verification. 11 NYCRR 65-3.5(a).

See, SZ Medical, P.C. v. Country-Wide Ins. Co., 12 Misc 3d 52 (App.Term 2nd & 11th Jud. Dists. 2006).

Allstate acknowledged it received the bill from Mt. Sinai on October 8, 2009. It had 10 business days from October 8, 2009 to request verification. The 10th business day after to claim from Mt. Sinai was received was October 23, 2009. The first verification request was dated October 26, 2009, which is more than 10 days from receipt of the claimAdditionally, Allstate fails to submit any evidence establishing it had an office practice or procedure designed to ensure the timely mailing of verification and follow up

verification requests. St. Vincent’s Hospital of Richmond v. Government Employees Ins. Co., supra: and Sound Shore Medical Center v. New York Central Mut. Fire Ins. Co., 30 Misc 3d 131(A) (App. Term, 9th & 10th Jud. Dists. 2011).

While timely denial of the Lenox Hill claim and failure to respond to verification requests regarding the Mt. Sinai claim may be valid defenses to these claims, the affidavits submitted in opposition to plaintiff’s motion to not provide proof in evidentiary form sufficient to establish theses defenses. However, since plaintiffs failed to establish through proof in admissible form a prima facie entitlement to judgment as a matter of law, plaintiff’s motion for summary judgment is denied.

SO ORDERED:

Hon. Fred J. Hirsh

District Court Judge

Dated: May 3, 2011

cc:Law Offices of Joseph Henig, P.C.

McDonnell & Adels, PLLC

District Court of Nassau County, Second District

07821/10

Friedman, Harfenist, Langer & Kraut, LLP 3000 Marcus Ave., Suite 2E1, Lake Success, NY 11042, Attorney for Plaintiff

Law Office of Karen Dodson, 100 Baylis Road, Suite 100, Melville, NY 11747, attorney for Defendant

Michael A. Ciaffa, J.

Defendant moves for an order granting it summary judgment dismissing plaintiff’s no-fault claims. Plaintiff opposes the motion.

The claims at issue involve electro-diagnostic testing that plaintiff performed upon its assignor, Winston J. Thorpe, based upon a neurologist’s referral. According to defendant’s peer review doctor, the medical records and findings that he reviewed “are inadequate in supporting the need for electro-diagnostic testing on this claimant.” Plaintiff’s opposition disputes the peer review doctor’s opinion, but it submits no expert proof of its own controverting the opinion of defendant’s expert.

Plaintiff’s opposition raises an important threshold legal question: is submission of an affirmed peer review report sufficient, by itself, to shift the burden to the plaintiff to submit opposing expert proof in order to defeat an insurer’s summary judgment motion? Recent Appellate Term decisions provide no clear answer to this question. Upon closer analysis, however, the Appellate Term’s decisions limit such burden shifting to cases where the peer review report sets forth a facially valid “factual basis and medical rationale.” While the quantum [*2]of proof needed to meet that burden may not be as stringent as required at a trial, cf. Nir v. Allstate Ins. Co., 7 Misc 3d 544, 546-7 (Civ Ct Kings Co 2005), the law continues to place the burden upon the defendant to satisfy the time-tested standards for obtaining summary judgment. If the opponent can show that an expert’s opinion is conclusory, or fails to address essential factual issues, or is based upon disputed or incorrect facts, the motion should be denied regardless of whether the opponent submits opposing expert proof. Nothing in the recent caselaw suggests the existence of a special exception for no-fault cases.

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NOVACARE/THORPE V. TRAVELERS

The general rules governing summary judgment motions are well-settled. Summary judgment is a “drastic remedy” which “should not be granted where there is any doubt” as to the existence of a material triable issue. Sillman v. Twentieth Century-Fox, 3 NY2d 395, 404 (1957). The proponent of the motion “must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case.” Winegrad v, NYU Med Center, 64 NY2d 851, 853 (1985). “Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers.” Id.

Once the moving party meets its initial burden, “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.” Alvarez v. Prospect Hosp., 68 NY2d 329, 324 (1986). But the converse of this rule is equally true: unless and until the moving party meets its initial burden, the burden of submitting contrary evidentiary proof is not properly imposed on the opponent.

The latter rule finds common application in medical malpractice cases. In Winegrad v. NYU Med. Center, supra, for instance, the Court held that “bare conclusory assertions” from the defendant doctors, denying that they deviated “from good and accepted medical practices,” were insufficient to establish that a plaintiff’s cause of action “has no merit so as to entitle defendants to summary judgment.” 64 NY2d at 853. The Court of Appeals accordingly reversed a lower court decision granting summary judgment to the defendants. Id. It did so notwithstanding the fact that the plaintiffs had submitted “only their Counsel’s affidavit” in opposition to defendants’ motion. Id. at 852.

Likewise, where a defendant doctor’s medical expert fails to address essential factual issues in his moving affidavit contesting a claim of medical malpractice, and bases his opinion upon “disputed or apparently incorrect facts,” the Second Department’s decisions call for denial of the defendant’s motion “despite the insufficiency of the evidence proferred by the plaintiffs in opposition . . .” See e.g. Muscatello v. City of New York, 215 AD2d 463 (2d Dept. 1995); Gray v. South Nassau Communities Hosp., 245 AD2d 337 (2d Dept. 1997). [*3]

The instant no-fault action involves an area of the law that often presents similar issues of medical judgment, akin to those presented in a medical malpractice case. Over the last several years, the District Court has seen an increasing number of summary judgment motions by insurers seeking dismissal of a no-fault claim, based upon an affirmed peer review report. See generally, Siegel and Lusting, Insurer’s Use of Peer Review Report at Summary Judgment, NYLJ 6/15/09, at p. 1 col. 4. The trend in the Appellate Term decisions seems to look favorably upon such motions. Under the

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NOVACARE/THORPE V. TRAVELERS

controlling appellate court precedents, however, in order for the insurer to prevail on the motion, the peer review report must nonetheless set forth a sufficient “factual basis and medical rationale” for the peer doctor’s conclusions. Id., citing cases; see e.g. Elmont Open MRI v. Clarendon Natl. Ins. Co., 2010 NY Slip Op 52061 (App Term, 9th & 10th Jud Dists.).

The published decisions of the Appellate Term, Second Department, have not precisely defined the phrase “factual basis and medical rationale.” To the extent that lower courts have attempted to define the phrase, see e.g. Nir v. Allstate Ins. Co., supra, the Appellate Term, to date, has not accepted any one definition. Nor has it insisted upon proof from a peer review doctor that links the doctor’s opinion to “generally accepted” medical practices. See Elmont Open MRI v. Clarendon Nat. Ins. Co., 2010 NY Slip Op 52061, supra, reversing decision and order of District Court, Nassau Co. (Ciaffa, J.), dated May 12, 2009.

Nevertheless, this Court sees no indication in the Appellate Term’s recent decisions that a conclusory unsubstantiated peer review report, by itself, is enough to meet the insurer’s initial burden. Older decisions by the Appellate Term make plain that “bare, conclusory assertion[s]” in a peer review report are insufficient “to create a triable issue of . . . medical necessity.” See Choicenet Chiropractic P.C. v. Allstate Ins. Co., 2003 NY Slip Op 50672 (App Term, 2d & 11th Jud Dists). A fortiorari, “bare conclusory assertions” in a peer review report should likewise be insufficient to satisfy the moving party’s burden on a summary judgment motion alleging lack of medical necessity.

Moreover, if a peer review report ignores or misrepresents documented facts in the medical records, the opponent can and should be able to point out such shortcomings. Although the Appellate Term has held that the records and reports reviewed by the peer review doctor “are not part of the defendant’s prima facie showing,” see Active Imaging, P.C. v. Progressive Northeastern Ins. Co., 2010 NY Slip Op 51842 (App Term, 2d, 11th & 13th Jud Dists), the opponent can certainly make use of such reports and records in challenging whether the peer doctor’s opinion includes a sufficient “factual basis and medical rationale.” Absent appellate authority to the contrary, this Court sees no reason why plaintiff’s counsel cannot utilize the underlying medical records, as plaintiff’s counsel does here, as part of a broad-based effort to convince the Court that defendant’s moving papers are insufficient to meet the insurer’s burden [*4]on a motion for summary judgment.

In short, there appears to be no basis in the law, and no basis in logic, for accepting an affirmed peer review doctor’s opinion, carte blanche, without scrutinizing the report’s contents. As plaintiff’s counsel cogently argues, “[e]very peer review report is different and requires individual scrutiny to determine whether or not in contains a [sufficient] factual basis and medical rationale.” The Court agrees that such scrutiny is

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necessary and appropriate before it decides whether the burden should be shifted back to the plaintiff to submit contrary expert proof. If the plaintiff can demonstrate, through references to the medical records or otherwise, that the peer review doctor’s opinion lacks a sufficient “factual basis” and/or “medical rationale” because it is conclusory, or because it fails to address essential factual issues or is based upon disputed or apparently incorrect facts, the defendant’s motion should be denied regardless of whether plaintiff submits expert proof of its own.

In the instant matter, plaintiff’s opposition points to such shortcomings in the peer review report. The peer review doctor’s opinion rests, in large part, upon his factual assumption that the medical records failed to document “persistent radicular symptoms”. However, as plaintiff’s counsel demonstrates, this assertion is contradicted by the very medical records that defendant’s expert reviewed.

Notably, the reports of claimant’s treating physicians document, over a course of nearly a month, the persistence of radiating pain in claimant’s neck and back. Several weeks after claimant’s accident, his family physician, Dr. Grigoran, performed a physical examination which resulted in an assessment of “cervical radiculopothy.” Upon Dr. Grigoran’s referral to a neurologist, Dr. Kahn, claimant was examined again. Despite having undergone weeks of conservative treatment, claimant was still suffering from “frequent” neck and back pain, accompanied by “numbness”. A cervical compression test was “positive” for “radicular symptomology.” So, too, the results of a Spurling test were reported as “positive”.

In light of theses symptoms and test results, Dr. Kahn’s diagnosis included findings of “Cervical/Lumbar radiculopothy,” and “Cervical radiculitis.” His recommendations included the performance of EMG/NCS tests of the cervical/lumbar spine and upper/lower extremities “to elucidate the degree and location of compression on existing nerve roots and peripheral nerves.” Not surprisingly, the electro-diagnostic test results revealed “an abnormal study, consistent with a left C5-6 and right L4-5 and L5-S1 radiculopothy.”

