CV-002459-19

Attorneys for Plaintiffs: Economou & Economou, P.C., 85 Cold Spring Road, Suite 200, Syosset, NY 11791 (516) 682-0010

Attorneys for Defendants: Martyn and Martyn, 330 Old Country Road, Suite 211, Mineola, NY 11501 (516) 739-0329

The following papers have been considered by the Court on this special proceeding submitted April 12, 2019

Notice of Petition w/ annexed supporting papers 1
Affirmation in Opposition w/ annexed supporting papers 2
Reply Affirmation 3

Petitioner brings this proceeding seeking an order, pursuant to CPLR 7511(1), vacating the master arbitration award herein, dated November 14, 2018, which affirmed the lower arbitration award, dated August 10, 2018. Petitioner further requests that, upon such award being vacated, it be awarded the amount of $2,027.00, together with statutory interest from December 29, 2016, as well as, costs and attorneys fees.

Specifically, petitioner contends that the master arbitrator’s award was arbitrary, capricious and incorrect as a matter of law in upholding a denial of benefits defense premised upon exhaustion of policy limits notwithstanding that the policy was not exhausted at the time petitioner’s otherwise valid claim was earlier denied in good faith by respondent carrier.

New York public policy strongly favors arbitration (Hackett v Milbank, Tweed, Hadley & McCloy, 86 NY2d 146,155 [1995]; Maross Constr., Inc. v Central New York Regional Transp. Authority, 66 NY2d 341, 346 [1985]). Since the purpose of arbitration is to allow final, binding resolution of parties’ claims without resorting to the courts, the scope of review of an arbitration decision is extremely limited. “Moreover, courts are obligated to give deference to the decision of the arbitrator” (In re N.Y.C. Transit Authority v Transport Workers’ Union of America, Local [*2]100, AFL-CIO, 6 NY3d 332, 336 [2005]).

Judicial review of a master arbitrator’s award is restricted to the grounds set forth in CPLR 7511, except in those instances where the award is $5,000 or more (see Matter of Petrofsky (Allstate Ins. Co.), 54 NY2d 207, 210 [1981]). As applicable in this case, Section 7511(b)(1)(iii) of the CPLR allows the court to vacate an arbitration award upon the application of either party, if it finds that the arbitrator prejudiced the applicant’s right by exceeding the scope of his or her authority in making the award. In no-fault insurance cases, it is the role of the master arbitrator to review the lower arbitration award and determine whether it was made in a rational manner and that it was neither arbitrary nor capricious (see Allstate Ins. Co. v Keegan, 201 AD2d 724, 725 [2d Dept 1994]).

“A master arbitrator exceeds his statutory power by making his own factual determination, by reviewing factual and procedural errors committed during the course of the arbitration, by weighing the evidence, or by resolving issues such as the credibility of the witnesses (see Matter of Smith [(Fireman’s Ins. Co.) 55 NY2d 224 [1982]]” (Id.; see also Matter of Jasser v Allstate Ins. Co., 77 AD3d 751 [2d Dept 2010]). On the other hand, even if the master arbitrator’s decision vacates the lower arbitration award based upon the fact that the lower arbitrator made an error of law, this is within the scope of the master arbitrator’s review, and “the courts are limited in their further review of the master arbitrator’s resolution of that error of law, since we generally will not vacate an arbitrator’s award where the error claimed is the incorrect application of a rule of substantive law, unless it is so irrational as to require vacatur” (Matter of Smith (Firemen’s Ins. Co.) 55 NY2d at 232 [citations and internal quotations omitted] [bold type added]).

Here, there is no claim that the master arbitrator made his own factual determination. Rather petitioner’s contention that the master arbitrator’s decision to affirm the lower arbitration was “contrary to controlling law” (Petition at ¶ 10) is necessarily premised on the contention that, as such, it is “so irrational as to require vacatur” within the meaning of Matter of Smith (Firemen’s Ins. Co.), supra.

Where as here, both the arbitrator and the master arbitrator cited and considered the split between the First and Second Departments on the issue of policy exhaustion and priority of payment (compare Harmonic Physical Therapy, P.C. v Praetorian Ins. Co., 47 Misc 3d 137(A) [App Term 1st Dept [2015]; Alleviation Med. Servs., P.C. v. Allstate Ins. Co., 55 Misc 3d 44 [App Term 2d Dept [2017]), ultimately following the rationale of Harmonic, the master arbitrator’s award cannot be found to be irrational. As the master arbitrator did not exceed his authority in affirming the lower arbitration award, vacatur of that award is not warranted,

Accordingly, petitioner’s motion is denied in all respects, and the master arbitrator’s award is confirmed (CPLR 7511[e]; Matter of Mercury Cas. Co. v Healthmakers Med. Group, PC, 67 AD3d 1017 [2d Dept 2009]).

So Ordered.

Dated: June 3, 2019
Hon. Ignatius L. Muscarella
DISTRICT COURT JUDGE

601499/2017

For Plaintiff: Jason Tenenbaum, Esq.
For Defendant: Rachel Drachman, Esq.

The following papers read on this motion:

Karen V. Murphy, J.

Defendant moves this Court for an Order dismissing the complaint on the ground that this matter has already been adjudicated in arbitration, and that the pleading fails to state a cause of action. Defendant also seeks to consolidate this matter with a Bronx County matter identified by Supreme Court Index No. 25976/2016E (Motion Sequence 001).

Plaintiff opposes Motion Sequence 001 and cross-moves for an Order granting plaintiff summary judgment adjudging and declaring that defendant is not entitled to no-fault coverage for the motor vehicle accident that occurred on December 17, 2014 (Motion Sequence 002). Motion Sequence 002 is unopposed.

With regard to Motion Sequence 001, that branch seeking to consolidate this action with a Bronx County action entitled Global Liberty Insurance Co. v. FJ Orthopedics and Pain Management, PLLC, a/a/o Mary King is denied. The Bronx County action was disposed on May 1, 2017 by judgment granting Global Liberty Insurance Company of New York a default judgment declaring that defendant FJ Orthopedics and Pain Management, PLLC is not entitled to reimbursement for services performed on defendant’s assignor (Mary King) for alleged injuries sustained in a motor vehicle accident that occurred on December 17, 2014.

The action pending before this Court involves the same assignor, Mary King, and results [*2]from the same motor vehicle accident.

That branch of defendant’s motion seeking dismissal of this action on the ground that arbitration has already been held is also denied. Defendant contends that “the matter was submitted for Arbitration. In light of the fact that the claims herein have already had an opportunity to be adjudicated, and both parties had a fair hearing, it would be a waste of the parties’ time and resources . . . and a waste of this Courts (sic) time and resources and against the interests of judicial economy, for the parties to reset litigation of the subject claims and begin the process anew in the supreme courts.”^[FN1]

Contrary to defendant’s contention, Insurance Law § 5106 (c) and 11 NYCRR 4.10 (h)(1) (ii) expressly provide that either party to a matter submitted to arbitration has the right to a de novo determination of the dispute in the event that the master arbitrator’s award equals or exceeds $5,000, exclusive of interest and attorneys’ fees (Matter of Greenberg, 70 NY2d 573 [1987]; AutoOne Insurance Company v. Eastern Island Medical Care, P.C., 141 AD3d 499 [2d Dept 2016]; Allstate Insurance Company v. Nalbandian, 89 AD3d 648 [2d Dept 2011]; Progressive Insurance Company v. Strough, 55 AD3d 1402 [4th Dept 2008]).

Moreover, there is no evidence presented that the policy in question contained a binding arbitration clause, nor has defendant ever moved for confirmation of the arbitration award, which, if confirmed, would be accorded res judicata effect (see Aetna Casualty & Surety Company v. Mantovani, 240 AD2d 566 [2d Dept 1997]).

That branch of defendant’s motion seeking dismissal of the complaint for failure to plead with particularity in accordance with CPLR § 3013 is also denied. This Court has reviewed the complaint filed in this action and finds that it sets forth the facts underlying the cause of action seeking declaratory judgment with sufficient particularity to give notice of plaintiff’s claim. The series of transactions and occurrences intended to be proved, including the billing and verification demands that were sent and not complied with, are adequately set forth (Di Mauro v. Metropolitan Suburban Bus Authority, 105 AD2d 236, 239 [2d Dept 1984]).

Although defendant does not specifically refer to CPLR §3211 (a)(7) in claiming that plaintiff fails to state a cause of action, the Court will address defendant’s claim as one made pursuant to the statute.Defendant has answered; however, this branch of its motion is not time-barred by CPLR § 3211 (e).

When deciding a motion to dismiss pursuant to CPLR § 3211(a)(7), the court must afford the complaint a liberal construction, accepting all facts as alleged in the complaint to be true, and according the plaintiffs the benefit of every favorable inference (see Marcantonio v Picozzi III, 70 AD3d 655 [2d Dept 2010]). The sole criterion on a motion to dismiss is “whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cognizable action at law a motion for dismissal will fail” (Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; see also Miglino v. Bally Total Fitness of Greater New York, Inc., 20 NY3d, 342, 351 [2013]; Leon v Martinez, 84 NY2d 83, 87-88, [1994]; Sokol v Leader, 74 AD3d 1180, 1180-1181 [2d Dept 2010]; Gershon v Goldberg, 30 AD3d 372, 373 [2d Dept 2006]). “Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss” (EBC I, Inc. v Goldman, Sachs & [*3]Co., 5 NY3d 11, 19 [2005]).

“A court is, of course, permitted to consider evidentiary material submitted by a defendant in support of a motion to dismiss pursuant to CPLR 3211 (a)(7) [citation omitted]” (Sokol, supra at 1181). “When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one, and, unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it… dismissal should not eventuate” (Guggenheimer, supra at 275; see also Vertical Progression, Inc. v. Canyon Johnson Urban Funds, 126 AD3d 784 [2d Dept 2015]; YDRA, LLC v. Mitchell, 123 AD3d 1113 [2d Dept 2014]; Korsinsky v. Rose, 120 AD3d 1307 [2d Dept 2014]).

“Whether or not issue has been joined, the court, after adequate notice to the parties, may treat the motion as a motion for summary judgment” (CPLR § 3211 [c]). Without proper notice, a “court’s sua sponte treatment of the motion as one for summary judgment [would] deprive[ ] plaintiff of the ‘opportunity to make an appropriate record’ and thus thwart[ ] the very purpose of CPLR 3211 (c)” (Mihlovan v. Grozavu, 72 NY2d 506, 508 [1988], quoting Rovello v. Orofino Realty Co., 40 NY2d 633, 635 [1976]).

“There are nevertheless three circumstances under which a court’s failure to provide CPLR 3211 (c) notice may be overlooked. One circumstance is when CPLR 3211 (c) treatment is specifically requested not by one party, but by all of the parties, or is at least requested by the same party that is aggrieved by the summary judgment determination. A second circumstance is when a dispute involves no questions of fact, but only issues of law argued by all parties, such as in the context of declaratory judgment actions involving an issue of statutory construction or the application of an unambiguous contractual provision. The third circumstance is when the respective submissions of both parties demonstrate that they are laying bare their proof and deliberately charting a summary judgment course [citations omitted]” (Hendrickson v. Philbor Motors, Inc., 102 AD3d 251, 258-259 [2d Dept 2012]).

