Civil Court of the City of New York, Kings County

161737/07

Ingrid Joseph, J.

Recitation, as required by CPLR §2219 (a), of the papers

considered in the review of this Motion

PapersNumbered

Notice of Motion Affidavits Annexed ………….1

Opposition/Answering Affidavits .. ..2

Replying Affidavits .

In this action to recover assigned first-party no-fault benefits, plaintiff filed a motion for summary judgment on or about September 16, 2009, which was returnable on October 6, 2009. The parties signed a written adjournment stipulation on the return date since the defendant failed to submit opposition. In the stipulation, the litigants agreed that the defendant would serve responsive papers upon plaintiff on or before January 29, 2010 and that any cross-motion served beyond the extended date would be denied as untimely. The defendant breached the agreement by serving the cross-motion and opposition on March 5, 2010, approximately one month after the due date. Consequently, the court rejected the defendant’s submissions when the parties appeared on March 29, 2010. The defendant now seeks an order pursuant to CPLR § 2221(e)(2) & (e)(3), granting leave to renew plaintiff’s prior motion for summary judgment and upon renewal, an order denying plaintiff’s motion and granting defendant’s cross-motion for summary judgment.

The issue before the court is whether the defendant can move for leave to renew its adversary’s motion on the basis that its cross-motion and opposition, which was rejected and not entertained, constitutes new facts?

The defendant’s untimely responsive papers, once rejected, constituted a default on the part of the defendant in opposing plaintiff’s motion (Lumbermen’s Mut. Cas. Co. v Fireman’s Fund American Ins. Co., 117 AD2d 588 [2d Dept 1986]; and see Omega Diagnostic Imaging, P.C. v MVAIC, 2011 WL 817397 [Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2011]; Manhattan Medical Imaging, P.C. v Nationwide Ins. Co., 27 Misc 3d 127(A)[Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2010]; Acupuncture Healthcare Plaza, P.C. v Zurich Ins. Co., 22 [*2]Misc 3d 126(A) [Sup. Ct, App Term 2nd, 11th and 13th Jud Dists 2008][the court’s grant of relief requested in an unopposed motion is considered a default judgment]). Even though the court allowed the defendant to orally address the issue of whether plaintiff met its prima facie burden, the resulting judgment in plaintiff’s favor was a default judgment. The court is cognizant that CPLR § 2221 is silent as to who may bring a motion to renew, but the Appellate Term has held that a party cannot renew a motion upon which it defaulted (Manhattan Medical Imaging, P.C., 27 Misc 3d 127(A)[Sup. Ct, App Term 2nd, 11th, 13th Jud. Dists 2010]). The appropriate procedural device for obtaining relief from a default judgment is a motion to vacate pursuant to CPLR § 5015(a)(1)(Eugene Di Lorenzo, Inc. v A.C. Dutton Lumber Co., Inc., 67 NY2d 138, 141 [1986]).

Even assuming arguendo that a motion for leave to renew was appropriate in this context or the court converted the motion into one to vacate the default judgment, the defendant has failed to meet the criteria for relief under either theory.

A motion for leave to renew, pursuant CPLR § 2221, creates an avenue for a party to provide the court with pertinent facts that it failed to include in the previous motion when such motion was before the court (8 NY Prac., Civil Appellate Practice § 5:2). The motion must be based upon new facts not offered on the prior motion that would change the prior determination or shall demonstrate that there has been a change in the law that would change the prior determination and shall contain reasonable justification for the failure to present such facts on the prior motion (CPLR § 2221(e)(2) & (e)(3); Rizzotto v Allstate Ins. Co., 300 AD2d 562 [2d Dept 2002]). In order to garner relief under CPLR § 5015, the defendant must show a reasonable excuse for the default and a meritorious defense.

The defendant’s cross-motion and opposition do not constitute new facts within the contemplation of CPLR § 2221, because the information contained therein is not newly discovered and would have been available when plaintiff’s motion was before the court but for the defendant’s untimeliness. Additionally, the defendant’s excuse of law office failure is untenable for purposes of CPLR §§ 2221 and 5015. Law office failure can be accepted as a reasonable excuse in the exercise of the court’s sound discretion, but the movant must submit supporting facts to explain and justify the default and mere neglect is not acceptable as a reasonable excuse (Cole-Hatchard v Grand Union, 270 AD2d 447 [2d Dept 2000] quoting Bravo v New York City Hous. Auth., 253 AD2d 510 [2d Dept 1998] and Davito v Marine Midland Bank, 100 AD2d 510 [2d Dept 1984]). The defendant’s excuse, that the task of responding to plaintiff’s motion was assigned to an attorney who left the firm, and the opposition due date had lapsed before the law office could “sort through” the former attorney’s caseload, represents nothing more than the law office’s neglect in managing its active cases. Furthermore, the defendant failed to provide details or submit any evidence in support of its explanation. Thus, the court finds that the excuse is conclusory and insufficient.

Accordingly, the defendant’s motion is denied.

This constitutes the decision and order of the court.

March 15, 2011_____________________________

HON. Ingrid Joseph

Judge, Civil Court

[*1]

Civil Court of the City of New York, Kings County, January 3, 2011

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, L.P., Melville, for defendant. Yelena Shlyamkovich, P.C., Brooklyn, for plaintiff.

{**2011 N.Y. Slip Op. at 1} OPINION OF THE COURT

Devin P. Cohen, J.

Defendant’s motion to dismiss pursuant to CPLR 3211 (a) (5) is decided as follows:

Procedural History

This action arises from an August 6, 2008 incident wherein plaintiff’s assignor allegedly sustained personal injuries and subsequently received treatment from plaintiff health services provider. On August 27, 2009, plaintiff commenced this action seeking to recover first-party no-fault benefits for services rendered to its assignor. Issue was joined by service of defendant’s{**2011 N.Y. Slip Op. at 2} [*2]answer on or about October 7, 2009.

Prior to the commencement of this lawsuit, defendant initiated a declaratory judgment action in Kings County Supreme Court, seeking a declaration that the incident of August 6, 2008 was a “staged or intentional incident” and therefore “not a covered event as defined by the applicable policy of insurance issued by Encompass” (plaintiff’s exhibit A). Plaintiff and its assignor, Vincent Meyers, were both named defendants in the declaratory judgment action. Neither plaintiff nor its assignor answered or appeared in the declaratory judgment action, and defendant moved for a default judgment.

On January 10, 2010 Justice Robert J. Miller granted the default judgment against plaintiff and its assignor and issued a declaratory judgment finding that defendant, “by reason of no coverage, is not required to provide a defense and/or indemnification to [plaintiff or its assignor] . . . in any current or future proceedings . . . including lawsuits seeking to recover no-fault benefits . . . arising out of the alleged incident of August 6, 2008” (defendant’s exhibit A at 3). Defendant now moves this court pursuant to CPLR 3211 (a) (5) for an order dismissing the complaint in this action, with prejudice, on the grounds of collateral estoppel based upon the order issued in the declaratory judgment action, and “for such other and further relief this court deems just and proper” (defendant’s motion to dismiss at 1).

This case raises the question of the effect of a declaratory judgment order, issued on default, with respect to collateral actions seeking to litigate the same issue. To address this question requires an analysis of the intersection of the applicable law and policies underlying declaratory judgments, collateral estoppel and default judgments.

Legal Standards

CPLR 3001 provides that “[t]he supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed.” The general purpose of the declaratory judgment is often described as “to serve some practical end in quieting or stabilizing an uncertain or disputed jural relation either as to present or prospective obligations” (James v Alderton Dock Yards, 256 NY 298, 305 [1931]). Thus, a primary goal in seeking a declaratory judgment is a decisive determination as to the rights of the parties in ongoing or future collateral actions.

The Court of Appeals in Kaufman v Eli Lilly & Co. (65 NY2d 449 [1985]) outlined the purpose of the doctrine of collateral estoppel and the circumstances under which it is applied. Generally, the doctrine “precludes a party from relitigating an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point” (id. at 455 [internal quotation marks omitted]). The doctrine stems from the principles of judicial economy and fairness (id. at 455).

In order for the doctrine of collateral estoppel to apply, two requirements must be satisfied: (1) “the identical issue necessarily must have been decided in the prior action and be decisive of the present action” (id. at 455); and (2) “the party to be precluded from relitigating the issue must have had a full and fair opportunity to contest the prior determination” (id. at 455). “The party seeking the benefit of [preclusion] has the burden of demonstrating the identity of the issues [while] the party [opposing] application [of the doctrine] has the burden of establishing the absence of a full and fair opportunity to litigate” (id. at 456).

