HUCV 2206-16
James F. Matthews, J.

Upon the following papers numbered 1 to 21 read on this petition for an order vacating the decision in part of a master arbitrator; by Notice of Petition /Order to Show Cause and supporting papers 1-3, ; Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 10,11 ; Replying Affidavits and supporting papers18,21 ; Filed papers ; Other exhibits: 4-9,12-17,19,20 ; (and after hearing counsel in support of and opposed to the motion), it is

ORDERED that the petition to vacate the part of the award and remand rendered by a Master Arbitrator’s decision dated June 27, 2016, which vacated the lower Arbitrator’s award dated March 8, 2016 for $4,329.19 to petitioner, and then remanded the matter to lower arbitration for consideration of respondent’s Mallela defense of fraudulent incorporation, is granted. That part of the award of the Master Arbitrator dated June 27, 2016, which vacated the lower Arbitrator’s award of $4,329.19 to petitioner, and then remanded the matter to arbitration for consideration of respondent’s Mallela defense, is vacated; and it is further

ORDERED that the remaining part of the award rendered by the Master Arbitrator’s decision dated June 27, 2016, which confirmed the decision of the lower Arbitrator dated March 8, 2016, is confirmed.

Petitioner asks the Court to vacate that part of the award of a Master Arbitrator dated June 27, 2016, which vacated the lower Arbitrator’s award of $4,329.19 to petitioner, and then remanded the matter to lower arbitration for consideration of whether respondent’s Mallela defense of fraudulent incorporation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]) was appropriate.

The respondent opposes the relief sought by petitioner, and requests that the Master Arbitrator’s award dated June 27, 2016, be confirmed.

The lower arbitration decision dated March 8, 2016, awarded the sum of $4,329.19 to petitioner, based upon a finding that mailing requests for two Examinations Under Oath [*2](“EUO’s”) set for June 24, 2015 and July 16, 2015, respectively, were ignored and unattended by petitioner, but the mailing requests were nonetheless facially untimely, in that the first EUO scheduling request was mailed four and one-half (4 1/2) years after the claim was submitted, thereby rendering the EUO requests a nullity, as related to the billing at issue, and rendering all other issues moot. The lower arbitration also found respondent failed to persuasively support their fee schedule defense and awarded the disputed sum of $4,329.19 to petitioner.

The Master Arbitrator’s decision dated June 27, 2016 leaves only a single issue for determination by the Court: respondent contends the lower arbitrator’s decision did not render a determination concerning respondent’s Mallela defense of fraudulent incorporation, which issue it asserts was raised before the arbitrator and was not precluded due to time constraints.

The Master Arbitrator found that the decision of the lower arbitrator was imperfectly rendered pursuant to CPLR 7511(b) (1)(iii) and 11 NYCRR 65-4.5(s), based upon the lack of a specific determination addressing respondent’s Mallela defense of fraudulent incorporation. It therefore vacated the award of $4,329.19 to petitioner, and remanded the matter back to arbitration for consideration of the Mallela contentions concerning fraudulent incorporation.

Petitioner contends that both the lower arbitration and the Master Arbitration found the EUO scheduling notices to be untimely, thereby precluding respondent’s fee schedule defense due to failure of a timely denial of the claim.

In addition, petitioner asserts that the lower arbitration decision included the statement that “all other issues are moot,” thereby including sufficient language to satisfy respondent’s Mallela contentions. Petitioner argues that respondent failed to provide its Mallela contentions with any type of factual allegations, which is why the lower arbitration decision was written in the manner provided. Respondent’s mere cite to Mallela contentions without factual support is legally insufficient (see generally Country-Wide Ins. Co. v Bay Needle Care Acupuncture, P.C., 2016 NY Slip Op 37157 [NY Supp 2016] [wherein the Court focused on petitioner’ belief that respondent may have been ineligible for benefits as an unlawfully incorporated professional corporation, but “petitioner nowhere specifies how respondent failed to meet that burden at the arbitration”]).

The Master Arbitrator’s decision implies that the lower arbitrator was obligated to disclose the basis for its decision, which is why the matter was remanded to lower arbitration for further consideration on the Mallela contentions. However, in actuality, an arbitrator is not obligated to reveal the basis for its award (see Hausknecht v Comprehensive Med. Care of New York, P.C., 24 AD3d 778 [2nd Dept 2005]; Matter of Nationwide Mut. Ins. Co. v Steiner, 227 AD2d 563 [2nd Dept 1996]).

The standard of review for an arbitration award is limited to a determination of whether the award was arbitrary, capricious or incorrect as a matter of law. A master arbitrator’s powers in reviewing an initial arbitrator’s decision are limited to the grounds stated in CPLR 7511, and additionally, under insurance regulations, is limited to whether the initial arbitrator ruled on factual and procedural issues in a manner that was arbitrary, capricious, irrational or without a plausible basis (see Matter of Petrofsky v Allstate Ins. Co., 54 NY2d 207, 211 [1981]; In the Matter of Allstate Ins. Co. v Keegan, 201 AD2d 724 [2nd Dept 1994]).

If a challenge is based upon a factual error in the arbitration, “the master arbitrator must uphold the determination if it has a rational basis” (see In the Matter of Richardson v Prudential Prop. & Cas. Ins. Co., 230 Ad2d 861 [2nd Dept 1996]). Moreover, an arbitrator’s award must be upheld “when the arbitrator ‘offer[s] even a barely colorable justification for the outcome [*3]reached'” (see In the Matter of Susan D. Settenbrino. P.C. v Barroga-Hayes, 89 AD3d 1094, 1095 [2nd Dept 2011]). Indeed, for an award to be irrational, there must be “no proof whatsoever to justify the award” (see In the Matter of Gaymon v MTA Bus Co., 117 AD3d 735, 736 [2nd Dept 2014]; In the Matter of Susan D. Settenbrino. P.C. v Barroga-Hayes, supra ). Moreover, “an arbitrator is not bound by principles of substantive law or rules of evidence, and may do justice and apply his or her own sense of law and equity to the facts as he or she finds them to be” (Id. at 1095).

Here, the Court finds that the petition before the Court is timely (see CPLR 7511[a]). Furthermore, the Court finds that the record demonstrates there was a rational basis for the initial arbitrator’s decision and the award dated March 8, 2016 was justified. It was supported by sufficient evidence in the record, and was not arbitrary, capricious, irrational or incorrect as a matter of law.

The Court further finds that the Master Arbitration award dated June 27, 2016, prejudiced petitioner by exceeding its powers (see CPLR 7511[b][1][iii]), and is irrational (see Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530 [2010]). Therefore, the petition is granted, to the extent that the part of the award of the Master Arbitrator dated June 27, 2016, which vacated the lower Arbitrator’s award of $4,329.19 to petitioner, and then remanded the matter to arbitration for consideration of respondent’s Mallela defense, is vacated.

The remaining part of the award rendered by the Master Arbitrator’s decision dated June 27, 2016, which confirmed the decision of the lower Arbitrator dated March 8, 2016, is hereby confirmed (see CPLR 7511[e]).

The foregoing constitutes the decision and order of this Court.

Dated: October 16, 2017
J.D.C.

SMCV 322-16
James F. Matthews, J.

Upon the following papers numbered 1 to 24 read on this motion by defendant for an order of dismissal pursuant to CPLR 3126 for non-compliance with interrogatories and combined discovery demands or an order striking plaintiff’s Notice of Trial and an order compelling plaintiff’s response to discovery demands pursuant to CPLR 3124, and an order compelling an EBT of plaintiff’s owner by a date certain ; by Notice of Motion/Order to Show Cause and supporting papers 1-4, 19 ; Notice of Cross Motion and supporting papers 20-22 ; Answering Affidavits and supporting papers 20-22 ; Replying Affidavits and supporting papers 23,24 ; Filed papers ; Other exhibits: 5-18 ; (and after hearing counsel in support of and opposed to the motion),

it is,

ORDERED that the motion by defendant, seeking an order vacating plaintiff’s Notice of Trial and striking the action from the Trial Calendar, pursuant to 22 NYCRR §208.17^[FN1] and dismissing plaintiff’s complaint pursuant to CPLR 3126 on the ground that plaintiff has failed to comply with defendant’s interrogatories and combined discovery demands, is denied, conditioned upon plaintiff providing specific and meaningful responses (see Kihl v Pfeffer, 94 NY2d 118, 123 [1999]; CPLR 3124) to all of the prior discovery and inspection demands of defendant served on 06/24/16, to the extent plaintiff has not complied, including the Combined Demands pursuant to CPLR 3120, Notice of Examination Before Trial pursuant to CPLR 3101 and 3107, Notice for Discovery and Inspection, Request for Expert Discovery, and Demand for Verified [*2]Written Interrogatories, within 30 days of the date of service of this Order by the Court; and it is further conditioned upon plaintiff providing, in particular, a clear copy of the following documents requested in defendant’s motion: management agreements, lease agreements, tax returns^[FN2] and bank records, as per defendant’s written demands. The Court finds there are special circumstances which warrant disclosure of plaintiff’s corporate income tax returns (see CPLR 3101; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A][App Term, 2nd & 11th Jud Dists, 2008]). Defendant’s request in its motion for “corporate records” and “other tax records” is denied, as being vague, broad and ambiguous, making compliance impossible; and it is further conditioned upon plaintiff, by an officer, director, member, agent or employee having the information (see CPLR 3133[b]), serving on defendant a meaningful written answer under oath, or a meaningful objection under oath stating the reasons for the objection, with reasonable particularity (see CPLR 3133[a]), to the extent plaintiff has not complied, to each interrogatory previously served upon it, with each question answered separately and fully and with each answer preceded by the question to which it responds, within 30 days of the date of service of this Order by the Court (see CPLR 3133[b]). In the view of the Court, plaintiff has failed to timely object to defendant’s interrogatories “with reasonable particularity the reasons for each objection” (see CPLR 3122[a]).

The Clerk of the Court is directed to adjourn the Notice of Trial to a date at least 90 days beyond the date this order is mailed to the parties.