When such test results are viewed together with claimant’s well documented medical history, it is difficult to accept, at face value, the peer review doctor’s factual assumption that he found no evidence of “persistent radicular symptoms” which may have justified Dr. Kahn’s [*5]decision to recommend electro-diagnostic testing. Moreover, in the peer doctor’s description of the accepted standards and protocols for electro-diagnostic testing, defendant’s peer review doctor acknowledges that such tests may be medically appropriate for patients whose radicular symptoms “are persistent or unresponsive to initial conservative treatments.”

In the face of the medical record evidence, cited above, and the absence of

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proof of a more definitive, clear cut standard for prescribing electro-diagnostic tests, plaintiff’s opposition makes a convincing case that defendant’s moving papers fail to meet its burden. To a significant extent, the peer review doctor’s opinion rests upon conclusory assumptions and disputed or incorrect facts. Consequently, such an opinion, by itself, is insufficient to prove defendant’s entitlement to judgment as a matter of law on its lack of medical necessity defense. In these circumstances, the absence of opposing expert proof from plaintiff is immaterial.

Finally, two other issues need to be addressed. The Court concludes that defendant’s proof of mailing of its denials is sufficient, and that its fee schedule defense was established, through proper proof, as a matter of law. Plaintiff’s opposition failed to demonstrate the existence of a triable issue on either point. Accordingly, at any subsequent trial of this action, defendant need not adduce proof of timely mailing of its denials, or adduce further proof of the fee schedule reduction. However, the issue of medical necessity will need to be tried.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: April 1, 2011

[*1]

District Court of Nassau County, Second District, March 8, 2011

APPEARANCES OF COUNSEL

Randall B. Smith, P.C., Melville, for plaintiff. Michael Andre Lynton, defendant pro se.

{**31 Misc 3d at 806} OPINION OF THE COURT

Michael A. Ciaffa, J.

When a court is presented with a default judgment application, it is tempting to simply grant it and move on to other pressing matters. However, the rule of law, as I understand it, demands more. The court’s duty is not “ministerial.” (See e.g. McGee v Dunn, 75 AD3d 624, 624 [2d Dept 2010].) If subject matter jurisdiction is lacking, the court should “refuse to proceed further and [should] dismiss the action.” (See Matter of Fry v Village of Tarrytown, 89 NY2d 714, 718 [1997], quoting Robinson v Oceanic Steam Nav. Co., 112 NY 315, 324 [1889].) No matter how meritorious a claim may be, the court in such a case would have no power to grant judgment upon it. Likewise, a court may grant a default judgment by law only if the moving party’s pleadings and proof establish one or more “viable” causes of action. (See McGee v Dunn, 75 AD3d at 624.) [*2]

The instant case puts these principles to a test. On multiple points, the plaintiff’s motion, while unopposed, presents facts and circumstances that raise a series of challenging issues. Although the end result of the court’s analysis is to sustain jurisdiction, that conclusion requires extended discussion. And in the end, deficiencies in plaintiff’s pleading and proof result in the denial of the motion, without prejudice to renewal. These issues are discussed, below, in turn.

Plaintiff, Utica Mutual Insurance Company, moves for a default judgment against defendant, Michael Andre Lynton, based upon Mr. Lynton’s failure to answer the complaint following service of process pursuant to CPLR 308 (2). The complaint proceeds on the premise that plaintiff “is subrogated to all rights of RAMONA ESTEVEZ as against the Defendant arising out of the claimed occurrence.” The subject “occurrence” was a motor vehicle accident between a vehicle operated by Ms. Estevez and a second vehicle owned and operated by Mr. Lynton. According to plaintiff’s papers, it made basic no-fault payments “to or on behalf of” Ms. Estevez, totalling $15,197.22. It also paid Ms. Estevez $6,000 in settlement of her claim for supplementary uninsured motorist benefits.

Monetary claims brought in this court are ordinarily limited to cases “where the amount sought to be recovered . . .{**31 Misc 3d at 807} does not exceed $15,000.” (UDCA 202.) However, “[w]here several causes of action are asserted in the complaint, and each of them would be within the jurisdiction of the court if sued upon separately, the court shall have jurisdiction of the action.” (UDCA 211.)

Although the latter statute has long been a part of the law governing proceedings in this court, its constitutionality remains open to question. In Mandel v Kent (70 AD2d 903, 903 [2d Dept 1979]), the Appellate Division held that the County Court’s jurisdictional limit applied “to the entire complaint rather than each cause of action.” It did so based on its reading of article VI, § 11 of the NY Constitution, which provides that the County Court’s jurisdiction “shall extend not to ’causes of action’ but only to ‘actions’ where the amount sought to be recovered is beneath a certain amount.” (See Westbury Wholesale Produce Co. v Maine Maid Inn, 186 Misc 2d 911, 914 [Nassau Dist Ct 2000] [discussing Mandel].)

In Westbury Wholesale Produce Co. v Maine Maid Inn (supra) Nassau District Court Judge Kenneth Gartner carefully considered whether to apply Mandel‘s logic to cases brought under the Uniform District Court Act. In a comprehensive, well-reasoned opinion, he concluded that the Appellate Division, Second Department, “would not extend the Mandel holding to District Court—an extension which would require the Appellate Division to of necessity declare UDCA 211 . . . unconstitutional as in contravention of . . . the New York State Constitution.” (186 Misc 2d at 916.)

Since Judge Gartner’s decision was handed down more than a decade ago, not a single published decision has cited Mandel. Nor have any court decisions questioned the ruling made by Judge Gartner in Westbury Wholesale Produce Co., respecting the [*3]continued applicability of UDCA 211 to District Court proceedings. Accordingly, the court concludes that Mandel does not nullify UDCA 211, and therefore turns to the question of whether plaintiff’s complaint properly pleads and presents “several causes of action,” each of which are within the court’s jurisdictional limits. (UDCA 211.)

The complaint, in this case, separately asserts two causes of action. The first cause of action seeks judgment holding defendant liable for $15,000, based upon plaintiff’s payment of basic no-fault benefits. The second cause of action seeks judgment holding defendant liable for an additional $6,000, based upon its settlement of Ms. Estevez’s supplementary uninsured motorist claim for pain and suffering.{**31 Misc 3d at 808}

Although plaintiff’s papers admit that plaintiff voluntarily reduced its claim for repayment of basic no-fault benefits to $15,000 “to comply with the jurisdiction of this Court,” that reduction begs the question of whether the court has jurisdiction to consider claims totaling $21,000 in the aggregate. Notwithstanding defendant’s default in answering the complaint, this court is empowered to consider plaintiff’s motion only if the claims fall within the ambit of UDCA 211, and on that point, plaintiff’s motion raises a second difficult and complex threshold issue.

At first blush, the assertion of separate “causes of action” in the complaint brings the case squarely within the literal language of UDCA 211. Each “cause of action” seeks damages of $15,000 or less ($15,000 under the first cause of action and $6,000 under the second cause of action).

However, decisions of other courts make plain that a lower court’s jurisdictional limits cannot be circumvented by the simple expedient of splitting a claim into separately stated “causes of action.” The Civil Court’s decision in Kemper v Transamerica Ins. Co. (61 Misc 2d 7 [Civ Ct, NY County 1969]) is illustrative.

In the Kemper case, plaintiff’s complaint asserted four “causes of action” against an insurer, arising from a fire loss. Four categories of damages were sought, each under a different policy provision. Each “cause of action,” on its face, sought damages within the jurisdictional limits of the Civil Court. Nevertheless, the total damages sought by plaintiff, arising from “a single fire,” exceeded the court’s monetary limit.

The Civil Court (Stecher, J.) concluded, on these facts, that the complaint asserted only a single “cause of action.” In holding that it lacked jurisdiction as a result, the Court acknowledged that the issue was “not a matter free from difficulty.” (61 Misc 2d at 8.) As explained in the decision, the words “cause of action” could have different meanings in different contexts. Quoting from a Court of Appeals decision involving a statutory pleading rule requiring that “each cause of action must be separate and numbered” (Payne v New York Susquehanna & W. R.R. Co., 201 NY 436, 440 [1911]), the Civil Court adopted the following definition for the purpose of assessing its jurisdiction: “If the facts alleged show one primary right of the plaintiff, and one wrong done by the defendant which [*4]involves that right, the plaintiff has stated but a single cause of action.” (61 Misc 2d at 8, quoting Payne, 201 NY at 440.){**31 Misc 3d at 809}

Applying this definition, the Civil Court concluded that the complaint raised only one cause of action:

“In the case under consideration the primary right is to be paid under the contract for the loss allegedly sustained in a single fire; and the defendant’s wrong is the failure to make that payment. There can be little doubt that various obligations of payment assumed under a single written contract accruing at the same time constitute but a single cause of action (Wolf v. Wolf, 22 A D 2d 678; 5 Williston, Contracts [rev. ed.], § 1291). It is thus apparent that the plaintiff’s claim . . . although stated in what appeared to be four separate causes of action are in fact one cause of action which exceeds the jurisdictional limitation on this court.” (61 Misc 2d at 8-9.)

The instant case involves similar, but not identical, factual circumstances. Plaintiff’s claims, although separately stated in two causes of action, each involve “one wrong done by the defendant,” namely, negligent operation of a motor vehicle by defendant, causing a collision that injured plaintiff’s insured. As a result, plaintiff’s insured applied for, and received, insurance benefits under the supplementary uninsured motorist and basic no-fault portions of her insurance policy. Under the provisions of that policy, plaintiff obtained subrogation rights which it now asserts in this action.

Just like in Kemper, it appears that plaintiff’s claim, although set forth in two separate “causes of action,” may be viewed as stating “but one case of action which exceeds the jurisdictional limit” for claims made in this court. (Kemper, 61 Misc 2d at 9.) If so viewed, the court would lack the power to grant the requested relief.

Notably, in Kemper, the Civil Court was able to transfer the action directly to the Supreme Court, pursuant to article VI, § 19 (f) of the NY Constitution. However, this court lacks similar authority. (Compare NY Const, art VI, § 19 [i].) As a consequence, if the claims in this case are found to exceed the court’s jurisdictional limits, the court would have no choice but to dismiss the proceeding. (See Fry v Village of Tarrytown, 89 NY2d at 718, citing Robinson v Oceanic Steam Nav. Co., 112 NY at 324.)