In this case, defendant claims that it complied with plaintiff’s verification request, and submits an affidavit from an individual employed as a Billing Manager for MD Capital Advisors, the third-party billing company that handles all no-fault billing for FJ Orthopedics PLLC, purporting to establish that the surgery center that hosted the surgical procedure performed on Mary King responded to Global Liberty’s verification requests. Defendant also attaches a copy of three small photographs that are claimed to be the surgical photographs requested by plaintiff Global Liberty.

Accordingly, defendant lays bare its proof, arguing that this action should be dismissed because it complied with plaintiff’s verification requests; as established in arbitration, the surgical photos were provided to plaintiff by the surgery center where the procedure was performed; “[w]hether they received the photos from FJ Orthopedics, from Doshi Diagnostic or from Excel Surgery Center should be of no importance as long as they have the photos in their possession.”

In response to defendant’s motion, plaintiff cross-moves for summary judgment (Motion Sequence 002). Plaintiff’s motion was e-filed and served on April 6, 2017; defendant’s motion was e-filed on March 15, 2017. Both Motion Sequences 001 and 002 bore return dates of April 7, 2017. On April 7, 2017, both sequences were adjourned to April 17, 2017, on which date they were marked submitted for the Court’s consideration. Defendant does not oppose plaintiff’s summary judgment motion. Thus, it would not thwart the purpose of CPLR § 3211 (c) to [*4]convert defendant’s motion to one for summary judgment. Plaintiff, having responded to defendant’s motion with its own motion for summary judgment, has not been deprived of an opportunity to make an appropriate record (cf. Mihlovan, supra). Moreover, defendant has not been deprived of an opportunity to supplement its proof by responding to plaintiff’s summary judgment motion; plaintiff’s summary judgment motion was adjourned to April 17, 2017, but defendant apparently chose not to oppose it. Accordingly, the Court will now consider plaintiff’s summary judgment motion.

It is well recognized that summary judgment is a drastic remedy and as such should only be granted in the limited circumstances where there are no triable issues of fact (Andre v. Pomeroy, 35 NY2d 361[l974]). Summary judgment should only be granted where the court finds as a matter of law that there is no genuine issue as to any material fact (Cauthers v. Brite Ideas, LLC, 41 AD3d 755 [2d Dept 2007]). The Court’s analysis of the evidence must be viewed in the light most favorable to the non-moving party, herein the defendant (Makaj v. Metropolitan Transportation Authority, 18 AD3d 625 [2d Dept 2005]).

A party moving for summary judgment must make a prima facie showing of entitlement as a matter of law, offering sufficient evidence to demonstrate the absence of any material issues of fact. (Winegrad v New York Univ. Med. Center, 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]).

“A no-fault claim is overdue if it is not paid or denied within thirty [30] days of receipt (see Insurance Law § 5106 [a]; 11 N.Y.C.R.R. 65-3.8 [a][1] & [c]) unless, within fifteen [15] business days of receipt of the claim, the insurer requests additional verification (see 11 N.Y.C.R.R. 65-3.8 [b][3])” (Westchester Medical Center a/a/o Salvatore Dipietro v GEICO, 2011 NY Slip Op 30862 [Sup Ct, Nassau County 2011]; A.B. Medical Services PLLC a/a/o David Ruiz v. GEICO General Insurance Company, 22 Misc 3d 1116A, 880 NYS2d 222 [Dist Ct, Nassau County 2008]).

Plaintiff contends that “[i]t is uncontroverted that the MRI films were never received” pursuant to plaintiff’s written verification requests; therefore, the no-fault billing is not overdue, and it should be declared that plaintiff does not owe defendant no-fault benefits.

In support of its motion, plaintiff submits, inter alia, the summons, complaint, and answer, the written verification requests made to defendant Lewin and to Doshi Diagnostic Imaging Services for the MRI films, and the affidavit of plaintiff’s no-fault claims adjuster.

Based upon the affidavit of Regina Abbatiello, plaintiff’s no-fault claims adjuster, plaintiff establishes that the surgery was performed on March 24, 2015, and the bill from defendant was received on April 9, 2015. The bill was delayed pending receipt of operative photographs and MRI films. By written request dated March 20, 2015, plaintiff requested, inter alia, “a copy of the R/Shoulder MRI films” from Doshi Diagnostic Imaging Services. Apparently, plaintiff did not receive the MRI films, and it sent a second written verification request to Doshi dated April 20, 2015.

Not having received the MRI films, plaintiff, by written requests dated April 28, 2015 and May 28, 2015, notified defendant and requested a copy of the right shoulder MRI films from defendant. The letters are addressed to Jonathan Lewin MD PC, and they state in relevant part, “[a]lso awaiting a copy of the R/Shoulder MRI films from Doshi Diagnostic MRI which were requested from the MRI facility and the doctor’s office. Once received the claim will be reviewed and processed.” Ms. Abbatiello’s affidavit avers that the MRI films were never received from either Doshi or from defendant Lewin.

Based upon the foregoing, plaintiff has established its prima facie entitlement to summary judgment as a matter of law that the claim is not overdue, since the additional verification remains outstanding, and that defendant is not entitled to reimbursement for no-fault benefits a/a/o Mary King related to the motor vehicle accident that occurred on December 17, 2014 (St. Vincent’s Hospital of Richmond v. American Transit Insurance Company, 299 AD2d 338 [2d Dept 2002]; 11 NYCRR 65.15 [g][1][i], [2][iii]).

Defendant does not oppose the instant cross-motion; therefore, defendant fails to raise a triable issue of fact as to the failure to respond to the request for the right shoulder MRI films.

Even considering defendant’s submissions upon Motion Sequence 001 as opposition to the instant summary judgment motion, defendant still fails to raise a triable issue of fact sufficient to defeat plaintiff’s motion.

The affidavit of Mike Manzo, billing manager for MD Capital Advisors, states that MD Capital Advisors is the third party billing company for FJ Orthopedics PLLC, which is not a party to this action. In fact, the affidavit appears to have been submitted in connection with the prior arbitration entitled FJ Orthopedics PLLC / Mary King, Applicant and Global Liberty Insurance Company of New York. Thus, it is unknown to the Court how Mr. Manzo’s affidavit is germane to defendant Lewin named in this action. Assuming, however, that his affidavit is relevant, because it relates to the assignor in this matter (Mary King), Mr. Manzo speaks to the issue of the surgical photographs, which is not the subject of the summary judgment motion. Moreover, his affidavit is vague as to “the verification response” and “requested documents” allegedly submitted to plaintiff on June 2, 2015; however, the response was likely the letter on FJ Orthopedics letter head, signed by Mike Manzo, dated May 21, 2015, which is annexed to Manzo’s affidavit. That letter states that, “your request for MRI films and color photos of surgey (sic) for the above mention (sic) claim is overly burdensome as neither our client FJ Orthopedics nor the patient Mary King does not (sic) have access to the actual films. . . The films are in Doshi Diagnostic’s possession . . . therefore, we enjoin you to obtain the actual films . . . with the attached medical authorizations signed by Mary King.”

Defendant’s submissions do nothing to raise a triable issue of fact as to the failure to provide the MRI films, nor do the submissions controvert the established fact that plaintiff attempted to get the films directly from Doshi first, by sending a first request and then a follow-up request, and when it received no films, plaintiff notified defendant of the request. Plaintiff sent the verification requests directly to Doshi, and plaintiff also timely informed the applicant, the defendant in this action, of the nature of the verification sought, and from whom it was sought, after the initial requests went unsatisfied (Doshi Diagnostic Imaging Servs. v. State Farm Insurance Co., 16 Misc 3d 42 [App Term 2d Dept 2007]; see also Advantage Radiology, P.C. v. Nationwide Mutual Insurance Company, 55 Misc 3d 91 [App Term 2d Dept 2017]).

The fact that FJ Orthopedics, albeit not a party to this action, may have provided plaintiff with a HIPPA authorization for the films does not constitute a response to the request for verification. Plaintiff did not need a HIPPA authorization to obtain the films (Eagle Surgical Supply, Inc. v. GEICO Insurance Co., 41 Misc 3d 134[A][App Term 1st Dept 2013]), and in any event, FJ Orthopedics’ statement made in its May 21, 2015 letter that the request “is overly burdensome” is evidence of its lack of motivation to satisfy plaintiff’s verification request.

Defendant has failed to raise a material, triable issue of fact; therefore, plaintiff’s summary judgment motion is granted.

Submit a judgment on notice.

The foregoing constitutes the Order of this Court.

Dated: June 22, 2017

Mineola, NY

Karen V. Murphy

Footnotes

Footnote 1:Defendant has submitted a master arbitration award in another matter, but plaintiff has submitted the correct master arbitration award pertaining to the parties in this action.

[*1]

Supreme Court, Nassau County, February 1, 2017

APPEARANCES OF COUNSEL

Joseph Henig, P.C., Bellmore, for plaintiff.

Law Offices of Printz & Goldstein, Woodbury, for defendant.

The motion by the plaintiff, St. Barnabas Hospital, as assignee of Dawn Henry (motion sequence No. 01), seeking an order pursuant to CPLR 3212, granting it summary judgment against the defendant, Government Employees Insurance Company (hereinafter GEICO), and the cross motion by the defendant, GEICO (motion sequence No. 02), seeking an order pursuant to CPLR 3212, granting it summary judgment and dismissing the complaint, are determined as hereinafter provided.

This is an action to recover no-fault benefits on a hospital no-fault billing. The plaintiff, St. Barnabas, is the assignee for health-related services rendered to GEICO’s insured, Dawn Henry, during the period of April 10, 2016 through April 13, 2016, for injuries sustained as a result of a motor vehicle accident that occurred on April 10, 2016. At issue is whether the defendant, GEICO, timely and properly requested additional verification from the plaintiff, St. Barnabas, upon its receipt of proof of the claim which effectively tolls the 30-day time period within which GEICO must pay or deny the claim for such services rendered in the amount of $43,212.59.

On April 21, 2016, the plaintiff, St. Barnabas, billed the defendant, GEICO, utilizing a hospital facility form (form NF-5) and a UB-04, seeking payment of a hospital bill in the sum of $43,212.59 (see exhibit 1 attached to plaintiff’s motion). The billing was sent via certified mail, return receipt requested, and was received by the defendant, GEICO, on April 25, 2016 (see exhibit 2 attached to plaintiff’s motion). On May 16, 2016, GEICO served a request for additional verification. On May 20, 2016, St. Barnabas served a response letter acknowledging receipt of GEICO’s request wherein it objected to the validity of the request. GEICO received St. Barnabas’ response on May 23, 2016. On June 20, 2016, GEICO served a second follow-up request for additional verification. St. Barnabas never responded to GEICO’s second request. The instant action was filed shortly thereafter.