The Court notes that plaintiff provided responsive papers dated 07/05/16 to defendant’s discovery demands of 06/24/16, belatedly on 11/01/16^[FN3] , which responses were rejected by defendant on 11/02/16 as being insufficient and unresponsive in a material way. The discovery demands are grounded in plaintiff’s complaint which seeks recovery of first-party no-fault benefits for medical services rendered to plaintiff’s assignor on 08/20/15 in the total amount of $5,200.00, as the result of an automobile accident of 07/02/15; and it is further

ORDERED that defendant’s alternative motion pursuant to CPLR 3124, seeking to compel plaintiff’s owner to appear for an examination before trial (“EBT”) at a date certain, is granted, to the extent that plaintiff corporation shall appear at an examination before trial (“EBT”) through a person chosen by plaintiff, who is knowledgeable of the facts and circumstances of all aspects of this matter as alleged in the verified complaint (see Sladowski-Casolaro v World Championship Wrestling, Inc., 47 AD3d 803 [2nd Dept 2008]), and is prepared to testify under oath, at a date, time and place certain set by defendant, convenient to plaintiff, within 30 days of the date of receipt of this order, with any adjournments only upon consent of the attorneys for the parties, but in no event beyond 45 days of the date of receipt of [*3]this order; and it is further

ORDERED that in the event of plaintiff’s failure to comply with this Order, plaintiff shall be precluded from offering into evidence at the trial of this action, any documents or testimony that were called for in defendant’s discovery demands, to which meaningful responses have not been timely served, pursuant to CPLR 3126(2) and (3), in addition to any other reasonable remedies requested by defendant which the Court deems appropriate; and it is further

ORDERED that plaintiff’s cross-motion for a protective order pursuant to CPLR 3103, is denied. Plaintiff failed to object by filing a motion for a protective order within 20 days of receipt of defendant’s demands and the untimely request must be denied (see CPLR 3122[a]; Hunt v Odd Job Training, 44 AD3d 714 [2nd Dept 2007]). Where a plaintiff has failed to timely object to the propriety of discovery, “plaintiff is obligated to produce the information sought, except as to matters which are palpably improper or privileged” (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 134[A][App Term, 9th & 10th Jud Dists 2009]; see also Fausto v City of New York, 17 AD3d 520 [2nd Dept 2005]). Where discovery demands concern matters which defendant is precluded from raising, “they are palpably improper notwithstanding the fact that plaintiff did not timely object thereto” (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., supra; A.B. Medical Services v Utica Mutual Ins. Co., 11 Misc 3d 71 [App Term, 2nd Dept 2006]).

However, where, as here, a defendant seeks discovery to support its defense that plaintiff is ineligible to recover no-fault benefits because it is a fraudulently incorporated professional service corporation (see State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313 [2005]), the defense is not precluded (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., supra).

Moreover, contrary to plaintiff’s contentions, the Court finds that defendant set forth detailed and specific reasons supporting the possible fraudulent incorporation of a professional service corporation by plaintiff, which if true, would preclude plaintiff from recovering no-fault benefits under the law, thereby demonstrating defendant’s requests for discovery were both material and necessary to the defense of the within actions (see A.B. Medical Services v Utica Mutual Ins. Co., supra; see also Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., supra). This was provided by the affidavit of David Brooks, Case Manager of the Special Investigative Unit of defendant insurance company (“SIU Investigator”), which was charged with investigating, detecting and combating fraud, including medical care provider fraud, pursuant to Insurance Law §409. His affidavit stems from his investigation, which established a good faith basis for defendant’s allegation that plaintiff may be involved in no-fault based fraudulent activities and provided a sufficient foundation for defendant’s discovery requests concerning the manner of plaintiff’s ownership, operation and control of its professional corporation (see New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., supra).

As such, discovery seeking a copy of the contract with a management company and a copy of the lease, is not palpably improper, as plaintiff has not demonstrated the information is privileged. Therefore, defendant is entitled to production of the documents and related information (Id.).

Furthermore, the Court finds that so much of defendant’s discovery requests which seek information regarding whether plaintiff was fraudulently incorporated, are material and necessary (see Midwood Acupuncture, P.C. v State Farm Mut. Auto Ins. Co., 14 Misc 3d 131[A][App Term, 2nd & 11th Jud Dists 2007]), and must be provided pursuant to defendant’s pertinent [*4]discovery demands.

In addition, plaintiff contends defendant’s verified answer fails to plead affirmative defenses relating to fraudulent incorporation with any type of specificity or particularity, or that facts may exist concerning whether plaintiff is properly incorporated, thereby waiving the defenses and making discovery unnecessary.

The Court finds that a review of defendant’s affirmative defenses 1, 19, 20, 23, 25 and 27, provides sufficient support for the potential merit of defendant’s defense of fraudulent incorporation, making plaintiff ineligible to recover no-fault benefits and making discovery material and necessary (see CPLR 3101[d]; Radiology Today, P.C. v GEICO, 32 Misc 3d 4 [App Term, 2nd Dept 2011]). It is well settled that “fraudulently incorporated medical corporations are not entitled to reimbursement of no-fault benefits and such defense is non-waivable and may be asserted any time (emphasis added)” (see Park Avenue Medical Care, P.C. v GEICO, 35 Misc 3d 1237[A][D Ct, Suffolk Cty 2012]; see also State Farm Mut. Auto Ins. Co. v Mallela, supra at 320; Midwood Acupuncture, P.C. v State Farm Mut. Auto Ins. Co., supra).

Moreover, “there is no requirement that a defense predicated upon the failure to comply with ‘New York State or local licensing requirement[s]’ (Insurance Department Regulations 11 NYCRR §65-3.16[a][12]), be pleaded with particularity pursuant to CPLR 3016[b]” (see Radiology Today, P.C. v GEICO, supra at 7).

The failure to state a Mallela type defense “with particularity in the answer does not preclude the defendant from seeking pre-trial disclosure related thereto” (see Park Avenue Medical Care, P.C. v GEICO, supra at *1). A Mallela defense is not subject to preclusion (see Lexington Acupuncture, P.C. v State Farm Mut. Auto Ins. Co., 12 Misc 3d 90.92[App Term, 2nd & 11th Jud Dists 2006]).

Furthermore, where a plaintiff health care provider fails to abide by relevant licensing laws, the corporation lacks standing to bring actions for recovery of assigned first-party no-fault benefits (see Quality Medical Care, P.C. v New York Cent. Mut. Fire Ins. Co., 26 Misc 3d 139[A][App Term, 2nd, 11th & 13th Jud Dists 2010]). Here, since defendant has asserted affirmative defenses in its answer challenging the standing of plaintiff, defendant is entitled to Mallela discovery (see Lexington Acupuncture, P.C. v General Assur. Co., 35 Misc 3d 42 [App Term, 2nd, 11th & 13th Jud Dists 2012]); and it is further

ORDERED that plaintiff’s cross-motion seeking, in the alternative, to compel defendant to produce its SIU Investigator and any claims representative who was responsible for denying the instant claim and/or referring the matter to SIU for deposition, is denied. Defendant has timely objected to this relief within 20 days of receipt of plaintiff’s demand (see CPLR 3122[a]).

The attorneys for plaintiff filed a Notice of Trial and a Certificate of Readiness for Trial dated 12/22/16, which was received by the Court on 01/02/17. Plaintiff’s attorneys stated to the Court in the Certificate of Readiness for Trial, that “discovery proceedings now known to be necessary completed” and “there are no outstanding requests for discovery,” which statements were certified pursuant to 22 NYCRR §130-1, and further stated that the Notice of Trial was “not frivolous.” The Court is holding plaintiff to its filed statements, and the EBT request is denied, accordingly.

The foregoing constitutes the decision and order of this Court.

Dated: July 24, 2017

Footnotes

Footnote 1: The proper section for seeking an order striking plaintiff’s Notice of Trial in District Court is 22 NYCRR §212.17.

Footnote 2: Discovery of Corporate tax returns are permissible where special circumstances are shown (see CPLR 3101[a]; Great Wall Acupuncture v State Farm Mut. Auto. Ins. Co., 20 Misc 3d 136[A][2nd & 11th Jud Dists 2008]). However, personal Federal and State Income tax returns of owner are not discoverable, “in the absence of a strong showing that the information is indispensable to the claim and cannot be obtained from other sources” (see Altidor v State-Farm ins. Co., 22 AD3d 435 [2nd Dept 2005]).

Footnote 3: Plaintiff’s papers were approximately four and a half months late and were therefore untimely (see CPLR 3122[a]; Fair Price Med. Supply Corp. v ELRAC Inc., 12 Misc 3d 119, 122 [App Term, 2nd & 11th Jud Dists 2006]).

SMCV 0083-16
James F. Matthews, J.

Upon the following papers numbered 1 to 10 read on this motion for an order of summary judgment dismissing the complaint ; by Notice of Motion /Order to Show Cause and supporting papers 1,2,6 ; Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 7,9 ; Replying Affidavits and supporting papers 10 ; Filed papers; Other exhibits: 3-5,8, ;(and after hearing counsel in support of and opposed to the motion),

it is,

ORDERED that the motion by defendant for summary judgment dismissing the complaint, pursuant to CPLR 3212, is denied.

Defendant moves by summary judgment for dismissal of plaintiff’s complaint, which seeks recovery of first-party no-fault benefits in the sum of $6,651.66 for medical services rendered to plaintiff’s assignor on 09/21/15 through 10/26/15 as the result of an automobile accident which occurred on 09/03/15.

The ground for dismissal is defendant’s contention that the claims totaling $6,651.66 are not overdue, as the time to pay or deny has not commenced, due to the plaintiff’s failure to provide the information requested in its verification requests and follow-up verification requests, for each of the collective claims. Defendant claims an “exhaustive” search of its computer and paper file revealed that the sought verification information was never received by defendant.^[FN1]

In opposition to the motion, plaintiff asserts defendant has failed to demonstrate by admissible evidence, that the verification requests were timely and properly mailed to plaintiff. Also, plaintiff contends the affidavits submitted in support of defendant’s motion, have not provided a foundation for admission of its business records, a necessary part of demonstrating plaintiff’s office practice and procedures.

Plaintiff further asserts defendant has not shown “good reasons” for demanding the verifications which tolled the time from which defendant had to pay or deny the claims. Finally, plaintiff contends it responded to the verification requests of defendant by providing all the documents within its control, which it claims were already in defendant’s possession, thereby making defendant’s verification requests defective and precluding defendant from raising non-coverage defenses to plaintiff’s claims.

No-fault regulations mandate that a claim for health services expenses be submitted by written proof of claim to the insurer, no later than 45 days after the date that health services were rendered (see 11 NYCRR §65-2.4[c]). After receipt of the written proof of claim, a no-fault claim is overdue if not paid or denied by the insurer within 30 calendar days (see Insurance Law §5106[a]; 11 NYCRR §65-3.8[a][1],[c]).

The thirty days may be extended where an insurer requests additional verification within 15 days of receipt of the claim (see 11 NYCRR 65-3.5[b]). If the insurer has not received a verification from the plaintiff within 30 days of the initial request, an insurer must send a follow-up verification request by phone call or mail within 10 days to the requested party (see 11 NYCRR §65-3.6[b]). This tolls the insurer’s obligation to pay or deny the claim until it receives the additional information requested (see 11 NYCRR 65-3.8[a][1]; Hospital For Joint Diseases v Traveler’s Property Casualty Ins. Co., 9 NY3d 312 [2007]).