The doctrine of collateral estoppel will only apply to matters “actually litigated and{**2011 N.Y. Slip Op. at 3} [*3]determined” in a prior action (Restatement [Second] of Judgments § 27). Without “actual litigation” there is no identity of issues (see Kaufman, 65 NY2d at 457). In general, courts have taken the position that “an issue is not actually litigated if . . . there has been a default” (Kaufman, 65 NY2d at 456-457; see Restatement [Second] of Judgments § 27, Comments d, e). More recently both in Zimmerman v Tower Ins. Co. of N.Y. (13 AD3d 137 [1st Dept 2004]) and Magic Recovery Med. & Surgical Supply Inc. v State Farm Mut. Auto. Ins. Co. (27 Misc 3d 67 [App Term, 2d Dept 2010]) appellate courts have reiterated their adherence to this principle and its application to declaratory judgments. Each court held that declaratory judgments issued on default would not be given preclusive effect in collateral proceedings.

The Parties’ Contentions

Defendant contends that collateral estoppel should apply and the case should be dismissed based upon the determination in the declaratory judgment action that the alleged accident was not a covered incident. Defendant contends that the decisive issue of coverage is the same in both actions. Furthermore, defendant (plaintiff in the declaratory judgment action) contends that plaintiff (a defendant in that action) had a full and fair opportunity to litigate the matter in the declaratory judgment action in that it was duly served with the summons and complaint and failed to appear or interpose an answer. Finally, defendant contends that, as a policy matter, “to not give preclusive effect to the Supreme Court judgment is to create a disincentive for a provider, or an Eligible Injured Person, to ever appear and litigate the issues of the Declaratory Judgment” (defendant’s reply at 2).

In opposition, plaintiff cites the general rule articulated above that collateral estoppel does not apply where there has been a default because the issues have not been “actually litigated” (see Zimmerman, 13 AD3d 137; Kaufman, 65 NY2d at 457). Plaintiff offers no explanation for its default in the declaratory judgment action.

Analysis

The line of appellate cases referenced above adheres to the principle that collateral estoppel does not apply where there has been a default in the prior action. It has been argued that when it first articulated this principle in Kaufman, the Court of Appeals did not intend it to be applied in such a bright-line manner, but rather intended a more case-specific evaluation of whether the issue had been “actually litigated” (see Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 153 [1988] [in analyzing the application of collateral estoppel “no rigid rules are possible, because . . . factors may vary in relative importance depending on the nature of the proceedings”]; see Kaufman, 65 NY2d at 457). In the no-fault context specifically, the argument has been made that declaratory judgments rendered on default should be given collateral estoppel effect (see Magic, 27 Misc 3d at 69-76 [Golia, J., dissenting]). That said, in light of the current appellate case law, the court is constrained from dismissing this case on the basis of collateral estoppel.

However, the fact that collateral estoppel does not apply does not mean that the instant action should proceed. The efficacy of a declaratory judgment relies on the assumption that it will be given preclusive effect in collateral actions. To allow the action to continue as though the declaratory judgment (DJ) action never occurred would create a disincentive for no-fault providers to ever appear in declaratory judgment actions and would undermine the purpose of the declaratory judgment process. While plaintiff/DJ defendant cannot, under the case law, be prejudiced by the default finding, neither should plaintiff/DJ defendant be unfairly advantaged [*4]by its own default.{**2011 N.Y. Slip Op. at 4}

In general, a default judgment is a presumptively valid judgment entitled to enforcement, unless or until reversed or set aside (All Terrain Props. v Hoy, 265 AD2d 87 [1st Dept 2000]; but see also Fleet Bus. Credit, LLC v Michael P. Costelloe, Inc., 19 Misc 3d 29 [App Term, 2d & 11th Jud Dists 2008] [limited exception for out-of-state defaults where defendant alleges a lack of personal jurisdiction in the prior action]). To avoid enforcement of a default judgment, a defendant must move to vacate and offer both a reasonable excuse for its default and a meritorious defense to the underlying action (CPLR 317). In the court’s view, a declaratory judgment, issued on default, should be treated in the same manner. Plaintiff’s proper recourse, if it wishes to proceed with this action, is to move to vacate the default judgment in the declaratory judgment action by offering a reasonable excuse for its failure to appear and a meritorious defense to that action.

The court is empowered to stay its own proceedings “[e]xcept where otherwise prescribed by law . . . in a proper case, upon such terms as may be just” (CPLR 2201). One instance in which the staying of a given action is often deemed appropriate is when another (collateral) action is pending (see Connors, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C2201:4 [discussing implied stay provision on a motion to dismiss pursuant to CPLR 3211 (a) (4)]). Since plaintiff contends that the declaratory judgment cannot be given preclusive effect because it was not “actually litigated,” this court will stay the instant matter to afford plaintiff the opportunity to move to vacate its Supreme Court default and, if granted, to “actually litigate” the coverage question in the declaratory judgment action.

Conclusion

For the foregoing reasons, the court exercises its discretion to stay this action indefinitely pending any vacatur of the default judgment in the collateral declaratory judgment action. This decision is without prejudice to defendant to remake or renew this motion in the event that plaintiff is unsuccessful in vacating the declaratory judgment.

[*1]

Civil Court of the City of New York, Kings County, December 7, 2010

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn, for plaintiff. Law Offices of Teresa M. Spina, Woodbury, for defendant.

{**30 Misc 3d at 486} OPINION OF THE COURT

Alice Fisher Rubin, J.

Both of the above-captioned actions are for recovery of unpaid no-fault medical bills. Plaintiff seeks to collect monies due after defendant denied reimbursement for bills received from plaintiff for medical services rendered to the assignors, Johnson and Diggs. Defendant’s denials were based on a lack of medical necessity.

During trials before this court on July 29 and August 4, 2010 to determine the issue of medical necessity of the treatments rendered, the court was presented with novel issues regarding the admissibility of some of defendant’s documents. The court reserved decision and instructed both parties to submit legal briefs discussing the issues. After reviewing the briefs and the law, the court finds that defendant did not establish its prima facie case and hereby enters judgment in favor of plaintiff.

Discussion

In both cases, defendant stipulated that plaintiff had established its prima facie case by proving that its claims were mailed and received by defendant, and that payment of no-fault benefits is overdue. Plaintiff stipulated that defendant issued timely and proper denials, but did not stipulate that defendant had a proper basis for the denials. The denials, written by Dr. Sohn, were based upon peer reviews, each authored either by himself, Dr. Ferrante or Dr. Snitkoff. Dr. Snitkoff was the only doctor not available to testify.

In the Johnson case, only one out of the four peer reviews presented was admitted into evidence. Two of the peer reviews not admitted were signed by Dr. Ferrante, but not notarized or dated; the third peer review not admitted was signed by Dr. Snitkoff, but not notarized. In the Diggs case, one peer review was admitted into evidence and two were not. The peer reviews{**30 Misc 3d at 487} not admitted, allegedly by Drs. Sohn and Snitkoff, were unsigned and not notarized.^[FN1]

The parties were to discuss the peer reviews not admitted into evidence in their memoranda. Generally, an unsigned peer review does not constitute admissible evidence and cannot be used to support a lack of medical necessity defense. (See CPLR 2106; Bronx Multi Med. Care, P.C. v Kemper Cas. Ins. Co., 21 Misc 3d 127[A], 2008 NY Slip Op 51928[U] [App Term, 1st Dept 2008].) Additionally, a peer review must be properly authorized or affirmed, by a notary, for example, in order to be admissible. (See Vista Surgical Supplies, Inc. v Travelers Ins. Co., 50 AD3d 778, 778 [2d Dept 2008]; Sandymark Realty Corp. v Creswell, 67 Misc 2d 630, 631 [Civ Ct, NY County 1971].) This court is not aware of any law which requires a peer review to be dated. However, the court hereby deems the date to be a necessary component in order to further authenticate the document, and also to ensure that the peer review is accurately described in the denial.

Peer Reviews Not Admitted Into Evidence

Defendant’s Arguments

Defendant’s memorandum includes several arguments. First, defendant states that it provided plaintiff with an expert witness disclosure on July 1, 2010 and plaintiff did not object to any documents contained in the disclosure. It is defendant’s position that plaintiff has now waived any objections to any information that was included in the disclosure because there was ample time to review and take action before trial. Defendant also proffers that any defect which may have existed in the{**30 Misc 3d at 488} denials was cured by plaintiff stipulating that they were timely and proper.

Lastly, defendant states that because Drs. Sohn and Ferrante were present to testify about their own peer reviews, the reviews do not have to be in evidence for their testimony to be valid. In support of this argument, defendant relies on Urban Radiology, P.C. v Tri-State Consumer Ins. Co. (27 Misc 3d 140[A], 2010 NY Slip Op 50987[U], *2 [2010]), which states that, where the underlying documents relied upon by a doctor to write a peer review are not used for their truth,^[FN2] but only to form an opinion based on the information contained in the documents, the defendant does not have to establish the reliability of those documents.

Plaintiff’s Arguments

In its memorandum, plaintiff concedes to stipulating that defendant’s denials were timely, but emphasizes that it only stipulated that the denials were proper in form, not in substance. According to St. Barnabas Hosp. v Allstate Ins. Co. (66 AD3d 996, 996 [2d Dept 2009]), a proper denial of a claim for no-fault benefits must include not only standard form information prescribed by the Insurance Department, but also must “promptly apprise the claimant with a high degree of specificity of the ground or grounds on which the disclaimer is predicated” (internal quotation marks and citations omitted). Plaintiff posits that defendant’s denials fail to state viable reasons with specificity.