The plaintiff alleges that the defendant, GEICO, failed to either pay the hospital bill or issue a timely denial. In opposition,{**55 Misc 3d at 787} the defendant, GEICO, contends that the plaintiff failed to demonstrate its prima facie entitlement to summary judgment on the grounds that (i) the plaintiff failed to show the claims were not denied within 30 days or that the basis for the denial was conclusory, vague or had no merit; (ii) the plaintiff’s supporting affidavit is deficient in that it cannot be demonstrated that the affiant, employed by a third-party claims administrator, has personal knowledge of the hospital’s practices or procedures and as such cannot establish that the bills are in fact business records of the hospital; and (iii) the plaintiff’s affiant failed to establish proper proof of mailing.

The defendant, GEICO, also cross-moves for summary judgment on the grounds that the plaintiff failed to provide all items requested by GEICO that were necessary to verify the claim, pursuant to 11 NYCRR 65-3.8 (a) (1), and which GEICO was entitled to receive pursuant to 11 NYCRR 65-3.5 (c). GEICO claims that the 30-day period within which the claim must be paid or denied was tolled due to its request for additional verification of the claim within 15 business days from GEICO’s receipt of proof of the claim.

Upon receipt of proof of the claim from St. Barnabas, GEICO alleges that it timely made a request for additional verification, specifically seeking a breakdown of which services constituted necessary emergency health services in order to issue appropriate payment on the claim (see aff of Kristen Savold ¶ 18 [B], annexed to defendant’s cross motion as exhibit B). In support of its cross motion, GEICO submits the State of New York Insurance Department’s Circular Letter No. 4 (2011) which partially amended section 5103 (b) (2) of the Insurance Law to prohibit a no-fault insurer from excluding from coverage necessary emergency health services rendered in a general hospital for any person who is injured as a result of operating a motor vehicle while in an intoxicated condition or while the person’s ability to operate the vehicle is impaired by the use of a drug within the meaning of Vehicle and Traffic Law § 1192. Circular Letter No. 4 further provides:

“For the purposes of compliance with Chapter 303, the Department interprets ‘necessary emergency health services’ to mean services rendered to a person by or under the supervision of a physician, paramedic, or emergency medical technician to treat the onset of sudden pain or injury and to stabilize the person, provided the person is transported{**55 Misc 3d at 788} directly from the scene of the motor vehicle accident to the general hospital. Pursuant to this interpretation, once the sudden pain or injury is treated and the person is stabilized, (generally in the emergency room) the no-fault insurance coverage ceases. In order to facilitate timely payment, a hospital should specify what portion of the bill consists of ‘necessary emergency health services.’ If the hospital does not specify what portion consists of ‘necessary emergency health services,’ then a no-fault insurer may request this information.” (See letter from GEICO to St. Barnabas dated May 16, 2016; NY St Ins Dept 2011 Circular Letter No. 4, RE: No-Fault Intoxication Coverage; Chapter 303 of the Laws of 2010, annexed to defendant’s cross motion as exhibit B.)

GEICO referenced the foregoing language from Circular Letter No. 4 in its letter requesting additional verification. GEICO specified in its request that St. Barnabas provide a “breakdown of charges up to where the patient was found to be stabilized.”

In its response, St. Barnabas stated that GEICO’s “request for a ‘breakdown of charges up to where the patient was found to be stabilized’ is not required under the insurance regulations or no fault law.” (See St. Barnabas response letter dated May 20, 2016, annexed to defendant’s cross motion as exhibit B.) St. Barnabas further responded that “[t]he patient received ‘Necessary Emergency Health Services’ during h[er] admission at the hospital.” (Id.)

The defendant, GEICO, further submits that it followed up with St. Barnabas for a second request for additional verification. To date, St. Barnabas has not responded to GEICO’s follow-up request.

GEICO also submits that it had a good faith basis for requesting additional verification of the bill at issue. In support of its cross motion, GEICO proffers the toxicology report for the insured provided by St. Barnabas with its bill, which shows that the patient had a blood alcohol level of .15% and tested positive for THC, an active ingredient in the drug marijuana, at the time of her admission to the emergency room. GEICO further proffers the physician affirmation of Dr. Kenneth Marici (see Dr. Marici affirmation and toxicology report, annexed to defendant’s cross motion as exhibit E). Based on the intoxication exclusion in GEICO’s policy, GEICO contends that the insured’s injuries are excluded from coverage (see{**55 Misc 3d at 789} policy endorsement, annexed to defendant’s cross motion as exhibit D). Thus, GEICO argues that its obligation to pay the plaintiff’s claim was limited to those items deemed “necessary emergency health services” and that it timely and properly requested additional verification from St. Barnabas in this regard.

GEICO argues that its timely request for additional verification indefinitely tolled the 30-day time period within which an insurer must pay or deny a claim until its receipt of the information requested. GEICO further argues that it would be inequitable for a provider to be rewarded for its failure to adequately respond to numerous timely requests for verification, relying upon Infinity Health Prods., Ltd. v Eveready Ins. Co. (67 AD3d 862 [2d Dept 2009]). Thus, GEICO posits that St. Barnabas’ action is premature since it failed to properly respond to GEICO’s request for verification, relying upon Hospital for Joint Diseases v New York Cent. Mut. Fire Ins. Co. (44 AD3d 903 [2d Dept 2007]). Based on the evidence presented, GEICO seeks a determination that the hospital bill is not yet overdue and for this court to dismiss the complaint.

In opposition and reply, the plaintiff, St. Barnabas, contends that it demonstrated its prima facie entitlement to judgment as a matter of law by submitting the requisite billing form, the affidavit of its third-party biller, and confirmation that the plaintiff’s hospital bill, form NF-5, was received by the defendant. St. Barnabas further asserts that GEICO is precluded from interposing any defenses due to its failure to either pay or deny the claim within 30 calendar days after it received proof of the claim.

With regard to GEICO’s claim that it timely and properly requested additional verification, counsel for St. Barnabas mimics the hospital’s verification response letter stating that “there is no authority in the Insurance Law, No-Fault Regulations, or in case law which shows that the defendant’s verification request was proper.” (See plaintiff’s opposition to cross motion ¶ 29.) In support of its claim that the verification request was not proper, St. Barnabas’ counsel relies upon various statutory provisions that set forth the fee schedule and inpatient hospital billing pursuant to which claims must be paid.

Notably, St. Barnabas concedes that “regarding the defendant’s request for a ‘breakdown of charges up to the point where the patient was found to be stabilized,’ Insurance Law § 5103 (b) (2) was amended and took effect on January 26, 2011.” (Id.{**55 Misc 3d at 790} ¶ 44.) St. Barnabas agrees that the law was amended to prohibit insurers from excluding from coverage payment for “necessary emergency health care services” when a patient is intoxicated by alcohol or drugs. However, St. Barnabas finds untenable the defendant’s position that insurers are only required to pay for care until the patient is stabilized, claiming that GEICO has impermissibly interpreted the statutory language. St. Barnabas further submits that in this case, the patient was involved in a serious motor vehicle accident involving multiple injuries, and that “[t]his period of time was the patient’s treatment for ‘necessary emergency health care services.’ ” St. Barnabas contends that it “fully responded to the Defendant’s alleged verification requests.”

The court notes that St. Barnabas’ papers are silent as to Circular Letter No. 4 and the specific language permitting no-fault insurers to request additional information to ascertain which services are in fact “necessary emergency health services.”

Legal Analysis

It is well settled that the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by providing sufficient evidence to demonstrate the absence of material issues of fact (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 [1957]; Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Zuckerman v City of New York, 49 NY2d 557 [1980]; Bhatti v Roche, 140 AD2d 660 [2d Dept 1988]). To obtain summary judgment, the moving party must establish its claim or defense by tendering sufficient evidentiary proof, in admissible form, sufficient to warrant the court, as a matter of law, to direct judgment in the movant’s favor (Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065 [1979]).

A provider of medical services can establish a prima facie showing of entitlement to summary judgment by submitting proof that the requisite claim forms were mailed and received by the carrier and that payment is overdue (Insurance Law § 5106 [a]; New York & Presbyt. Hosp. v Countrywide Ins. Co., 44 AD3d 729 [2d Dept 2007]; Westchester Med. Ctr. v Liberty Mut. Ins. Co., 40 AD3d 981 [2d Dept 2007]; New York & Presbyt. Hosp. v Allstate Ins. Co., 30 AD3d 492 [2d Dept 2006]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2d Dept 2004]). Pursuant to 11 NYCRR 65-3.8 (a) (1), “No-fault benefits are overdue if not paid within 30 calendar days after{**55 Misc 3d at 791} the insurer receives proof of claim, which shall include verification of all . . . the relevant information requested pursuant to section 65-3.5 of this Subpart” (see also Insurance Law § 5106; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274 [1997]). An insurer can extend this 30-day time frame by making a timely request for additional verification of the claim “within 15 business days” after receipt thereof (Infinity Health Prods., Ltd. v Eveready Ins. Co., 67 AD3d 862 [2d Dept 2009]; 11 NYCRR 65-3.5 [b]).

If a sufficient prima facie showing is demonstrated, the burden then shifts to the non-moving party to come forward with competent evidence to demonstrate the existence of a material issue of fact, the existence of which necessarily precludes the granting of summary judgment and necessitates a trial (Zuckerman v City of New York, 49 NY2d 557 [1980], supra).

The plaintiff has failed to establish a prima facie showing that it is entitled to judgment as a matter of law on its claim to recover no-fault medical payments. The plaintiff’s claim is premature as the evidence presented demonstrates that the 30-day time period within which an insurer must pay or deny a claim has not been triggered. In turn, the plaintiff failed to sufficiently respond to the defendant’s requests for additional verification.

The plaintiff’s position that the verification request was improper because it is not required under the insurance regulations or no-fault law is without merit. The defendant, GEICO, referenced Circular Letter No. 4 dated January 12, 2011, issued by the State of New York Insurance Department, in its original request for additional verification. The purpose of the Circular Letter is to advise no-fault insurers and health insurers of the amendment of Insurance Law § 5103 (b) (2) and to interpret the regulations related thereto. While the plaintiff concedes that the law was amended in January 2011 to reflect that insurers are prohibited from excluding from coverage necessary emergency health services even where the patient was intoxicated by alcohol or drugs, the plaintiff fails to address the portion of the Circular Letter at issue here. Specifically, the plaintiff submits no argument or opposition with regard to the portion of the Circular Letter that permits a no-fault insurer to request a hospital to specify what portion of the bill consists of “necessary emergency health services.” Rather, the plaintiff claims that the statutory language does not explicitly provide as such. The court disagrees. 11 NYCRR 65-3.5 (c) provides{**55 Misc 3d at 792} that “[t]he insurer is entitled to receive all items necessary to verify the claim directly from the parties from whom such verification was requested.”