Where a requested verification is not provided an insurer is not required to pay or deny the claim (see 11 NYCRR §65-3.8[3]; NY & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568, 570 [2nd Dept 2004]). However, an insurer may deny the claim after 120 calendar days if plaintiff does not provide all of the requested verification under its control or possession, or written proof providing reasonable justification for its failure to comply (see 11 NYCRR §65-3.5[o], for all claims submitted after 4/1/13). Also, an insurer’s “non-substantive, technical or immaterial defect or omission, as well as an insurer’s failure to comply with a prescribed time frame” shall not “negate an applicant’s obligation to comply with the request or notice” (see 11 NYCRR §65-3.5[p], for all claims submitted after 4/1/13).

Though an insurer is entitled to request and receive information necessary to the processing and verifying of the provider’s claim (see 11 NYCRR §65-3.5[c]), the scope of the requested materials are not unlimited (see generally 11 NYCRR 65-3.6[b]). Insurance regulations require the existence of “good reasons” to demand verification (see 11 NYCRR 65-3.2[c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [2nd Dept 2007).

A proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]); see also Manhattan Medical v State Farm Mut. Ins. Co., 20 Misc 3d 1144[A][Civ. Ct. Richmond Cty. 2008]).

A summary judgment motion must be supported by an affidavit of a person having knowledge of the facts and the affidavit shall recite all the material facts and show there is no [*2]defense to the cause of action or that the cause of action or defense has no merit (see CPLR 3212[b]). A conclusory affidavit or an affidavit by an individual who lacks personal knowledge of the facts does not satisfy the proponent’s prima facie burden (see JMD Holding Corp. v Congress Financial Corp., 4 NY3d 373 [2005]).

Here, the Court determines that defendant has failed to demonstrate a prima facie entitlement to summary judgment for dismissal with proof in admissible form sufficient to establish there are no material issues of fact (see Alvarez v Prospect Hospital, supra; Stephen Fogel Psychological, P.C. v Progressive Ins. Co., 35 AD3d 720, 721 [2nd Dept 2006]; Prime Psychological Services P.C. v Nationwide Prop. & Cas. Ins. Co.,24 Misc 3d 230, 232 [Civ Ct. Richmond Cty. 2009]).

The Court notes that the affidavit of Regina Abbatiello, No-Fault Claims Adjuster, demonstrates she was personally familiar with the standard office policy and operating procedures for the processing of no-fault claims in litigation or arbitration, including payments and denials of benefits. She states her affidavit was given after a detailed review “of all document/ correspondence and computer records maintained by Global in accordance with its standard operating procedures that are recorded/document and maintained under claim no. NF15930301.”

She further states she generated the verification requests, and follow-up additional verification requests with carbon copies, to the plaintiff assignor at the address shown on the NF-3 claim forms, seeking information, including MRI films, and the referring doctor’s report on the need for multiple MRI studies. Defendant’s records show that a verification request was sent out on 11/18/15 for each claim which had been received on 11/09/15.

Upon not receiving a response, a second verification request was sent out on 12/18/15. No response with the requested information was provided.

The Court finds the stated procedure in the instant matter is conclusory and lacking in relevant specifics to set forth the standard office practice or procedure used to ensure that items were properly addressed and mailed (see Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App.Term 2nd Dept 2007]). The proof establishes that verification requests are placed by the adjusters in the outgoing mail bin. However, the proof fails to sufficiently demonstrate what happens to the verification requests after placement in the mail bin. It appears that mixed mail for defendant’s office is placed in the mail bin, not just mail being sent for verification requests. Since the mail is submitted in a sealed envelope, the procedure described fails to show the contents of each envelope which is being processed (see Presbyterian Hosp. v Maryland Casualty Ins. Co., 226 AD2d 613 [2nd Dept 1996]; see also S & M Supply Inc. v GEICO Ins. Co., 2003 NY Slip Op 51192[U][App Term, 2nd & 11th Jud Dists 2003]).Consequently, it does not demonstrate that the verification requests to plaintiff were inside the envelopes taken by the defendant’s mailing clerk to the U.S. Post Office in the afternoon. In addition, there is no affidavit from an employee mail clerk attesting to the actual mailing of the verification requests. The Court also notes the lack of any certificates of mailing signed and stamped by an employee of the U.S. Postal Service to confirm the mailing of the defendant’s requests for verification, which would give rise to a rebuttable presumption of mailing by defendant (see A.B. Med. Servs. PLLC. v USAA Cas. Ins. Co., 6 Misc 3d 126[A][App. Term, 2nd & 11th Jud. Dists. 2004]; Residential Holding Corp. v Scottsdale Ins. Co., 286 Ad2d 679 [2nd Dept 2001]).

Moreover, a copy of defendant’s actual letters of requests for further verification are [*3]attached as an exhibit to the moving papers. However, there is no admissible statement from any person having knowledge of the facts which would sufficiently link the standard office practices and procedures for the generating and mailing of these verifications. Nor is there any sworn statement from a person with knowledge, for admitting these letters as business records (see CPLR 4518[a]). The only connecting statement is made by the affirmations of defendant’s counsel, which have no evidentiary value, as an attorney’s affirmation not based upon personal knowledge is without probative value or evidentiary significance (see Warrington v Ryder Truck Rental, Inc., 35 AD3d 455, 456 [2nd Dept 2006]; see also Wesh v Laidlaw, 59 AD3d 534 [2nd Dept 2009]). Also, defendant’s attorneys have not provided a proper foundation for an opinion (see People v Goldstein, 6 NY3d 119 [2005]). In addition, an attorney’s opinion which is not based upon personal knowledge “is without evidentiary value and thus unavailing” (see Zuckerman v City of New York, supra at 563).

The Court further finds that defendant has failed to establish an objective, reasonable basis for the contents of the verification demands alleged to have been mailed to plaintiff (see 11 NYCRR 65-3.2[c]; Doshi Diagnostic Imaging Servs. v State Farm Ins. Co., 16 Misc 3d 42 [2nd Dept 2007).

The evidence shows that verification requests were responded to by plaintiff’s attorneys, by 7 cover letters each dated 12/18/15, for the respective claim amounts of: $878.67, $878.67, $878.67, $878.67, $912.00, $959.61 and $879.73. In each letter, plaintiff’s attorneys stated:

“Enclosed please find a further response to your verification request”(emphasis added) concerning the above-referenced claim. These documents constitute all available documentation provided by the above-referenced provider. Accordingly, kindly remit payment. Failure to do so may result in litigation being commenced”

Attached to each letter was a copy of a pertinent medical report showing the results of an: MRI left wrist without contrast, MRI left hip without contrast, MRI left foot without contrast, MRI left shoulder without contrast, MRI lumbar spine without contrast, MRI thoracic spine without contrast, and MRI cervical spine without contrast.

Plaintiff has demonstrated it satisfied its duty to timely communicate with defendant, providing a statement of reasonable justification why it could not provide what further verification sought, as it had provided all of the available documents (see 11 NYCRR §65-3.5[o]; see also Dilon Med. Supply Corp. v Travelers Ins. Co.,7 Misc 3d 927, 931-932 [NY City Civ. Ct. 2005]), and it would be unable to fully satisfy the insurer’s request (see Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 Ad2d 553 [2nd Dept 1999]). A defendant also has a duty to act, by payment or denial of the claim or request for further verification, upon receipt of plaintiff’s response to defendant’s verification request, so long as plaintiff’s documentation is arguably responsive to defendant’s verification request (see All Health Med. Care v Government Employees Ins. Co., 2 Misc 3d 907 [NY City Civ Ct. 2004]).

Here, defendant remained silent in the face of plaintiff’s verification responses, and failed to demonstrate “good reason” to support its continued verification requests, as required by 11 NYCRR 65-3.2[c]).

Moreover, there is no sworn statement from anyone with knowledge, which provides a reasonable basis for the verification demands. The affidavit of Regina Abbatiello (No-Fault Examiner) states that upon receipt of the claim with billing, “the following represent the bills that [*4]were delayed pending the receipt of additional verification.” She further states: “the additional verification requests and follow-up additional verification requests were sent to Plaintiff Assignee with appropriate carbon copies in accordance with the regulations.”

She then relates what was sought: “The information that was sought included: copies of mri films; referring doctors report on the need for multiple mri studies.” However, the foregoing statements are conclusory, and no reason is stated for the verification requests. Nor is any recognition or credit acknowledged in her affidavit for the 7 letters of 12/18/15 with MRI medical reports supplied by plaintiff in response to the verification demands.

For the foregoing reasons, the Court determines defendant has failed to establish a prima facie showing of entitlement to summary judgment dismissing the complaint as a matter of law.

Accordingly, the motion for summary judgment by defendant dismissing plaintiff’s complaint pursuant to CPLR 3212, is denied.

The foregoing constitutes the decision and order of this Court.

Dated: July 6, 2017

Footnotes

Footnote 1: The affidavit of the No-Fault Claims Adjuster fails to state who conducted the “exhaustive” search of its computer and paper file to determine that the verification information sought was never received by the defendant.

HUCV 1227-16
James F. Matthews, J.

Upon the following papers numbered 1 to 15 read on this motion by defendant for an order granting summary judgment of dismissal ; by Notice of Motion /Order to Show Cause and supporting papers 1,2,9 ; Notice of Cross Motion and supporting papers ; Answering Affidavits and supporting papers 10,12 ; Replying Affidavits and supporting papers 13,15; Filed papers; Other exhibits: 3-8,11,14 ; (and after hearing counsel in support of and opposed to the motion), it is,

ORDERED that the motion by defendant for summary judgment dismissing plaintiff’s complaint pursuant to CPLR 3212, is denied.

Defendant moves by summary judgment for dismissal of plaintiff’s complaint which seeks to recover first-party no-fault benefits for medical services rendered to plaintiff’s assignor on 02/24/15 in the total amount of $878.67 as the result of an automobile accident of 12/05/14.

The grounds for dismissal are the failure of plaintiff to fully comply with defendant’s 3rd request for additional verification dated 05/07/15, by providing “a copy of the decision-making report from the referring doctor demonstrating the medical necessity and/or need for the MRI(s).” In addition, defendant asserts plaintiff failed to provide “documentation identifying the relationship between each individual involved in the rendering of services and the professional corporation, including the manner in which the person is compensated [ie: W-2, 1099).” Also, plaintiff failed to provide verification of documents “that establishes the licensure, certification or credentials for each individual involved in the rendering of the services for which payment is sought”; the name and model number of the MRI machine used on the above date[s] of service”; [*2]and “the completed NF-3 Form with original signature[non-stamped]”).^[FN1] Defendant contends that the above stated verification requests remain outstanding to date, though defendant acknowledges receipt on 04/20/15 of a “partial response” containing certain items previously requested.