Ironically, if the action were to be dismissed, and then refiled in the Supreme Court, that court could then transfer the case back to the District Court, as allowed by NY Constitution, article{**31 Misc 3d at 810} VI, § 19 and CPLR 325 (d). In that event, this court would be empowered, under CPLR 325 (d), to determine the claims without regard to otherwise [*5]applicable monetary limits.

Should plaintiff have its claims bounced back and forth, like this, to obtain determination of its claims against defendant? I think not. Although the jurisdictional limits of UDCA 202 must be respected, the language of UDCA is broad enough to encompass the subject claims.

As recognized in Kemper, the phrase “cause of action” can have different meanings in different contexts. No hard and fast definition has been applied by our state’s courts. Although allegations emanating from “a single occurrence or transaction” often have been deemed to be part of one cause of action, “distinct causes of action” just as certainly may arise from a single transaction or occurrence. (See 1 NY Jur 2d, Actions § 40.) Indeed, it appears well settled that “[w]here a single wrongful act causes injury to both the person and property of another, the party wronged has, and can separately sue upon, distinct causes of action.” (1 NY Jur 2d, Actions § 57; see also 103 NY Jur 2d Torts § 3 [“A single tortious act which causes damage to a person and to property gives rise to separate causes of action”].) “Similarly, a single wrongful act affecting different interests . . . may give rise to a separate cause of action in favor of the owner of each such interest.” (1 NY Jur 2d, Actions § 57.)

Not surprisingly, “conflicting decisions in different jurisdictions” have sometimes confounded our state’s courts in determining whether one or more causes of action are being advanced. (See Reilly v Sicilian Asphalt Paving Co., 170 NY 40, 43, 43-45 [1902].) But more recent decisions draw a clear distinction between an injured person’s cause of action for pain and suffering, on the one hand, and an insurer’s related cause of action for recoupment of payments for extended economic loss. (See Record v Royal Globe Ins. Co., 83 AD2d 154 [2d Dept 1981].) The issue in Record v Royal Globe was whether an insured’s release of a claim for personal injuries impaired the insurer’s subrogation rights. While the decision did not address issues of jurisdiction, the court’s analysis hinged upon its recognition that a subrogated claim for “economic loss” (i.e. payments for lost earnings and medical expenses) was very different from a “noneconomic” claim for pain and suffering. Since these claims were considered to be separate and distinct, the Court concluded that the release by Royal Globe’s insured of{**31 Misc 3d at 811} her noneconomic claims for pain and suffering had not impaired the insurer’s subrogation rights respecting economic loss.

Viewing the claims in this case in a similar manner, it is apparent that the complaint does, indeed, state separate and distinct causes of action. Although both claims are asserted by the same party, under provisions of the same insurance policy, the first cause of action, for basic no-fault benefits, involves “economic losses” (e.g. medical expenses), whereas the second cause of action, for supplementary uninsured motorist benefits, involves payments for the insured’s pain and suffering. [*6]

Accordingly, the court concludes, on balance, that it has jurisdiction over plaintiff’s claims. Since the complaint can be read as properly asserting two causes of action, each of which is within this court’s jurisdiction (see UDCA 211), it will proceed to determine the merits of plaintiff’s default judgment application.

Plaintiff’s motion includes proof of service of the summons and complaint upon defendant, proof of his default, and proof of the facts constituting plaintiff’s claims. (See CPLR 3215 [f].) Nevertheless, before a judgment by default can be granted, the court must be provided with sufficient facts to establish that the plaintiff possesses legally viable causes of action. (See e.g. McGee v Dunn, supra; Beaton v Transit Facility Corp., 14 AD3d 637 [2d Dept 2005].)

With respect to the first cause of action, the complaint, as amplified by plaintiff’s moving affidavits, includes sufficient allegations that defendant was not a “covered person” under no-fault, since he lacked insurance for his vehicle on the date of the accident. Such allegations are “an essential element of an insurer’s right to recoup first-party benefits” in a subrogation action. (See Country-Wide Ins. Co. v 3-M Prod. Sales, 96 AD2d 569, 569 [2d Dept 1983].)

However, an equally essential element of the cause of action is an allegation that plaintiff’s insured failed to commence a lawsuit, of her own, seeking damages for personal injuries arising from the accident. (See Country-Wide Ins. Co. v 3-M Production Sales, supra; see also Insurance Law § 5104 [b].) If such an action has been brought, the insurer’s remedies, by law, would be limited to its lien rights against any recovery obtained by verdict or settlement of that action. (Insurance Law § 5104 [b].)

On the other hand, if the insured failed to commence such an action within two years after accrual of her claim, then, and{**31 Misc 3d at 812} only then, would the insurer have “a cause of action for the amount of first party benefits paid or payable against any person who may be liable to the covered person [i.e. its insured] for [her] personal injuries.” (Insurance Law § 5104 [b].) Although the facts of this case involve the filing of a lawsuit by the insurer more than two years from the date of the accident, plaintiff’s papers are silent as to whether its insured did or did not file her own lawsuit against Mr. Lynton.

In the absence of allegations addressing the issue, the court will not assume, from such silence, that plaintiff’s first cause of action was properly brought under Insurance Law § 5104 (b). Consequently, plaintiff’s request for judgment by default on the first cause of action is denied, without prejudice to resubmission upon additional proof respecting whether its insured did or did not commence her own personal injury action which might overlap with plaintiff’s claim for first-party no-fault benefits in this subrogation lawsuit. [*7]

Plaintiff’s allegations and proof respecting its second cause of action suffer from a different defect. The latter claim seeks recovery of supplementary uninsured motorist benefits that plaintiff paid to its insured in settlement of her claim for pain and suffering. Although the “serious injury” requirements of Insurance Law § 5104 (a) do not expressly preclude claims for pain and suffering by a covered person against a noncovered person, this case does not present such a direct claim for pain and suffering. Rather, it involves a claim by an insurer arising from its payment of supplementary uninsured motorist benefits to Ms. Estevez for a “non-economic loss,” pursuant to Insurance Law § 3420 (f) (2) and the Insurance Superintendent’s Regulations (11 NYCRR 60-2.3 [f]). Under applicable case law holdings, Ms. Estevez could not have properly obtained payment of uninsured motorist benefits for her pain and suffering without proof of serious injury. (See Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196 [2007]; see also Meegan v Progressive Ins. Co., 43 AD3d 182, 184-186 [4th Dept 2007].)

Should plaintiff be able to sue the defendant to recoup supplementary uninsured motorist payments without proof that its insured, in fact, sustained a serious injury? In the absence of case law holding otherwise, the court is not prepared to presuppose such a result. While it can be argued that the insurer is simply standing in the insured’s shoes, the law as written expressly gives the insurer only a limited right to pursue a subrogation claim against a noncovered person, as authorized{**31 Misc 3d at 813} by Insurance Law § 5104 (b), for basic first-party no-fault benefits, and to the extent an insurer acquires additional subrogation rights by paying supplementary uninsured motorist benefits pursuant to Insurance Law § 3420 (f), such payments are properly made only in cases involving serious injuries. Consequently, an insurer suing a noncovered person upon such a subrogated claim for supplementary uninsured motorist benefits should properly be required to plead and prove the serious injury in order to obtain a judgment against the defendant on the latter cause of action.

In the instant case, notwithstanding the complaint’s conclusory statement that plaintiff’s insured “was caused to sustain personal injuries,” the complaint includes no factual allegations which might satisfy the requirements of Insurance Law § 5102 (d), defining the sort of “serious injuries” which could form the basis for meeting the statutory definition. Moreover, the medical records submitted with plaintiff’s motion do not suffice under the circumstances, since no effort is made to use the records to demonstrate how the injuries and treatments brought the case within the statutory definition of a serious injury. Absent proof, by party affidavit (see CPLR 3215 [f]), that the personal injury claim at issue was “serious” enough to satisfy the No-Fault Law’s threshold, the court cannot conclude that the plaintiff has the right, by law, to recover its payment to its insured under the subrogation theory asserted.

Accordingly, where, as here, an insurer neither properly pleads, nor proves by [*8]party affidavit, that its insured suffered a true “serious injury” that justified payment of supplementary uninsured motorist benefits for pain and suffering, it is not entitled, upon a default, to obtain a judgment on the claim merely because the complaint includes a conclusory sentence alleging that plaintiff’s insured suffered undefined injuries in the accident. Here, too, that failure of proof requires denial of the motion without prejudice.

For the foregoing reasons, the court concludes that it has jurisdiction to determine claims by plaintiff that exceed $15,000 in the aggregate. However, due to deficiencies in plaintiff’s pleading and proof, the court must deny plaintiff’s motion, without prejudice to renewal.

[*1]

District Court of Nassau County, First District, October 13, 2010

APPEARANCES OF COUNSEL

Abrams, Fensterman, Eisman, Greenberg, Formato & Einiger, LLP, for plaintiff. Lawrence Rogak, LLC, for defendant.

{**30 Misc 3d at 239} OPINION OF THE COURT

Fred J. Hirsh, J.

Facts

This action raises issues regarding the extent to which a no-fault insurance carrier may rely upon the results of an independent medical examination (IME) to deny payment for medical treatment provided after the IME.

Plaintiff sues to recover first-party no-fault benefits for chiropractic care provided to Sandra Burrell during the period January 3, 2006 through January 30, 2007.

Burrell was injured in a motor vehicle accident that occurred on February 16, 2005. State Farm Insurance Company (State Farm) provided no-fault insurance benefits to Burrell for medical treatment received for injuries sustained in this accident.

Burrell received chiropractic treatment for the injuries she sustained in the accident from Richard E. Amato, D.C. (Dr. Amato). Burrell assigned her right to receive first-party no-fault benefits for her chiropractic care to Dr. Amato.

State Farm requested that Burrell submit to an IME to be conducted by Todd Aordkian, D.C. (Dr. Aordkian). The IME was conducted on September 8, 2005.

Dr. Aordkian’s examination found the range of motion of Burrell’s cervical and lumbar spine to be essentially normal. The only objective finding he made was decreased sensation along the right leg.

In addition to conducting an IME, Dr. Aordkian also reviewed medical records of the doctors who had provided treatment to Burrell prior to the IME and report of a cervical MRI dated April 30, 2005.

