[*1]

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

APPEARANCES OF COUNSEL

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

OPINION OF THE COURT

Jack M. Battaglia, J.

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

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

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

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

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

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

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

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

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

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

“[W]here the plaintiff relies solely on its proof of claim to establish a prima facie showing, without any additional submission of proof of medical necessity in admissible form, and, in opposition, the defendant provides proof in admissible form of the lack of medical necessity, summary judgment may, in appropriate circumstances, be awarded to the defendant unless the plaintiff comes forward with admissible proof in reply to create a triable issue of fact.” (A.B. Med. Servs. v New York Cent. Mut. Fire Ins. Co., 3 Misc 3d 136[A], 2004 NY Slip Op 50507[U], *2 [App Term, 2d & 11th Jud Dists 2004].)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Judgment awarded to State Farm, dismissing the claims.

Civil Court of the City of New York, Kings County

062603/03

Arlene P. Bluth, J.

Upon the foregoing cited papers, defendant moves to vacate and set aside a judgment entered against it on August 12, 2004, to enforce an alleged settlement and discontinuance agreement, and for sanctions. Plaintiff cross-moves for sanctions and costs. For the following reasons, defendant’s motion and plaintiff’s cross-motion are denied. [*2]

The pertinent facts on this motion and cross-motion are as follows: On April 8, 2003, plaintiff Brooklyn Heights Medical, P.C. sued to recover first-party No-Fault benefits in the amount of $4,199.05 plus statutory interest, costs, and attorneys’ fees for healthcare services allegedly rendered to plaintiff’s assignor, Elene Barrow. On May 24, 2004, this Court, in an Order by the Hon. Sylvia Hinds-Radix after oral argument, awarded summary judgment to plaintiff in the amount of $4,199.05 “as set forth in the summons and complaint.” Thereafter, the parties negotiated a settlement of the case for $3,000, apparently to facilitate swifter payment to plaintiff than by execution of the judgment, albeit of a lesser sum. On June 9, 2004, plaintiff’s counsel faxed to defendant’s counsel a typed, unsigned stipulation of settlement and discontinuance. The first page stated: “Please sign for confirmation and fax back to our office ASAP.” The stipulation of discontinuance also provided that if full payment was not made within 30 days, the stipulation would become null and void.

Defendant’s counsel telephoned plaintiff’s counsel requesting that signed stipulations be forwarded. Plaintiff’s counsel informed him that the firm’s policy was to require that the opposing party sign the documents first. On July 8, 2004, plaintiff’s counsel faxed a letter to

defendant’s counsel stating that, although 30 days had passed with no payment on the settlement forthcoming, defendant’s counsel would be given an additional seven days to submit payment and return the signed documents. Otherwise, the letter warned, the settlement would be deemed null and void. Defendant’s counsel did not submit payment or sign the stipulation. Defendant’s counsel claims he faxed a letter to plaintiff’s counsel on July 19, 2004 demanding a signed stipulation; however, the fax report appended to defendant’s exhibit indicates a failed transmission.

Defendant’s attempt to escape the judgment against it by breathing life into an unconsummated settlement has no legal support. The CPLR is clear that “[a]n agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered.” CPLR § 2104. Neither plaintiff nor plaintiff’s counsel ever “subscribed” i.e., signed the stipulation at issue. Therefore, plaintiff is not bound by the settlement.

Plaintiff was free to attach any conditions it wished to its settlement offer. Likewise, defendant was free to reject the offer based on objections to any of plaintiff’s terms. By failing to sign the stipulation and forward payment thereunder, defendant effectively rejected plaintiff’s offer, and allowed it to lapse on its terms.^[FN1] The case law cited by defendant is inapposite. Although detrimental reliance on an oral stipulation may preclude the application of CPLR [*3]

§ 2104, that exception does not apply on these facts. See La Marque v. North Shore Univ. Hosp., 120 AD2d 572, 573 [2nd Dept 1986].

Accordingly, defendant’s motion to vacate the judgment against it and enforce the settlement is denied. Because the Court does not find that either party acted in bad faith, defendant’s motion for sanctions and plaintiff’s cross-motion for sanctions and costs are both denied.

This is the Decision and Order of the Court.

Dated:

ARLENE P. BLUTH

Judge, Civil Court

ASN by__________ on __________

Footnotes

Footnote 1: The Court notes that if defendant’s counsel would have in fact signed and returned the stipulation, it would have been binding on plaintiff even without signature by plaintiff or its counsel. See Stefaniw v. Cerrone, 130 AD2d 483 [2nd Dept 1987].

Civil Court of the City of New York, Kings County

035013/04

Arlene P. Bluth, J.

Upon the foregoing cited papers, plaintiff moves for summary judgment pursuant to CPLR § 3212, and defendant cross-moves to compel depositions of plaintiff, plaintiff’s assignor, and plaintiff’s treating physicians pursuant to CPLR § 3124 and 3126. For the following reasons, plaintiff’s motion is granted, and defendant’s motion [*2]is denied as moot.^[FN1]

In this action, plaintiff Vital Points Acupuncture, P.C. seeks to recover first-party No-Fault benefits in the amount of $2,299 plus statutory, interest, costs, and attorneys’ fees, for healthcare services it allegedly rendered to plaintiff’s assignor, Muller Pierre, from May 28, 2003 to August 6, 2003, following an alleged accident on May 16, 2003.