In support of the motion, defendant asserts the first verification request was sent on 03/18/15 within 15 business days of receipt of plaintiff’s claim on 03/04/15. Upon non-compliance, a second verification request was sent on 04/20/15. After 120 days elapsed without receipt of the requested verification, defendant denied the claim by mailing a NF-10 Denial of Claim form dated 09/17/15 with an Explanation of Review (“EOR”) stating inter alia “that your claim has been denied as you have failed to submit the requested verification of additional relevant information under your control of possession, or written proof providing reasonable justification for the failure to comply, within 120 calendar days of the initial request.”

In opposition to the motion, plaintiff asserts defendant failed to demonstrate by admissible evidence, that the verification requests were timely and properly mailed to plaintiff. Plaintiff contends the affidavits submitted in support of defendant’s motion, have not provided a foundation for admission of its business records, a necessary part of demonstrating defendant’s office practice and procedures. Plaintiff further asserts defendant has not shown “good reasons” for demanding the verifications which would toll the time from which defendant had to pay or deny the claims.

No-fault regulations mandate that a written proof of claim for health service expenses are overdue if not paid or denied by the insurer within 30 calendar days (see Insurance Law §5106[a]; 11 NYCRR §65-3.8[a][1]). An insurer may toll the 30 day period by requesting additional verification of the claim within 15 business days from its receipt of the claim (see 11 NYCRR 65-3.5[b]). If the insurer has not received verification from the plaintiff within 30 days of the initial request, the insurer may send a follow-up verification request by phone or mail within 10 calendar days (see 11 NYCRR 65-3.6[b]). An insurer may not issue a denial of claim form (NF-10) prior to its receipt of verification of all relevant information requested by the insurer (see Insurance Law §5106[a]; 11 NYCRR §65-3.5[c]). However, an insurer may deny the claim after 120 calendar days if plaintiff does not provide all of the requested verification under its control or possession, or written proof providing reasonable justification for its failure to comply (see 11 NYCRR §65-3.5[o], for all claims submitted after 4/1/13). Also, an insurer’s “non-substantive, technical or immaterial defect or omission, as well as an insurer’s failure to comply with a prescribed time frame” shall not “negate an applicant’s obligation to comply with the request or notice” (see 11 NYCRR §65-3.5[p], for all claims submitted after 4/1/13).

Here, the Court determines that defendant has failed to make a prima facie showing of entitlement to judgment as a matter of law with proof in admissible form sufficient to establish the lack of any material issues of fact (see Alvarez v Prospect Hospital, 68 NY2d 320, 324 [1986]; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]); see also Manhattan Medical v State Farm Mut. Ins. Co., 20 Misc 3d 1144[A][Civ. Ct. Richmond Cty. 2008]).

Defendant’s sole Affidavit of its No-Fault Litigation Supervisor, is insufficient to establish the timeliness and propriety of the mailing of its verification request, follow-up [*3]verification requests, and the NF-10 denial of claim. The affidavit’s statements are conclusory and based upon hearsay, and fail to sufficiently demonstrate defendant’s standard office practice and procedures used to ensure the proper mailing of its verification requests and denials (see St. Vincent’s Hosp. of Richmond v Government Employees Ins. Co., 50 AD3d 1123 [2nd Dept 2008]; Ortho-Med Surgical Supply, Inc. v MVAIC, 28 Misc 3d 139[A][App Term 2nd, 11th & 13th Jud Dists 2010]; Delta Diagnostic Radiology, P.C. v Chubb Group of Insurance, 17 Misc 3d 16, 18 [App Term 2nd & 11th Jud Dists 2007]). The Court notes the lack of an affidavit from a claims representative and/or a mailroom employee, who would be familiar with defendant’s office practice and procedures for mailing verification requests and denials, especially as it applied in the instant matter.

As a result, defendant has failed to create a presumption of timely and proper mailing (see S & M Supply Inc. v GEICO, 2003 NY Slip Op. 51192[U][App Term, 2nd & 11th Jud. Dists. 2003]; Harbor Medical & Diagnostics P.C. v Allstate Ins. Co., 11 Misc 3d 1063[A][Civ Ct, New York City 2006]).

Moreover, defendant claims “a copy of the decision-making report from the referring doctor demonstrating the medical necessity and/or need for the MRI(s)” has not been provided to date. However, defendant’s own evidence demonstrates that plaintiff provided a Physician’s Letter of Medical Necessity dated 02/16/15 to defendant with its letter dated 04/15/15 (see defendant’s Exhibit “C” and plaintiff’s Exhibit “1”). As a result, defendant has failed to demonstrate a prima facie case.

In addition, defendant has failed to demonstrate that it informed “the applicant AND its attorney of the reason why the claim is delayed by identifying in writing the missing verification and the party from whom it was requested.” Defendant’s prima facie proof fails to show defendant informed the applicant and his attorney, in compliance with 11 NYCRR §65-3.6(b).

Accordingly, the motion by defendant for summary judgment dismissing plaintiff’s action against it pursuant to CPLR 3212, is denied.

It is not necessary for the Court to reach any remaining contentions.

The foregoing constitutes the decision and order of this Court.

Dated: June 14, 2017

Hon. James F. Matthews
J.D.C.

Footnotes

Footnote 1: The language for the additional verification requests is taken from defendant’s Explanation of Benefits, attached as exhibit B).

HUCV 371-16
James F. Matthews, J.

Upon the following papers numbered 1 to 27 read on this motion by plaintiff for an order to quash subpoena and defendant’s motion to strike Notice of Trial by Notice of Motion / Order to Show Cause and supporting papers 1-10, 11-16; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 17-22 ; Replying Affidavits and supporting papers 23-27 ; Filed papers; Other; it is,

ORDERED that the motion by plaintiff brought by order to show cause, seeking to quash the subpoena issued to its non-party bank, J.P. Morgan Chase Bank, by defendant’s counsel, and the notice of motion brought by defendant, seeking to strike the plaintiff’s Notice of Trial and Certificate of Readiness, and to remove the matter from the trial calendar, are consolidated; and it is further

ORDERED that the motion by plaintiff seeking to quash the subpoena issued by defendant’s counsel to plaintiff’s non-party bank, J.P. Morgan Chase Bank, is denied; and it is further

ORDERED that the stay issued by the Court, is hereby vacated, and the subpoena duces tecum issued by defendant to J.P. Morgan Chase Bank is valid and enforceable by the issuing party; and it is further

ORDERED that the motion by defendant to strike the Notice of Trial and Certificate of Readiness dated December 22, 2016, filed by plaintiff pursuant to 22 NYCRR §212.17(a), is granted, and the action shall be stricken from the trial calendar pursuant to 22 NYCRR §212.17(c).^[FN1] The Clerk of the Court is directed to strike the action from the trial calendar.

This is an action by plaintiff health care provider seeking recovery of payment for [*2]medical services rendered on 10/04/12- 02/21/13 in the total sum of $7,286.21, as the result of a car accident of plaintiff’s assignor, under New York’s No-Fault Law.

Defendant caused a subpoena duces tecum to be served, by fax, on plaintiff’s non-party bank, J.P. Morgan Chase Bank, of which receipt and acceptance was acknowledged in a letter attached as an exhibit by defendant. It required production of bank records, including copies of banking statements, canceled checks, deposit slips, signature cards, corporate resolutions, account authorizations, bank account registers, ledgers and electronic transfers for plaintiff for the years 2012 through the present, for all accounts titled in the name of Harden Street Medical, PC, including Account number 978760122.

Plaintiff moves by order to show cause for a protective order pursuant to CPLR 2304, seeking to quash the subpoena duces tecum. Plaintiff objects to the service by fax on the non-party bank, J.P. Morgan Chase Bank, stating it was improperly served. Plaintiff complains the subpoena is being improperly used as a “fishing expedition” for discovery or for the existence of evidence. Plaintiff also protests the subpoena fails to set forth factual predicates for the relief sought, and the material requested is overbroad and an unsupportable demand for discovery.In opposition to plaintiff’s motion to quash, defendant submits an affidavit from an employee and Manager of the Medical Fraud Division, who was previously a Fraud Investigator for defendant, as well as an employee in claims and the Special Investigative Units. He submits the factual findings of his investigative report, which include certain patterns that are notoriously indicative of fraudulent situations involving no-fault claims, including inter-relationships with different named medical entities and management companies, and named individuals, based at the same address. Defendant asserts its demands are properly within a subpoena duces tecum, and are material and necessary to search for Mallella fraud claims (see State Farm v Mallella, 4 NY3d 313 [2005]).^[FN2]

Defendant also moves by motion to strike the Notice of Trial and Certificate of Readiness dated 12/22/16, which was filed by plaintiff pursuant to 22 NYCRR §212.17.^[FN3] Defendant asserts that plaintiff has failed to comply with the discovery demands of defendant, and yet filed a Certificate of Readiness and Notice of Trial with the Court.

The Court notes that plaintiff has not denied defendant’s assertion that plaintiff has not complied with the discovery demands of defendant, including outstanding interrogatories, notice for discovery and inspection pursuant to CPLR 3101, and notice to take deposition upon oral examination. Indeed, counsel for defendant submits his affirmation in support of the motion to strike, stating that “there is pending discovery in the within matter, this matter is not ready to be [*3]placed on the trial calendar, and the Court has been incorrectly informed by plaintiff’s counsel that discovery has been completed…”

Here, the Court finds that defendant has complied with the notice requirement of CPLR 3101[a][4] in stating on the face of the subpoena “the circumstances or reasons such disclosure is sought or required” (see Matter of Kapon v Koch, 23 NY3d 32 [2014]; Jamaica Wellness Med. P.C. v USAA Cas. Ins. Co., 49 Misc 3d 926 [Civ Ct of City of New York, Kings Cty 2015]).

The Court further determines that defendant has demonstrated its discovery demands are both material and necessary (see CPLR 3101[a]; State Farm Mut. Auto. Ins. Co. v Mallela, supra), and “is in keeping with this state’s policy of liberal discovery” (see Matter of Kapon v Koch, supra at 39). There is no requirement that the subpoenaing party demonstrate that it cannot obtain the requested disclosure materials from any other source (Id. at 38). The use of the words “material and necessary” must be interpreted to require disclosure “of any facts bearing on the controversy which will assist preparation for trial by sharpening the issues and reducing delay and prolixity” (Id. at 38, citing Allen v Crowell-Collier Publ. Co., 21 NY2d 403 [1968]).