Dr. Aordkian’s diagnosis was a resolved cervical and lumbar sprain. Dr. Aordkian [*2]issued a report dated September 16, 2005 in which he concluded Burrell needed no further chiropractic treatment for the injuries arising from the February 16, 2005 automobile accident.

Dr. Aordkian testified at trial that Burrell’s condition would not improve even if she received additional chiropractic treatment.

Burrell received additional chiropractic treatment from Dr. Amato during the period January 3, 2006 through January 30, 2007.

Dr. Amato submitted the bills for this treatment to State Farm. State Farm denied payment of the bills for this treatment{**30 Misc 3d at 240} because “New York No-Fault Chiropractic benefits were denied on 9/30/05 based upon the physical examination of Dr. Aordkian performed on 9/8/05.”

Dr. Aordkian testified he had not seen any medical reports or records relating the treatment Burrell received from Dr. Amato from January 3, 2006 through January 30, 2007. He did not know what Burrell’s condition was when she received this treatment or whether her condition had worsened after he conducted the IME.

The parties stipulated to the timely submission of the bills for the treatment and the timely issuance of denials. The parties stipulated into evidence the bills, the report of the independent medical examination performed by Dr. Aordkian and the medical reports and records reviewed by Dr. Aordkian when he conducted the IME.

Discussion

The no-fault regulations permit an insurer to demand the injured party submit to an IME “as often as[ ] the Company may reasonably require.” (11 NYCRR 65-1.1 [d].)

An applicant for no-fault benefits is not to be treated as an adversary. (11 NYCRR 65-3.2 [b].) The basic goal of an insurer in processing no-fault claims is “the prompt and fair payment to all automobile accident victims.” (11 NYCRR 65-3.2 [a].)

The purpose of an IME is to assist the carrier in determining the extent of the claimant’s injuries and the claimant’s need for continuing medical treatment. (See Rowe v Wahnow, 26 Misc 3d 8, 11-12 [App Term, 1st Dept 2009, McKeon, P.J., dissenting].)

The purpose of the no-fault statute is to insure prompt payment of medical claims regardless of fault. (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].)

In order to meet this purpose, an insurer must pay or deny a claim within 30 days of receipt. (11 NYCRR 65-3.8 [a] [1].) An insurer may toll or extend its time to pay a claim by timely demanding an IME, an examination under oath or verification. (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].)

A no-fault insurance carrier is precluded from asserting at trial any precludable defense not asserted in a timely denial.{**30 Misc 3d at 241} (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].)^[FN*]

In this case, State Farm denied no-fault benefits for chiropractic care provided by Amato to Burrell between January 3, 2006 and January 30, 2007 based upon an IME cutoff based upon the IME performed by Dr. Aordkian on September 8, 2005.

However, like all other no-fault claims, timely submission of these claims by Amato created a presumption that the treatment was medically necessary. (All County Open MRI & Diagn. Radiology P.C. v Travelers Ins. Co., 11 Misc 3d 131[A], 2006 NY Slip Op 50318[U] [App Term 9th & 10th Jud Dists 2006]; Prime Psychological Servs., P.C. v Progressive Cas. Ins. Co., 24 Misc 3d 1244[A], 2009 NY Slip Op 51868[U] [Civ Ct, Richmond County 2009].) The burden shifted to the defendant to rebut the presumption of medical necessity. (A.B. Med. Servs. PLLC v Utica Mut. Ins. Co., 10 Misc 3d 50 [App Term 2d & 11th Jud Dists 2005]; AP Orthopedics & Rehabilitation, P.C. v Allstate Ins. Co., 27 Misc 3d 698 [Civ Ct, Richmond County 2010].)

The term “IME cutoff” is a misnomer. The No-Fault Law and regulations do not permit a carrier to unilaterally deny a claimant future benefits based upon an IME. An “IME cutoff” is nothing more than the opinion of the doctor that based upon the claimant’s complaints and the doctor’s objective findings at the time the IME is performed the claimant no longer needs medical care or treatment and/or diagnostic testing. The determination the claimant no longer needs treatment is generally based upon the examining doctor’s findings which result in the doctor concluding (1) the claimant has fully recovered from the injuries; (2) the claimant has made as full a recovery as is possible taking into account the nature and extent of the injuries, the claimant’s age, preexisting conditions or other factors; and/or (3) additional treatment or testing will not provide any medical benefit to the claimant. In this case, Dr. Aordkian{**30 Misc 3d at 242} determined Burrell had made as full a recovery as possible and therefore needed no further chiropractic care.

Medical treatment is not necessary if it is inconsistent with generally accepted medical standards. (Delta Med. Supplies, Inc. v NY Cent. Mut. Ins. Co., 14 Misc 3d 1231[A], 2007 NY Slip Op 50241[U] [Civ Ct, Kings County 2007]; CityWide Social Work & Psychological Servs. v Travelers Indem. Co., 3 Misc 3d 608 [Civ Ct, Kings County 2004].) In order to make such a determination, the defendant must establish a factual basis and a medical rationale for finding the tests or treatment were not medically necessary. (Prime Psychological Servs., P.C. v Progressive Cas. Ins. Co., 24 Misc 3d 1244[A], 2009 NY Slip Op 51868[U] [Civ Ct, Richmond County 2009]; Nir v Allstate Ins. Co., 7 Misc 3d 544 [Civ Ct, Kings County 2005].)

An IME is a snapshot of the injured party’s medical condition as of the date of the [*3]IME. The opinion of the doctor conducting an IME and issuing a report that no further treatment or testing is needed is nothing more than an expert’s opinion that at the time the examination was conducted the claimant did not need any further treatment or testing. As regards the need for future treatment, the IME is nothing more than an expert’s prediction that the claimant has fully recovered or received the maximum therapeutic benefit from the treatment and does not presently need any additional treatment.

However, there is no legal reason why claims for medical treatment submitted after an “IME cutoff” has been issued should be treated any differently than claims submitted prior to the IME. Therefore, a timely submitted claim for medical services rendered after the issuance of an IME cutoff is presumed to be medically necessary. The timely submission of a post-IME cutoff claim shifts the burden to the defendant to establish a factual basis and medical rationale for its determination that the treatment was unnecessary.

Dr. Aordkian testified that he did not review any reports or records relating to the treatment Burrell received after the IME. He was unaware of the reasons Burrell sought and obtained the treatment. He was unaware of the treatment provided. Therefore, the defendant failed to prove either a factual basis or a medical rationale for its determination that the chiropractic treatment was unnecessary.

The defendant could have obtained the necessary information through verification and could have had Dr. Aordkian or any other qualified expert review the material and render an opinion{**30 Misc 3d at 243} regarding the medical necessity of the treatment rendered. State Farm did not do this.

For the foregoing reasons, the court finds for the plaintiff.

The clerk is ordered to enter judgment in favor of the plaintiff and against the defendant in the sum of $1,920.90 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 *: Four defenses are not subject to the preclusion rule: (1) fraudulent incorporation (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]); (2) lack of coverage (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]); (3) staged accident (Central Gen. Hosp. v Chubb Group of Ins. Cos., supra; Matter of Allstate Ins. Co. v Massre, 14 AD3d 610 [2d Dept 2005]; V.S. Med. Servs., P.C. v Allstate Ins. Co., 11 Misc 3d 334 [Civ Ct, Kings County 2006]); and (4) exhaustion of coverage (Hospital for Joint Diseases v Hertz Corp., 22 AD3d 724 [2d Dept 2005]); Hospital for Joint Diseases v State Farm Mut. Auto. Ins. Co., 8 AD3d 533 [2d Dept 2004]).

[*1]

District Court of Nassau County, Second District, September 24, 2010

APPEARANCES OF COUNSEL

Law Offices of Robert E. Dash, Syosset, for plaintiff. Law Offices of Teresa M. Spina, Woodbury, for defendant.

{**29 Misc 3d at 985} OPINION OF THE COURT

Michael A. Ciaffa, J.

At the trial of this no-fault case, involving electrodiagnostic testing, defendant presented expert testimony from Dr. Nicholas Berbari in support of its lack of medical necessity defense. Dr. Berbari is board certified in internal medicine. While his qualifications in that field are not contested, plaintiff contended at trial that Dr. Berbari was not competent to challenge the necessity of the electrodiagnostic tests prescribed by claimant’s treating chiropractor.

Memoranda addressing plaintiff’s contention have been submitted for the court’s consideration. For the reasons set forth below, the court overrules plaintiff’s objection to Dr. Berbari’s competence. The testimony adduced by defendant at trial, read in the context of other evidence, includes adequate proof of Dr. Berbari’s familiarity with the generally applicable standards for prescribing and performing electrodiagnostic testing. Accordingly, plaintiff’s challenge to Dr. Berbari’s expertise goes only to the weight of his testimony, and not to its admissibility.

The court begins its analysis by noting that defendant does not have to call a chiropractor as its expert witness in order to controvert the necessity of electrodiagnostic tests ordered by Andrew D. Pincus, D.C., in the course of providing chiropractic services and treatments to claimant after an auto accident. Although expert proof is needed to overcome the presumption of medical necessity and to satisfy defendant’s burden by a preponderance of evidence, the defendant ordinarily may meet that burden by submitting proof from a medical expert establishing that the services in question were not necessary when viewed in the context of generally accepted medical practices. (See Nir v Allstate Ins. Co., 7 Misc 3d 544, 546-547 [Civ Ct, Kings County 2005].) [*2]

It is well settled that a physician called to testify at a trial “need not be a specialist in a particular field in order to be considered a medical expert.” (Gordon v Tishman Constr. Corp., 264 AD2d 499, 502 [2d Dept 1999], quoting Julien v Physician’s Hosp., 231 AD2d 678 [2d Dept 1996], quoting Humphrey v Jewish Hosp. & Med. Ctr. of Brooklyn, 172 AD2d 494 [2d Dept 1991].) While the practice of chiropractic has been deemed “separate and distinct from the practice of medicine” (see Taormina v Goodman, 63 AD2d 1018 [2d Dept 1978]), chiropractors and medical doctors both share the ability to make informed judgments{**29 Misc 3d at 986} regarding the need for electrodiagnostic tests. Moreover, defendant’s expert in this matter, Dr. Berbari, established to the court’s satisfaction that he possesses, through training and experience, sufficient knowledge and expertise to render an opinion respecting the relevant standards for prescribing and performing electrodiagnostic testing. Consequently, the court sees no basis for concluding, as a matter of law, that his opinion is incompetent simply because the subject tests were ordered by a chiropractor.