Plaintiff submitted six bills to defendant, all of which were denied. The first four bills, mailed on June 10, 2003; June 25, 2003; July 15, 2003; July 28, 2003; and August 12, 2003, were each denied on August 15, 2003 on the ground that “medical justification ha[d] not been established”since plaintiff’s assignor had failed to appear for two independent medical examinations (IMEs). The last two bills were denied on September 22, 2003, and included an additional ground for denial: a so-called “low impact study” commissioned by the insurer and conducted on August 26, 2003, which found that the extent of injuries alleged could not have been caused by the accident.

To establish a prima facie entitlement to summary judgment as a matter of law, a plaintiff healthcare provider must submit proof in admissible form demonstrating that it is an assignee under a properly executed assignment, that the prescribed statutory claim form, setting forth the fact and amount of the loss sustained, was mailed to and received by the defendant, and that payment of no-fault benefits is overdue. See NYCRR 65-3.11(b)(2); Mary Immaculate Hosp. v. Allstate Ins. Co. 5 AD3d 742 [2d Dept 2004]; Triboro Chiropractic and Acupuncture P.L.L.C. ex rel. Tacopino v. Electric Ins. Co., 2 Misc 3d 135(A) [App Term, 2d & 11th Jud Dists 2004]. Plaintiff in this case has done so, thereby shifting the burden to defendant. The alleged defects in plaintiff’s proof of claim and assignment of benefits raised by defendant are without merit because defendant has waived any objections to plaintiff’s proof of claim and assignment form by not requesting verification of either during the prescribed 30-day period. See Park Health Ctr. v. Eveready Ins. Co., 2001 NY Slip Op 40665(U) [App Term, 2d and 11th Jud Dists 2001]; Mt. Sinai Hosp. v. Triboro Coach, 263 AD2d 11 [2d Dept 1999].

Further, defendant’s denials based on Mr. Pierre’s failure to attend IMEs were ineffective because defendant did not comply with the regulations governing requests for additional verification. The regulations treat a request for an IME as a request for additional verification. See 11 NYCRR 65-3.5(c). Thus, the insurer was required to give Mr. Pierre a second opportunity to undergo the requested IMEs by following up with a second verification request within 10 calendar days of the first request. See 11 NYCRR 65-3.6(b).

Irrespective of the untimeliness of its denials, however, defendant has raised a defense of lack of coverage. An insurer may assert at any time that the accident arises from an insurance fraud scheme or that the alleged injury was not caused by an insured incident and is therefore not covered under plaintiff’s policy. Central Gen. Hosp. v. Chubb Group of Ins. Companies, 90 NY2d 195 [1997]; Metro Medical Diagnostics, P.C. v. Eagle Ins. Co., 293 AD2d 751 [2d Dept 2002]; Amaze Med. Supply, Inc. v. AIU Ins. Co., 5 Misc 3d 139(A) [App Term, 9th & 10th Jud Dists 2004]; S & M Supply, Inc. v. Nationwide Mut. Ins. Co., 3 Misc 3d 138(A) [App Term, 2nd & 11th Jud Dists 2004]. A defense based upon lack of coverage must be “premised on the fact or founded belief that the alleged injury does not arise out of an insured incident.” See Central Gen. Hosp. v. Chubb Group of Ins. Companies, 90 NY2d 195, 199 [1997]; see also A.B. Medical Svcs. P.L.L.C. v. State Farm Mut. Auto. Ins. Co., 4 Misc 3d 143(A) [App Term, 2d and 11th Jud Dists 2004] .

Defendant bases its lack of coverage defense on the results of a so-called low-impact study which claims to show that the alleged accident could not have caused the injuries allegedly suffered by plaintiff’s assignor. In support of its allegation, defendant submits the sworn affidavit of Alfred Cipriani, an employee of FTI/SEA Consulting Applied Science, the company that conducted the study at defendant’s request. The low-impact study by itself, [*3]however, does not create a triable issue of fraud or lack of coverage. See A.M. Med., P.C. v. New York Cent. Mut. Ins. Co., 2 Misc 3d 918 [Civ Ct, Queens Cty 2004]. Mr. Cipriani’s affidavit does not explain in any detail and in non-technical language how the study was conducted and what the results mean. It does not specify the documents or physical evidence FTI/SEA relied upon, and does not establish any factual basis for the study’s conclusions or why such conclusions are reliable. Mr. Cipriani does not explain how the test was conducted, nor does the affidavit explain how the injuries of plaintiff’s assignor are incompatible with the study results.

Likewise, the affidavit of Justin Barth, a no-fault specialist for the insurer, does not indicate why the insurer believed that the alleged injury did not arise out of an insured incident and decided to commission a low-impact study in this case. Further, it fails to specify whether the alleged fraudulent conduct was a staged accident or the provider’s unilateral scheme to obtain no-fault benefits for unnecessary or excessive medical treatment, the latter being precluded by defendant’s untimely denials. See Melbourne Med., P.C. v. Utica Mut. Ins. Co., 4 Misc 3d 92, [App Term, 2nd Dept 2004].