Next, plaintiff notes that none of the documents relied upon by either Dr. Sohn or Dr. Snitkoff in creating their peer reviews were admitted into evidence, and that neither party had any personal knowledge of where the documents came from. Plaintiff also asserts that the undated peer reviews do not provide any evidence that they are the peer reviews referred to in defendant’s denials, and there was no testimony to provide an explanation for the omissions.

Finally, plaintiff argues that a peer review must be in evidence to be used as a basis for a denial. Plaintiff claims that an unsubstantiated, inadmissible peer review is equivalent to no peer review at all; therefore, a denial based on such a peer review is unsubstantiated as well. Plaintiff cites Innovative Chiropractic, P.C. v Travelers Ins. Co. (27 Misc 3d 141[A], 2010 NY{**30 Misc 3d at 489} Slip Op 50994[U], *1 [App Term, 2d, 11th & 13th Jud Dists 2010]), which explains that a proper peer review “set[s] forth a factual basis and medical rationale for the conclusion that there was a lack of medical necessity for the services at issue.” Following this rationale, plaintiff asserts that before defendant can even prove the denials are proper, a peer review must first be in admissible form, which is not the case here.

Defendant Has Not Proved Its Prima Facie Case

Although plaintiff did not object to the documents contained in defendant’s expert witness disclosure before trial, defendant has not provided, and the court has not found, any authority to support the notion that plaintiff waived its ability to object to the denials during trial. Further, the court cannot support defendant’s argument that plaintiff’s stipulation cured the defects in defendant’s denials. At least one case has stated that a defective denial cannot be corrected nunc pro tunc beyond the time period where the denial is due. (See Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 11 AD3d 664, 665 [2d Dept 2004].) However, the Nyack case is silent on the process of how a defective denial is cured, even within the time period of when it is due.

Defendant’s final argument suggests that, although some of the peer reviews by Drs. Sohn and Ferrante were not in evidence, the doctors’ testimony regarding those documents is still valid. The Urban case cited by defendant, however, only states that a party does not have to establish the reliability of the underlying documents used to create a peer review, but does not state that the same is true for the actual peer review. As stated previously, there is case law providing that a peer review must be admissible to be used in establishing a lack of medical necessity defense.

Based on the law, neither of the peer reviews at issue in the Diggs case can be rendered admissible because they were not signed, regardless that one of the doctors was present to testify. Since the documents are not admissible, they cannot serve as a valid basis for defendant’s denials and, therefore, defendant is not able to establish its prima facie case.

In the Johnson case, because Dr. Snitkoff was not present, there is no way to authenticate his signature, and his peer review is therefore inadmissible. Although not notarized, it would seem as though Dr. Ferrante’s peer reviews are admissible because he was present in court to affirm his own{**30 Misc 3d at 490} signature. However, because both of his peer reviews fail to state the date they were signed, this court cannot ensure that the peer reviews presented were the ones relied upon and referenced in the denials. Based upon the aforementioned facts and law, defendant has not provided sufficient proof of its medical necessity defense and judgment is entered in favor of plaintiff.

Footnotes

Footnote 1: Plaintiff argues that the one peer review admitted in the Diggs case was in error because there was a month-long gap between the date of the peer review and the date it was signed, which is a violation of CPLR 4518. The court finds this argument to be misplaced and will not review the documents already admitted into evidence.

Footnote 2: For example, to prove that there was an injury or that a patient was treated as set forth in the records. (Urban Radiology, P.C., 2010 NY Slip Op 50987[U], *2.)

Civil Court of the City of New York, Kings County

056025/09

Devin P. Cohen, J.

Upon review of the foregoing papers, and after oral argument, the defendant’s motion to dismiss is denied.

In this action to recover assigned first-party no-fault benefits, defendant insurance provider moves pursuant to CPLR 3211(a)(1) and (7) to dismiss all causes of action in the complaint based on plaintiff’s alleged failure to attend two duly requested Examinations Under Oath (EUOs).

CPLR 3211(a)(1)

To obtain pre-answer dismissal pursuant to CPLR 3211(a)(1), defendant must allege that its defense is fully founded upon documentary evidence. Moreover, the documentary evidence offered in that defense “must resolve all factual issues as a matter of law, and conclusively dispose of the plaintiff’s claim” (Teitler v Max J. Pollack & Sons, 288 AD2d 302 [2d Dept 2001]). “Documentary evidence” within the meaning of CPLR 3211(a)(1), must be “unambiguous and of undisputed authenticity” (Fontanetta v Doe, 73 AD3d 78 [2d Dept 2010] citing Siegel, Practice Commentaries, McKinney’s Cons. Laws of NY, Book 7B, CPLR C3211:10, at 21-22). CPLR 3211(a)(1) does not anticipate or intend the use of affidavits submitted as testimony substitutes (see e.g. Berger v Temple Beth-El of Great Neck, 303 AD2d 346 [2d Dept 2003]).

Affidavits submitted by a defendant “will almost never warrant dismissal under CPLR 3211” (Lawrence v Miller, 11 NY3d 588, 595 [2008]). In the context of CPLR 3211(a)(1), the narrow exception to this general rule might be affidavits used solely to establish the bona fides of other, genuinely documentary evidence. For instance, a certifying affidavit establishing a true and accurate copy of a filed deed might support a motion for dismissal under CPLR 3211(a)(1).

By its nature, the pre-answer motion to dismiss deprives the parties of the opportunity and obligation to have a trial, to exchange discovery, or for the non-moving party to have even a responsive pleading in the action. This is a drastic remedy, and should be reserved to cases which turn on an undisputed and undisputable document (e.g. a dishonored check, a deed, etc.). CPLR [*2]3211(a)(1) should not be used as a pre-answer alternative for what is more properly a request for summary judgment pursuant to CPLR 3212.

Defendant relies upon two affidavits to support the instant motion. The affidavit of Jackie Hackett describes the standard office procedure for generating and mailing verification requests, including EUO notices, as well as denials. The affidavit of calendar clerk Toyla Hogan alleges that the plaintiff failed to appear for the EUOs purportedly scheduled by the defendant. Presumably, this is the “documentary evidence” to which defendant’s motion refers.

Defendant’s affidavits are not the type of evidence required in order to succeed on a pre-answer motion to dismiss pursuant to CPLR 3211(a)(1). Rather, defendant’s proffered affidavits are testimonial in nature. They are essentially offered as substitutes for testimony which would otherwise be offered later at trial. These testimonial affidavits are, by their nature, neither unambiguous nor of undisputed authenticity. They depend heavily on the credibility attached to them as recitations of the facts of the case. They offer only one view (or two views) of the factual narrative which underlies the claim in question.

CPLR 3211(a)(7)

Defendant further asserts that the claim should be dismissed because plaintiff’s pleading fails to state a cause of action (CPLR 3211[a][7]). Under CPLR 3211(a)(7), the applicable test is whether the pleading states a cause of action, not whether the proponent of the pleading, in fact, has a meritorious cause of action (see Sokol v Leader, 74 AD3d 1180 [2d Dept, 2010]). “Whether a plaintiff can ultimately establish its allegations is not part of the calculus” (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11 [2005]). “[O]n a motion to dismiss pursuant to CPLR 3211(a)(7), the court must determine whether, accepting as true the factual averments of the complaint and according the plaintiff the benefits of all favorable inferences which may be drawn therefrom, the plaintiff can succeed upon any reasonable view of the facts stated” (Board of Educ. of City School Dist. of City of New Rochelle v County of Westchester, 282 AD2d 561, 562 [2d Dept 2001]).

As previously established, the testimonial affidavits of Ms. Hogan and Ms. Hackett are not documentary evidence as required under CPLR 3211(a)(1). More germane to a CPLR 3211(a)(7) analysis, while these affidavits, if taken as true, might bear on the merits of plaintiff’s action, they do not affect whether or not the complaint itself states a cause of action. Here, plaintiff’s complaint states a cause of action in that plaintiff claims to have properly submitted bills to defendant for acupuncture services rendered to its assignor which have not been paid. Thus, dismissal is not appropriate under CPLR 3211(a)(7).

Ripeness

Defendant seems to suggest that this action should be dismissed as premature because plaintiff has failed to comply with defendant’s verification requests scheduling the EUOs, and that the failure to comply tolls the defendant’s time to deny the claim. Pursuant to NYCRR § 65.15(h), an outstanding verification request tolls the 30 day statutory period during which defendant must pay or deny a claim. Since an insurer is not obligated to pay or deny a claim while verification requests for that claim are outstanding, any lawsuit filed during such period is deemed premature (see Vista Surgical Supplies v General Assur. Co., 12 Misc 3d 129(A) [App Term, 2d Dept 2005]; Ocean Diagnostic Imaging, P.C. v Nationwide Mutual Ins. Co., 11 Misc 3d 135(A) [App Term, 2d Dept 2006]). However, in this case, defendant admits that it issued a denial for this claim on January 28, 2008, citing plaintiff’s alleged failure to appear for the scheduled EUOs. Having denied the claim, [*3]defendant essentially invited the plaintiff’s subsequent proceedings to challenge the denials.