In reaching this conclusion, the court recognizes that other courts, in other contexts, have rejected evidence from medical doctors in matters involving issues of chiropractic malpractice (e.g. Taormina v Goodman, supra), or the necessity of MRIs ordered by a chiropractor (e.g. Elmont Open MRI & Diagnostic Radiology, P.C. v State Farm Ins. Co., 26 Misc 3d 1211[A], 2010 NY Slip Op 50053[U] [Nassau Dist Ct, 2010]). But both lines of cases leave open, for judicial consideration, expert medical proof that competently addresses the issue at hand. In Taormina, the plaintiff presented “no competent . . . evidence” that the defendant failed to exercise the degree of care that “a reasonably prudent chiropractor” would exercise under the circumstances. (63 AD2d at 1018.) In Elmont Open MRI, the court noted the absence of proof from defendant’s expert respecting “the generally accepted reasons why a chiropractor would order . . . a cervical or lumbar MRI” (2010 NY Slip Op 50053[U], *4).

The instant case, in contrast, involves standards of care which are arguably identical for chiropractic practitioners and doctors of internal medicine. Both evaluate patients showing symptoms of radiculopathy in the course of their practices. Dr. Berbari’s testimony sets forth his understanding of the generally accepted standards for prescribing and conducting electrodiagnostic testing upon patients who exhibit symptoms of radiculopathy. From defendant’s perspective, the opinions expressed by Dr. Berbari are not dependent upon knowledge of chiropractics, per se, but rather reflect generally accepted standards which extend to any professional’s involvement in electrodiagnostic testing. Absent proof on rebuttal from plaintiff contesting the latter point, the court is not prepared to assume that Dr. Berbari’s opinion is incompetent and irrelevant to the issues at hand.

To the extent plaintiff maintains that defendant’s expert lacks familiarity with applicable chiropractic standards for prescribing electrodiagnostic tests, the court concludes that any alleged lack of familiarity with chiropractic standards goes only “to the{**29 Misc 3d at 987} weight of the testimony, not its admissibility.” (See Bodensiek v Schwartz, 292 AD2d 411 [2d Dept 2002]; see also Walsh v Brown, 72 AD3d 806 [2d Dept 2010]; Texter v Middletown Dialysis Ctr., Inc., 22 AD3d 831 [2d Dept 2005]; Erbstein v Savasatit, 274 AD2d 445 [2d Dept 2000].)

Decisions from other state courts are in accord with this approach. In Blankenship v [*3]Iowa Nat. Mut. Ins. Co. (41 Colo App 430, 432, 588 P2d 888, 890 [1978]), for example, the court reiterated that a doctor of medicine “is not ipso facto an incompetent witness” simply because the case involved a chiropractor’s actions. The issue in that case, like the issue here, was whether the chiropractor’s charges “were reasonable and necessary” (41 Colo App at 431, 588 P2d at 890). The defendant opposed the chiropractor’s claim for payment by presenting proof from an orthopedist that the chiropractor’s treatments were “neither necessary nor beneficial.” (Id.) Rejecting plaintiff’s claim on appeal that the orthopedist was “not competent to testify as an expert against a [chiropractic] practitioner,” the court held:

“[T]he issue in this case was not whether, based on the standard of care and degree of skill customarily observed by practitioners of chiropractic, Dr. Collinson was guilty of malpractice or had been negligent in the treatment administered. Rather, the issue was whether the chiropractic services furnished were ‘reasonable and necessary’ . . . Any evidence which aided the jury in deciding that question was proper. The plaintiffs’ contention goes only to the witness’ credibility.” (41 Colo App at 432, 588 P2d at 890.)

Accordingly, plaintiff’s motion to preclude consideration of Dr. Berbari’s testimony is denied. The parties are directed to proceed with presenting other necessary proof on the next scheduled trial date, September 30, 2010. All other issues, including the persuasive weight of defendant’s expert proof, are reserved for later determination.

District Court of Nassau County, Second District

45913/08

Friedman, Harfenist, Langer & Kraut, LLP, 3000 Marcus Ave. Suite 2E1 Lake Success, NY 11042, Attorney for Plaintiff

Law Offices of Michael S. Nightingale, 300 Glen Street, LL2 Glen Cove, NY 11542, Attorney for Defendant

Michael A. Ciaffa, J.

The trial of this no-fault action by Elmont Open MRI against New York Central Mutual Fire Ins. Co. presents two issues for determination: (1) plaintiff’s proof of its prima facie case, and (2) defendant’s defense that several MRIs were not medically necessary.

The first issue had to be tried because defendant would not stipulate to plaintiff’s prima facie case. Such stipulations are customary in this Court. Nevertheless, defendant was within its rights to force plaintiff to meet its burden of making out a prima facie case. However, the precise extent of that burden was necessarily shaped and framed by defendant’s proof in support of an earlier summary judgment motion.

In the Court’s decision on that earlier summary judgment motion, it considered and decided two contested points. First, the Court found that defendant had established, as a matter of law, that it had issued timely denials of plaintiff’s claims for no-fault benefits. The Court made this finding based upon an affidavit of defendant’s senior no-fault litigation examiner, attesting to defendant’s claim handling practices following receipt of no-fault claims. The denials submitted with that affidavit indicate both the date of receipt of the claim and the date of the denial’s issuance. The decision found that defendant had demonstrated, through “evidentiary proof in admissible form,” that it issued denials within 30 days of receipt of plaintiff’s claims. Accordingly, the decision concluded that defendant “timely issued its denials,” thereby eliminating the need for further proof on that point.

The Court’s decision went on to determine, however, that defendant failed to sufficiently demonstrate that the services provided by plaintiff were not medically necessary. Accordingly, [*2]the decision denied summary judgment to defendant, setting the stage for this trial.

Against this background, plaintiff presented at trial unrefuted testimony from its

medical biller, establishing a business-record foundation for introduction of plaintiff’s no-fault bills into evidence. See CPLR 4518. The bills show, among other things, the services provided by plaintiff, the date of service, plaintiff’s charges, and the date of the bill. When considered together with defendant’s previous proof as to when plaintiff’s bills were received and when they were denied, plaintiff’s evidence amply made out a prima facie case.

Contrary to defendant’s contention at trial, plaintiff did not need to submit any testimony respecting the mailing of its claims to establish their timeliness or to meet its initial burden of making out a prima facie case. By law, claims for health service expenses must be submitted to the insurer “no . . . later than 45 days after the date services are rendered.” See 11 NYCRR 65-2.4(c). The testimony from plaintiff’s medical biller laid a proper foundation for the admission of business-record proof regarding the dates plaintiff’s services were rendered. The affidavit of defendant’s senior no-fault examiner admitted receipt of the bills. That admission left open only the issue of whether the bills that defendant received were “admissible in evidence” as proof of the “transaction[s], occurance[s] or event[s]” that were documented in the bills. See CPLR 4518; see also Bajaj v. General Assurance, 18 Misc 3d 25, 27-8 (App Term, 2007). When read together with denials which set forth the dates when the claims were received, it is evident that the claims were each received within the required 45 day period. No greater proof is required in such circumstances.

Under applicable precedent, a provider can make out a prima facie case through proof that its claims were timely “mailed and received and that payment . . . was overdue.” See Mary Immaculate Hosp. v. Allstate Ins. Co., 5 AD3d 742, 742-3 (2d Dept. 2004). But nothing in the law actually mandates proof of “mailing” within 45 days. The regulations, instead, simply require that claims must be “submitted” to the insurer in a timely fashion in order to trigger the insurer’s duty to pay, deny, or seek verification of the claim. See 11 NYCRR 65-2.4(c). Consequently, plaintiff did not need to adduce proof of mailing in order to make out a prima facie case.

Moreover, on the issue of the timeliness of plaintiff’s claims, the Court properly took judicial notice of defendant’s summary judgment papers. A court may take judicial notice, sua sponte, of the court’s records and papers in a pending action. See Prince, Richardson on Evidence, §§2-202, 2-209 (11th Ed., Farrell). Those records and papers show, quite clearly, that defendant’s examiner had made affirmative representations respecting the dates defendant had received plaintiff’s claims, and effectively admitted the timeliness of plaintiff’s claims. Statements made in an affidavit may sometimes constitute informed judicial admission; such admissions may be duly considered by a trial court in determining the facts relevant to an action. See Richardson on Evidence, supra, § 8-219. This was a classic case for doing so. [*3]

The Court has carefully reviewed the decision in Bajaj v. General Assurance, supra, in reaching this conclusion. It sees nothing in that decision which precludes consideration of defendant’s prior admissions as establishing part of plaintiff’s prima facie case.

In Bajaj, the Appellate Term merely ruled that an insurer’s admitted receipt of a given claim is not tantamount to a “concession[ ] of the facts asserted in plaintiff’s claim forms . . .” 18 Misc 3d at 28. Under the logic of Bajaj, a defendant’s admitted receipt of a given claim form will not be deemed to “concede the facts set forth in the claim form with respect to the dates of service, the services rendered and the charges therefor.” Id. However, the defendant’s admission of receipt “would serve . . . to acknowledge that this was the claim form that it received.” Id.

Thus viewed, although Bajaj did not directly address whether such an admission might extend to the date that claim was received, this Court sees no logical reason why an insurer should not be bound by its own admissions as to the date of receipt of given claims. Accordingly, I concluded at trial, and reiterate in this decision, that defendant’s prior admissions eliminated the need for further proof as to when plaintiff’s claim forms were mailed. Based upon the testimony from plaintiff’s biller laying a proper foundation for submission of plaintiff’s claim forms as business records, plaintiff’s proof satisfied its burden under Bajaj respecting the facts set forth in the claim forms. Defendant’s admission of when the claims were received, in turn, proves that the claims were submitted to it in a timely fashion. Since defendant will not be allowed to repudiate its own prior admissions, the Court turns to the issue of defendant’s medical necessity defense.

Defendant’s lack of medical necessity defense contests the necessity of four MRIs – – a cervical spine MRI, a lumbar spine MRI, an MRI of claimant’s left elbow, and an MRI of claimant’s left knee. (The necessity of a fifth test, a brain MRI, was not contested at trial.)