Disclosure from a non-party “requires no more than a showing that the requested information is relevant to the prosecution or defense of the action” (see Bianchi v Galster Management Corp., 131 AD3d 558 [2nd Dept 2015]). Therefore, plaintiff’s objections to the disclosure demands in the subpoena lack sufficient merit (see also One Beacon Ins. Group, LLC. v Midland Med. Care, P.C., 54 AD3d 738 [2nd Dept 2008]; Q-B Jewish Med.Rehabilitation, P.C. v Allstate Ins. Co., 33 Misc 3d 64 [App. Term, 2nd Dept 2011]).

The Court also determines that plaintiff’s motion to quash the subpoena has failed in its burden to demonstrate that the discovery sought is “utterly irrelevant” to the action or that the “futility of the process to uncover anything legitimate is inevitable or obvious” (Id. at 34; CPLR 3103[a]). The burden is on the moving party to establish the need for a protective order (see Vivitorian Corp. v First Cent. Ins. Co., 203 AD2d 452, 453 [2nd Dept 1994]; CPLR 3103[a]). Also, a motion for a protective order is addressed to the sound discretion of the Court (see Jamaica Wellness Med. P.C. v USAA Cas. Ins. Co., supra).

In the view of the Court, defendant is entitled to financial records to ascertain whether the health care provider is actually ineligible to recover assigned no-fault benefits (see State Farm Mut. Auto. Ins. Co. v Mallela, supra; All Boro Psychological Services, P.C. v Auto One Ins. Co., 35 Misc 3d 136[A][App Term, 2nd, 11th & 13th Jud Dists, 2012]), including corporate tax returns and tax records (see 62-41 Woodhaven Med. P.C. v Adirondack Ins. Exch., 30 Misc 3d 131[A][App Term, 2nd, 11th & 13th Jud Dists 2011], and bank records to show whether disproportionate shares of a professional corporation’s revenue is evidence of ownership and/or control by an unlicensed individual (see One Beacon Ins. Group, LLC. v Midland Med. Care, P.C., supra).

Moreover, plaintiff’s argument that defendant improperly served the subpoena duces tecum, by fax, on plaintiff’s non-party bank, is unavailing. The bank accepted service of the subpoena without objection.

Therefore, plaintiff’s motion to quash the subpoena duces tecum served by defendant on plaintiff’s non-party bank, J.P. Morgan Chase Bank, is denied. The stay by the Court is lifted and the subpoena duces tecum remains valid and enforceable by defendant.

The motion by defendant to strike the Notice of Trial and Certificate of Readiness dated [*4]December 22, 2016, filed by plaintiff, is granted, to the extent that the action shall be stricken from the calendar pursuant to 22 NYCRR §212.17(c). The Clerk of the Court is directed to strike the action from the calendar.

The foregoing constitutes the decision and order of this Court. Submit judgment.

Dated: May 11, 2017

Hon. James F. Matthews J.D.C.

Footnotes

Footnote 1:Defendant’s counsel seeks to strike plaintiff’s Notice of Trial and Certificate of Readiness pursuant to 22 NYCRR §208.17, however, the correct cite is 22 NYCRR §212.17.

Footnote 2:Mallella permits insurance carriers with no-fault claims to pursue fraud investigations for good cause and withhold reimbursement from fraudulently licensed medical corporations.

Footnote 3:The Court notes that defendant does not move to compel discovery pursuant to CPLR 3124. Therefore, the Court makes no ruling in this regard, other than stated within this decision.The Court also notes the motion to strike the Notice of Trial and Certificate of Readiness was timely brought within 20 days pursuant to 22 NYCRR §212.17[c], and this was not raised by any party as an issue. Both motions, by plaintiff and by defendant, were marked submit on the same date, and have been consolidated by the Court for the within rendered decision.

[*1]

District Court of Suffolk County, Third District, June 8, 2016

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville (Michael A. Callinan of counsel), for defendant.

Law Office of Gabriel & Shapiro, LLC, Wantagh (Steven Miranda of counsel), for plaintiff.

Ordered that this motion by defendant for an order pursuant to CPLR 3212 granting summary judgment in its favor against plaintiff dismissing the complaint in this action for assigned first-party no-fault benefits is denied, and plaintiff’s cross motion for summary judgment in its favor against defendant is granted.

Defendant denied the no-fault claims at issue based on the failure of plaintiff Avalon Radiology, P.C. to appear for two examinations under oath (EUOs) on April 10, 2014 and May 1, 2014. Defendant’s first EUO request, dated March 26, 2014, stated that the examination would consist of questions pertaining to Avalon’s corporate entity, the medical condition of the eligible injured party, and Avalon’s corporate relationship with any and all other professional and nonprofessional corporations (exhibit I to moving papers). Avalon responded to the first EUO request with a letter dated April 3, 2014, requesting the good faith, objective reason for defendant’s request for an EUO pertaining to Avalon’s incorporation and licensure, as well as the basis for suspecting it had engaged in fraudulent behavior (exhibit K). In response to Avalon’s letter of April 3, 2014, defendant sent a second letter dated April 14, 2014, stating that it was not required to provide the specific objective justification for its EUO request and rescheduling the EUO for May 1, 2014 (exhibit L), as well as a third letter dated April 18, 2014, also setting forth the May 1, 2014 EUO date (exhibit H). The claims were denied following Avalon’s failure to appear for the May 1, 2014 EUO (exhibits R, S, T).

Appearance at an EUO is required as a condition precedent to no-fault coverage (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2d Dept 2006]). A duty of reasonableness and cooperation is, however, imposed on both parties in the verification process (see Diagnostic Radiographic Imaging, P.C. v GEICO, 42 Misc 3d 1205[A], 2013 NY Slip Op 52247[U] [Civ Ct, Kings County 2013]; 11 NYCRR 65-3.5 [e]).{**52 Misc 3d at 838}

In pertinent part, the applicable no-fault regulation, 11 NYCRR 65-3.5 (e), provides as follows:

“When an insurer requires an examination under oath of an applicant to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination. Insurer standards shall be available for review by department examiners.”

An insurer is not required as a precondition to a demand for an EUO to provide the justification for the request. Where the recipient of a duly made demand for an EUO fails to request the justification for the demand, the right to receipt of such justification is waived as to that recipient. Thus, the failure to respond to a duly made demand for an EUO relieves the insurer of an obligation to demonstrate the reasonableness of the requests. (Westchester County Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 262 AD2d 553 [1999]; Morris Med., P.C. v Amex Assur. Co., 37 Misc 3d 140[A], 2012 NY Slip Op 52260[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists]; Crescent Radiology, PLLC v American Tr. Ins. Co., 31 Misc 3d 134[A], 2011 NY Slip Op 50622[U] [App Term, 2d Dept, 9th & 10th Jud Dists]; see also IDS Prop. Cas. Ins. Co. v Stracar Med. Servs., P.C., 116 AD3d 1005 [2d Dept 2014]; Interboro Ins. Co. v Clennon, 113 AD3d 596 [2d Dept 2014]; NY Rehab Pain Mgt. & Med. Servs., PC v State Farm Auto Ins. Co., 51 Misc 3d 1226[A], 2016 NY Slip Op 50821[U] [Sup Ct, Nassau County 2016] [provider did not timely (prior to date scheduled for EUO) request insurer to provide the reason for EUO demands].)

Thus, Avalon’s request for the objective reason in response to the first EUO request triggered an obligation on the part of the defendant insurer to respond by providing the specific objective justification for the EUO request. The insurer’s response in this case to the effect that it was not obligated to do so is plainly wrong. The insurer clearly had an obligation to comply with no-fault regulation section 65-3.5 (e) and supply the requesting party, in this case the provider, with the “specific objective justification supporting the use of such examination.” The regulations do not allow the insurer to use an EUO as a fishing expedition. There must be a specific objective reason for the request. (See American Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441 [1st Dept 2015]; American Tr. Ins. Co. v Curry, 45 Misc 3d 171 [Sup Ct, NY County 2013].) If the court were to conclude otherwise, the cited language of the applicable regulation would be rendered meaningless.{**52 Misc 3d at 839}

Because the defendant insurer failed to provide the requisite “specific objective justification supporting the use of such examination” in response to the plaintiff’s timely demand for same, the initial and subsequent EUO requests were noncompliant with the regulations. Clearly, the plaintiff’s response to the defendant’s initial request did not constitute an absolute refusal to appear for an EUO. Had a sufficient response been made by the defendant, plaintiff would have been obligated to appear at a subsequently scheduled EUO, the first request having [*3]been vitiated by plaintiff’s timely response in the form of a request for the justification for the EUO. (See Metro Psychological Servs., P.C. v Mercury Cas. Co., 49 Misc 3d 143[A], 2015 NY Slip Op 51644[U] [App Term, 1st Dept 2015]; Palafox PT, P.C. v State Farm Mut. Auto. Ins. Co., 49 Misc 3d 144[A], 2015 NY Slip Op 51653[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015].) Defendant therefore has not demonstrated that plaintiff twice failed to appear for properly scheduled EUOs (see Palafox PT, P.C. v State Farm Mut. Auto. Ins. Co.).

In accordance with the foregoing, defendant’s motion for summary judgment is denied, and plaintiff’s cross motion for summary judgment in its favor against defendant is granted.

CV-9502-14/HU
C. Stephen Hackeling, J.

Petitioner moves, “pursuant to CPLR §7511 (b)(1)”, to vacate the award of Master Arbitrator Godson (petitioner’s Exhibit A), which upheld the arbitration award of arbitrator Thomas (petitioner’s Exhibit B).

Specifically, petitioner argues that the arbitrator “exceeded its power or so imperfectly executed it that a final and definite award on the subject matter submitted was not made”. Petitioner also requests a rehearing, [pursuant to CPLR §7511(d)] in the event the award is vacated, while respondent requests the award be confirmed. Upon denial of an application to vacate or modify an [*2]award, the Court is required automatically to confirm the award, eliminating the need for the party opposing such application to cross-move for confirmation. See, e.g., Blumenkopf v. Proskauer Rose, LLP, 2012, 95 AD3d 647 (N.Y.A.D. 1st Dept.); CPLR § 7511.

Subjection of this no-fault action to the arbitral process was semi-consensual, not compulsory. Under this process, the arbitrator’s award “is reviewed by the Master Arbitrator, under internal procedures promulgated or approved by the Superintendent of Insurance and such review is not restricted to the grounds of CPLR § 7511. The (subsequent) decision of the Master Arbitrator was then reviewed. Under Article 75 of the CPLR, the limited review grounds of CPLR §7511 do apply. “The rationale of the no-fault award . . . while a matter of primary concern to a Master Arbitrator, is of no moment to the Court and cannot be reviewed by it.” Seigel, NY Prac. § 601.