For the reasons stated, defendant’s motion is denied. The plaintiff shall serve a copy of this decision and order on defendant’s counsel, with notice of entry. Defendant shall serve and file an answer in this matter within 30 days of plaintiff’s service of this order. This constitutes the decision and order of this court.

Civil Court of the City of New York, Kings County

141235/2008

Law Offices of Teresa M. Spina, Attorneys for Defendant,

Geico Indemnity Company, 170 Froehlich Farm Blvd, Woodbury, NY 11797

Moshe D. Fuld, P.C., Attorney for Plaintiff, 38 West 32nd Street, 7th Fl, New York, NY 10001

Reginald A. Boddie, J.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved by Order to Show Cause to consolidate this matter with forty-five other pending cases commenced by the same provider against the defendant, to amend its answer to include a fraudulent incorporation defense, for additional discovery, and for a stay pending resolution of this issue in all the cases. Plaintiff opposed the motion and seeks costs and sanctions.

Defendant alleged that plaintiff provider, Urban Radiology, is ineligible for reimbursement of no-fault benefits, under Insurance Law § 5102 (a) (1), because at the time services were rendered plaintiff was fraudulently incorporated, in violation of Business Corporation Law §§ 1503, 1507,1508, and Education Law §§ 6530 and 6531. Courts have previously held that fraudulent incorporation is not a precluded defense and constitutes a complete bar to recovery under the no-fault insurance regulations (State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]; AB Medical Services PLLC v Utica Mut. Ins. Co., 11 Misc 3d 71 [2006]).

In brief, defendant asserted that “Although Dr. Rigney is listed as the owner of Urban Radiology, P.C. according to the Office of Professions of New York State, it is possible that he may not in fact be the true’ owner of Urban Radiology, P.C. The instant UCC filing demonstrates that Ocean MRI, Inc. exerts total control of the proceeds and profits of Urban Radiology, P.C.” (affirmation of Eileen Hopkins ¶ 16). Defendant further alleged that Dr. Rigney was owner of JRWB Diagnostic Imaging, P.C., which also conducts MRIs, and that in [*2]January 1999 an arbitrator determined that Ocean MRI and David Batisyan were the true owners (affidavit of Eileen Hopkins ¶ 18). Accordingly, defendant requested depositions of Dr. John T. Rigney and Mr. Aleksander Kamsan, the former billing manager, with respect to all of plaintiff’s cases pending in this Court (Id. at ¶ 27).

During oral argument of this motion, defendant conceded that the cases are at various stages of litigation, including some which are already scheduled for trial, and that the facts differ in each case, except that the services were rendered by the same provider.

Consolidation

Civil Practice Law and Rules § 602 (a) provides for consolidation of actions in appropriate circumstances as follows:

When actions involving a common question of law or fact are pending before a court, the court, upon motion, may order a joint trial of any or all matters in issue, may order the actions consolidated, and may make such other orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.

However, consolidation is highly disfavored by courts in no-fault insurance cases. Generally, no-fault benefit claims may not be consolidated unless the facts and circumstances arise from a common accident. (Metro Medical Diagnostics, P.C. v Motor Vehicle Accident Indemnity Corp., 6 Misc 3d 136[A], 2005 NY Slip Op 50238[U] [2005]; Poole v Allstate Ins. Co., 20 AD3d 158, 519 [2d Dept 2006] (holding it would be an improvident exercise of discretion not to sever forty-seven claims where a single trial of claims would prove unwieldy and confuse the trier of fact.) Here, defendant cannot establish that the no-fault cases arose from a common set of facts or accident as grounds for consolidation. Instead, defendant seeks to proceed on the basis that the claims share a common question of law.

The identical issue was presented in a case decided by the Appellate Term in 2008 (S & B Neurocare, P.C. v Geico, 20 Misc 3d 132[A], 2008 NY Slip Op 51450[U] [2008]). There, the defendant also sought to consolidate all pending cases between the parties and assert a fraudulent incorporation defense. The court denied the motion, holding that merely alleging a medical provider is fraudulent fails to create sufficient questions of law and fact to justify consolidation. (id.) The court also upheld the denial of defendant’s motion to compel discovery because “[d]efendant failed to submit an affidavit specifying any facts entitling it to pretrial proceedings almost a year after the notice of trial was filed” (id.; see also New York City Civ Ct Act § 208.17 [d]).

Similarly, the facts here clearly militate against consolidation. The cases are all at unspecified stages of litigation. Although defendant failed to set forth the procedural posture of each case, defendant acknowledged that many of the cases had proceeded past discovery and were noticed for trial. Notably, plaintiff stated, “Most cases the defendant seeks to consolidate have had a Notice of Trial filed, and the defendant is precluded from demanding additional [*3]discovery therein” (affirmation of Michael Reich ¶ 16). Consequently, it would be unwieldy to join the cases and clearly prejudicial to the plaintiff. Furthermore, defendant ‘s underlying premise for alleging fraudulent incorporation, on these facts, is speculative. For the reasons set forth herein, consolidation is inappropriate and therefore denied.

Stay

Defendant also sought a stay pursuant to CPLR 2201, pending the outcome of discovery and a hearing on the alleged fraudulent incorporation defense. Defendant averred that a stay is necessary to maintain the status quo, to promote judicial economy and in the interests of justice (affirmation of Eileen Hopkins ¶ 34).

CPLR 2201 provides, “[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just.” A search revealed no cases where the Civil Court issued a stay of multiple actions, in similar circumstances, pending further discovery and the hearing of a Mallela claim. However, where relief was requested in the Supreme Court seeking a stay of Civil Court proceedings, the court treated these motions as motions for preliminary injunction. (see St. Paul Travelers Ins. Co. v Nandi, 15 Misc 3d 1145[A], 2007 NY Slip Op 51154[U] [2007]; New York Central Mutual Ins. Co. v McGee et al, 25 Misc 3d 1232[A], 2009 NY Slip Op 52385[U] [2009].)

To prevail on an application for preliminary injunction, the moving party must demonstrate a probability of success on the merits, danger of irreparable harm in the absence of being granted relief and a balance of equities in its favor (St. Paul Travelers at *7). Here, defendant clearly did not meet this test. Defendant has not established that it can properly assert a claim of fraudulent incorporation. Defendant also cannot establish irreparable harm since proof of fraud is an absolute defense to a claim for payment; nor can defendant demonstrate a balance of equities in its favor at this juncture in the litigation.

Nevertheless, the parties need not be held to the elevated standard of a preliminary injunction since, unlike the requests in St. Paul Travelers and New York Central Mutual, the defendant here does not seek to have this court stay proceedings pending in another court (15 Misc 3d 1145[A]; 25 Misc 3d 1232[A]). As such, defendant is not required to show that it would be entitled to preliminary injunction (Siegal, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C2201:2).

As the Court of Appeals artfully noted in Mallela,

The [no fault] regulatory scheme, however, does not permit abuse of the truth seeking opportunity that 11 NYCRR 65-3.16 (a) (12) authorizes. Indeed, the Superintendent’s regulations themselves provide for agency oversight of carriers, and demand that carriers delay the payment of claims to pursue investigations solely for good cause (see 11 NYCRR65-3.2 [c]). In the licensing context, carriers will be unable to show “good cause” unless they can demonstrate behavior tantamount to fraud. Technical violations will not do. (Mallela, 4 NY3d 313 [2005].) [*4]

Here, defendant’s statement that, “Although Dr. Rigney is listed as the owner of Urban Radiology, P.C. according to the Office of Professions of New York State, it is possible that he may not in fact be the true’ owner of Urban Radiology, P.C.” is insufficient to show that defendant has a good faith basis to allege that Dr. Rigney is not the owner of Urban Radiology. Defendant has presented no affidavits or documents which address the issue of the alleged fraud with any certainty. Rather, defendant moved this court to stay the actions in order to explore the possibility of fraud. Consequently, this court declines to grant a discretionary stay in circumstances where, as here, the defendant’s request for relief is based almost entirely on speculation rather than specific testimonial or documentary proof. (see St. Paul Travelers at *7.) Accordingly, defendant’s request for a stay is denied. Defendant may renew its request in the individual cases, as appropriate, upon presentation of additional proof consistent with this decision.

Leave to amend the answers and permit additional discovery

Finally, defendant requested leave to amend its answers and for additional discovery. CPLR 3025 (b) commits the grant or denial of such leave to the trial court’s discretion (Edenwald Contracting, 60 NY2d at 959, citing Murray v City of New York, 43 NY2d 400, 404-05 [1977]; Thomson v Suffolk County Police Dept., 50 AD3d 1015 [2d Dept 2008]). It provides that leave “shall be freely given upon such terms as may be just” (CPLR 3025 [b]).