The court also disagrees with the plaintiff’s contention that it fully responded to the defendant’s verification requests by merely stating, “[t]he patient received ‘Necessary Emergency Health Services’ during h[er] admission at the hospital.” The plaintiff’s response is vague in that it fails to delineate whether some, most or all of the services were in fact “necessary emergency health services.” Further, in its Circular Letter, the Insurance Department contemplated the need for hospitals to specify what portion of the bill consists of such emergency services. The Insurance Department also defined “necessary emergency health services” as sudden pain or injury that is treated until the patient is stabilized, generally in the emergency room.

In the matter sub judice, the patient was admitted to St. Barnabas for approximately three days from April 10, 2016 through April 13, 2016. The defendant, GEICO, submitted sufficient proof in admissible form showing that the patient was intoxicated by alcohol and marijuana at the time of the accident. As such, GEICO was entitled to request information concerning the breakdown of services until the patient was found to be stabilized in accordance with Insurance Law § 5103 (b) (2), as amended, and the related Circular Letter No. 4 interpreting the statute. Such information would permit GEICO to assess when the no-fault insurance coverage ceases, if at all, and the appropriate amount of the claim that must be paid.

Pursuant to 11 NYCRR 65-3.6 (b), where there is a timely original request for verification, but no response to the request for verification is received within 30 calendar days thereafter, or the response to the original request for verification is incomplete, then the insurer, within 10 calendar days after the expiration of that 30-day period, must follow up with a second request for verification. When a no-fault medical service provider fails to respond or inadequately responds to two timely verification requests, the 30 days in which to pay or deny the claim is tolled and does not begin to run. Accordingly, any claim for payment by the medical service provider after two timely requests for verification is premature (see Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 106 AD3d 157 [2d Dept 2013]).

Thus, as the defendant correctly maintains, the plaintiff’s initial claim for payment was premature and was not complete{**55 Misc 3d at 793} until the defendant received additional verification of the claim as requested (see 11 NYCRR 65-3.8 [a] [1]; [b] [3]; Nyack Hosp. v State Farm Mut. Auto. Ins. Co., 19 AD3d 569 [2d Dept 2005]).

Where, as here, the insurer presents sufficient evidence that it timely requested additional verification and the hospital fails to provide the information requested, the complaint must be dismissed as premature (St. Vincent’s Hosp. of Richmond v American Tr. Ins. Co., 299 AD2d 338 [2d Dept 2002]).

Accordingly, it is hereby ordered that the plaintiff’s motion (motion sequence No. 01) seeking summary judgment, pursuant to CPLR 3212, is denied; and it is further ordered that the defendant’s cross motion seeking summary judgment, pursuant to CPLR 3212, is granted, and the complaint is dismissed.

13672/13

Baker Sanders, LLC Attorney for the Plaintiff 100 Garden City Plaza, Suite 500 Garden City, New York 11530 Ph: (516) 741-4799

Bruno, Gerbino, & Soriano, LLP Attorney for the Defendant 445 Broad Hollow Road, Suite 220 Melville, New York 11747 Ph: (631) 390-0010

Papers Submitted:

Upon the foregoing papers, the Defendant STATE FARM AUTO INS. CO.’s motion (“State Farm”) seeking an order pursuant to CPLR § 3212 granting it summary judgment dismissing the complaint against it or in the alternative, an order pursuant to CPLR § 3212 (e) granting it partial summary judgment, is determined as provided herein.

The Plaintiff in this action, NY Rehab Pain Management & Medical Services, P.C. (“NY Rehab”) seeks to recover first party no-fault benefits for services allegedly supplied to its [*2]assignor, Gamal Elshekh, to treat him for injuries he allegedly suffered as the result of an automobile accident on December 26, 2008. State Farm maintains that the Plaintiff’s failure to appear for an Examination Under Oath (“EUO”) is violative of both the terms and conditions of the applicable insurance policy as well as the No-Fault regulations and entitles it to dismissal of the complaint.

The facts pertinent to the determination of this motion are as follows:

In response to 21 bills submitted by NY Rehab for services it allegedly provided Elshekh on December 29th , 30th and 31st and January 2nd, 3rd, 5th, 6th, 7th, 8th, 9th, 12th, 14th and 17th, by letter dated February 2, 2009, which was allegedly mailed on February 3rd, State Farm allegedly notified NY Rehab that it must submit to an EUO, which would be conducted on March 2, 2009. Similarly, in response to bills submitted by NY Rehab for services it allegedly provided Elshekh on January 17th, 19th, 21st, 26th and 28th, by letter dated February 11, 2009, which was allegedly mailed on February 12th, State Farm allegedly notified NY Rehab that payment for those services would not be made either until it appeared for the previously noticed EUO. A copy of the February 2nd letter was enclosed with that notification. Once again, in response to bills submitted by NY Rehab for services it allegedly provided Elshekh on January 17th, 19th, 21st, 24th, 26th, 27th, 28th and 31st, by letter dated February 17, 2009, which was allegedly mailed on February 18th, State Farm allegedly notified NY Rehab that payment for those services would also not be made until it appeared for the previously noticed EUO and a copy of the February 2nd letter was again enclosed.

Finally, in response to NY Rehab’s bills submitted for services it allegedly rendered to Elshkeh on January 28th, and 31st and February 2nd and 4th, by letter dated February 24, 2009, which was allegedly mailed on February 25th, State Farm allegedly notified NY Rehab that payment for those services would not be made until it appeared for the previously noticed EUO and a copy of the February 2nd letter was again enclosed.

State Farm alleges that no one appeared for the EUO on March 2, 2009 and so by letter dated March 5, 2009, which was allegedly mailed on March 6th, State Farm alleges it sent a follow up letter to NY Rehab rescheduling its EUO for March 23, 2009 with respect to the aforementioned bills as well as with respect to additional bills it had received for services NY Rehab allegedly provided Elshek on Febraury 9th, 11th, 13th, 16th, 18th and 23rd.

State Farm alleges that no one appeared for that EUO, either, as a result of which, by notices dated March 31, 2009, which were allegedly accompanied by Explanations of Review, State Farm allegedly notified NY Rehab, via NF-10s, that all of the aforementioned claims were denied based on its policy violation, i.e., its failure to appear for its EUO. Those notices were allegedly mailed on April 1, 2009.

One hundred and eleven additional claims for services rendered between February 9, 2009 and May 18, 2010 were also allegedly denied via NF-10s and accompanied by Explanations of Benefits based upon NY Rehab’s failure to provide the verification that had previously been sought, i.e., again, based upon its failure to appear for the EUO on March 2, 2009 and March 23, 2009. Two other bills for services rendered February 4, 2009 and June 11, 2009, in the amount of $ 33.70 each along with statutory interest, were paid on July 9, 2013. Seven other claims for services allegedly rendered to Elshek on January 8, 2009, January 28-31, 2009, January 31, 2009, June 9, 2009 and June 18-22, 2009 were allegedly denied on June 26, 2013 as duplicative and [*3]claims for services allegedly rendered on January 26, 2009 and February 2, 2009 were allegedly denied as duplicative on October 13, 2013.

State Farm maintains that after an investigation by its Special Investigative Unit, it determined that it had a reasonable and objective basis to request an EUO to ascertain whether NY Rehab was entitled to collect no-fault benefits under 11 NYCRR 65-3.16 (a) (12). More specifically, in support of its motion, State Farm has submitted an affidavit of its investigator Joseph Farrington who attests that he had reason to believe that NY Rehab might be fraudulently incorporated as the purported owner of the facility was suspected of being a nominal owner. See, State Farm Mut. Auto. Ins. Co. v Robert Mallela, 4 NY3d 313 (2005).

In support of its motion, State Farm has submitted copies of all of the letters sent to NY Rehab accompanied by Certificates of Mailing Lists indicating that correspondence was sent on each of the cited dates to “NY REHAB PAIN MANAGEMENT’ at “32-44 31st ST, Long Island City, NY 11106.”

State Farm has also submitted the affidavit of David Warfel who attests in detail to State Farm’s business practices and procedures which lead to the creation of the all of the notices allegedly sent to NY Rehab, including the letters dated February 2, 2009, February 11, 2009, February 17, 2009, February 24, 2009, March 5, 2009 and March 31, 2009. He also attests to the creation of the NF-10 denial of claim forms denying claims for services provided from February 9, 2009 up to and including May 18, 2010.

While State Farm relies on the Certificates of Mailing issued by the United States Post Office, standing alone, they establish only that something was mailed to NY Rehab on the dates in question, however, they do not establish what was mailed.

Nevertheless, State Farm has submitted an affidavit of George Perry attesting to the procedures regarding both the creation and the mailing of requests for EUOs as well as for additional verification and denials that were in place at the pertinent times. He explains how those documents are generated and how the Claim Service Assistant(s) compile them in packages for mailing, create the Certificates of Mailing logs, bundle the envelopes along with the corresponding log and places them in a bin for pick up by its mail department. He explains that beginning in April 2008, State Farm has, in its ordinary course of business, paid for and secured a Certificate of Mailing from the United States Post Office for all letters containing requests for EUO and/or additional verification as well as for denials or NF-10s. The Post Office places a postmark on the Certificates of Mailing log indicating the date on which it took possession of the listed envelopes and those Certificates are returned to State Farm’s Office where they are maintained.

State Farm has also submitted the affidavit of Kevin O’Leary, Esq., of Bruno, Gerbino & Soraiano, LLP, the attorneys for State Farm. He attests that he was present at the office where the EUOs were scheduled on March 2, 2009 and March 23, 2009. He attests that had someone from NY Rehab appeared at the office on either of those dates, the receptionist would have so notified him and he would have either conducted the EUO himself or assigned another attorney to do so. He attests that no one appeared on either of the dates on behalf of NY Rehab and that no one contacted his office to confirm or reschedule the EUOs, either.