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CPLR § 7511 (b)(1) sets forth the exclusive grounds for vacating an arbitration award. Grounds to vacate under CPLR § 7511 (b)(1) are few and are narrowly applied. (See CPLR § 7511, Commentary C 7511:2). The specific list of grounds includes “corruption, fraud or misconduct . . . partiality of an arbitrator appointed as neutral, an arbitrator’s excess of power or imperfect execution such that a final an definite award. . . was not made (and) . . . failure to follow procedure [CPLR § 7511 (b)(1)]. Outside of the narrowly circumscribed exceptions . . . the Court lacks authority to review arbitration decisions, even where an arbitrator has made an error of law or has misapplied substantive law. Matter of Kowaleski v. New York State Dept. of Correctional Services, 16 NY3d 85 (NY 2010).

Errors of law and misapplication of substantive law generally do not suffice to permit the Court to disturb the arbitrator’s decision , Matter of Falzone v. New York Central Mutual Fire Ins. Co., 15 NY3d, 530 (NY 2010). Unless the parties’ agreement provides otherwise, an arbitrator need not apply the rules of evidence and is not bound by principles of substantive law . . . he may do justice as he sees it, applying his own sense of law and equity . . . to the facts as he finds them to be. Matter of Falzone v. New York Central Mutual Fire Ins. Co., supra. Even if an arbitrator “has made an error of law, Court’s generally may not disturb the arbitrator’s decision . . . Court’s are obligated to give deference to the decision of the arbitrator. . .” Matter of Falzone, supra. Accordingly, judicial review of arbitration awards is extremely limited. “An arbitrator’s award should not be vacated for errors of law and fact committed by the arbitrator and the Court’s should not assume the role of overseers to mold the award to conform to their sense of justice” (Matter of MBNA Am. Bank v. Karathanos, 65 AD3d 688, 883 NYS 2d 917, 918 (N.Y.A.D. 2nd Dept., 2009). “A Court may not usurp the arbitrator’s role by imposing its concept of a just and equitable result”. Matter of Local 345 of Retail Store Empls. Union v. Heinrich Motors, Inc.,

81 AD2d 1021 (N.Y.A.D., 4th Dept. 1981).

Manifest disregard of the law is not a basis [under CPLR § 7511 (b)] to vacate an arbitration award. Banc. of America Securities v. Knight, 4 Misc 3d 756 (Sup. Ct. NY County, 2004). “While irrationality’ is not explicitly set forth in CPLR § 7511(b) as a ground for vacating an award, the Court of Appeals recognizes it as a kind of adjunct of the excess of power provision”. Siegel, NY Prac. §602. An award that is contrary to settled law may be vacated, however same “will be upheld if there is any reasonable hypothesis to support it, such as where the issue is unsettled is subject to conflicting Court decisions”. RDK MEd., P.C. v. General Assur. Co., 8 Misc 3d 1025 (NY City Civ. Ct., 2005). A non mandatory arbitration award will be upheld unless it violates a strong public policy, is totally irrational, or exceeds a specifically enumerated limitation of the arbitrator’s powers . . . the arbitrator’s determination on issues of law, such as application of the statute of limitations as well as on issues of fact is conclusive, in absence of proof of fraud, corruption or other misconduct”. State Farm Auto Ins. Co. V. Harco Nat. Ins. Co., 29 Misc 3d 1229 (NY City Civ. Ct. 2010).

Upon review of the papers submitted including the arbitration transcript (provided by respondent), the Court finds no basis for disturbing the award. There was sufficient evidence in the record to support the award and a rational hypothesis to support the award, which found that the respondent established its defense [that provider, New Century Acupuncture, P.C. was not entitled to obtain payment for services by reason of violation of statutes regarding ownership and control of medical provider’s offices]. Petitioner has not established, as it contends, the grounds alleged in its Notice of Petition that “the arbitrator exceeded his power or so imperfectly executed it (such that) . . . a final and definite award . . . was not made”, nor has it shown entitlement for vacatur of the award for any of the specific grounds contained in CPLR § 7511.

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The Court specifically rejects petitioner’s argument that the arbitrator improperly applied the “preponderance” standard of proof to the respondent’s defense of improper licensing/control. Petitioner argues that the higher “clear and convincing” standard of proof should have been applied. “The essence of this defense (is that ) petitioner is ineligible to recover no-fault benefits due to petitioner’s failure to comply with New York State’s licensing requirements) . . . based on (petitioner’s) failure as a professional corporation to be owned and controlled only by licensed professionals . . .” Carothers v. Progressive Ins. Co., 42 Misc 3d 30 (App. Term, 2d, 11th & 13th Jud. Dists., 2013). The fact finder focuses on factors which determine whether the provider’s company is actually owned, co-owned or controlled by unlicensed individuals. 11 NYCRR 65 3.16(a)(12) provides that a health care provider is not eligible for reimbursement under section 1507 of the BCL if it fails to meet any applicable licensing requirement, whether at the time of its incorporation or thereafter. Although this defense is called “fraudulent incorporation”, it “truly poses [*3]an issue of the provider’s “ineligibility” to receive reimbursement, rather than fraud”. Tahir v. Progressive Cas. Ins. Co., 12 Misc 3d 657, 663, (NY City Civ. Ct. 2006). “While the word fraud is commonly used todescribe a Mallela defense, Mallela has nothing to do with common law fraud . . . In reality Mallela is akin to piercing the corporate veil”. Concourse Chiropractic, PLLC v. Sate Farm Ins. Co., 35 Misc 3d 1213 (Dist. Ct., Nassau, 2012).

In V.S. Medical Services, P.C., 11 Misc 3d 334 (NY City Civ. Ct. 2006), Judge Bluth rejected the application of the clear and convincing evidence standard to the respondent’s defense of lack of coverage/staged accident, stating that the respondent “need only come forward with evidence that rebuts (the) presumption of coverage . . . that is once the petitioner has made out its prima facie case, the burden of production ( also called the burden of going forward) on the issue of coverage falls upon the respondent and the respondent must demonstrate that it has a founded basis for believing that the alleged collision was intentionally caused. The burden of persuasion, however, remains on the petitioner who must prove its case by a fair preponderance of credible evidence . . . How much evidence must respondent produce to satisfy its burden of production? There is no magic formula, but it clearly must be enough to rebut the presumption that the injuries were caused by a covered accident, that is, a true accident . . . After all the evidence has been presented, the Court must decide whether the evidence of coverage preponderates in favor of the petitioner, the party who bears the burden of persuasion. V.S. Medical Services, P.C., supra. In Universal Open MRI of the Bronx, P.C. v. State Farm Mut. Auto Ins., 12 Misc 3d 1151 (A), (NY City Civ. Ct., 2006), Judge Velasquez also applied the preponderance of the evidence standard of proof to respondent’s evidence of a staged accident, and stated that although “our Appellate Courts commonly invoke the term “fraud” when discussing the defense of “staged accident” (which is actually a defense of lack of coverage), they are not necessarily discussing fraud.

The petitioner also argues that M.A. Godson “made his own factual determination regarding respondent’s EUO no show defense ” and “that M.A. Godson decided the EUO issue de novo”, as this issue was “never decided in the first instance” by arbitrator Thomas. Arbitrator Thomas’ report made factual findings that “respondent . . . sent the applicant two requests to appear for an EUO. . . and that respondent failed to appear thereat”. The arbitrator also discussed the timeliness of respondent’s EUO requests. The arbitration report failed to explicitly state that her award was based on respondent’s failure to appear at the EUO’s. Rather, her determination explicitly stated that respondent sufficiently established petitioner’s ineligibility to receive reimbursement by reason of petitioner’s fraudulent incorporation. Said report denied plaintiff’s claim in its entirety. The arbitrator, found that the respondent proved its complete defense justifying her award which denied petitioner’s claim entirely on said ground alone. It may have been clearer had the arbitrator explicitly stated that failure to attend the EUO’s was the second ground on which her report was based, however, it was unnecessary. The Court is of the opinion that this conclusion on the part of the arbitrator is implicit in her report and that the Master Arbitrator properly reviewed thethis issue but did not determine it factually, de novo.

3-

The Master Arbitrator’s award states one of the two issues it was reviewing was whether the no-fault arbitrator’s findings justified a conclusion that respondent properly denied applicant’s claims on the basis of failure to attend two EUO’s. The Master Arbitrator clearly found that the failure to attend the EUO’s was an appropriate reason for the no-fault arbitrator to have sustained the respondent’s denials. The Master Arbitrator also affirmed the arbitrator’s report in its entirety; finding that the arbitrator did not act in a arbitrary, capricious or irrational manner or contrary to law in denying the claim on the grounds of petitioners’ fraudulent incorporation.

In any event, even had the arbitrator held that respondent appeared at the EUO’s, and had it stated this in its report, and had the Master Arbitrator upheld such a finding, the ultimate result is unchanged, as the respondent prevailed entirely its fraudulent incorporation defense.

Petitioner’s final argument, regarding collateral estoppel was withdrawn by petitioner, at a conference with both counsel and the jurist present. Petitioner’s motion, based on this and other grounds, is denied.

Accordingly, the petition is denied. (CPLR §7511 (e)). The award is confirmed. The respondent may enter judgment pursuant to CPLR § 7514. Submit judgment.

________________________________

J.D.C.

Dated: June 18, 2015

4

[*1]

District Court of Suffolk County, Third District, September 30, 2013

APPEARANCES OF COUNSEL

Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Garden City (Edward A. Cespedes of counsel), for plaintiff. Abrams, Cohen & Associates, New York City (David P. Turchi of counsel), for defendant.

{**41 Misc 3d at 984} OPINION OF THE COURT

C. Stephen Hackeling, J.

The above-captioned medical service provider plaintiff brings this action pursuant to the provisions of section 5106 of the Insurance Law to recover $1,876.76 of “no-fault” claim benefits after the defendant timely denied same upon the grounds that the claim was not “properly rated” and that the fees were in excess of the workers’ compensation fee [*2]schedule.

The parties stipulated to a framed issue trial and ask the court to direct judgment resolving the issue of whether paragraph 11 of the Official New York Workers’ Compensation Medical Fee Schedule, Physical Medicine (2010) limits claims reimbursement to 8.0 units (codes) per day for each provider individually or for all provider claims cumulatively. It is the defendant insurance company’s position that the provisions of 11 NYCRR 65-3.15 require the court to interpret paragraph 11 as an “exhaustion” regulation, similar to the $50,000 claim limitation contained therein, which acts as a bar to all subsequent claimants. The plaintiff’s contention is that the 8-unit rule is applied per claim and is not a bar to subsequent claimants.