In other words, the court should freely grant leave to amend a pleading based on the facts and circumstances of each case and where there is no significant prejudice or surprise to the non-moving party (Sewkarran v DeBillis, 11 AD3d 445 [2d Dept 2004]). However, the evidence submitted in support of the motion must indicate that the amendment may have merit (Edenwald Contracting, 60 NY2d at 959; Ingrami v Rover, 45 AD3d 806, 808 [2007]). Where the proposed amendment is “palpably insufficient or patently devoid of merit,” the court should deny leave to amend (Yemini v Goldberg, 46 AD3d 806 [2d Dept 2007] (citations omitted); Beja v Meadowbrook Ford, 48 AD3d 495 [2d Dept 2008]).

CPLR 3101 governs disclosure and requires “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof” (CPLR 3101 [a]). The court has previously held that, under appropriate circumstances, a party may move to seek additional discovery for the purpose of supporting a Mallela claim, pursuant to CPLR 3101 (a) (One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, 740 [2d Dept 2008]). In instances where such discovery is sought, movant is not required to show “good cause,” but rather that the documents sought are “material and necessary in the prosecution” of the action (CPLR 3101 [a]; One Beacon at 741 (citations omitted)).

Here, the court is unable to determine whether leave to amend and for additional discovery is appropriate, or in which cases it may be appropriate, as defendant has failed to articulate details regarding the procedural posture of each case. In any event, in as much as the court has declined to consolidate the cases, these issues need not be determined. Accordingly, the requests for leave to amend and for additional discovery are denied without prejudice to [*5]renew upon a proper showing in each case.

Other relief

Defendant’s remaining requests for relief are premature, and therefore not addressed. Plaintiff’s requests for costs and sanctions are denied.

This constitutes the Decision and Order of the Court.

Dated: August 23, 2010

________________________

Reginald A. Boddie

Civil Court of the City of New York, Kings County

02097/08

The plaintiff was represented by Melissa Betancourt, Esq., 155 Kings Highway, Brooklyn, NY 11223-1036, 718.336.8076. The defendant was represented by Kylie A. Higgins, Esq. of the Law Offices of Teresa M. Spina, 170 Froehlich Farm Boulevard, Woodbury, NY 11797, 516.714.7727.

Genine D. Edwards, J.

In an action to recover assigned first party no-fault benefits, defendant seeks leave to amend its answers, strike the notices of trial, and compel discovery, including a deposition. It also seeks to consolidate all nineteen (19) captioned actions. Plaintiff opposes the order to show cause.

BACKGROUND

Defendant argues that plaintiff fraudulently billed for medical services it allegedly rendered to [*2]its assignors.^[FN1] Though defendant admits that it did not deny plaintiff’s bills on the basis of fraudulent billing, it maintains that it has a cause of action to recover benefits paid under a theory of fraud or unjust enrichment.^[FN2] Defendant therefore seeks leave to amend its answers to interpose counterclaims for fraud and unjust enrichment.

Upon such amendment, defendant argues that the notices of trial and certificates of readiness for the captioned actions must be vacated, and the matters stricken from the trial calendar because discovery, including a deposition is warranted with respect to plaintiff’s billing practices. Defendant also seeks consolidation of the captioned actions, arguing that discovery on its counterclaims for fraud and unjust enrichment involve common questions of law and fact.

In opposition, plaintiff asserts that it responded to defendant’s discovery demands and defendant fails to indicate how depositions would provide more relevant information than the responses and documentation previously provided. Plaintiff further alleges that leave to amend the answers must be denied because defendant did not submit an affidavit from a qualified individual with personal knowledge of the subject claim. It argues that the affidavit from Ellen Dargie, a supervisor in defendant’s medical billing unit, who prepared a spreadsheet of the bills plaintiff submitted to defendant for the years 2007 and 2008, does not affirmatively state that plaintiff engaged in fraudulent billing. Finally, plaintiff contends that defendant is attempting to set forth a defense that it is precluded from asserting.

DISCUSSION

Pursuant to CPLR § 3025(b), a party may amend its pleading at any time by leave of the Court. See NY CPLR § 3025(b); Murray v. City of New York, 43 NY2d 400, 401 NYS2d 773 (1977); Cornell Med., P.C. v. Mercury Cas. Co., 24 Misc 3d 58, 884 NYS2d 558 (App. Term, 2d Dept. 2009); Perini Corp. v. City of New York (Honeywell Street and Queens Blvd. Bridges), 27 Misc 3d 813, 897 NYS2d 860 (Sup. Ct. NY County 2010). Leave shall be freely given provided the proposed amendment is not palpably insufficient or patently devoid of merit. See Thomas Crimmins Contr. Co. v. City of New York,74 NY2d 166, 544 NYS2d 580 (1989) (“Where a proposed defense plainly lacks merit, however, amendment of a pleading would serve no purpose but needlessly to complicate discovery and trial, and the motion to amend is therefore properly denied.”); Kuslansky v. Kuslansky, Robbins, Stechel and Cunningham, LLP, 50 AD3d 1101, 858 NYS2d 212 (2d Dept. 2008); Lucido v. Mancuso, 49 AD3d 220, 851 NYS2d 238 (2d Dept. 2008) (“Where the proposed amended pleading is palpably insufficient or patently devoid of merit, or where the delay in seeking the amendment would cause prejudice or surprise, the motion should be denied.”); Uptodate Med. Servs, P.C. v. State Farm Mut. Auto. Ins. Co., 23 Misc 3d 42, 879 NYS2d 695 (App. Term, 2d, 11th & 13th Jud. Dists. 2009) (“The court must examine the merits of the cause of action or defense to be asserted in the proposed amendment since leave to amend should not be granted where the cause of action or defense to be asserted is totally without merit or is palpably insufficient as a matter of law.”).

In the no-fault context, a healthcare provider shall receive payment for services rendered to [*3]

patients whose injuries arise from covered motor vehicle accidents. The insurance carrier has 30 days from the date of receipt of the claim to pay or deny it in whole or in part. See 11 NYCRR 65-3.4; New York & Presbyterian Hosp. v. Progressive Casualty Ins. Co., 5 AD3d 568, 774 NYS2d 72 (2d Dept. 2004); Jesa Medical Supply, Inc. v. American Transit Ins. Co., —- NYS2d —-, 2010 NY Slip Op. 20231 (Civ Ct. Kings County 2010). The law requires a claim for no-fault benefits to be timely and properly denied. See Careplus Med. Supply, Inc. v. Selective Ins. Co. of Am., 25 Misc 3d 48, 890 NYS2d 258 (App. Term, 2d Dept. 2009). In other words, “all bases that an insurer has for denying a no-fault claim, except for specific and limited exceptions, must be raised in a timely denial.” Lincoln General Ins. Co. v. Alev Medical Supply, Inc., 25 Misc 3d 1019, 887 NYS2d 490 (Dist. Ct., Nassau County 2009). See also Fair Price Medical Supply Corp. v. Travelers Indem. Co., 10 NY3d 556, 860 NYS2d 71 (2008); PDG Psychological P.C. v. Utica Mut. Ins. Co., 11 Misc 3d 128(A), 815 NYS2d 496 (App. Term, 2d & 11th Jud. Dists. 2006) (An untimely denial precludes an insurance carrier from raising most defenses at the trial.); Devonshire Surgical Facility v. GEICO, 14 Misc 3d 1208(A), 836 NYS2d 484 (Civ. Ct., NY County 2006); Alev Medical Supply, Inc. v. Progressive Ins. Co., 27 Misc 3d 1220, 2010 NY Slip Op. 50813(U) (Dist. Ct., Nassau County 2010) (An insurance carrier is precluded from asserting any “precludable” defense not asserted in a timely denial.). Fraudulent billing is precluded as a defense unless it is raised in a timely denial. See Fair Price Med. Supply Corp., 10 NY3d at 564-565; Careplus Med. Supply, Inc., 25 Misc 3d at 49 (The defense of provider fraud is precluded if not timely and properly asserted.); M. G. M. Psychiatry Care, P.C. v. Utica Mut. Ins. Co., 12 Misc 3d 137(A), 824 NYS2d 763 (App. Term, 2d & 11th Jud. Dists. 2006) (Fraud defense whether premised on fraudulent billing, excessive medical treatment or otherwise is subject to the preclusion sanction.).

Herein, defendant’s counterclaims for fraud and unjust enrichment are palpably insufficient and patently devoid of merit because the claims were not denied on the grounds of fraudulent billing. They were paid in part and denied in part based upon medical necessity and the charges not being in accordance with the fee schedule. Further, the denials were submitted for the first time in defendant’s reply papers, without an affidavit attesting that the denials were timely mailed to plaintiff pursuant to a standard office practice or procedure. See Rengifo v. City of New York, 7 AD3d 773, 776 NYS2d 865 (2d Dept. 2004) (Defendant cannot rely on documents submitted for the first time in its reply papers.); Fair Price Med. Supply v. Liberty Ins. Co., 12 Misc 3d 145(A), 824 NYS2d 762 (App. Term, 2d & 11th Jud. Dists. 2006) (Defendant failed to establish a timely denial via an affidavit by one with personal knowledge that the denial of claim form was timely mailed or an affidavit containing a sufficiently detailed description of standard office mailing procedure to give rise to the presumption of timely mailing.). As all evidence indicates that the counterclaims pertain to a precluded defense, defendant may not assert them in an amended answer. See Cornell Med., P.C., 24 Misc 3d at 60 (App. Term, 2d Dept. 2009) (“In our opinion, since defendant’s proposed counterclaim [for unjust enrichment] pertains to a defense which is precluded due to defendant’s untimely denials, the Civil Court properly denied the branch of defendant’s motion seeking leave to amend the answer to assert the counterclaim.”).