Therefore, defendant has failed in its opposition papers to allege facts with the requisite particularity to create triable issues of fraud or lack of coverage. See A.B. Medical Services PLLC v. State Farm Mutual Auto Ins. Co., 3 Misc 3d 130(A) [App Term, 2d & 11th Jud Dists 2004]; Amstel Chiropractic P.C. JYQ Acupuncture P.C. v. Omni Indemnity Co., 2 Misc 3d 129 [2d and 11th Jud Dists 2004] (finding that unsubstantiated hypotheses and suppositions are insufficient to raise a triable issue of the assignor’s fraud); cf. Ocean Diagnostic Imaging P.C. v. State Farm Mut. Ins. Co., 2004 NY Slip Op 24498 [2d and 11th Jud Dists 2004] (investigator’s affidavit set forth ample facts and founded beliefs to establish the existence of a triable issue of fact as to whether there was a lack of coverage).

Accordingly, plaintiff is awarded summary judgment in the amount of $2,299 plus statutory interest, costs, and attorneys’ fees.

This is the Decision and Order of the Court.

Dated:

ARLENE P. BLUTH

Judge, Civil Court

ASN by__________ on __________

Footnotes

Footnote 1:This decision is issued in conjunction with this Court’s decision in a companion case, Vital Points Acupuncture, P.C. a/a/o Claudette Pierre v. New York Central Mutual Fire Insurance Company, Index Number 35007/04.

[*1]

Civil Court of the City of New York, Kings County, February 28, 2005

APPEARANCES OF COUNSEL

Israel, Israel & Purdy, LLP (Scott H. Fisher of counsel), for plaintiff. Robert P. Tusa (Josephine M. Celano of counsel), for defendant.

OPINION OF THE COURT

Milagros A. Matos, J.

Facts

Plaintiff medical provider Dr. Jacob Nir, assignee of Josapphat Etienne, instituted this action to recover first-party no-fault benefits from defendant insurer Allstate. Dr. Nir, a neurologist, was denied payment by the insurer for diagnostic testing he performed on the patient/insured Josapphat Etienne. The patient was injured in an automobile accident on January 15, 2004. On February 6, 2004, Dr. Nir examined the patient and conducted electromyography and nerve conduction velocity (EMG/NCV) tests that revealed nerve injury in the patient’s lower back.

At the time the services were rendered, the patient Josapphat Etienne was insured under a no-fault insurance policy issued by defendant Allstate. The no-fault benefits were properly assigned to Dr. Nir, who submitted claim forms to Allstate in the amount of $2,227.71 on February 24, 2004. On April 7, 2004, Allstate made a partial payment to Dr. Nir in the amount of $211.85, leaving a balance of $2,015.86. Defendant denied the remaining claims based upon a peer review report stating that the tests were not medically necessary. Before trial the parties stipulated that the only issue for determination by the court was whether the diagnostic testing was medically necessary as defined by Insurance Law § 5102 (a) (1), and thus whether or not defendant properly denied payment of the claim. The court conducted a full trial of this matter on February 7, 2005.

At trial, both sides presented the testimony of a physician. For defendant, the doctor that had authored the peer review report testified that the diagnostic tests were not medically necessary based on his review of Dr. Nir’s medical reports. The peer review doctor did not examine the patient himself. Even though the diagnostic testing resulted in positive findings of neurological damage to the patient’s lower back, the peer review doctor found that the tests, performed three weeks after the accident, were “medically unnecessary.” Specifically, the peer review doctor testified that not enough time had elapsed from the time of the accident to the time [*2]of the testing, and therefore the testing was premature.

Plaintiff’s expert witness testified that the EMG/NCV testing was medically necessary based on his review of Dr. Nir’s medical report and accredited medical publications. He testified that the patient’s symptoms suggested that there was injury to the nerve. The patient presented complaints of persistent “radiating” pain in the cervical and lower back as well as numbness and tingling. The expert witness concluded that the tests were medically necessary to diagnose radiculopathy, or nerve damage. Finally, plaintiff’s witness testified that the timing of the testing was consistent with the generally accepted medical practices set forth by the American Association of Electrodiagnostic Medicine (AAEM) for both EMG and NCV testing.

Discussion

Although there have been no appellate court rulings on the issue, trial courts have consistently held that the insurer bears both the burden of production and the burden of persuasion with respect to medical necessity of the treatment or testing for which payment is sought. (King’s Med. Supply Inc. v Country-Wide Ins. Co., 5 Misc 3d 767, 771 [Civ Ct, Kings County 2004] [“(i)t is by now firmly established that the burden is on the insurer to prove that the medical services or supplies in question were medically unnecessary”]; Behavioral Diagnostics v Allstate Ins. Co., 3 Misc 3d 246 [Civ Ct, Kings County 2004]; A.B. Med. Servs. v GEICO Ins., 2 Misc 3d 26 [App Term, 2d Dept 2003]; see also Karen B. Rothenberg and Jennifer R. Rapaport, No-Fault: The Litigation Epidemic, NYLJ, Jan. 5, 2004, at 4, col 4.) Therefore, once plaintiff has established its prima facie case, defendant must prove that the treating doctor’s services were not medically necessary. As an element of its proof defendant may use a peer review report, which is a medical professional’s written evaluation of the medical necessity of the services provided. In the summary judgment context, defendant may raise triable issues of fact for lack of medical necessity with a peer review report that “set[s] forth a sufficiently detailed factual basis and medical rationale for the claim’s rejection.” (Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U] [App Term, 2d & 11th Jud Dists 2003]; S & M Supply v Kemper Auto & Home Ins. Co., 2 Misc 3d 134[A], 2004 NY Slip Op 50209[U] [App Term, 2d & 11th Jud Dists 2004].) In other words, “to withstand a motion for summary judgment, a peer review report must set forth a factual basis sufficient to establish, prima facie, the absence of medical necessity.” (Choicenet Chiropractic P.C. v Allstate Ins. Co., 2003 NY Slip Op 50672[U], *1 [App Term, 2d & 11th Jud Dists 2003].)