It is well established that summary judgment may be granted only when it is clear that no triable issue of fact exists. (Alvarez v. Prospect Hospital, 68 NY2d 320 [1986]) A party seeking [*4]summary judgment bears the initial burden of demonstrating its entitlement to judgment as a matter of law by submitting evidentiary proof in admissible form. (Zuckerman v. City of New York, 49 NY2d 557, 562 [1980]) A failure to make that showing requires the denial of that summary judgment motion, regardless of the adequacy of the opposing papers. (Ayotte v. Gervasio, 81 NY2d 923 [1993]) If the movant makes a prima facie showing, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact. (Alvarez v. Prospect Hospital, supra at 324) “[T]o defeat a motion for summary judgment the opposing party must show facts sufficient to require a trial of any issue of fact’ “. (Friends of Animals v. Associated Fur Manufacturers, Inc., 46 NY2d 1065, 1067—1068 [1979], quoting CPLR § 3212, subd. [b]) “On a motion for summary judgment, facts must be viewed in the light most favorable to the non-moving party”. (Ortiz v. Varsity Holdings, LLC, 18 NY3d 335, 339 [2011])

11 NYCRR 65-1.1provides as follows:

In the case of a claim for health service expenses, the eligible injured person or that person’s assignee or representative shall submit written proof of claim to the Company, including full particulars of the nature and extent of the injuries and treatment received and contemplated, as soon as reasonably practicable but, in no event later than 45 days after the date services are rendered. The eligible injured person or that person’s representative shall submit written proof of claim for work loss benefits and for other necessary expenses to the Company as soon as reasonably practicable but, in no event later than 90 days after the work loss is incurred or the other necessary services are rendered. The foregoing time limitations for the submission of proof of claim shall apply unless the eligible injured person or that person’s representative submits written proof providing clear and reasonable justification for the failure to comply with such time limitation. Upon request by the Company, the eligible injured person or that person’s assignee or representative shall:

(a) execute a written proof of claim under oath;

(b) as may reasonably be required, submit to examinations under oath by any person named by the Company and subscribe the same;

(c) provide authorization that will enable the Company to obtain medical records; and

(d) provide any other pertinent information that may assist the Company in determining the amount due and payable.

The eligible injured person shall submit to a medical examination by physicians selected by, or acceptable to, the Company, when, and as often as, the Company may reasonably require.

An Insurer has 30 days after proof of claim is received in which to pay or deny a claim. 11 NYCRR 65.5 (g)(3). However, 11 NYCRR 65.15 (d) (1) affords an insurance company 10 days after receipt of an application for no-fault benefits or a bill for payment of benefits in which to seek additional verification. And, upon receipt of the prescribed verification forms, an insurance company may seek additional verification within 15 days. (11 NYCRR 65.3.5 [b]). In the event that the requested verification is not received by the insurance company within 30 days from the date of the request, the insurance company has an obligation to follow-up either by telephone or by mail within 10 days. (11 NYCRR 65.15 [e] [2]). If the Insurance company [*5]complies with all of these conditions, and all of the verification is still not received, the insurance company may deny the claim. In fact, the insurance company’s 30 days to pay or deny a claim does not begin to run until all requested verification information is received, (11 NYCRR 65.15 [g][1][I]) including the performance of an Examination Under Oath if one has been requested. (11 NYCRR 65-3.8 [a][1])

” It is well established that the failure to comply with the standard policy provision requiring disclosure by way of submission to an [EUO] as often as may be reasonably required, as a condition precedent to performance of the promise to indemnify, constitutes a material breach’ of the policy, precluding recovery of the policy proceeds (citations omitted)”. (IDS Prop. Cas. Ins. Co. v. Stracar Med. Services, P.C., 116 AD3d 1005, 1007 [2d Dept. 2014], quoting Bulzomi v. New York Cent. Mut. Fire Ins. Co., 92 AD2d 878, 878 [2d Dept. 1983]) An insurance company which establishes ” that it twice duly demanded an examination under oath’ from the assignees, that the assignees twice failed to appear, and that [it] issued a timely denial of the claims’ arising from the assignees’ provision of medical services to the assignors” establishes its prima facie entitlement to judgment as a matter of law. (IDS Prop. Cas. Ins. Co. v. Stracar Med. Services, P.C., 116 AD3d at 1007, quoting Interboro Ins. Co. v. Clennon, 113 AD3d 596, 597 [2d Dept. 2014]; citing Stephen Fogel Psychological, P.C. v. Progressive Cas. Ins. Co., 35 AD3d 720, 721 [2d Dept. 2006]). It must establish that “it timely and properly mailed its EUO scheduling letters and its denial of claim forms, which denied the claims on the ground that plaintiff had failed to appear at duly scheduled EUOs.” Bay LS Med. Supplies, Inc. v. Allstate Ins. Co., 50 Misc 3d 147(A) (App Term 2016), citing St. Vincent’s Hosp. of Richmond v. Government Empls. Ins. Co., 50 AD3d 1123 [2d Dept. 2008]) “[A]dmissible evidence in the form of an affidavit of an employee with knowledge of the [insurance company’s] standard office practices or procedures designed to ensure that items were properly addressed and mailed” may be used to establish the mailing of required documents. (St. Vincent’s Hosp. of Richmond v. Govt. Employees Ins. Co., 50 AD3d at 1124, citing New York & Presbyt. Hosp. v. Allstate Ins. Co., 29 AD3d 547 [2d Dept. 2006]; Hospital for Joint Diseases v. Nationwide Mut. Ins. Co., 284 AD2d 374 [2d Dept. 2001]; Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679 [2d Dept. 2001]; Delta Diagnostic Radiology, P.C. v. Chubb Group of Ins., 17 Misc 3d 16 [App Term 2007]; see also, Five Boro Psychological Services, P.C. v. Progressive Northeastern Ins. Co., 27 Misc 3d 141(A) [App Term 2010]; cf. Westchester Med. Ctr. v. Countrywide Ins. Co., 45 AD3d 676 [2d Dept. 2007]). An attorney “who would have conducted the EUO if the [assignee] had appeared certainly [is] in a position to state that the [assignee] … did not … appear in his office on the date[s] indicated as directed in the notice and did not otherwise appear in his office on the date indicated”. (Hertz Corp. v. Active Care Med. Supply Corp., 124 AD3d 411, 411 [2d Dept. 2015]). And, belated objections to an EUO demand based upon a lack of grounds therefor which are first made in an action are not permitted. Rutland Med., P.C. v. State Farm Ins. Co., 45 Misc 3d 1033, 1034 (Civ Ct Kings County 2014), citing Five Boro Psychological and Licensed Master Social Work Servs. PLLC v. Geico Gen. Ins. Co., 38 Misc 3d 354 (Civ Ct Kings County 2012); see also, Eagle Surgical Supply, Inc. v. Allstate Ins. Co., 46 Misc 3d 128(A) (App Term 2014), citing Viviane Etienne Med. Care, P.C. v. State Farm Mut. Auto. Ins. Co., 35 Misc 3d127(A) (App Term 2012); Crescent Radiology, PLLC v. American Tr. Ins. Co., 31 Misc 3d 134 (A) (App Term 2011); All Boro Psychological Services, P.C. v. State Farm Mut. Auto. Ins. Co., 46 Misc 3d [*6]127(A) (App Term 2014)

NY Rehab alleges that State Farm has not properly established that its notices for Examinations Under Oath were properly addressed or mailed. The affidavits of David Warful and George Perry adequately establish State Farm’s practices and procedures leading to the creation of the subject notices as well as their mailing. Contrary to NY Rehab’s contention, the correspondence was not erroneously addressed to Long Island City instead of Astoria. There is only one address at 32-44 31st Street in those towns which is identical.

NY Rehab also maintains that State Farm has not established its nonappearance at the scheduled EOUs. State Farms’s attorney’s affidavit attesting to NY Rehab’s nonappearance at the scheduled EUOs satisfies its obligation to establish NY Rehab’s nonappearance. Hertz Corp. v. Active Care Med. Supply Corp., 124 AD3d at 411; New Capital Supply, Inc. v. State Farm Mut. Auto. Ins. Co., 45 Misc 3d 758, 761 (Civ Ct New York County 2014), citing Natural Therapy, Accupuncture, P.C. v. State Farm Mut. Ins. Co., 42 Misc 3d 137(A) (AppTerm 2014) (attorney’s affirmation stating that he was present at office on the date the EUO was scheduled and that had the provider appeared he would have conducted the EUO or assigned an attorney to do so suffices to establish a provider’s nonappearance at an EUO); see also, Palafox PT, P.C. v. State Farm Mut. Auto. Ins. Co., 49 Misc 3d 144(A) (App Term 2015)

NY Rehab also opposes this motion on the grounds that State Farm did not have good cause for requiring it to appear for an EUO in the first place and that in any event, its owner appeared for an EUO with respect to the identical issues in question here in another case. Again, belated objections to the propriety of the EUO are not permitted at this juncture. Rutland Med., P.C. v. State Farm Ins. Co.,supra, citing Five Boro Psychological and Licensed Master Social Work Servs. PLLC v. Geico Gen. Ins. Co., supra; see also, Eagle Surgical Supply, Inc. v. Allstate Ins. Co., supra, citing Viviane Etienne Med. Care, P.C. v. State Farm Mut. Auto. Ins. Co.,supra; Crescent Radiology, PLLC v. American Tr. Ins. Co.,supra; All Boro Psychological Services, P.C. v. State Farm Mut. Auto. Ins. Co.,supra. And, ” an insurance company is entitled to obtain information promptly while the information is still fresh to enable it to decide upon its obligations and protect against false claims. To permit [the defendants] to give the information more than [three] years after the [loss] would [constitute] a material dilution of the insurance company’s rights’ “. (IDS Prop. Cas. Ins. Co. v. Stracar Med. Services, P.C., 116 AD3d at 1007-08, quoting Argento v. Aetna Cas. & Sur. Co., 184 AD2d 487, 487-488 [2d Dept. 1992]; see also, Johnson v. Allstate Ins. Co., 197 AD2d 672, 672 [2d Dept. 1993], lv denied 82 NY2d 664 [1994]; Lentini Bros. Moving & Stor. Co. v. New York Prop. Ins. Underwriting Assn., 53 NY2d 835, 836 [1981]; Azeem v. Colonial Assur. Co., 96 AD2d 123, 125 [4th Dept. 1983], affd 62 NY2d 951 [1984]) A belated appearance by NY Rehab in a separate proceeding does not excuse its breach of its policy and the regulations here.

Finally, NY Rehab opposes State Farm’s motion based on outstanding discovery. ” A party who contends that a summary judgment motion is premature is required to demonstrate that discovery might lead to relevant evidence or [that] the facts essential to justify opposition to the motion were exclusively within the knowledge and control of the movant’ “. (Interboro Ins. Co. v. Clennon, 113 AD3d 596, 597 [2d Dept. 2014], quoting Cajas—Romero v. Ward, 106 AD3d 850, 852 [2d Dept. 2013]; citing CPLR 3212 [f]) NY Rehab has not met that burden.

State Farm cites to an exhibit consisting of hundreds of pages to be reviewed in an [*7]attempt to confirm its allegation that seven claims were properly denied as duplicative. Therefore, it has not established that the seven claims were properly denied as duplicative. However, it has, in any event, established that those claims were submitted following NY Rehab’s failure to appear for its EUO, thereby justifying State Farm’s denial of those claims.

Accordingly, it is hereby

ORDERED, that the Defendants’ motion seeking summary judgment is GRANTED and the Plaintiff’s complaint is dismissed.

This constitutes the Decision and Order of the Court.

All applications not specifically addressed are DENIED.

DATED: May 24, 2016
Mineola, New York
Hon. Randy Sue Marber, J.S.C.