In reading Judge Engoron’s decision in, Quality Psychological Services, P.C. v. GEICO Ins. Co., Index No.47851/08, Civil Court, Bronx County, dated July 22, 2010, published in the New York Law Journal, August 3, 2010, in conjunction with other decisions discussing no-fault law, this Court is persuaded that the instant matters smack of fraud and unjust enrichment considering the compilation of plaintiff’s bills annexed to Ms. Dargie’s affidavit. However, this Court must follow the law set forth by the Court of Appeals. See Fair Price Medical Supply Corp., 10 NY3d at [*4]564-565. To be quite frank, the buck stops at the insurance carriers upon the receipt of claims for no-fault benefits. Insurance carriers concerned about fraudulent claims must use the verification process to obtain additional information. It behooves GEICO and all other insurance companies to diligently investigate the claims and submit well-thought out denials within the time allotted by the Legislature,^[FN3] until such time as the law is amended.

Accordingly, defendant’s application to amend the answers is denied. Thus, the remaining parts of the order to show cause to strike the notices of trial, compel discovery^[FN4] including a deposition, and to consolidate^[FN5] all nineteen (19) captioned actions are denied as moot.

The order to show cause is denied in its entirety.

This constitutes the decision and order of the Court.

Dated: August 16, 2010____________________________

Genine D. Edwards

Judge of Civil Court

Footnotes

Footnote 1: Specifically, defendant alleges that in one day plaintiff’s treating psychologists performed medical services that amounted to more than 24 hours of testing.

Footnote 2: Defendant paid-in-part and denied-in-part plaintiff’s claims for no-fault benefits. Thus, the counterclaims are based upon plaintiff having obtained partial payments for services rendered.

Footnote 3: “While the 30-day period plus any applicable tolls for paying or denying a claim may be too short a time frame in which to detect billing fraud, any change is up to the Legislature.'” Lincoln General Ins. Co. v. Alev Medical Supply, Inc., 25 Misc 3d at 1022 (quoting Fair Price Med. Supply Corp.,10 NY3d at 565.).

Footnote 4: Discovery may not be obtained regarding matters that are not in issue at trial. See Alev Medical Supply, Inc. v. Progressive Ins. Co., 27 Misc 3d 1220, 2010 NY Slip Op. 50813(U) (Dist. Ct., Nassau County 2010).

Footnote 5: Pursuant to CPLR § 602(a), the Court may consolidate actions involving common questions of law or fact. See Whiteman v. Parsons Transp. Group of New York, Inc., 72 AD3d 677, 900 NYS2d 87 (2d Dept. 2010). Consolidation is usually granted where the issues in the action sought to be consolidated are identical or essentially the same or if it will result in a complete disposition of all claims arising out of the same transaction or incident in one action. Defendant sought consolidation to obtain discovery on its counterclaims for fraud and unjust enrichment. Since leave to amend the answer to interpose the counterclaims was denied, defendant may not obtain consolidation. Moreover, without the amendment defendant cannot consolidate the nineteen captioned actions because the evidence demonstrates that although the actions were brought by a single assignee, the causes of action arose from different automobile accidents on various dates in which unrelated assignors suffered diverse injuries and required different medical treatment. See Poole v. Allstate Ins. Co., 20 AD3d 158, 799 NYS2d 247 (2d Dept. 2005).

[*1]

Civil Court of the City of New York, Kings County, July 27, 2010

APPEARANCES OF COUNSEL

Israel, Israel & Purdy LLP, Great Neck (Josephine Lupis-Usinger of counsel), for plaintiff. Peknik Peknik & Schaefer LLC, Long Beach (Matthew Bruzzese of counsel), for defendant.

{**29 Misc 3d at 367} OPINION OF THE COURT

Pamela L. Fisher, J.

Plaintiff, John Giugliano, DC, P.C., assignee of Laura Hebenstreit,{**29 Misc 3d at 368} instituted this action to recover first party no-fault benefits from defendant Merchants Mutual Ins. Co. A trial was held before this court on June 30, 2010. After considering and evaluating the trial evidence and upon weighing and assessing the credibility of the witnesses, the court makes the following findings of fact and conclusions of law.

At trial, the parties stipulated that plaintiff established its prima facie case, that defendant established timely denials, and that the bills, denials, and underlying medical records would be admitted into evidence. The sole issue remaining for trial was whether plaintiff was entitled to recover for the claims submitted based on the New York Workers’ Compensation Medical Fee Schedule (hereafter “Fee Schedule”).

As stated in Roberts Physical Therapy, P.C. v State Farm Mut. Auto Ins. Co. (14 Misc 3d 1230[A], 2006 NY Slip Op 52565[U], *2 [Civ Ct, Kings County 2006]), in order

“[t]o contain the cost of providing medical services to patients treated under New York’s No-Fault law, the state legislature set limits on the fees health care providers may charge patients who sustain injuries . . . by incorporating into the no-fault scheme the fee [*2]schedules established by the Worker’s Compensation Board for industrial accidents.”

The Fee Schedule is divided into seven sections: Introduction and General Guidelines, Evaluation and Management, Anesthesia, Surgery, Radiology, Pathology and Laboratory, Medicine, and Physical Medicine. The Fee Schedule also contains a chiropractic fee schedule section, and a psychology fee schedule section. Each of these sections lists a variety of medical procedures and assigns to each procedure a number known as a current procedural terminology registry code (hereinafter CPT code). In the instant matter, plaintiff, a licensed chiropractor, submitted bills indicating that manipulation of spine under anesthesia (CPT code 22505) and closed treatment of mandibular fracture with manipulation (CPT code 21451) were performed on the assignor. The CPT codes which plaintiff utilized in billing are listed in the surgery section of the Fee Schedule. Dr. Macki was identified as the primary surgeon and Dr. Giugliano was identified as the co-surgeon for the procedures.

Defendant called Laurene Skeffington, a compliance analyst, to testify regarding whether plaintiff properly billed for the services pursuant to the Fee Schedule. Ms. Skeffington testified that it was not appropriate for a chiropractor to utilize the surgical fee schedule even when the procedures performed are not{**29 Misc 3d at 369} listed under the chiropractic fee schedule. She also testified that it was not appropriate to bill CPT code 22505 twice regardless of the fact that both the thoracic and cervical spine were treated.

Plaintiff called Dr. John Giugliano as a rebuttal witness. Dr. Giugliano testified that as the procedures performed, manipulation of spine under anesthesia and closed treatment of mandibular fracture with manipulation, are not listed under the chiropractic fee schedule it was appropriate for them to be billed utilizing the CPT codes listed in the surgery section of the Fee Schedule. Dr. Giugliano stated that it was permissible for CPT code 22505 to be billed twice as two separate areas were treated, namely the thoracic and cervical spine. Dr. Giugliano testified that the procedures required the participation of two doctors and that he served as co-surgeon during the procedures.

It should be noted that the surgery section of the Fee Schedule denotes different percentages of payment based on whether a participating surgeon is acting as a “Surgical Assistant” or a “Co-Surgeon.” A surgical assistant bills at 16%, while co-surgeons are directed to apportion billing in relation to the responsibility and work done. (See New York Workers’ Compensation Fee Schedule, Surgery, at 4.) Defendant’s witness did not offer testimony regarding whether plaintiff should have billed as a surgical assistant or a co-surgeon. Plaintiff’s rebuttal witness, Dr. Giugliano, testified that the classifications are interchangeable and he was entitled to bill as a co-surgeon. Absent proof to the contrary, the court finds that plaintiff was entitled to bill as a co-surgeon under the Fee Schedule.

With respect to plaintiff utilizing the surgery CPT codes, the court finds that plaintiff successfully rebutted defendant’s testimony and plaintiff was entitled to use these CPT codes as the procedures were not listed under the chiropractic fee schedule. When a charge for a reimbursable service has not been scheduled by the superintendent, then the provider shall establish a fee consistent with other fees for comparable procedures shown in such schedule subject to review by the insurer. (Id.; see also Studin v Allstate Ins. Co., 152 Misc 2d 221 [Suffolk Dist Ct 1991].) Therefore, the court finds that plaintiff established that the procedures were properly billed pursuant to the Fee Schedule and plaintiff is entitled to be reimbursed for the services performed.{**29 Misc 3d at 370}

Judgment in favor of the plaintiff in the amount of $2,980.58 plus costs, disbursements, [*3]statutory interest and statutory attorneys fees.