In the trial context, few decisions elucidate on defendant’s burden of proof, or what evidence may be sufficient to establish that the services were medically unnecessary. At a minimum, defendant must establish a factual basis and medical rationale for the lack of medical necessity of plaintiff’s services. (See CityWide Social Work & Psychological Servs. v Travelers Indem. Co., 3 Misc 3d 608 [Civ Ct, Kings County 2004]; Inwood Hill Med. v Allstate Ins. Co., 3 Misc 3d 1110[A], 2004 NY Slip Op 50565[U] [Civ Ct 2004] [at trial, the defense that the claim was not medically necessary “must be supported by sufficient factual evidence or proof and cannot simply be conclusory”].) Therefore, if defendant [*3]provides an insufficient factual basis or medical rationale for its peer review report at trial, the court will afford the peer review report minimal weight, and defendant may fail to sustain its burden of proof.

A peer review report’s medical rationale is insufficient if it is unsupported by or controverted by evidence of medical standards. For example, the medical rationale may be insufficient if not supported by evidence of the “generally accepted medical/professional practice.” (CityWide Social Work & Psychological Servs. v Travelers Indem. Co., 3 Misc 3d 608, 612 [Civ Ct, Kings County 2004].) “Generally accepted practice is that range of practice that the profession will follow in the diagnosis and treatment of patients in light of the standards and values that define its calling.” (CityWide Social Work & Psychological Servs. v Travelers Indem. Co., 3 Misc 3d at 616, supra.) Alternatively, if the plaintiff offers evidence that its medical services were consistent with generally accepted medical practice, the defendant’s peer review report will be afforded less weight and defendant may fail to sustain its burden of proof at trial. (See Elm Med., P.C. v American Home Assur. Co., 2003 NY Slip Op 51357[U], *12 [Civ Ct 2003] [defendant peer review doctor’s conclusion that the electrodiagnostic testing was not “properly documented” did not contradict plaintiff’s testimony of medical necessity and defendant failed to carry its burden].)

A peer review report’s factual basis may be insufficient if it fails to provide specifics of the claim, is conclusory, or otherwise lacks a basis in the facts of the claim. (Amaze Med. Supply v Allstate Ins. Co., 3 Misc 3d 43 [App Term, 2d & 11th Jud Dists 2004].) For example, a defendant may not establish lack of medical necessity if the only reason for the denial was that the peer review doctor did not have enough information in the claim file upon which a determination could be made. (Park Neurological Servs. P.C. v GEICO Ins., 4 Misc 3d 95 [App Term, 2d Dept 2004].) One court held that a peer review report may be insufficient if the peer review doctor merely reviewed records, rather than examining the insured patient, in preparing the peer review report. (Alliance Med. Off. v Allstate Ins. Co., 196 Misc 2d 268 [Civ Ct, Kings County 2003]; see also Fifth Ave. Pain Control Ctr. v Allstate Ins. Co., 196 Misc 2d 801 [Civ Ct, Queens County 2003].)

In this case, defendant’s doctor recommended denial of plaintiff’s claim because, in his opinion, the diagnostic testing performed by plaintiff Dr. Nir was done prematurely. During testimony the peer review doctor cited only a review of Dr. Nir’s medical reports as the basis for his peer review report. He did not physically examine the patient before writing the peer review report. He cited no medical authority, standard, or generally accepted medical practice as a medical rationale for his findings. Finally, defendant was not able to explain how the tests could be medically unnecessary when the tests did in fact yield positive findings of nerve damage. Such scant factual basis and medical rationale will not sustain defendant’s burden of proof.

Furthermore, defendant’s case was competently rebutted by plaintiff’s expert witness. Defendant could not establish its conclusory medical rationale, that the testing was done [*4]prematurely, in the face of plaintiff’s evidence of the generally accepted medical practice. Plaintiff’s witness testified that the AAEM recommends EMG/NCV testing either “acutely” after or “several weeks” after an accident occurs. On cross-examination, defendant’s peer review doctor agreed that the AAEM is authoritative in the field of electrodiagnostic medicine. The generally accepted medical practice cited by the AAEM was consistent with Dr. Nir’s practice in this case.

Conclusion

Based on the evidence, the court concludes that the testimony and peer review report of defendant’s peer review doctor were insufficient to sustain defendant’s burden of proof on the only issue before this court, lack of medical necessity. Judgment should be entered for the plaintiff in the amount of $2,015.86, plus interest from February 24, 2004 and attorneys’ fees as provided by the insurance regulations, together with the statutory costs and disbursements of this action.

Civil Court, Kings County

046215/02

Loren Baily-Schiffman, J.