602913/15

Riconda & Garnett, LLP Attorney for the Plaintiff753 West Merrick Road Valley Stream, New York 11580

Law Offices of Bryan M. RothenbergAttorney for the Defendant 90 Merrick Avenue, Suite 300 East Meadow, New York 11554

Danielle M. Medeiros, Esq. Assistant Law Clerk 100 Supreme Court Drive Mineola, New York 11501

Upon the foregoing papers, the Defendant, 21st CENTURY INSURANCE’s (hereafter “21st Century”), motion seeking an order (a) pursuant to CPLR § 3211 (a) (7) dismissing the Plaintiff, MICHAEL BERTUCCI’s First Cause of Action; and (b) pursuant to CPLR § 3211 (a) (7) striking from the Second Cause of Action of the Complaint the claim for punitive damages, is determined [*2]as provided herein.

The Plaintiff, Michael Bertucci, brings this action seeking damages allegedly resulting from the denial of no-fault benefits by his insurer, the Defendant, 21st Century.

The Defendant issued an automobile insurance policy (“the Policy”) to the Plaintiff at his Pennsylvania address located at 101 East Tamarack Court, East Stroudsburg, PA 18302. The Policy provides for the payment of medical bills for the insured.

On November 26, 2014, the Plaintiff was involved in an automobile accident on Deer Park Avenue, in the County of Suffolk, State of New York. As a result of his injuries from this accident, the Plaintiff sought treatment with medical providers in New York. In addition, the Plaintiff forwarded a timely application for no-fault benefits to 21st Century. The Defendant, however, refused to pay any of the Plaintiff’s medical bills arguing that the Plaintiff’s car was principally garaged in New York State rather than in Pennsylvania and thus the Plaintiff violated the conditions of the Policy. Ultimately, approximately seven months from the date of his accident, on June 25, 2015, 21st Century issued a denial of the Plaintiff’s entire claim for no-fault benefits, including for the payment of his medical bills, claiming that the Policy conditions were violated.

This action was commenced seeking damages on the Plaintiff’s First Cause of Action based upon a claim of negligence and a claim for breach of contract including a claim for punitive damages alleged in the Plaintiff’s Second Cause of Action. The Plaintiff claims that his medical treatment has been delayed because of the Defendant’s non-payment of his medical bills, which, in turn has resulted in the aggravation and exacerbation of his injuries. The Plaintiff submits that the Defendant’s delay and failure to timely pay his no-fault benefits has resulted in the delay of his treatment which has complicated his recovery and is the basis of his claims in tort and for breach of contract and for punitive damages.

Specifically, in his First Cause of Action, the Plaintiff asserts that two of his healthcare providers refused to continue to provide services after learning from 21st Century that it would not pay for planned future treatments. In his Second Cause of Action, the Plaintiff alleges that the Defendant breached it contractual obligations under the Policy by failing to pay no-fault benefits required by the Policy and therefore he is entitled to, inter alia, an award of punitive damages.

In moving, post-answer, for an Order seeking to dismiss the negligence and punitive damages claims ^[FN1] , the Defendant argues that the Plaintiff fails to state a cause of action for either claim. Specifically, the Defendant argues that it is “under no legal duty to refrain from communicating with the Plaintiff’s heath care providers regarding its intentions to not pay submitted bills” and that “any failure to pay health care providers is at most a simple breach of contract that is not actionable in tort” (See Affirmation In Support, ¶ 10). Thus, it argues, it is entitled to a dismissal of the Plaintiff’s First Cause of Action. With respect to the claim for punitive damages in the Plaintiff’s Second Cause of Action, the Defendant argues that the Plaintiff’s allegations are insufficient to warrant an award of punitive damages as a matter of law.

On a motion to dismiss pursuant to CPLR § 3211 (a) (7), the Court must accept as true, the facts “alleged in the complaint and submissions in opposition to the motion, and accord [*3]plaintiffs the benefit of every possible favorable inference,” determining only “whether the facts as alleged fit within any cognizable legal theory” (Simkin v. Blank, 19 NY3d 46, 52 [2012]; Sokoloff v. Harriman Estates Dev. Corp., 96 NY2d 409, 414 [2001]; Polonetsky v. Better Homes Depot, 97 NY2d 46, 54 [2001]; Leon v. Martinez, 84 NY2d 83, 87-88 [1994]). “Whether a plaintiff can ultimately establish [his or her] allegations is not part of the calculus in determining a motion to dismiss” (EBC I, Inc. v. Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). Indeed, the plaintiff has no obligation on a motion to dismiss to demonstrate evidentiary facts to support the allegations contained in the complaint. (Stuart Realty Co. v. Rye Country Store, 296 AD2d 455 [2d Dept. 2002]; Paulsen v. Paulsen, 148 AD2d 685, 686 [2d Dept. 1989])

However, conclusory averments of wrongdoing are insufficient to sustain a complaint. (DiMauro v. Metropolitan Suburban Bus Auth., 105 AD2d 236 [2d Dept. 1984]) Thus, bare legal conclusions and factual allegations “flatly contradicted by documentary evidence in the record are not presumed to be true, and [i]f the documentary proof disproves an essential allegation of the complaint, dismissal pursuant to CPLR 3211 (a) (7) is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action”. (Deutsche Bank Natl. Trust Co. v. Sinclair, 68 AD3d 914, 915 [2d Dept. 2009] quoting Peter F. Gaito Architecture., LLC v. Simone Dev. Corp., 46 AD3d 530, 530 [2d Dept. 2007])

Here, the Plaintiff’s attempt to assert a claim for negligence against the Defendant based upon its communications with his health care providers fails to withstand the Defendant’s motion to dismiss. The law is settled. A claim for negligence requires the pleading of facts that impose a duty of care upon the defendant in favor of the plaintiff, a breach of that duty, and that the breach of such duty was a proximate cause of plaintiff’s injuries. (Pulka v. Edelman, 40 NY2d 781 [1976]; Akins v. Glens Falls School Dist., 53 NY2d 325, 333 [1981]) Absent a duty of care, there is no breach, and without breach there can be no liability. (Pulka v. Edelman, supra; Gordon v. Muchnick, 180 AD2d 715 [2d Dept. 1992]) Preliminarily, however, whether a duty of care is imposed upon the defendant in favor of the plaintiff under the circumstances alleged is an issue of law for the court to decide. (Church v. Callanan Indus., 99 NY2d 104 [2002])

Here, the Plaintiff has failed to specify or identify the duty that he claims the Defendant allegedly breached. This is fatal on a motion seeking to dismiss the negligence claim based on the failure to state a cause of action.

Indeed, even affording the Plaintiff a liberal construction of his claims, it is clear to this Court that insofar as the gravamen of the First Cause of Action is that health care providers refused to continue to provide service after learning from 21st Century that it would not pay for planned future treatments, the asserted duty, if any, lies in either the act of communication or in the content of the communication. As best determined from the papers submitted herein, including the Plaintiff’s opposition papers, it is the Plaintiff’s contention that his tort claim is based upon 21st Century’s denial of his no-fault benefits claim without justification (i.e., the content of the Defendant’s communication) (See Affirmation In Opposition, ¶¶ 16, 21). To that end, this Court finds that the decision of the insurance company to not pay for treatment does not establish a tort cause of action independent from the breach of contract claim. (Logan v. Empire Blue Cross & Blue Shield, 275 AD2d 187 [2d Dept. 2000]) As the Second Department held in Logan v. Empire Blue Cross & Blue Shield, supra:

[The insurer] d[oes] not owe the [individual insureds] a duty to perform its contractual obligations [*4]with reasonable care. The respective contracts of insurance between [the insurer] and the [individual insureds] d[oes] not create a relationship for which a duty is owed to the plaintiff separate from the contractual obligation’ ***

(Logan v. Empire Blue Cross & Blue Shield, supra at 192 [citations omitted]).

Thus, while the Plaintiff’s attempt to enforce a claimed right to have the Defendant pay his medical bills may be valid under a contract theory, it does not form a basis for a negligence (tort) claim herein.

Moreover, even if this Court were to construe the Plaintiff’s negligence claim as one based upon the Defendant having communicated with the Plaintiff’s medical providers (regardless of the content of the communication), the act of communicating, also, can not form a basis for a negligence claim. Indeed, the Plaintiff has failed to identify any legal basis which proscribes the Defendant from communicating with a policyholder’s health care providers regarding the status of its coverage investigation.

Therefore, the branch of the Defendant’s motion seeking to dismiss the Plaintiff’s First Cause of Action should be granted.

With regard to the branch of the Defendant’s motion seeking to dismiss the claim for punitive damages contained in the Plaintiff’s Second Cause of Action, initially, it is noted that no separate cause of action for punitive damages lies for pleading purposes. (Paisley v. Coin Device Corp., 5 AD3d 748 [2d Dept. 2004]; Crown Fire Supply Co. v. Cronin, 306 AD2d 430, 431 [2d Dept. 2003])

Moreover, in an action based on breach of contract, “punitive damages may be recoverable if necessary to vindicate a public right”. (New York Univ. v. Continental Ins. Co., 87 NY2d 308, 315 [1995]; citing Rocanova v. Equitable Life Assur. Socy., 83 NY2d 603, 613 [1994]) Punitive damages may not be used to remedy private wrongs. In addition, one of the necessary elements in such a case is that the “defendant’s conduct must be actionable as an independent tort”. (New York Univ. v. Continental Ins. Co., supra, at 316; Rocanova v. Equitable Life Assur. Socy., supra) A breach of contract can be an actionable independent tort when the nature of the contracting party’s services is to protect people and property from physical harm. (New York Univ. v. Continental Ins. Co., supra at 317)

Here, in support of his claim for punitive damages, the Plaintiff asserts that 21st Century’s actions were “wanton, willful, and in reckless disregard for the rights of plaintiff” (See Complaint, ¶ 61). Not only is this bare characterization without consequence and wholly deficient to withstand the Defendant’s motion to dismiss (see generally, Barker v. Amorini, 121 AD3d 823, 824 [2d Dept. 2014]), by a simple reading, it is clear that none of the facts alleged establish a conduct on the part of the Defendant that is part of a pattern directed at the public generally. In addition, as noted above, because the Plaintiff has also failed to establish any independent basis for determining that the Defendant’s conduct constitutes a tort independent of the insurance contract itself, the Plaintiff’s demand for punitive damages requires dismissal. (New York Univ. v Continental Ins. Co., supra, at 320)

Similarly, that portion of the Plaintiff’s claim, which is seeks punitive damages, as alleged in his Second Cause of Action, should be dismissed.

The parties’ remaining contentions have been considered and do not warrant discussion.

Accordingly, it is hereby

ORDERED, that the Defendant, 21st CENTURY INSURANCE’s motion seeking an order (a) pursuant to CPLR § 3211 (a) (7) dismissing the Plaintiff, MICHAEL BERTUCCI’s First Cause of Action; and (b) pursuant to CPLR § 3211 (a) (7) striking from the Second Cause of Action of the Complaint the claim for punitive damages, is GRANTED.

This constitutes the Decision and Order of the Court.

DATED: February 1, 2016
Mineola, New York
________________________________
Hon. Randy Sue Marber, J.S.C.