[*1]

Civil Court of the City of New York, Kings County, May 29, 2010

APPEARANCES OF COUNSEL

Law Offices of Daniel J. Tucker, New York City (Peter Coates of counsel), for defendant. Law Offices of Melissa Betancourt, P.C., Brooklyn (Aaron Cargain of counsel), for plaintiff.

{**28 Misc 3d at 828} OPINION OF THE COURT

Sylvia G. Ash, J.

In an action seeking payment of first-party no-fault benefits, defendant moves to reargue the court’s decision dated October 9, 2009, wherein the court found that defendant’s denial of plaintiff’s claim was untimely.

The court found that defendant’s follow-up verification request was two days late, thus reducing its denial time to 28 days (see Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294 [2007]), which made its denial in this case late by one day. Defendant contends that the court erred in its finding that its follow-up verification request was sent two days late rather than one day late. Defendant argues that Presidents’ Day is a legal holiday and should not have been included in computing the timeliness of defendant’s denial.

In an action to obtain payment of first-party no-fault benefits, 11 NYCRR 65-3.8 provides that a no-fault insurance carrier has 30 days from the date of receipt of the claim to pay or deny a claim in whole or in part. However, the insurance carrier’s time to pay or deny a claim is extended by making a timely demand for verification. (See Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862 [2d Dept 2009].) A claim does not have to be paid or denied until the insurance carrier has been provided with all timely demanded verification. (See New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004]; Mount Sinai Hosp. v Chubb Group of Ins. Cos., 43 AD3d 889 [2d Dept 2007].) Pursuant to 11 NYCRR 65-3.5 (b) the insurance company must request additional verification within 15 business days of the [*2]receipt of the prescribed verification forms. However, an untimely verification request will reduce the 30 calendar days wherein a claim must be denied or paid upon receipt of the requested information. (11 NYCRR 65-3.8 [j].)

The court notes that the rule specifically states business days rather than calendar days. However, the statute does not define either term. Traditionally the law has recognized the difference between a calendar day and business day (see Miuccio v Puppy City, Inc., 22 Misc 3d 1132[A], 2009 NY Slip Op 50404[U] [2009]). A calendar day is defined as a Sunday or any day of the week specifically mentioned (see General Construction Law § 19). Therefore, even a holiday would be considered a calendar day. Generally, when an act must be done within a given number of days, and the last day falls on a holiday, the time is extended{**28 Misc 3d at 829} to the next business day (see General Construction Law § 20). However, when an act must be done within a given number of “calendar” days weekends and legal holidays are not excluded in the calculation thereof.

The General Construction Law does not contain a definition of business days. In examining how the term is defined in different statutes, it generally means any calendar day except Sunday and any legal holiday (see Miuccio v Puppy City, Inc., supra). However, this definition comes into conflict with the way most courts define business days when it comes to no-fault cases, where Saturday, Sunday and holidays have generally been excluded.

Here, if the rule called for 15 calendar days, Presidents’ Day as an intervening holiday would not be excluded in calculating defendant’s verification request (General Construction Law § 20). However, since the rule specifically states that such request must be submitted within 15 business days, it appears that the legislature’s intent was to at least exclude legal holidays in calculating the number of days required to submit additional verification requests.

In the case at bar, plaintiff submitted its claim to the defendant on February 5, 2007. The court, in computing the time defendant was required to request additional verification, hereby defines business day to mean any calendar day excluding Saturday, Sunday and legal holidays. Therefore, the court agrees with the defendant that Presidents’ Day, being a legal holiday, should have been excluded in computing the time for the verification request, and as such, its request was one day late not two days late.

Accordingly, defendant’s motion to reargue and vacate the court’s order dated October 9, 2009, is hereby granted to the extent that the parties’ summary judgment motions are denied, and this matter is set down for trial on the sole issue of medical necessity.

Civil Court of the City of New York, Kings County

042765/08

Plaintiff:

Max Valerio, Esq.

Gary Tsirelman, P.C.

55 Washington Street, Suite 606

Brooklyn, New York 11201

Defendant:

Dominick Dale, Esq.

Law Offices of Teresa M. Spina

170 Froehlich Farm Boulevard

Woodbury, New York 11797

Pamela L. Fisher, J.

Plaintiff, Beal-Medea Products, Inc., assignee of Michael Perez, instituted this action to recover first party no-fault benefits from Defendant GEICO. A trial was held before this Court on March 29, 2010 and April 5, 2010. After considering and evaluating the trial evidence and upon weighing and assessing the credibility of the witnesses, the Court makes the following findings of fact and conclusions of law.

The parties stipulated that Plaintiff established its prima facie case, that Defendant established timely denials, and that the sole issue for trial was medical necessity. The parties also stipulated to the admission of the bills and denials. It is Defendant’s burden at trial to show that the supplies provided to Plaintiff’s assignor were medically unnecessary. See Amaze Med. Supply, Inc. v. Eagle Ins. Co., 2003 NY Slip Op 51701U (NY App. Term 2003). To meet its burden, at a minimum, Defendant must establish a factual basis and medical rationale for its asserted lack of medical necessity, which is supported by evidence of the generally accepted medical/professional [*2]practices. See Nir v. Allstate Ins. Co., 2005 NY Slip Op 25090 (NY Civ. Ct. 2005).

At trial, Defendant called Dr. Michael Jacobs to testify regarding the peer review report of Dr. Andrew Miller. Plaintiff objected on hearsay grounds to Dr. Jacob’s testimony because he was not the author of the original peer report. The Court now turns to the question of whether it is permissible for a substitute doctor to testify.

The Appellate Term First and Second Department have held that a substitute peer doctor is permitted to testify as the witness is subject to full cross-examination, however they have limited the substitute peer’s testimony to the basis for denial as set forth in the original peer review report. Bronx Expert Radiology, P.C. v. New York Cent. Mut. Fire Ins. Co., 2009 NY Slip Op 51475U, 1 (NY App. Term 2009). See also Home Care Orthos. Med. Supply v. American Mfrs. Mut. Ins. Co., 14 Misc 3d 139(A) (2007); Spruce Med. and Diagnostic, P.C. v Lumbermen’s Mut. Cas. Co., 15 Misc 3d 143A(2007). Bronx Expert did not limit its holding to cases where documents are in evidence. When the parties have stipulated that either the peer report or the underlying medical records are admitted into evidence applying the Bronx Expert standard is clear. However when the parties have not stipulated documents into evidence the Court must determine to what extent may the witness rely on out-of-court documents without violating the hearsay rule. See Progressive Med., Inc. v Allstate Ins. Co., 2010 NY Slip Op 50219U (NY App. Term 2010).

In SK Med. Servs., P.C. v. New York Cent. Mut. Fire Ins. Co., 2006 NY Slip Op 26227, 1 (NY Civ. Ct. 2006), a lower court case decided before Bronx Expert, the parties stipulated that the peer report was in evidence and the court held that the substitute peer was permitted to testify. The substitute peer was limited to testifying to the facts and opinions contained in the peer review report. Id. The decision was based on the rationale that an insurer may not assert new grounds for its refusal to pay a claim and must adhere to the defense as stated in its denial. Id. Permitting a substitute peer to testify does not violate these principles as long as the substitute peer doctor is limited to the basis for the denial as set forth in the original peer report. Id. As the parties stipulated the peer into evidence, SK Medical did not address the evidentiary concerns associated with admitting the peer report or underlying medical records into evidence when a substitute peer testifies. When documents are not in evidence, the Plaintiff will inevitably object to the testimony of the peer or substitute peer on hearsay grounds. Bronx Expert does not expound upon hearsay concerns. Instead the case states that Defendant’s expert is not precluded from testifying because his opinion may have been based, at least in part, on his review of the assignor’s medical records prepared by plaintiff. See Bronx Expert.

In IAV Med. Supply, Inc. v Progressive Ins. Co., 2010 NY Slip Op 50433U, 5 (NY Civ. Ct. Mar. 15, 2010), the Court relied on the standard set forth in Bronx Expert, and held that a substitute peer doctor was permitted to testify when there were no documents in evidence because the witness would be subject to cross-examination and his testimony would be limited to the original peer review reports. IAV Medical allowed the testimony by relying on the fact that the peer reports had been submitted to the Plaintiff prior to trial as part of a summary judgment motion and expert disclosure, however the court did not address hearsay concerns.When the peer report and/or underlying medical records have not been stipulated into evidence, Defendant must overcome Plaintiff’s hearsay exception in order to elicit testimony from the expert witness. In this instance, the Court may rely on the framework laid by Wagman. Wagman v. Bradshaw, 292 AD2d 84, 85 (NY App. Div. 2d Dep’t 2002). In Wagman, the Appellate Division [*3]held that an expert witness may testify when he or she relied upon inadmissible out-of-court material to formulate an opinion provided: (1) it is of a kind accepted in the profession as reliable as a basis in forming a professional opinion, and (2) there is evidence presented establishing the reliability of the out-of-court material referred to by the witness. Id. See also Hambsch v New York City Tr. Auth., 63 NY2d 723); Supple Mind Acupuncture, P.C. v. State Farm Ins. Co., 2008 NY Slip Op 51856U (NY App. Term 2008). Under the purview of Wagman, it follows that a peer doctor as well as a substitute peer doctor would be permitted to testify as long as the witness is able to satisfy the two prong Wagman test. The testimony of the peer and substitute peer are deemed permissible because of an exception to the hearsay rule. Namely their testimony is deemed permissible when they have established the reliability of the out of court documents relied upon. It is a contradiction to permit the peer doctor to testify based on an exception to the hearsay rule and in turn prohibit a substitute peer from testifying. Both the peer and substitute peer are relying on out of court documents which fall under a hearsay exception. Generally, litigants can satisfy the first prong of Wagman, however establishing the second prong is more difficult.