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

MOTION FOR SUMMARY JUDGMENT

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

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

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

AssignorDate of Date Claim Date of Reason for

ServiceReceivedDenialDenial

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

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

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

Korets2/2/00unknownNo denial received

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

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

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

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

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

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

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

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

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

Savelyn2/1/00unknownNo denial received

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

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

A.Claims Previously Paid

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

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

B.Timeliness of the Denials [*4]

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

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

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

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

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

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

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

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

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

C.Propriety of Denial Based On “Pending Investigation”

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

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

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

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

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

D.Authentication of Assignment of Benefits;

Invalid Verification of Treatment Forms

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

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

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

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

F.Plaintiff’s Standing to Bring This Action

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

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

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

DISCOVERY MOTION

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

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

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

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

CONCLUSION

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

This constitutes the Decision and Order of this Court.

DATED:February 17, 2005

______________________________

LOREN BAILY-SCHIFFMAN, J.C.C.

Civil Court, Kings County

056085/04

Loren Baily-Schiffman, J.

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

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

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

Plaintiff’s Prima Facie Case

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

Defendant’s Opposition

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

Fraud Defense

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

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

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

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

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

This constitutes the Decision and Order of the Court.

DATED:February 10, 2005

______________________________

LOREN BAILY-SCHIFFMAN, J.C.C.

Civil Court of the City of New York, Kings County

97383/04

Eileen N. Nadelson, J.

Plaintiff instituted this action for first party benefits pursuant to New York’s No-Fault Insurance Law. Plaintiff allegedly provided its assignor with psychological services. Its bill was received by Defendant insurer on August 8, 2003, as evidenced by the statements appearing on its Denial of Claim Form.

According to Defendant, on the same day it received Plaintiff’s bill it mailed Plaintiff a verification request. This notice states:

We are writing to advise there will be a delay with regard to the disposition of

your Psychological claim.

Processing of this claim will be delayed pending our receipt of the results of an

independent medical examination scheduled to verify:

the injury is casually related to the motor vehicle accident [*2]

On September 10, 2003, Defendant avers that it mailed a second notice that states:

Pleased be advised we cannot consider payment due to the following:

We are delaying your bill pending the results of the causality IME

Plaintiff denies ever receiving these notices, and Defendant has not provided a legally sufficient proof of mailing said notices to Plaintiff.

On January 13, 2004, more than 30-days after receipt of the claim, Defendant issued its denial of claim, basing its denial of benefits on Plaintiff’s “failure to provide requested verification and examination under oath to support the rendition and necessity of services and to establish your entitlement to benefits.”

In its response to the instant motion, Defendant asserts that Plaintiff has engaged in a consistent pattern of fraud with respect to billing for psychological services under the No-Fault statute. In support of this contention, Defendant provides a form it sent to the Frauds Bureau of the New York State Insurance Department and the affidavits of various assignors in other claims who indicate that they did not receive the services billed for from Plaintiff. The court notes that no such affidavit is provided for the instant assignor.

11 NYCRR sec. 65-3.3 states that an insurer must either pay or deny a claim for first party benefits under the No-Fault law within 30 days of receipt of a properly completed claim. This 30-day time period may be extended if the insurer requests verification of the claim, and until such verification is received the 30-day period is tolled. See generally Westchester County Medical Center v. New York Central Mut. Fire Ins. Co., 262 AD2d 553, 692 N.Y.S. 2d 665 (2d Dept. 1999)

I n order to meet the mandates of the regulations, the insurer must demonstrate that the request for verification was properly mailed to the claimant. See Hospital for Joint Diseases v. Nationwide Mut. Ins. Co., 284 AD2d 374, 726 N.Y.S. 2d 443 (2d Dept. 2001). In the instant case, Plaintiff denies ever receiving such requests and Defendant has not refuted that allegation with an affidavit of a person with personal knowledge of the mailing or of the insurer’s mailing procedures. Allstate Social Work and Psychological Svcs PLLC v. GEICO General Insurance Co., 2005 NY Slip Op. 50024(U), 2005 WL 107046 (NY City Civ. Ct). Therefore, for this reason alone the court may conclude that the 30-day period prescribed under 11 NYCRR sec. 65-3.3 was not properly tolled.

Furthermore, the wording of the notices as written above do not constitute proper verification requests. The notices, as submitted in the papers to the court, merely state that the processing of the claim will be delayed pending the results of the verification, but nowhere has Plaintiff been specifically asked to verify the claim. Consequently, these notices do not constitute proper verification requests that would toll the 30-day period pursuant to 11 NYCRR sec. 65-3.8. [*3]

However, even though Defendant failed to adhere to statutory time requirements, the court must still address Defendant’s argument that Plaintiff’s claims are not covered because of fraud. The lateness of a denial or the absence of a required denial does not prohibit the insurer from raising the defense of lack coverage based upon the fact or founded belief that the alleged injury did not arise out of an insured incident. A.M. Medical Services, P.C. v. AIU Insurance Company, 4 Misc 3d 1027A, 2004 NY Slip Op. 5108(U) (Nassau 2004). The issue of fraud is not intended to escape the notice of the court simply because of a late denial. Valley Psychological, P.C. v. Liberty Mutual Insurance Co., 195 Misc 2d 540, 760 N.Y.S. 2d 627 (Albany 2002). However, although the affidavits submitted indicate serious problems with Plaintiff’s billing practices and services, Defendant has failed to demonstrate any fraud with respect to the instant claim.