The undisputed facts are that the plaintiff medical provider timely submitted claims for assorted code procedures constituting 10 units. It is the defendant’s undisputed contention that prior to the receipt of the plaintiff’s claim (and or verification responses) that the defendant already had reimbursed other providers for 8.0 units of services and it was therefore entitled to deny the plaintiff’s claim.

11 NYCRR 65-3.15 provides as follows:

“Computation of basic economic loss

“When claims aggregate to more than $50,000, payments for basic economic loss shall be made to the applicant and/or an assignee in the order in which each service was rendered or each expense was incurred, provided claims therefor were made to the insurer prior to the exhaustion of the $50,000. If the insurer pays the $50,000 before receiving claims for services rendered prior in time to those which were paid, the insurer will not be liable to pay such late claims. If the insurer receives claims of a number of providers of services, at the same time,{**41 Misc 3d at 985} the payments shall be made in the order of rendition of services.”

Paragraph 11 of the Official New York Workers’ Compensation Medical Fee Schedule, Physical Medicine (2010) provides: “Multiple Physical Medicine Procedures and Modalities: When multiple physical medicine procedures and/or modalities are performed on the same day, reimbursement is limited to 8.0 units or the amount billed, whichever is less. The following codes represent the physical medicine procedures and modalities subject to this rule.”

The parties advised the court that the proffered issue is a matter of first impression and that no reported precedent exists which interprets paragraph 11 of the Official New York Workers’ Compensation Medical Fee Schedule, Physical Medicine (2010). The court’s independent research corroborates this fact.

It is the court’s determination that the claim benefit exhaustion concept described [*3]in regulation 11 NYCRR 65-3.15 is inapplicable to the excessive fee limitations imposed by paragraph 11 of the Official New York Workers’ Compensation Medical Fee Schedule. They are distinct and separate regulatory mechanisms which make no reference to each other. The section 65-3.15 $50,000 policy limit is a “non-waivable” defense which need not be raised in the defendant’s denial of claim. (See New York & Presbyt. Hosp. v Allstate Ins. Co., 12 AD3d 579 [2d Dept 2004]; Westchester Med. Ctr. v Allstate Ins. Co., 17 Misc 3d 1134[A], 2007 NY Slip Op 52257[U] [Sup Ct, Nassau County 2007].) The paragraph 11 excessive fee schedule defense is waivable and must be timely asserted in its claim denial or it is precluded from being thereafter interposed. (See Triboro Chiropractic & Acupuncture P.L.L.C. v New York Cent. Mut. Fire Ins. Co., 7 Misc 3d 138[A], 2005 NY Slip Op 50856[U] [App Term, 2d Dept, 2d & 11th Jud Dists 2005], citing Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997].)

The purpose of the workers’ compensation medical fee schedule is to prevent “excessive billing” by each individual provider and not to create an “exhaustion” of benefits competition between claimants as is clearly the intent of section 65-3.15. The fee schedule is a guideline on how to properly fill out and submit a claim. Such a finding is consistent with the Court of Appeals’ direction to interpret “no-fault” regulations in such a manner as to not frustrate the legislative intent of requiring prompt payment of benefits. (See Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 [2007], citing Matter of Medical Socy. {**41 Misc 3d at 986}of State of N.Y. v Serio, 100 NY2d 854 [2003].) Paragraph 11 does not indicate that it regulates benefits for “all” claims on any given day.

The regulating authority could have easily included the phrase “for all claimants,” if that was its intent. The interpretation of regulations must be consistent with its authorizing statute. (See Matter of Luxenberg v Stichman, 208 Misc 706 [Sup Ct, Bronx County 1955], citing Lightbody v Russell, 293 NY 492 [1944]; see also generally Boreali v Axelrod, 71 NY2d 1 [1987].)

Accordingly, the court enters judgment for the plaintiff allowing reimbursement for 8 of its claims’ 10 billing units, in the sum of $1,876.76 plus appropriate statutory interest, attorneys fees and costs.

District Court of Suffolk County, Third District

HUC 10836-11

C. Stephen Hackeling, J.

Upon the following papers numbered 1 to 21 read on this motion by defendant to dismiss action by Notice of Motion / Order to Show Cause and supporting papers 1,2,14 ; Notice of Cross Motion and supporting papers 10,11,14 ; Answering Affidavits and supporting papers 15,17 ; Replying Affidavits and supporting

papers 18,21 ; Filed papers; Other exhibits: 3-13; 16; 19-20 ; and after hearing counsel in support of and opposed to the motion)

it is,

ORDERED that the motion by defendant for dismissal of plaintiff’s complaint pursuant to CPLR 3211(a)(1) and (7) is granted. The Clerk of the Court is hereby directed to enter judgment accordingly.

This is an action by plaintiff for payment of health services allegedly rendered to plaintiff’s assignor from an automobile accident on January 8, 2007 in the sum of $492.84, in addition to interest of 2% compounded per month pursuant to 11 NYCRR §65.15(g) and attorney fees of 20% of the overdue claim with a maximum of $850.00 and a minimum of $80.00 pursuant to 11 NYCRR §65.4.6(e), under New York’s No-Fault Law.

Defendant, in a pre-answer motion, now moves for dismissal of the action, contending that plaintiff violated a policy condition for verification of the claim, as plaintiff never [*2]appeared at a Examination Under Oath (“EUO”) on March 26, 2007 and the adjourned date of April 16, 2007, dates requested by defendant, and plaintiff failed to provide additional verification of the claim, as requested by defendant.

Defendant asserts it received a proof of claim from plaintiff within the statutory 45 days required from the date that medical services were rendered. Thereafter, defendant asserts it requested verification of the claim. Since a response from plaintiff was not received within the 30 day statutory period, defendant sent a follow-up second statutory request for verification. To date, plaintiff has not provided the requested verification.

In support of its motion to dismiss, defendant contends it was justified in seeking EUOs and further verification of plaintiff’s claims, based upon an investigation it commenced of plaintiff for improper organization, management and billing operations. Defendant submits, inter alia, a copy of the pleadings, the affidavits of Sibrena Johnson, an employee in the Special Investigative Unit, Christopher Howard, an investigator in the Special Investigative Unit, Denise Rafalski, a Claim Support Services Supervisor, and an affidavit from Michael Bellamy, the Administrative Services Mailroom Services Assistant for defendant, and an attorney’s affirmation from Joshua E. Mackey, Esq.

In opposition to defendant’s motion, plaintiff contends that

defendant was required to forward statutory timely verification requests. Plaintiff contends the defendant’s submitted proof is insufficient to establish a timely request.Furthermore, defendant contends the request to attend the EUO’s contained a document demand requiring plaintiff’s production, seven days prior to the scheduled EUO’s. Defendant contends the document demand included, inter alia, a demand for tax returns and general ledgers, and proof of ownership of the professional corporation, all of which were improper demands outside the scope of a verification request to substantiate a $492.84 claim. Plaintiff further asserts the request indicated the claim would not be paid if the requested documents were not provided. Therefore, plaintiff claims there was no point in going to the EUO’s, as defendant had no intention of paying the claim without receipt of the documents which were improperly requested.

Defendant replies it properly denied the claim as plaintiff never complied with the outstanding verification requests.

No-fault regulations mandate that a claim for health service expenses must be submitted by written proof of claim to the insurer, no later than 45 days after the date that health services were rendered (see 11 NYCRR §65-2.4[c]). An insurer can then issue payment or deny the claim (see 11 NYCRR §65.15). After receipt of the written proof of claim, a no-fault claim is overdue if not paid or denied by the insurer within 30 calendar days (see Insurance Law §5106[a]; 11 NYCRR §65-3.8[a][1]). An [*3]insurer may toll the 30 day period by requesting additional verification of the claim within 15 days from its receipt of the claim (see 11 NYCRR 65.15 [d][1][e]; NY & Presbyt. Hosp. v Allstate Ins. Co., 30 AD3d 492, 493 [2nd Dept 2006]). If the insurer has not received a verification from the plaintiff within 30 days of the initial request, the insurer may send a follow-up verification request within 10 calendar days (see 11 NYCRR 65.15[e][2]).

An appearance at a properly demanded EUO is a condition precedent to an insurance carrier’s liability to pay a no-fault claim (see 11 NYCRR §65-1.1; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720, 722 [2nd Dept 2006]; Richmond Radiology, P.C. v American Transit Ins. Co., 33 Misc 3d 135[A][App. Term 2nd, 11th and 13th Jud. Dists. 2011]; Five Boro Psychological Services, P.C. v Progressive Northeastern Ins. Co., 27 Misc 3d 141[A][App. Term 2nd, 11th and 13th Jud. Dists. 2010; Dynamic Med. Imaging, P.C. v State Farm Mutual Automobile Ins. Co., 29 Misc 3d 278 [D. Ct. Nassau Co. 2010]).

A verification demand by an insurer will extend the 30 day

period until such time as the requested verification is received (see 11 NYCRR §65.15[g][1][I]; Hosp. For Joint Diseases v Elrac, Inc., 11 AD3d 432 [2nd Dept 2004]; Westchester County. Med. Ctr. v New York Cent. Mut. Fire Ins., 262 AD2d 553 [2nd Dept 1999]). Where a requested verification is not provided an insurer is not required to pay or deny the claim (see 11 NYCRR §65-3.8; NY & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2nd Dept 2004]).

Here, the Court determines that defendant’s papers in support of dismissal demonstrate that the EUO notices and verification requests were sent twice to plaintiff’s address pursuant to its standard office practice and procedure and were sufficient to establish timely notification of defendant’s EUO and verification requests (see St. Vincent’s Hosp. of Richmond v GEICO, 50 AD3d 1123, 1124 [2nd Dept 2008]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., 27 Mis3d 140[A][App. Term, 2nd, 11th & 13th Jud Dists 2010]; Chi Acupuncture, P.C. v Kemper Auto & Home Ins. Co., 14 Misc 3d 141[A][App. Term, 9th & 10th Jud. Dists. 2007]). It is undisputed that plaintiff failed to respond in any manner to defendant’s EUO and verification requests. The affirmation of defendant’s EUO counsel demonstrates that EUOs were noticed and scheduled to be conducted at the office of defendant’s counsel on March 26, 2007 and the adjourned date of April 16, 2007, none of which were attended by a representative of plaintiff (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., supra; Five Boro Psychological Services, P.C. v Progressive Northeastern Ins. Co., supra). In addition, defendant demonstrated the timely mailing of the NF-10 denial of claims forms in accordance with defendant’s standard office practice and procedure (see St. Vincent’s Hosp. of Richmond v GEICO, supra at 1124). Plaintiff’s inaction to [*4]defendant’s timely notifications is fatal to its causes of action for alleged services rendered (see Crescent Radiology, PLLC., as Assignee of Spiros Arbiros v American Transit Ins Co., 31 Misc 3d 134[A][App Term, 9th & 10th Jud Dists 2011]; Urban Radiology, P.C. v Tri-State Consumer Ins. Co., supra).