Dr. Robert E. Costello, a chiropractor, testified in support of the defense. In his opinion, the two spine MRIs were performed prematurely and without adequate chiropractic justification. The elbow and knee MRIs, in turn, were deemed unnecessary for any chiropractic treatment. He explained that while chiropractors are allowed by law to examine a person’s extremities, they cannot treat most elbow and knee injuries. Accordingly, in Dr. Costello’s view, the established practice in such cases is to refer the patient to an orthopedist, and leave to that specialist any decisions respecting diagnostic tests such as MRIs.

Notably, medical records in evidence show that a neurologist, Dr. James N. Ligouri, examined claimant about a week before the MRIs and performed a neurologic evaluation. Based on that evaluation, his impression was that claimant was suffering from cervical and lumbosacral radiculopothy. In addition to recommending continued chiropractic care, Dr. Ligouri’s plan included MRIs of the cervical and lumbar spine. Both tests, when performed, disclosed disc herniations.

Dr. Ligouri also evaluated claimant’s left elbow. After noting claimant’s continued [*4]complaints of elbow pain and sensory loss in her left arm, Dr. Ligouri’s “impression” noted a need to rule out ulnar neuropathy. The MRI results were normal.

Other documents in evidence confirm that claimant was seen by an orthopedist after the elbow and knee MRIs were performed. The orthopedist reviewed the results of those tests in the course of making further treatment decisions. According to the orthopedist’s evaluation, the knee MRI report included findings “consistent with a tear of the anterior horn of the medical meniscus.” In view of claimant’s continued symptoms, positive clinical findings, and positive MRI findings, the orthopedist concluded that “arthroscopic surgery of [claimant’s] left knee is indicated and recommended.”

In the face of this evidence, the Court concludes that defendant has failed to prove its lack of medical necessity defense by a preponderance of evidence. Applying the test set forth in Nir v. Allstate Ins. Co., 7 Misc 3d 544, 546-7 (Civ Ct Kings Co 2005), the Court finds that defendant’s peer review evidence lacked a sufficiently credible factual and medical basis, since it failed to meaningfully address the proof, cited above, that a neurologist and an orthopedist saw a need for, or relied upon, the results of the subject tests.

Accordingly, judgment is rendered for the plaintiff. Submit Judgment on Notice.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: August 31, 2010

[*1]

District Court of Nassau County, First District, July 15, 2010

APPEARANCES OF COUNSEL

Rivkin Radler LLP for defendant. Friedman, Harfenist, Kraut & Perlstein for plaintiff.

{**29 Misc 3d at 279} OPINION OF THE COURT

Fred J. Hirsh, J.

The defendant moves for summary judgment.

Background

This action raises the issue of whether an insurer can obtain documentary material relating to a potential Mallela defense in a demand for an examination under oath (EUO).

Staffa Pasqualino was injured in a motor vehicle accident on July 15, 2007. Richard Amato, D.C., Staffa’s treating chiropractor, referred Staffa for a lumbar and cervical MRI and 3-D renderings that were performed at Dynamic Medical Imaging, P.C. on August 24, 2007.

Staffa assigned his right to receive no-fault benefits for these tests to Dynamic.

Dynamic submitted its bills for these services to State Farm Mutual Automobile Insurance Company for payment. State Farm acknowledges receipt of the bill for the lumbar MRI and 3-D rendering on September 24, 2007 and receipt of the bill for the cervical MRI and 3-D rendering on September 26, 2007.

State Farm sent a letter to Dynamic and Steven Brownstein, M.D. dated October 8, 2007 demanding Dr. Brownstein appear for an EUO at the office of Rivkin Radler LLP, 926 RexCorp Plaza, Uniondale, New York on October 30, 2007 at 10:00 a.m.

The letter advised Dr. Brownstein that if the date, time or place for the EUO were inconvenient, he should contact State Farm to reschedule the EUO at a time, place and/or date that was reasonably convenient for Dr. Brownstein. The letter further advised Dr. Brownstein State Farm would reimburse Dr. Brownstein for any income lost and travel expenses incurred as a result of his appearance for the EUO.

The mailing log produced by State Farm indicates the letter was mailed to Dynamic and Dr. Brownstein by certified mail, return receipt requested, at three different addresses. The first address, P.O. Box 87, Springfield, New Jersey 07081-0087, is the billing address for Dynamic. The second address, 73-36 Grand Avenue, Maspeth, New [*2]York 11378, is the address of the Dynamic facility at which the MRIs were performed. The papers{**29 Misc 3d at 280} do not establish why the letter was sent to the third address, 8 Linda Lane, Springfield, New Jersey 07081.^[FN1]

The EUO letter requested Dr. Brownstein to produce seven days prior to the EUO the following information:

“(i) documents evidencing ownership of the P.C., at the time of the treatment for which you seek payment, by one or more licenced professionals, including but not limited to a copy of the certificate of incorporation for the P.C., receipts for filing, stock certificates, and the stock ledger for the P.C.

“(ii) documents relating to the income and expenses of the P.C., including but not limited to tax returns and general ledgers of the P.C. for the past twelve months.

“(iii) a list of the individuals who provided and/or supervised the health care services for which you seek payment, identification of the type of professional license each individual holds, and documents (i.e, W-2, 1099, etc.) identifying the relationship between the individual and the P.C. (e.g. whether the individual is an employee or independent contractor and how that individual is compensated).

“(iv) a list of days of the week and hours that any owner of the P.C. provides or supervises services for the P.C. during the period for which payment is sought for services rendered.

“(v) all documents, including all schedules, attachments or addenda, relating to the relationship between the P.C., and/or any entity [or] individual that leases equipment or space to or from the P.C., or provides management, consulting, administrative or billing services to the P.C. and any payments made to any person or entity that rendered such services to the P.C.

“(vi) complete, sign and return the enclosed NF-3 form.”^[FN2]

The letter advises Dynamic and Dr. Brownstein if they have previously provided this information and/or documentation, it need not be provided for this EUO.{**29 Misc 3d at 281}

The letter advises Dynamic and Dr. Brownstein State Farm will not pay the bills until [*3]the requested documentation has been provided and either Dr. Brownstein or an appropriate representative from Dynamic has appeared for the EUO. The letter then stated failure to provide the requested documentation and/or failure to appear for the EUO will result in State Farm disclaiming coverage for treatment provided to the claimant.

Neither Dr. Brownstein nor any other representative of Dynamic appeared for the EUO scheduled for October 30, 2007. The requested documentation was not provided.

State Farm sent a letter dated November 7, 2007 as a second request for an EUO to Dynamic and Dr. Brownstein. This letter referenced the October 30, 2007 EUO and Dr. Brownstein and Dynamic’s failure to attend. The letter advised Dynamic and Dr. Brownstein they were being given one last chance to appear for an EUO. The letter scheduled the EUO for November 19, 2007 at the offices of Rivkin Radler LLP. The letter requested Dynamic and/or Dr. Brownstein to call in advance to confirm attendance. The letter again advised Dynamic and Dr. Brownstein that if the date, time and place was inconvenient to call and reschedule the EUO for a date, time and/or place that was more convenient. The letter advised that State Farm would reimburse the person who appeared at the EUO for lost earnings and travel expenses. It also requested the production of the same documents demanded in the October 8, 2007 letter. Finally, the letter advised Dynamic and Dr. Brownstein appearance at the EUO was a condition of coverage and failure to appear will result in the denial of all claims submitted on behalf of Staffa.

The November 7, 2007 letter was addressed to Dr. Brownstein and Dynamic at the same addresses as the October 8, 2007. The mail log produced by State Farm indicates these letters were mailed on November 8, 2007.

Neither Dr. Brownstein nor a representative of Dynamic appeared for the EUO scheduled for November 19, 2007.

Neither Dynamic nor Dr. Brownstein submitted papers in which they denied receipt of either the October 8, 2007 or November 7, 2007 letters. Nothing has been produced that would indicate the letters have been returned by the United States Postal Service as undeliverable as addressed.

State Farm issued a denial dated December 12, 2007 denying payment for the lumbar and cervical MRIs and the 3-D renderings. The basis for the denial was the failure to appear for an EUO and failure to comply with 11 NYCRR 65-3.16 (a) (12).

{**29 Misc 3d at 282}Dynamic commenced this action on January 24, 2008 seeking to recover the amount due for the MRIs and 3-D renderings. Issue has been joined.

Discussion

A no-fault insurance carrier may request an eligible injured person or that person’s assignee to submit to an examination under oath as may reasonably be required. (11 NYCRR 65-1.1.) The examination under oath shall be conducted at a place and time reasonably convenient for the applicant. (11 NYCRR 65-3.5 [e].) A request for an examination under oath “must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination.” (11 NYCRR 65-3.5 [e].)

Appearance at a properly demanded EUO is a condition precedent to an insurance carrier’s liability to pay no-fault benefits. (Five Boro Psychological Servs., P.C. v Progressive Northeastern Ins. Co., 27 Misc 3d 141[A], 2010 NY Slip Op 50991[U] [App Term, 2d, 11th and 13th Jud Dists 2010].)

No-fault is a statutory/regulatory system. (See Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854 [2003].) No-fault is in derogation of the common law. (East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202 [2d Dept 2009].) The rights of an insurer are limited to those expressly provided for by the statute and regulations. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997], rearg denied 90 NY2d 937 [1997].) The regulations provide for an examination under oath. The term “examination under oath” is not defined by the no-fault regulations. Words used in regulations that are not specifically defined in the regulations are to be given their ordinary meaning. (Matter of Oefelein v Town of Thompson Planning Bd., 9 AD3d 556 [3d Dept 2004]; Matter of Parker v Kelly, 140 AD2d 993 [4th Dept 1988]; McCarter v Beckwith, 247 App Div 289 [2d Dept 1936]; McKinney’s Cons Laws of NY, Book 1, Statutes § 76.) Examination is defined as the questioning of a witness by an attorney. (See Law.Com Law Dictionary.) Examination can also be defined as a formal interrogation. (Webster’s Unabridged Dictionary 673 [2d ed 1998].) Therefore, the term “examination under oath” as used in the no-fault regulations means the insurer can request the injured party or the assignee of the injured party to appear and give oral testimony after having been sworn or under affirmation.