All of the documents appearing in the papers refer to different claims with different assignors, and the court cannot rule based on the adage that “where there’s smoke, there’s fire.” The burden is on the Defendant to provide the court with adequate evidence of potential fraud with respect to the parties before it in order for the court to substantiate its decision. Therefore, the court cannot conclude that there was any problem with respect to the claim at bar.

Based on the foregoing, the court is forced to conclude that Plaintiff is entitled to summary judgment in the amount of $1200.92 plus statutory interest, attorney’s fees and costs.

Dated: February 10, 2005

__________________________

EILEEN N. NADELSON, J.C.C.

Civil Court of the City of New York, Kings County

055906/04

Loren Baily-Schiffman, J.

Plaintiff moves for summary judgment on claims for first party No-Fault benefits.^[FN1] Plaintiff, a provider of health services and the assignee of its patient’s claims for payment, seeks $1,559.33 plus statutory interest and attorneys fees for three claims for acupuncture services. For the reasons stated below, Plaintiff’s motion is granted.

In order to establish a prima facie case on behalf of a provider, plaintiff must submit proof that the claim was mailed and received and that defendant did not pay or deny the claim within thirty (30) days. Mary Immaculate Hosp. v. Allstate, 5 AD3d 742 (2d Dept 2004); Liberty Queens Medical P.C. v. Liberty Mutual, 2002 W.L. 31108069 (App. Term 2nd & 11th Dists., 2002). Pursuant to Insurance Law §5101 et seq. and the regulations promulgated [*2]thereunder, an insurer must either pay or deny a claim for No-Fault benefits within thirty (30) days of the date that the proof of claim is received. Insurance Law §5106; 11 NYCRR 65.15 (g)(3). The thirty (30) day period may be extended by an insurer’s request for verification of the claim within ten (10) business days for claims submitted prior to April 5, 2002 and fifteen (15) business days for subsequent claims. 11 NYCRR 65.15 (d) & (e). An insurer who fails to deny or pay a claim within the thirty (30) day period is precluded from raising any defenses to the claim, other than lack of coverage or fraud. Presbyterian Hospital v. Maryland Casualty Co., 90 NY2d 274 (1997); Presbyterian Hospital v. Aetna Casualty & Surety Co., 233 AD2d 433 (2d Dept., 1996); Central Hospital v. Chubb, 90 NY2d 195 (1997); Mt. Sinai v. Triboro Coach, 263 AD2d 11 (2d Dept., 1999). An insurer’s failure to raise objections within the ten (10) or (15) day verification period constitutes a waiver of defenses based thereon. Id.

A party moving for summary judgment must show by admissible proof that there are no material issues of fact in controversy and that they are entitled to judgment as a matter of law. Alvarez v. Prospect Hospital, 68 NY2d 320 (1986); Winegrad v. New York Univ. Medical Center, 64 NY2d 851 (1985). Once that showing is made, the burden shifts to the opponent of summary judgment to come forward with proof in admissible form that there are material issues of fact in controversy that require a trial. Id.

Plaintiff asserts that it is entitled to summary judgment because defendant failed to pay any of the subject claims within thirty (30) days of receipt and denied the claims on an impermissible basis: failure of the assignor to appear for IME’s. Defendant opposes the motion on the following bases: 1) that plaintiff’s motion papers fail to prove the medical necessity of the services provided; 2) that the assignment of benefits is not authenticated; 3) the bills attached to the motion are not in admissible form and, as such, may not be considered in support of plaintiff’s motion; and 4) the claims were timely denied.

DISCUSSION

The case law in this Judicial District is clear that plaintiff need not prove medical necessity, authenticate the assignment of benefits or present its bills in admissible form in order to make out its prima facie case for summary judgment. Plaintiff need only submit proof that the claim was mailed and received and that defendant did not pay or deny the claim within thirty (30) days. Mary Immaculate Hosp. v. Allstate, 5 AD3d 742 (2d Dept 2004); Liberty Queens Medical P.C. v. Liberty Mutual, 2002 W.L. 31108069 (App. Term 2nd & 11th Dists., 2002). Accordingly, the only issues which need be decided by the Court are the timeliness of defendant’s denials of the three claims that are the subject of this action and, if the Court finds any of the denials to be timely, whether failure to appear for IME’s is a proper basis on which to deny a claim.

Defendant responded to plaintiff’s claims dated June 26, 2002, July 23, 2002 and August 19, 2002 with one denial dated September 9, 2002. In that denial, defendant indicates that the June 26, 2002 claim was received on July 29, 2002; the July 23, 2002 claim was received on [*3]August 21, 2002; and the August 19, 2002 claim was received on August 26, 2002. Each of plaintiff’s claims is accompanied by a postal log stamped by the Postal Service indicating that the claim was mailed on the day it is dated. The explanation for why each claim was received by defendant weeks after it was mailed comes from the Affirmation of Gary Coore, a Litigation Supervisor employed by defendant. Mr. Coore states that defendant received the June 26, 2002 claim on July 1, 2002 and on July 18, 2002 sent plaintiff a letter indicating that defendant was delaying investigation of the claim pending receipt of certain identified information. Defendant states that this letter is a request for verification that was timely requested within the fifteen (15) business days permitted by NYCRR §65-3.5. According to Mr. Coore, the requested information was received on July 29, 2002. Independent medical examinations (IMEs) were then scheduled for the assignor, Mason Cory. Mr. Cory allegedly failed to appear for six (6) IMEs scheduled for August 1, 2002 and then re-scheduled for August 15, 2002. A denial was issued on September 9, 2002 on the basis that the assignor failed to appear for IMEs. Defendant asserts that this denial was timely.