Plaintiffs Must Make Written Objection To ImproperVerification Request To Avoid Denial Toll.

Nonetheless, defendant’s request for the production of documents and information seven days prior to the EUO is troubling to the Court. The request, as plaintiff contends, is clearly outside the scope of permissible information. Lower Courts have found this type of EUO request for documents and information to be “palpably improper” (see Concourse Chiropractic, PLLC., v State Farm Mutual Ins. Co., 35 Misc 3d 1213[A][D. Ct. of Nassau Co. 2012]; Dynamic Med. Imaging, P.C. v State Farm Mutual Automobile Ins. Co., supra at 285). “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” (see 11 NYCRR 65-3.5[a]; Dynamic Med. Imaging, P.C. v State Farm Mutual Automobile Ins. Co., supra at 283. “The regulations only permit the insurer to obtain written information to verify the claim” (Id. at 283; see also 11 NYCRR 65-3.5[b]). “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” (Id. at 283). Disclosure of tax returns “is disfavored since income tax returns contain confidential and private information” (Id. at 283; see also Walter Carl, Inc. v Wood, 161 AD2d 704, 705 [2nd Dept 1990]). A party seeking the production of tax returns must make a strong showing of necessity and an inability to obtain tax returns from any other source (see Abbene v Griffin, 208 AD2d 483 [2nd Dept 1994]).

However it is the plaintiff’s reaction to the “palpably improper” document demand of defendant’s EUO request that vitiates its causes of action. Here, the plaintiff did nothing and did not contact the defendant’s counsel to protest the document request.There is no provision in the no-fault regulations which permit a claimant or an insurance company to ignore communications from each other “without risking its chance to prevail in the matter” (see Canarsie Chiropractic, P.C. v State Farm Mutual Auto. Ins. Co., supra at *2; Media Neurology, P.C. v Countrywide Ins. Co., 21 Misc 3d 1101[A][NY City Civ. Ct. 2008]; All Health Medical Care, P.C. v Gov. Employees Ins. Co., 2 Misc 3d 907 [NY City Civ. Ct. 2004]); see Westchester Cty. Med. Center v NY Central Mutual Fire Ins. Co., 262 AD2d 553, 555 [2nd Dept 1999]. [*5]

It is well established that the No-Fault statute is designed

to ensure prompt resolution of claims by accident victims. “Any questions concerning a communication should be addressed by further communication, not inaction” (see Canarsie Chiropractic, P.C. v State Farm Mutual Auto. Ins. Co., citing Dilon Medical Supply Corp. v Travelers Ins. Co., 7 Misc 3d 927 [NY City Civ. Ct. 2005]). By failing to respond in some manner to defendant’s verification request, “plaintiff undermined the purpose of the No-Fault statute, which is to ensure the prompt resolution of claims” (see Canarsie Chiropractic, P.C. v State Farm Mutual Auto. Ins. Co., supra at *2).It is incumbent upon the plaintiff to mail a “Malella Discovery Objection” letter in response to such an improper verification request so as to prevent a “denial toll” and run the thirty (30) days to pay time period. Island Chirop. Testing, P.C. v. nationwide Ins. Co., 2012 NY Slip Op 51001 (u). As an objection was not interposed, the defendant’s 30 day period to pay continuing to be tolled, requiring dismissal of this complaint as premature.

Plaintiffs Must Appear Or Raise Written

Objection to EUO Demand

The plaintiff’s assignee also did not show up at either date for the EUO’s. Again, there was no protest of the fact that the EUO’s were scheduled at the inconvenient location of Poughkeepsie, New York, a few hours upstate from plaintiff’s office in Nassau County. Nor did the plaintiff request reimbursement for time and travel expenses “thereby preserving its defenses concerning the EUO notices” (see Canarsie Chiropractic, P.C. v State Farm Mutual Auto. Ins. Co., 27 Misc 3d 1228[A][NY City Civ. Ct. 2010]).

The Court further determines, that by not appearing at the properly noticed EUO, plaintiff did not fulfill a condition precedent which would have required defendant to pay its no-fault claim (see Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., supra at 722).Even if the plaintiff timely mailed a “Malella Discovery Objection”, it is still incumbent for the assignor to appear at the EUO as a precondition to commencing a lawsuit to recover upon the claim.

Accordingly, the motion by defendant to dismiss plaintiff’s complaint pursuant to CPLR 3211(a)(1) and (7) is granted. Plaintiff’s complaint is hereby dismissed.

Dated: June 15, 2012Hon. C. Stephen Hackeling

J.D.C.

District Court of Suffolk County, Third District

HUC 2715-11

C. Stephen Hackeling, J.

The defendant’s application for an order dismissing the above captioned action as premature (upon the grounds that plaintiff did not respond to defendant’s verification and follow-up verification requests), is denied. The plaintiff’s cross-motion for summary judgment is granted. The defendant’s affidavits have not adequately demonstrated that defendant timely sent verification requests and follow-up verification requests to the plaintiff. The Court notes that the inadmissable affidavit of Eduardo Morales Carr (improperly notarized) who is positioned in Syracuse, states that he “generated and issued” such requests on certain dates. However, further affidavits indicate that such requests are electronically sent to the centralized administrative team in Harrisburg, Pennsylvania. An insufficient explanation is offered how the letters generated and properly addressed, what procedures are in place to safeguard that all generated requests are actually mailed and to the proper addresses. Further, the affidavit of James R. Snyder, Jr. attempts to describe what occurs in the mailroom, and fails to address postage issues. In sum, the affidavit of Eduardo Morales Carr does not establish by personal knowledge, his mailing of timely requests on dates certain, nor do the affidavits of the defendant, taken as a whole, contain [*2]a sufficiently detailed description of the standard office mailing procedures which give rise to the presumption of mailing. The submitted proof fails to meet even the relaxed standard of proof of mailing established by the Second Department Appellate Division. See, St. Vincents Hospital of Richmond v. Geico, 50 AD3d 1123 (N.Y.AD2d Dept. 2008).

Mallela Discovery As Part Of A Verification Of Claim

Even if defendant’s affidavits could be corrected or evidence introduced at trial to demonstrate that its verification letters were timely mailed; the defendant’s verification requests, seeking inter alia, copies of “sale of shares or transfer of ownership (and) lease agreements” are impermissible and improper requests, and cannot support the finding of a denial “toll” which would permit an award of summary judgment to defendant. Inasmuch as the defense of “fraudulent incorporation” is not subject to the preclusion rule, the defendant may raise this defense in its answer, even if not asserted in the claim denial. The defendant may request relevant written documents pertaining to same as part of post joinder written discovery, or may commence a declaratory judgment action seeking to declare the medical provider ineligible to recover benefits. See, Lexington Acupuncture, P.C. v. General Assurance Co., 2012 WL661685 (NY 2nd Dept. App.Term 11th & 13th Dists. 2012), citing to Midwood Acupuncture P.C. v. State Farm Ins. Co., 14 Misc 3d 131(A) (2d Dept. App. Term 11th & 13th Dists. 2007). Requesting this type of information by way of claim verification is abusive of the no-fault verification process. See, Concourse Chiropractic, PLLC v. State Farm Mut. Ins. Co., 2012 NY Slip Op 50676 (U) 35 Misc 3d 1213 (A) (Nassau Co.Dist. Ct, 2012);involving document discovery as part of an “EUO” demand. Tarnoff Chiropractic, PC v. Geico Ins. Co., 35 Misc 3d 1213(A) (Nassau Co. Dist. Ct. 2012); Dynamic Med. Imaging, PC v. State Farm Mut. Auto Ins. Co., 29 Misc 3d 278 (Nassau Co. Dist. Ct. 2010). It is also contrary to the stated policy of the no-fault legislation which is “to insure prompt payment of medical claims for medical treatment provided to people injured in automobile accidents, regardless of fault”. Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 10 NY3d 566 (NY 2008).

The affidavit of Eduardo Morales Carr, the claims specialist who decided to seek the additional verification in question, provides no good faith basis for seeking corporate status documents. Additionally, the affidavit of Linda Manning does not establish that the defendant had “good cause” to seek fraudulent incorporation documentation at the time the verification requests were generated. Permitting an insurer to obtain written documents such as tax returns, incorporation agreements or leases regarding a potential fraudulent incorporation “Malella” defense as part of the verification process defeats the stated policy and purpose of the no-fault law and carries with it the potential for abuse. See, State Farm Mutual Ins. Co. v. Malella, 4 NY3d 320 (NY 2003) which establishes the parameters of challenging a no-fault claim premised [*3]upon violations of NY Bus. Corp. Law Secs. 1507 and 1508 and NY Educ. Law Sec 6507 (4)(c) and NYCRR 65-3.16 (a)(12). The defendant should not be able to defeat no-fault claims by making onerous and improper non claim related document demands by way of verification.

The Court concurs with its sister Nassau County District Court determinations that “verification” demands as defined by 11NYCRR Sec. 65-3.5(c) are limited to “verifying the claim”. Concourse Chiropractic v. State Farm Ins. Co. cite supra., Judge Hirsch in the Concourse and Dynamic Med. Imaging decisions determined that couching Malella defense discovery in the form of an examination under oath is insufficient to invoke the “verification toll” which would require dismissal of the insurer complaint as premature. Extending this reasoning, Mallela discovery is also inappropriate, even in the absence of an EUO demand, or even if it only involves document production.

Plaintiff’s cross-motion for summary judgment is granted for the amount demanded in the complaint. It is undisputed that defendant received plaintiff’s claims (see affirmation of Frank Marotta, Esq.; exhibits affixed to defendant’s motion papers, affidavit of Eduardo Morales Carr) and has not issued a denial. The verification requests herein did not toll defendant’s 30 day time to deny or pay the claims, as the plaintiff timely responded to the defendant’s request objecting to the Malella discovery request and advising that it was not in possession of said documentation. Such a response meets the requirements under the Insurance Regulations. See 11 N.Y.C.R.R. Sec. 65.15, so as to run the 30 day claim pay/deny time period.

Submit judgment on twenty (20) days notice.

_______________________

J.D.C.

Dated: _________________