Footnotes

Footnote 1:Despite the fact that this motion to dismiss, made pursuant to CPLR § 3211 (a) (7) is made shortly after serving of the Defendant’s Answer and before any disclosure, this Court will nevertheless treat this application as a narrowly framed post-answer CPLR § 3211 (a) (7) motion.

Supreme Court, Nassau County

12683-11

Law Offices of Bryan M. Rothenberg, Attorneys for Plaintiff.

Gary Tsirelman, Esq., Attorney for Defendant All Boro Psychological Services, P.C.

Montfort, Healy, McGuire & Salley, LLP, Attorneys for Defendant Roxanne Chowdry.

The Rybak Firm, PLLC, Attorneys for Defendants Amega, Inc., Healing Art Acupuncture, P.C., J.C. Healing Touch Rehab PT, P.C., North East Empire Medical, P.C., SS Medical Care, P.C., True Align Chiropractic Care, P.C., and ZG Chiropractic Care, P.C.

Steven M. Jaeger, J.

The following papers read on this motion:

Order to Show Cause and AffirmationX

Notice of Cross Motion and AffirmationX

AffidavitX

Opposition to Defendant’s Cross MotionX

Affirmation in OppositionX

Affirmation in SupportX

Reply in SupportX [*2]

ReplyX

Order to show cause pursuant to CPLR 6301 and 2201 by the plaintiff 21st Century Advantage Insurance Company for an order, inter alia, staying and enjoining all presently pending and future lawsuits and arbitrations instituted as against the plaintiff for (1) the recovery of no-fault benefits; and/or (2) reimbursement for

health care services rendered pursuant to stated automobile insurance polices previously issued by the plaintiff.

Cross motion pursuant by codefendant All Boro Psychological Services, P.C., for an order: (1) dismissing the plaintiff’s complaint to CPLR 3211[a][4]; or alternatively, (2) severing the claims asserted against it pursuant to CPLR 603 and 1002[c]; and/or (3) extending its time to serve an answer to the verified complaint pursuant to CPLR 3012[d] and 2004.

In August of 2011, the plaintiff 21st Century Advantage Insurance Company [“the plaintiff”], commenced the within insurance fraud action as against various no-fault, health care providers and individual defendant-policyholders. The verified complaint alleges in substance that during a ten-month period between June of 2009 and January of 2010, certain individual defendants engaged in a fraudulent scheme to illegally procure approximately ten automobile insurance policies (Cmplt., ¶¶ 5-7; 142; 161, 181, 195).

More specifically, the plaintiff contends, inter alia, that: the named individual defendants and others, applied for the subject policies by telephone or over the internet by using common telephone and facsimile numbers; that the applicants used invalid bank accounts and bogus credit cards to do so; and that thereafter — mostly within 60 days of the policy issuance dates and before non-payment-based cancellation notices could become effective — the fraudulently insured vehicles were involved in “staged,” side-swipe or rear-end type accidents, for which false claims were filed (Keane Aff., ¶¶ 4-8; 10-11; Mirabella Aff., ¶¶ 9-11).

The verified complaint further alleges that after the allegedly false claims were filed, the plaintiff requested information from its insureds and others, and also scheduled examinations under oath [“EUO”], as authorized by the policies (Cmplt., ¶¶ 154-159; 192-195, 249-250, 280). The defendants, however, either failed to appear for the EUOs or testified in an evasive, suspicious and inconsistent manner with respect to the policy application process and the occurrence of the subject accidents (Keane Aff., ¶¶ 9-10; Cmplt., ¶¶ 153-155; 172-[*3]173; 194; 203-204, 229; 280).

With respect to one policy transaction in particular, the complaint avers that the “unlisted” driver who was actually operating the insured’s vehicle during the accident (which occurred nine days after the policy was issued), appeared for an EUO and testified that: inter alia, he was offered money by the named insured to become involved in an accident; that specifically, he was instructed to rear-end another vehicle; and that he was then told by the named insured to apply for no- fault therapy benefits after the accident occurred (Cmplt., ¶¶ 203-204).

The plaintiff asserts that in sum, and based on its investigation, none of the individual defendants provided evidence demonstrating that the policy applications and ensuing accidents were bona fide — as opposed to intentionally staged, sham incidents designed to defraud the plaintiff (Keane Aff., ¶¶ 11-12).

The plaintiff’s verified complaint sets forth five causes of action and demands, among other things, declaratory relief rescinding and/or voiding the policies (Cmplt., ¶¶ 325- 361).

In light of its assertion that the subject policies were fraudulently obtained and void, the plaintiff thereafter declined to reimburse certain health care providers who supplied no-fault medical services to the insured defendants (Cmplt., ¶¶ 56-140). As a result, approximately 100 of those health care providers later commenced no-fault reimbursement actions against the plaintiff in the New York City Civil Court (Mirabella Reply Aff., ¶ 6).

In December of 2011, the plaintiff moved by order to show cause (with temporary restraining order) to enjoin the prosecution and/or commencement of all actions and arbitrations — pending or to be commenced in the future — arising out of the issuance of the subject policies (OSC, ¶¶ [a]-[c]).

Upon receipt of the plaintiff’s papers, the Court signed the proposed temporary restraining order contained therein, which effectively stayed all current and future actions and/or arbitrations pending the return date of the plaintiff’s main application (Jaeger, J.).

Codefendant All Boro Psychological Services, P.C [“All Boro”] has opposed the plaintiff’s application and also cross moved for stated relief, including dismissal of the plaintiff’s complaint pursuant to CPLR 3211[a][4] based on a Civil Court reimbursement action it commenced against the plaintiff. Alternatively, All Boro has requested a severance (CPLR 603; 1002[c]), and if that relief is denied, All Boro has sought leave to file a late answer to the verified complaint (see, CPLR 2004; 3012[b]).

With respect to its CPLR 3211[a][4] dismissal claim (“another action [*4]pending”), All Boro asserts that in June of 2011 a few months before the plaintiff commenced this action — it instituted its own no-fault, reimbursement action against the plaintiff in the New York City Civil Court (Chin Aff., ¶¶ 2—6; Exh., “3”). The All Boro Civil Court complaint alleges in sum, that All Boro provided covered, no-fault medical services to one of the individual defendants in this action, “Shameeka Moore” (Chin Aff., ¶¶ 2—6; Exh., “3”). According to All Boro’s Civil Court complaint, despite due demand, the plaintiff has declined to pay the sum of $1181.73 — the amount allegedly now due and owing for the health care services it rendered.

A number of additional, non-moving providers have also opposed the plaintiff’s motion, i.e., codefendants Amega, Inc., Healing Art Acupuncture, P.C.; J.C. Healing Touch Rehab PT, P.C.; North East Empire Medical, P.C.; SS Medical Care, P.C.; True Align Chiropractic Care, P.C.; True Align Chiropractic Care P.C., and ZG Chiropractic Care, P.C — and also Roxana Chowdhry (a non-insured alleged accident victim).

The plaintiff’s order to show cause is now before the Court for review and resolution. The order to show cause should be granted. All Boro’s cross motion is granted to the limited extent indicated below.

Preliminarily, although the plaintiff cites to, inter alia, CPLR 2201 as authority for its application, CPLR 2201 applies to stays issued in matters pending before the motion Court (e.g., Peluso v Red Rose Rest., Inc., 78 AD3d 802, 803; St. Paul Travelers Ins. Co. v. Nandi, ___Misc.3d___, 2007 WL 1662050, at 8 [Supreme Court, Queens County 2007]; Siegel, New York Practice, § 256, at 435-436 [4th ed] see, New York Cent. Mut. Ins. Co. v. McGee, ___Misc.3d ___, 2009 WL 4068474, at 6 [Supreme Court, Kings County 2009], modified on different grounds, 87 AD3d 622 see also, Autoone Ins. Co. v. Manhattan Heights Medical, P.C., ___Misc.3d.___, 2009 WL 2357009, at 2-3 [Supreme Court, Queens County 2009]). Here, the plaintiff’s order to show cause demands relief enjoining actions and arbitrations pending in a variety of different forums. Accordingly, the motion is properly viewed as one for a preliminary injunction — to which the requirements prescribed by Article 63 are therefore applicable (St. Paul Travelers Ins. Co. v. Nandi, supra see also, Mercury Cas. Co. v. Inger Grant Lynbrook Adv Acupuncture, supra, 2011 WL 4874666 [Supreme Court, Nassau County 2011]; New York Cent. Mut. Ins. Co. v. McGee, supra cf., Urban Radiology, P.C. v. GEICO Ins. Co., ___Misc.3d.___, 2010 WL 3463018, at 2-3 [New York City Civil Court 2010]).

With respect to those requirements, “[a] party seeking the drastic remedy of [*5]a preliminary injunction has the burden of demonstrating, by clear and convincing evidence, (1) a likelihood of ultimate success on the merits, (2) the prospect of irreparable injury if the provisional relief is withheld, and (3) a balancing of the equities in the movant’s favor” (Perpignan v. Persaud, 91 AD3d 622, 623 see also, Nobu Next Door, LLC v. Fine Arts Housing, Inc., 4 NY3d 839, 840 [2005]; Aetna Ins. Co. v. Capasso, 75 NY2d 860, 862 [1990]; Doe v. Axelrod, 73 NY2d 748, 750 [1988]). However, conclusive proof is not required (Arcamone-Makinano v. Britton Property, Inc., 83 AD3d 623; 624; Ying Fung Moy v Hohi Umeki, 10 AD3d 604, 605), and the mere existence of an issue of fact will not itself be

grounds for the denial of the motion (see, CPLR 6312[c]; Reichman v. Reichman, 88 AD3d 680, 681; Ruiz v Meloney, 26 AD3d 485, 487).

“The decision to grant or deny a preliminary injunction lies within the sound discretion of the Supreme Court” (91-54 Gold Road, LLC v. Cross-Deegan Realty Corp., 93 AD3d 649).

With these principles in mind, and in the exercise of its discretion, the Court agrees that the plaintiff has established its entitlement to the injunctive relief sought. It is settled that “[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 see, Matter of Liberty Mut. Ins. Co. v Goddard, 29 AD3d 698, 699; Eagle Ins. Co. v. Davis, 22 AD3d 846, 847; Matter of Metro Med. Diagnostics v Eagle Ins. Co., 293 AD2d 751, 752).

At bar, the plaintiff’s submissions include the affidavit of its Special Investigator, Sandra Keane, who was involved in the investigation, and the plaintiff’s 361 paragraph, complaint (verified by Ms. Keane), which provides a highly fact-specific, case-by case description of, inter alia, the manner in which the policies were acquired; the insured defendants’ alleged non-cooperation, and other relevant transactional facts depicting the allegedly suspicions and questionable nature of the applications made and the accidents which later occurred (see, Autoone Ins. Co. v. Manhattan Heights Medical, P.C., supra, 2009 WL 2357009, at 2-3 cf., Felsen v. Stop & Shop Supermarket Co., LLC, 83 AD3d 656, 657). These non-conclusory factual assertions are sufficient to prima facie establish a likelihood of success on the merits of the plaintiff’s fraud-based claims, i.e., that the policies were fraudulently acquired and therefore subject to rescission (Autoone Ins. Co. v. Manhattan Heights Medical, P.C., supra; St. Paul Travelers Ins. Co. v. Nandi, supra, 2007 WL 1662050, at 8).