The Affidavit of Gary Coore states that the defendant received plaintiff’s July 23, 2002 claim on July 26, 2002 and on July 31, 2002 sent a delay letter to plaintiff requesting certain specified information. Mr. Coore also states that this claim was denied on September 9, 2002 for the assignor’s failure to appear at the IMEs scheduled for August 1, 2002 and then re-scheduled for August 15, 2002. Mr. Coore states that plaintiff’s August 19, 2002 claim was received on August 21, 2002 and denied on September 9, 2002 for failure to appear at the aforementioned IMEs.

Timeliness of June 26, 2002 Claim

This claim was received by defendant on July 1, 2002 accordingly to the admission of Mr. Coore contained in his Affidavit in opposition to the instant motion. Mr. Coore states that a request for verification was sent on July 18, 2002, but no proof of mailing of this document is provided to permit the Court to determine whether the request was timely sent. Mr. Coore goes on to admit that responses to the request for verification were received on July 29, 2002. The claim was denied on September 9, 2002 on several bases: 1) that all No-Fault benefits for injured person were denied effective May 19, 2002; and 2) that the injured person failed to appear for IME’s on August 1, 2002 and August 15, 2002.

Pursuant to 11 NYCRR §65.15(c)(3), after receipt of requested verification information, an insurer has thirty (30) days within which to pay or deny the subject claim. Here, defendant has admitted that it received the requested verification information on July 29, 2002, yet the claim was not denied until September 9, 2002. The actions of the insurer in scheduling IME’s after receipt of the requested information did not extend its time to pay or deny the claim Choicenet Chiropractic, PC v. Elco Administrative Services Co., 2002 NY Slip Op. 40382 (Civil Court, Queens Co.), nor is the failure to appear for IME’s a permissible basis upon which to deny a claim. Urban Medical Diagnostics, PC v. Liberty Mutual Insurance Co. 2001 NY [*4]Slip Op. 40655, (App. Term, 2d & 11th Jud. Dists, 2001); Millenium Medical Diagnostics, PC v. Liberty Mutual Insurance Co., 2001 NY Slip Op. 40654 (App. Term, 2d & 11th Jud. Dists., 2001). Accordingly, the July 26, 2002 claim was not timely denied.

Timeliness of July 23, 2002 Claim

The July 23, 2002 claim was received by the insurer on July 31, 2002 and denied on September 9, 2002. Annexed to Mr. Coore’s Affidavit is a document he refers to as a “pend letter” which by its terms requests that certain information be provided. However, there is no indication in the papers in opposition to the instant motion that this document was mailed to plaintiff, on what date or by what means it was mailed or if any response to the letter was received. Mr. Coore only states that IME’s were scheduled, the assignor failed to appear for the IME’s and a “timely denial” was issued on September 9, 2002.

As indicated above, the assignor’s failure to appear for IME’s is not a proper basis to deny a claim. Urban Medical Diagnostics, PC v. Liberty Mutual Insurance Co., supra; Millenium Medical Diagnostics, PC v. Liberty Mutual Insurance Co., supra. Moreover, as defendant has failed to prove that a request for verification was mailed to plaintiff, if the “pend letter” can be considered a request for verification, the thirty (30) day time period within which to deny a claim was never extended. The claim was received on July 31, 2002 and was not paid or denied within thirty (30) days thereafter. Accordingly, the denial of this claim is untimely.

Timeliness of August 19, 2002 Claim

This claim was received by the insurer on August 21, 2002. Defendant does not allege in its opposition papers that a request for verification of this claim was sent to plaintiff. Mr. Coore’s Affidavit states that IME’s were scheduled to be held prior to the receipt of this claim. The assignor failed to appear at these IME’s and

the insurer denied the claim on September 9, 2002 on the basis of the failure to appear at these previously scheduled IME’s. The insurer’s actions in response to this claim are analogous to situations where an insurer relies on a previous denial to deny a current claim. The Appellate Division, 1st Department, stated the following in A&S Medical, PC v. Allstate Ins. Co., 2005 NY Slip Op. 00505 (1 Dept., 2005)

When a provider of medical services submits a claim as assignee of an insured, neither the statute nor the regulations contemplate the insurer simply sitting mute and failing to act upon the claim, silently and secretly relying upon an earlier denial issued directly to the insured.

Quoting Atlantis Medical, PC v. Liberty Mutual Ins. Co., 2002 NY Slip Op. 40043 (Dist Ct, Nassau Co,3d Dist, Great Neck Part). The statute and the regulations, similarly, do not permit the insurer after receipt of a claim to

simply sit mute” and deny the claim based upon an earlier failure to appear at IME’s. While this [*5]denial is timely, the basis for the denial is unavailable to defendant. Urban Medical Diagnostics, PC v. Liberty Mutual Insurance Co., supra; Millenium Medical Diagnostics, PC v. Liberty Mutual Insurance Co., supra.

For all the foregoing reasons, summary judgment is granted to plaintiff in the sum of $1559.33 plus statutory interest and attorneys to be computed by the Clerk of the Court.