Courts have held that Plaintiff invariably can not rebuff the reliability of the out of courts documents relied upon by an expert when the out of court documents consist of documents that plaintiff or assignor have prepared. See Andrew Carothers, M.D. (Martinez) v. GEICO, 2008 NY Slip Op 50456[U], 18 Misc 3d 1147[A], 859 NYS2d 892 (Civil Ct., Kings Co. 2008); Home Care Ortho. Med. Supply Inc., v. American MFRS. Mut. Ins. Co., 2007 NY Slip Op 50302[U], 14 Misc 3d 139[A], 836 NYS2d 499 (App. Term, 1st Dept. 2007); Primary Psychiatric Health, P.C., v. State Farm Mutual, 2007 NY Slip Op 50583[U], 15 Misc 3d 1111[A], 839 NYS2d 436 (Civil Ct., Kings Co. 2007). In Popular Imaging, P.C. v State Farm Ins. Co., 2009 NY Slip Op 52355U (NY Civ. Ct. 2009), a peer doctor was permitted to testify with respect to a peer report and underlying medical records which were not in evidence. The Court found that the peer doctor satisfied the Wagman two prong test for permitting expert testimony based upon out of court documents. Id. The Court held that a Plaintiff invariably can not rebuff the permissibility of the expert testimony on reliability grounds when those documents are Plaintiff’s or assignor’s documents.

In PLP Acupuncture, P.C. v. Progressive Cas. Ins. Co., 2009 NY Slip Op 50491U, 1-2 (NY App. Term 2009), the Court permitted a substitute peer doctor to testify. The Court applied the Wagman test and held that the substitute peer could rely upon out of court documents in forming his opinion as long as the substitute peer offers proof of the reliability of the out of court documents. Id. The Court further held that as some of the medical reports relied upon by defendant’s acupuncturist in his peer review report were prepared by plaintiff, plaintiff could not challenge the reliability of its own medical records and reports. Id.

In Dilon Med. Supply Corp. v. New York Cent. Mut. Ins. Co., 2007 NY Slip Op 52454U, 2 (NY App. Term 2007), the Appellate Term reversed a lower court which precluded a substitute doctor from testifying. The Court held that since defendant sought to call a medical expert witness who was available for cross-examination, and his testimony as to the lack of medical necessity of plaintiff’s services would be limited to the basis for the denials as set forth in the original peer review reports, the expert witness should have been permitted to testify. Id.

Applying this standard to the case at hand, the Court will permit the substitute peer doctor to testify and limit his testimony to the basis for denial as set forth in the original peer review. Plaintiff objected to Dr. Jacob’s testimony based upon hearsay grounds. The Court of Appeals has [*4]held that an expert witness may testify that he or she relied upon specific, inadmissible out-of-court material to formulate an opinion provided: (1) it is of a kind accepted in the profession as reliable as a basis in forming a professional opinion and (2) there is evidence presented establishing the reliability of the out-of-court material referred to by the witness. See Wagman. Dr. Jacobs testified that the out-of-court documents he relied upon were professionally reliable, however he did not present evidence establishing the reliability of the out-of-court material. Therefore, Defendant failed to demonstrate either that the testimony did not rely on out-of-court documents for the truth of the matters stated herein, or that the documents were being relied upon for their truth but fell within an exception to the rule against hearsay. See Progressive Med., Inc. v Allstate Ins. Co., 2010 NY Slip Op 50219U (NY App. Term 2010). Accordingly, Dr. Jacobs’ testimony is stricken and the Court finds that Defendant did not establish a factual basis and medical rationale for its asserted lack of medical necessity.

Judgement in favor of Plaintiff in the amount of $563.04, plus costs, disbursements, statutory interest and statutory attorneys fees. This constitutes the decision and order of the Court.

May 6, 2010

Pamela L. Fisher

Judge, Civil Court

Civil Court of the City of New York, Kings County

034843/08

Sylvain Jakobavics, Esq.

Attorney for Plaintiff

2630 Ocean Avenue

Suite A-3

Brooklyn, NY 11229

718.332.0577

James Hiebler & Assoc.

Attorney for Defendant

20 Main Street

Hempstead, NY 11550

516.564.8000

Johnny L. Baynes, J.

Plaintiff in this application for first party no-fault benefits pursuant to Insurance Law § 5106[a], See also, Mary Immaculate Hospital. v. Allstate Ins. Co., 5 AD3d 742 [2004], moves for summary judgment in the amount of $729.71 for medical services rendered.

A party moving for summary judgment must show, by evidence in admissible form, that there are no material issues of fact in controversy and that they are entitled to judgment as a [*2]matter of law. Once that showing is made, the burden shifts to the opponent of the motion for summary judgment to come forward with proof in admissible form that there are material issues of fact in controversy which require a trial. Alvarez v. Prospect Hospital, 68 NY2d320 (1986); Winegrad v. New York University Medical Center, 64 NY2d 851(1985).

In the instant matter, plaintiff has shown, by admissible evidence, that it was assigned the instant claim and submitted same to defendant and that said claim was not paid within thirty days of its receipt by defendant. The Affidavit of Alla Noginsky, the owner of plaintiff facility, is detailed, clear and sets forth with specificity the basis for her knowledge of the procedures with respect to the instant claim, the manner of gathering and recording the billing information and the specifics as to the mailing of the bill and NF-3 claim form to the defendant.

Moreover, the Affidavit of Donna King, defendant’s employee, a no fault examiner, acknowledges that the NF-10 submitted with the defendant’s motion papers is correct. That NF-10 denial of claim form states clearly that the denial was not issued with respect to the bills, received “11/26/06-2/16/07”, until April 10, 2007, in clear violation of the requirement of Insurance Law § 5106[a] that the denial be issued within thirty (30) days of their receipt by defendant.

The NF-10 describes the basis for the denial as follows:

AS PER CARRIER’S INVESTIGATION A PORTION OF

YOUR BILL WILL NOT BE HONORED ACCORDING TO

THE CLAIMANT’S RECORDED STATEMENT THE

ACUPUNCTURE SESSIONS LASTED15 MINUTES.

CARRIER WAS BILLED AN ADDITIONAL 15 MINUTES

WITH NEEDLE REINSURCION [sic] WHICH WAS NOT

RENDERED. AS PER DENIAL OF 12/11/06 NO FURTHER

TREATMENT WILL BE HONORED. CONSULTANT

REPORT PREVIOUSLY SENT.

Defendant’s excuse for the delay in denying the claim is that there was a “pending fraud investigation”. There is no indication that any verification request was ever sent to plaintiff after defendant received the bills. Such a request would have served to toll the time to deny the claim. Moreover, the report of Special Investigations Unit [hereinafter “SIU”] Investigator, Charles Rorke, is unsworn and not in admissible form as required by CPLR § 3212. However, even if it were admissible, Mr. Rorke concluded that “there is no evidence that [the accident forming the basis of the claim] was caused or staged”.

Defendant correctly states that “a no fault insurer is not precluded from asserting a defense of fraud, despite the insurer’s untimely denial of the claim”. Central Gen. Hosp v. Chubb Group of Ins. Cos., 90 NY2d 195 [1997]; Matter of Progressive Northwestern Ins Co. V Van Dina, 282 Ad2d 269 [2d Dept 2001]. However, no such tolling provision applies with respect to provider fraud, which seemingly forms the basis for defendant’s denial. Fair Price Medical Supply Corp v. Travelers Indemnity Co., 10 NY3d 556, 860 NYS2d 471 [2008]. [*3]

Defendant urges that the Court find there is an issue of fact as to fraud and set the matter down for trial on that issue. The Court declines to do so. Even if there were admissible evidence of provider fraud, as set forth above, such evidence would not excuse defendant’s untimely denial of the within claims.

The Court finds that plaintiff has met its prima facie burden of proving mailing. Defendant is, however, unable to prove timely denial.

Wherefore, the Clerk of Court is directed to enter judgment in favor of plaintiff in the sum of $729.71, together with statutory costs, interest and attorneys fees.

The foregoing Constitutes the Decision and Order of the Court.

Dated: January 22, 2010

____________________________________

JOHNNY L. BAYNES, JCC