The regulations do not provide an insurer with the right to obtain written documentation other than such documentation{**29 Misc 3d at 283} as may be demanded as verification. In addition to appearing for an examination under oath, the assignee can be compelled to execute a written proof of claim under oath and provide other pertinent information as may assist the insurer in determining the amount due and payable. (11 NYCRR 65-1.1.) The regulations do not give the insurer the right to ask an assignee to produce documents relating to the corporate structure or finances of a medical provider. (11 NYCRR 65-3.5 [a].) Upon receipt of the completed verification form, the insurer can request additional verification. (11 NYCRR 65-3.5 [b].) The regulations only permit the insurer to obtain written information to verify the claim. (11 NYCRR 65-3.5 [c]; see generally V.M.V. Mgt. Co., Inc. v Peerless Ins., 15 AD3d 647 [2d Dept 2005].) Nothing in the no-fault regulations permits an insurer to request an assignee to produce corporate organizational and financial documents a week in advance of an EUO.

An examination under oath permits the insurer to question the injured party or its assignee regarding the claim. While an examination under oath has been treated by the courts as a condition precedent to coverage, the no-fault regulations treat the examination under oath as a form of verification. Thus, where a carrier properly demands an examination under oath, “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].) The insurer has 30 days from the day the EUO is conducted to pay or deny the claim. (Id.)

The purpose for demanding verification is to extend or toll the carriers time to pay or deny the claim so the carrier can obtain information regarding the claim. (Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co., 44 AD3d 903 [2d Dept 2007]; 11 NYCRR 65-3.5 [c]; 11 NYCRR 65-3.8 [a] [1].) The extension of time in which to pay or deny the claim is extremely important in circumstances in which [*4]the insurer is seeking information regarding a defense the insurer would be precluded from raising if the defense is not stated in a timely served denial. (Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]; Lincoln Gen. Ins. Co. v Alev Med. Supply Inc., 25 Misc 3d 1019 [Nassau Dist Ct 2009].)

However, this rationale does not apply to a Mallela defense since a Mallela defense is nonprecludable. (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005].)

While Mallela has been called a fraudulent incorporation defense, the rationale underlying Mallela is that only an appropriately{**29 Misc 3d at 284} licensed professional may be the owner of a professional corporation (Business Corporation Law § 1507), a professional limited liability company (Limited Liability Company Law § 1207) or a professional limited liability partnership (Partnership Law § 121-1500 [q]) and only licensed professionals can obtain payment of no-fault benefits. (11 NYCRR 65-3.16 [a] [12].) The Mallela defense permits an insurer to look behind a facially proper business structure to determine if persons not duly licensed to practice the profession are the actual owners of the medical provider. (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].) If the provider is not owned by a licensed professional or if the provider is controlled by a nonprofessional, then the provider may not obtain payment of no-fault benefits. (State Farm Mut. Auto. Ins. Co. v Mallela, supra.)

If a carrier believes the provider/assignee is subject to a Mallela defense, the proper way to assert it is as an affirmative defense in its answer. (New York First Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 25 Misc 3d 134[A], 2009 NY Slip Op 52217[U] [App Term, 2d, 11th & 13th Jud Dists 2009].)

The document demand contained in State Farm’s EUO letters to Dynamic and Dr. Brownstein are essentially a demand for pre-action discovery regarding a Mallela defense. CPLR 3102 (c) permits pre-action discovery only by court order and only to aid in bringing an action. Some of the documentation requested in the EUO letters State Farm might not be able to obtain even if it had been requested in a duly served notice for discovery and inspection.^[FN3]

The oft-stated purpose of the No-Fault Law is to insure prompt payment for medical services rendered to persons injured in motor vehicle accidents. (Fair Price Med. Supply Corp. v Travelers Indem. Co., supra; Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]; Presbyterian{**29 Misc 3d at 285} Hosp. in City of N.Y. v Maryland Cas. Co., supra.) Permitting an insurer to obtain what would be [*5]tantamount to full discovery regarding a Mallela defense as part of an EUO would defeat that purpose and is beyond the scope of the No-Fault Law and regulations relating to an EUO.

Permitting an insurer to demand what has been demanded by State Farm in this action for an EUO is fraught with the potential for abuse. (See Unitrin Advantage Ins. Co. v Carothers, 17 Misc 3d 1121[A], 2007 NY Slip Op 52100[U] [Sup Ct, NY County 2007]; Gegerson v State Farm Ins. Co., 27 Misc 3d 1207[A], 2010 NY Slip Op 50604[U] [Nassau Dist Ct 2010].) An insurer should not be able to defeat no-fault claims by making an onerous and improper document demand relating to an EUO.

If an insurer has a reasonable basis for believing a medical provider cannot obtain payment of no-fault benefits because the provider is “fraudulently incorporated,” then it should assert the defense in its answer and litigate the issue on the merits in the action brought by the provider for no-fault benefits. The insurer should move to consolidate all of the actions brought by the provider and have the issue of whether the provider is subject to a Mallela defense determined in one action. (See Matter of Andrew Carothers, M.D., P.C. v Insurance Cos. Represented by Bruno, Gerbino & Soriano, LLP, supra.) Alternatively, an insurer can commence a declaratory judgment action seeking a judgment declaring the provider ineligible to receive no-fault payments. (See State Farm Mut. Auto. Ins. Co. v Mallela, supra.)

While State Farm may have reason to believe Dynamic is not eligible to receive no-fault benefits for Mallela reasons, State Farm cannot use a palpably improper EUO demand not subject to court review as a basis for obtaining summary judgment. (See Westchester Med. Ctr. v Progressive Cas. Ins. Co., 51 AD3d 1012 [2d Dept 2008].)

Since the EUO demand was improper, defendant’s motion for summary judgment is denied.^[FN4]

Footnotes

Footnote 1: A check of this address on Google maps indicates Linda Lane is a cul-de-sac in a residential neighborhood.

Footnote 2: It does not appear that an NF-3 form has any applicability to this action. An NF-3 is the New York Motor Vehicle No-Fault Insurance Law Verification of Hospital Treatment form. (11 NYCRR part 65, subpart 65-4, Appendix 13.)

Footnote 3: The EUO demand requests Dynamic produce its corporate tax returns. Disclosure of tax returns is disfavored since income tax returns contain confidential and private information. (Walter Karl, Inc. v Wood, 161 AD2d 704 [2d Dept 1990]; Briton v Knott Hotels Corp., 111 AD2d 62 [2d Dept 1985].) The party seeking to obtain production of income tax returns must make a strong showing of necessity and an inability to obtain the information contained in the income tax return from any other source. (Abbene v Griffin, 208 AD2d 483 [2d Dept 1994].) A party will not be required to produce tax returns if the information may be obtained from any other source. (Samide v Roman Catholic Diocese of Brooklyn, 5 AD3d 463 [2d Dept 2004].)

Footnote 4: The court notes defendant has alleged a Mallela defense in its answer. Nothing in this decision should be interpreted to prevent the defendant from asserting or proving a Mallela defense or obtaining proper discovery from Dynamic in regard to this defense.

District Court of Nassau County, Second District

32836/08

Friedman, Harfenist, Langer & Kraut, LLP, 3000 Marcus Ave. Suite 2E1, Lake Success, NY 11042, Attorney for Plaintiff

Rossillo & Licata, P.C. 355 Post Ave., Suite 204, Westbury, NY 11590, Attorney for Defendant

Michael A. Ciaffa, J.

Motion by defendant for summary judgment dismissing plaintiff’s no-fault claim is DENIED.

The papers submitted by defendant in support of its motion for summary judgment include proof of plaintiff’s admitted receipt of defendant’s denial, grounded upon a defense of lack of medical necessity. Although plaintiff’s counsel questions the sufficiency of defendant’s proof that the denial was mailed timely, cf Elmont Open MRI v. Progressive Cas. Ins. Co., 2009 NY Slip Op 50693 (Dist Ct Nassau Co.), plaintiff is in no position to contest the adequacy of defendant’s proof of timely mailing under the circumstances at bar. At least in cases, like this one, where plaintiff’s interrogatory responses admit receipt of the denial but aver that plaintiff keeps no record of the dates when denials are received, plaintiff should not be allowed to dispute the timeliness of the denial without making an affirmative allegation that the denial was received on or after a particular date. In the absence of such an affirmative allegation, the Court may properly assume that the denial was mailed on or about the date shown on the denial. Federal Courts routinely assume that notices are duly mailed “on the date shown on the notice” unless the recipient presents “sworn testimony or other admissible evidence” which provides a factual basis for challenging the assumption. See, e.g. Sherlock v. Montefiore Med. Center, 84 F3d 522, 526 (2nd Cir, 1996). [*2]

Moreover, since the denial presumably was received in an envelope which included evidence of a date of postmarking or postal metering, the Court can properly draw an adverse inference from plaintiff’s failure to retain and preserve the envelope. It appears well settled that a party’s failure to keep and produce “the postmarked envelope” may result in an “adverse inference” in cases involving an issue of timely mailing. See, e.g. Lewis v. U.S., 144 F3d 1220, 1223 (9th Cir. 1998).

Consequently, the Court need not reach the issue of whether defendant’s proof of timely mailing of its denial strictly satisfied the requirements of St. Vincent’s Hosp. v.

GEICO, 50 AD3d 1123 (2d Dept. 2008), and its progeny. Since plaintiff’s answers to interrogatories admitted receipt of the denial, and since plaintiff has averred that it kept no records indicating the date of receipt, the timeliness of defendant’s mailing is not a legitimate issue in dispute. The Court therefore turns to the sufficiency of defendant’s proof of its defense, on the merits, that the subject MRI was not medically necessary.

In support of defendant’s lack of medical necessity defense, defendant relies upon the affidavit and peer review report of Dr. Kevin Portnoy. The proof is in proper evidentiary form. The doctor’s opinion is based upon his review of medical records obtained as part of defendant s verification process. Dr. Portnoy appears to have the background, experience, and credentials to make a credible presentation on the issue of medical necessity. His report, on its face, sets forth a factual basis and medical rationale for the denial, supported by reference to certain articles and general guidelines respecting the performance of MRIs. Cf. Nir v. Allstate Ins. Co., 7 Misc 3d 544, 546-7 (Civ Ct Kings Co 2005).