This constitutes the Decision and Order of the Court.

Dated:February 9, 2005

__________________________

HON. LOREN BAILY-SCHIFFMAN

Footnotes

Footnote 1:Plaintiff has presented motion papers that are generic in nature and are more like a brief on No-Fault law than support for specific relief related to the claims and denials annexed as exhibits to the motion papers. The Court looks with disfavor on this practice which requires the Court to leaf through the exhibits to divine the factual basis for the relief sought in the motion.

Civil Court of the City of New York, Kings County

307729/03

Delores J. Thomas, J.

Plaintiff moves for an order granting it summary judgment. The motion is granted.

Plaintiff, Ocean Diagnostic Imaging P.C. As Assignee of Mohammed Rahman (“Ocean Diagnostic”), commenced this action to recover the sum of $1,758.40 for medical services it provided to the assignor, Mohammed Rahman (“Rahman”), and its attorney’s fees [Summons And Complaint Plaintiff’s Exhibit A].

Defendant, American Protection Insurance Company (“American Protection”), opposes the motion in its entirety. Its counsel maintains that Ocean Diagnostic’s bills were properly denied [Affirmation In Opposition of Lawrence Chiarappo, Esq. dated May 28, 2004 Paragraph Five]. Defendant’s denial was based upon the Physician Peer Review conducted by Dr. Daniel G. Kassan, M.D. on March 2, 2003 [Defendant’s Exhibit B].

Dr. Kassan’s report stated the following: [*2]

There was no evidence of significant injury on physical examination of cervical spine or right knee that would support the need for MRI of cervical spine or right knee. The injuries described could be adequately evaluated with physical examination and close monitoring of progress.

Dr. Kassan concluded that the two MRIs “were inappropriate and without necessity.” He recommended that payment should not be made to the health care provider.

On March 13, 2003, American Protection denied the submitted claim based upon Dr. Kassan’s peer review.

Defendant’s denial stated that:

. . . there was no necessity for the MRI. Therefore, your bill is denied in full. Denial of Claim Form dated March 13, 2003 [Defendant’s Exhibit C].

Defendant sent the denial to plaintiff on March 13, 2003 [Affidavit of Kimberly Palmer dated May 26, 2004 Paragraph Seven].

In an action to recover first-party no-fault benefits for medical services rendered to its assignor, the health care provider establishes a prima facie entitlement to summary judgment by proof it submitted the statutory claim form setting forth the fact and the amount of loss sustained and that the payment of no-fault benefits was overdue (Star Medical Services P.C. v. Eagle Insurance Company, 2004 NY Slip Op. 24482, 2004 WL 2779347 [App Term, 2nd & 11th Jud Dists, December 1, 2004]).

The insurer must submit proof in admissible form to rebut plaintiff’s prima facie showing to oppose a motion for summary judgment (A.B. Medical Services, PLLC v. Lumbermens Mutual Casualty Company, 4 Misc 3d 86, [App Term, 2nd & 11th Jud Dists, 2004]).

An insurer may timely deny a claim on the ground that the medical treatment was medically unnecessary based upon a peer review. The peer review must set forth a sufficient factual foundation and medical rationale for the rejection of the claim (Triboro Chiropractic and Acupuncture P.L.L.C. v. Electric Insurance Company, 2 Misc3rd 135(A) [App Term, 2nd & 11th Jud Dists, 2004]). The peer review must be affirmed (A.B. Medical Services, PLLC v. New York Central Mutual Fire Insurance Company, 3 Misc 3d 136(A), 2004 WL 1302031 [App Term, 2nd & 11th Jud Dists, 2004]) or sworn to (A.B. Medical Services, PLLC v. Lumbermens Mutual Casualty Company, supra). If the report is not affirmed or sworn to, the court may grant summary judgment to the plaintiff (A.B. Medical Services, PLLC v. New York Central Mutual Fire Insurance Company, supra).

Notwithstanding defendant’s counsel’s representation [Chiarappo Affirmation Paragraph Nine], Dr. Kassan’s peer review was not affirmed. Nor did Dr. Kassan swear to the truth of the representations made in his report.

Since the peer review was not sworn to or affirmed, it is not admissible. Therefore, American Protection may not utilize Dr. Kassan’s report to oppose plaintiff’s application for summary relief.

In light of the fact that defendant has not offered any other basis for denying movant’s [*3]application, plaintiff’s motion for summary judgment is granted in its entirety.

The clerk is directed to enter judgment in favor of the plaintiff and against the defendant in the sum of $1,758.40 with statutory interest measured from August 5, 2003, along with statutory attorney’s fees, and applicable costs and disbursements.

This constitutes the decision and order of the court.

Dated:Brooklyn, New York

February 9, 2005

DELORES J. THOMAS

Judge Civil Court

Civil Court, Kings County

91337/04

Eileen N. Nadelson, J.

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

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

11 NYCRR sec. 63-3.16(a)(12) states that:

A provider of health care services is not eligible for reimbursement under

section 5102(a)(1) of the Insurance Law if the provider fails to meet any [*2]

applicable New York State or local licensing requirement necessary to

perform such services in New York or meet any applicable licensing

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

such service is performed.

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

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

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

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

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

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

This constitutes the decision and order of the court.

[*3]Dated: February 8, 2005

__________________________

EILEEN N. NADELSON, J.C.C.