Nevertheless, it cannot be emphasized too strongly that summary judgment is a “drastic remedy” which should not be granted if there is “any doubt” respecting the existence of a triable issue. “Issue finding, not issue determination, is the key to the procedure.” Staten Island Hosp. v. Home Ins. Co., 148 AD2d 522 (2d Dept 1989), quoting Sillman v. Twentieth Century-Fox, 3 NY2d 395, 404 (1957); see also Millennium Radiology P.C. v. NY Central Mut. Fire Ins. Co., 2009 NY Slip Op 50877 (Civ Ct Richmond Co.).

Judged by these standards, defendant has not met its heavy burden. Although plaintiff perhaps would have been better served had it secured an affidavit from the doctor who prescribed the subject MRI, the doctor previously submitted to defendant a letter of medical necessity which sets forth his own factual basis and medical justification for the MRI. It states, in pertinent part: “After two months of treatment, patient still has neck pain and stiffness. An MRI of the Cervical Spine was warranted to further evaluate my patient and to rule out disc herniation and pathology.” The factual basis set forth is supported by medical documentation, showing claimant’s condition, day to day, in the weeks immediately preceding the MRI. Moreover, the MRI test results confirmed multiple disc herniations abutting the anterior aspect of the spinal canal.

Dr. Portnoy’s report never specifically addresses the treating doctor’s stated basis for the test. While he gives a number of examples of factors that would justify an MRI, he cites no [*3]specific medical authority or standards which state that an MRI would be contraindicated for a patient still suffering from a cervical trauma approximately two months post-accident. Moreover, he makes no effort “to explain how the [MRI] could be medical unnecessary when the test[] did in fact yield positive findings . . .” Nir, supra.

In short, when viewed in the context of the presumption of medical necessity, the treating doctor’s rationale, the medical records of claimant’s condition, and the heavy burden placed upon defendant under the caselaw governing summary judgment, the Court concludes that Dr. Portnoy’s report and affidavit fail to prove defendant’s entitlement to judgment as a matter of law. Accordingly, defendant’s motion for summary judgment must be denied.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: June 4, 2010

CC:Friedman, Harfenist, Langer & Kraut, LLP

Rossillo & Licata, P.C.

MAC:ju

District Court of Nassau County, Second District

35416/07

McDonnell & Adels, P.C., 401 Franklin Ave. Garden City, NY 11530, Attorney for Plaintiff

Mandel & Santora, Esqs. 29 Broadway Lynbrook, NY 11563, Attorney for Defendant

Michael A. Ciaffa, J.

Plaintiffs move for summary judgment upon claims for no-fault benefits, or alternatively, for an order of preclusion. Defendant cross-moves for dismissal of the claim of plaintiff Naik on grounds of an EUO default.

Addressing plaintiffs’ motion first, the Court finds that plaintiffs’ moving papers fail to establish their entitlement to judgment as a matter of law. Their motion includes mis-dated copies of bills which cannot possibly be deemed admissible “business records” (CPLR 4518) in support of the motion. Indeed, as defendant’s opposition papers document, the copies submitted are each dated October 13, 2009 – – more than two years after the action was commenced. Moreover, the actual bills received by defendant in 2007 differ in certain respects from the copies submitted with plaintiffs’ motion. While it appears that the “bills” submitted by plaintiffs’ counsel were generated through a computer operator’s error, it remains plaintiffs’ burden on a summary judgment motion to adduce proof, in proper evidentiary form, establishing plaintiffs’ claims as a matter of law. Under the instant circumstances, they have not done so.

Defendant’s cross-motion presents a more difficult issue. In other contexts, this Court has not hesitated to grant dismissal of no-fault claims where a provider has been guilty of a provable EUO default. See Dynamic Med. Imaging, P.C. v. State Farm Mut. Auto Ins. Co., 2009 NY Slip Op 29478 (Dist Ct. Nassau Co.). However, before such a default may be found, the insurer must establish its “specific objective justification supporting the use of such examination.” Progressive Northeastern Ins Co. v. Arguelles [*2]Med. P.C., 2009 NY Slip Op 32353 (Sup Ct. NY Co.); see also Westchester Med Center v. GEICO, 2009 NY Slip Op 30914 (Sup Ct. Nassau Co.). In this Court’s

opinion, defendant’s cross-motion includes adequate proof from an investigator that objectively justified an examination of Dr. Naik under oath (see aff. of Gina McLaughlin). That proof included allegations suggesting that Dr. Naik “billed for services he did not render” and had submitted various “questionable” billings (id.). Since any refusal to pay on such grounds would necessarily have to be asserted in the insurer’s denial, or be forever precluded, see Fair Price Med. Supply Co. v. Travelers Under. Co., 10 NY3d 556 (2008), the insurer certainly had good reason, at the verification stage, to investigate these issues further.

Nevertheless, it is unclear, from defendant’s moving papers, whether defendant also possessed a “specific objective justification” for its extremely broad requests for extensive documentation relating to the Naik entity’s ownership, licencing, income, expenses, employment practices, and business relationships. In addition to wanting to investigate the particular claims at issue, defendant’s investigator believed that Dr. Naik’s medical practice was a fraudulently incorporated entity. See State Farm Mut. Auto Ins. Co. v. Mallela, 4 NY3d 313 (2005). Defendant’s EUO requests accordingly asked for “the following information”:

(i)documents evidencing ownership of the P.C., at the time of the treatment for which you seek payment, by one or more licensed professionals, including but not limited to a copy of the certificate of incorporation for the P.C., receipts for filing, stock certificates, and the stock ledger for the P.C.

(ii)documents relating to the income and expenses of the P.C., including but not limited to tax returns and financial statements for the past two years, and bank statements and general ledgers of the P.C. for the past twelve months.

(iii)a list of the individuals who provided and/or supervised the health care service for which you seek payment, identification of the type of professional license each individual holds and any practice specialty of each, and documents (i.e., W-2, 1099, etc) identifying the relationship between the individual and the P.C. (E.g. whether the individual is an employee or independent contractor and how that individual is compensated),

(iv)a list of the days of the week and hours that any owner of the P.C. provides or supervises services for the P.C. during the period for which payment is sought for services rendered;

(v)all documents, including all schedules, attachments or addenda,

related to the relationship between the P.C., and/or any entity or individual that leases equipment or space to or from the P.C., or provides management, consulting, [*3]administrative or billing services to the P.C. and any payments made to any person or entity that rendered such services to the P.C.

Although an investigation into Mallela issues is sometimes warranted at the verification stage of a claim, the Insurance Superintendent’s regulations allow insurers to delay payments through the pendency of the verification process “solely for good cause.” See Andrew Carothers, MD, PC v. Insurance Companies, 13 Misc 3d 970, 2006 NY Slip Op 26372 (Civ Ct Richmond Co.), quoting Mallela, supra. The verification protocols of 11 NYCRR 65-3.5 should ordinarily be “narrowly construed,” lest they be used to promote improper delays by insurers in making required no-fault payments. Cf. Prime Psych. Serv., P.C. v. ELRAC, 2009 NY Slip Op 52579 (Civ Ct. Richmond Co.). Toward this end, it seems inappropriate to allow insurers to go far beyond the intended scope of the verification rules governing particular claims through far-reaching requests for Mallela documentation.

EUOs, in general, are supposed to afford providers an opportunity “to establish proof of claim” in doubtful cases. See §65-3.5(e). While defenses that might be precluded by Fair Price certainly may be explored, Mallela defenses present a different balance. Since a Mallela defense can be asserted in a no-fault case regardless of whether it formed a basis for the insurer’s denial, see Mulitquest, PLLC v. Allstate Ins, Co., 2007 NY Slip Op 27366 (App Term), the insurer has a less important need, at the verification stage, to engage in a far-reaching exploration of the plaintiff’s corporate structure and business practices. Moreover, it generally may do so only in circumstances where it has a founded belief that the provider is guilty of behavior “tantamount to fraud.” See Andrew Carothers, MD, PC., supra, quoting Mallela, supra.

Consequently, in circumstances such as those presented, it would have been proper for Dr. Naik to have objected, in part, to defendant’s request for such extensive document disclosure in connection with defendant’s verification and EUO requests. Cf. Cambridge Med., P.C. v. Nationwide Prop. & Cas. Ins. Co., 2008 NY Slip Op 50629 (Civ Ct Richmond Co.). But Dr. Naik did not do so. That failure to object shifts the balance back in defendant’s favor.

Most importantly, Dr. Naik’s opposition to the cross-motion makes no effort to explain his default. He does not deny receipt of the EUO notices. He does not question whether defendant had an objectively reasonable basis for seeking an EUO. And he does not raise any issue respecting the burdensome nature of the request for extensive documentation.

Instead, Dr. Naik’s sole contention is that the second EUO request was mailed three days late. The argument is unavailing. It hinges on the assumption that the

second EUO request letter “should have been mailed within 10 calendar days of the first alleged no-show.” However, the ten-day period for sending a follow-up notice runs, not from the date of the scheduled first EUO, but from a date “30 calendar days after the original request.” See section 65-3.6(b). In any event, failure to strictly comply with [*4]the time-table for making additional verification requests is not necessarily fatal. See Infinity Health Products, Ltd. v. Eveready Ins. Co., 67 AD3d 862 (2d Dept. 2009). Since

plaintiff Naik twice flouted his obligation to submit to an EUO and to provide verification of his claim, it would be inequitable, to say the least, to allow him to belatedly interpose a technical defense to his default. See Infinity Health Products, Ltd., supra.

In these circumstances, the Court concludes that defendant is entitled to summary judgment dismissing plaintiff Naik’s complaint on grounds of EUO default.

Finally, the Court rejects defendant’s argument that Dr. Gegerson’s claim must fail due to lack of causation. Defendant did not cross—move for such relief, and while plaintiffs’ summary judgment motion allows the Court to grant relief to defendant through a search of the record, the proof in the record, as a whole, at best presents a triable issue as to causation. If plaintiff Gegerson requires additional disclosure respecting defendant’s denial in order to prepare for trial on that issue, his attorneys should serve further discovery requests promptly. However, the Court sees no basis, at this time, for granting an order of preclusion to this plaintiff or granting him other relief under CPLR 3126.

SO ORDERED:

DISTRICT COURT JUDGE

Dated: April 8, 2010

CC:Mandel & Santora, Esqs.

McDonnell & Adels, P.C.

MAC:ju