The plaintiff has additionally demonstrated that the requested injunctive [*6]relief will serve to minimize repetitive litigation and arbitrations in which the same, potentially dispositive defenses and claims relating to the disputed policies will be raised (Autoone Ins. Co. v. Manhattan Heights Medical, P.C., supra). Similarly, and, “in view of the multiplicity of lawsuits and the possible inconsistent outcomes in the absence of an injunction, [the] plaintiff has established the elements of irreparable injury and the balancing of the equities in its favor” (St. Paul Travelers Ins. Co. v. Nandi, supra, 2007 WL 1662050, at 8).

Contrary to the plaintiff’s contentions, however, “[t]he Second Department has repeatedly emphasized that CPLR 6312[b] clearly and unequivocally requires the party seeking an injunction to give an undertaking'”(Schneck v. Schneck,___, Misc 3d.___, 2008 WL 5192626, at 6 [Supreme Court, Nassau County 2008], quoting from, Glorious Temple Church of God in Christ v. Dean Holding Corp., 35 AD3d 806, 807; 6312[b] see also, 91-54 Gold Road, LLC v. Cross-Deegan Realty Corp., supra, 93 AD3d 649, 650; Putter v. Singer, 73 AD3d 1147, 1149; Buckley v. Ritchie Knop, Inc., 40 AD3d 794, 796; Massapequa Water Dist. v. New York SMSA Ltd. Partnership, ___ Misc 3d.___, 2008 WL 779259 at 9 [Supreme Court, Nassau County, 2008])(Mirabella [Opp] Aff., ¶ 16).

Therefore, and as a condition to the granting of the above-referenced injunctive relief, the plaintiff shall file an undertaking as directedbelow in accord with the dictates of CPLR 6312(b)(Schneck v. Schneck, supra, 2008 WL 5192626, see also, Massapequa Water Dist. v. New York SMSA Ltd. Partnership, supra, 2008 WL 779259 at 9 [Supreme Court, Nassau County, 2008]; Buckley v. Ritchie Knop, Inc., supra).

Turning to All Boro’s cross motion, that branch the motion which is to dismiss the complaint based on the Civil Court reimbursement action should be denied (CPLR 3211[a][4]). In the exercise of its broad discretion pursuant to CPLR 3211[a][4](see, Clark v. Clark, 93 AD3d 812, 815), the Court agrees that dismissal of the subject action based on the pending, Civil Court matter is unwarranted, since, inter alia, the two actions lack the requisite degree of identity

in terms of the issues presented and the relief sought (Clark v. Clark, supra, at 815; Goldman v A & E Club Props., LLC, 89 AD3d 681, 683).

All Boro’s alternative demand for relief — denominated as a request for a severance — appears to be miscast (CPLR 603, 1002[c]). In substance, a severance is a discretionary measure which is “sparingly” exercised so as to minimize prejudice where, inter alia, common factual and legal issues are lacking and/or where a single trial of differing claims would negatively effect a substantial right [*7](Herskovitz v Klein, 91 AD3d 598, 599; New York Cent. Mut. Ins. Co. v. McGee, supra, 87 AD3d at 624; Bentoria Holdings, Inc. v Travelers Indem. Co., 84 AD3d 1135, 1137; Cole v Mraz, 77 AD3d 526, 528; Quiroz v Beitia, 68 AD3d 957, 960 see generally, Shanley v Callanan Indus., 54 NY2d 52, 57 [1981]).

Here, however, All Boro is apparently making the opposite claim; namely, that common legal and factual issues do, in fact, exist (see, Chin Reply Aff., ¶¶ 1-4). Where commonality exists, courts have denied severance requests, reasoning “that the interests of judicial economy and consistency of verdicts will be served by having a single trial” (Herskovitz v Klein, supra; Golden Eagle Capital Corp. v Paramount Mgt. Corp., 88 AD3d 646, 648; Quiroz v Beitia, supra, 68 AD3d 957, 960). Alternatively, to the extent that All Boro is arguing that its Civil Court action should be exempted from the subject injunction (Chin Reply Aff., ¶¶ 1-2), that result would be inconsistent with the Court’s granting of that remedy and could reintroduce the potential for conflicting results which the injunction was, in part, designed to minimize (cf., St. Paul Travelers Ins. Co. v. Nandi, supra, 2007 WL 1662050, at 8).

Lastly, that branch of the All Boro’s cross motion which is for leave to file a late answer, in the form annexed to its motion papers, is granted as unopposed (Chin Reply Aff., Exh., “1”).

The Court has considered the parties’ remaining contentions and concludes that they do not support an award of relief beyond that granted above.

Accordingly, it is,

ORDERED that the plaintiff’s motion for a preliminary injunction is granted to the extent that terms of the temporary restraining order previously approved by the Court shall be continued during the pendency of the subject action, and it is further,

ORDERED that the plaintiff shall post an undertaking in the sum of $50,000.00 pursuant to CPLR 6312(b) within twenty (20) days of the date of this Order, and if such undertaking is not posted, the order to show cause is denied, and it is further,

ORDERED that the cross motion pursuant by codefendant All Boro Psychological Services, P.C., is granted to the limited extent that its application to serve the proposed answer annexed to its moving papers is granted, and the cross motion is otherwise denied.

The foregoing constitutes the decision and order of the Court.

Dated: May 24, 2012 [*8]

________________________________________

STEVEN M. JAEGER, A.J.S.C.

Supreme Court, Nassau County

1411/12

Economou & Economou, Attorney for Petitioner, 485 Underhill Boulevard, Syosset, NY 11791

Brian Rothenberg, Attorney for Respondent, 100 Duffy Avenue, Hicksville, NY 11801

Robert A. Bruno, J.

Upon the foregoing papers, it is ordered that this motion is decided as follows:

Petitioner requests an Order pursuant to Article 75 and CPLR §3102( c), compelling disclosure and discovery to aid in arbitration; and, pursuant to Article 75 and CPLR §2201(b) staying any and all proceedings present, and staying the filing of any new proceedings which seek reimbursement of no-fault benefits pursuant to Article 51 (Comprehensive Motor Vehicle Insurance Reparations Act) and 11 NYCRR 65 (Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act) pending the compliance with such order. Respondent opposes said application.

In a proceeding pursuant to CPLR Article 75, to, inter alia, stay arbitration of certain No-Fault proceedings, the petitioning insurance carriers move pursuant to CPLR 3102[c] for an order: (1) compelling disclosure and discovery in aid of arbitration from the defendant Kissena Medical Imaging, P.C.; and/or (2) staying certain pending arbitrations commenced by Kissena Medical Imaging, P.C., and temporarily enjoining and/or staying it from commencing any further No-Fault arbitration proceedings for reimbursement of benefits as against the petitioners.

The petitioner insurance companies — over 40 in total — have commenced the within proceeding to stay certain pending and/or anticipated no-fault arbitrations and/or “any and all proceedings” which have been, or will be, instituted by the respondent No-Fault provider/medical corporation, Kissena Medical Imaging, P.C. [“Kissena”](Pet., ¶¶ 4-5; 19-20; Exh., “A”). The petition also demands stated disclosure in aid of the foregoing arbitration proceedings, four of which — the petitioners claim — are currently pending (Pet., ¶¶ 19-20).

According to the petitioning carriers, Kissena has billed them for radiological services it has provided to injured no-fault claimants, from whom Kissena received benefit assignments (Caio Aff., ¶¶ 6-7). The carriers have declined, however, to pay the Kissena bills, arguing in sum that Kissena is an illegally constituted and/or fraudulently incorporated medical service corporation in violation of applicable no-fault rules and regulations (see generally, State Farm Mut. Auto. Ins. Co. v. Mallela, 4 NY3d 313, 320-321 [2005]; One Beacon Ins. Group, LLC v. Midland Medical Care, P.C., 54 AD3d 738, 740).

More specifically, the relief sought by the petitioners is based on allegations that: (1) Kissena [*2]has been fraudulently incorporated by “paper” owner, Lawrence N. Diamond, M.D; (2) it “appears” that Kissena is secretly owned and controlled by a non-physician in violation of New York law; and (3) that Kissena has billed the plaintiffs for services performed by independent contractors, not by Kissena employees, also in violation stated No-Fault rules and regulations (Pet., ¶¶ 4-7, 9-12, 15-16, 18). In response, Kissena has commenced certain arbitration proceedings under the No-Fault law to recover payment for the services it has rendered.

Significantly, apart from the four arbitrations identified in an attachment to the petition (Exh., “A”), the petition does not allege that the remaining carriers have actually received specifically identified claims or arbitration demands from Kissena; nor does it identify precisely what arbitrations — pending or otherwise — are imminent with respect to the extensive list of carriers whose names have been included in the caption.

The disclosure sought in connection with the application is extensive and requests, inter alia: the production of Kissena’s owner, Lawrence N. Diamond, M.D., for a deposition; the identity of all billing and management companies and/or agents for Kissena; all written agreements and contracts, including those between Kissena and any billing and/or management agents; all written agreements between Diamond personally and any of Kissena’s billing or management companies or agents; all contracts between Diamond and Kissena; all financial statements of Kissena, including all banks records for accounts maintained by Kissena; all federal and state tax documentation, including all filings and returns for both for Kissena and Diamond personally; all corporate documents/leases for premises where the clinic may be located; and as well as all equipment leases, documents of incorporation and all filings made with the Secretary of State (Pet., ¶ 32).

Upon submission of the petitioners’ order to show cause, this Court struck the temporary restraining order contained therein. The foregoing temporary restraining order would have broadly stayed “any and all” pending proceedings and enjoined Kissena from commencing any additional arbitration matters as against all of the named petitioners (Order to Show Cause, 2nd and 3rd decretal paragraphs).

The petitioners’ underlying application for injunctive relief and discovery in aid of arbitration is now before the Court. The application should be denied.

It is settled that petitioner seeking disclosure in aid of an arbitration pursuant to CPLR 3102[c] must affirmatively demonstrate that “extraordinary circumstances” exist, “such that this relief would be absolutely necessary for the protection of its rights” (see, Progressive Specialty Ins. Co. v. Alexis, 90 AD3d 933, 834; Travelers Indem. Co. v. United Diagnostic Imaging, P.C., 73 AD3d 791, 792 see also, De Sapio v. Kohlmeyer, 35 NY2d 402, 406 [1974]; Hendler & Murray v. Lambert, 147 AD2d 442, 443 cf., Government Employees Ins. Co. v. Morris, 83 AD3d 709; Kissena Medical Imaging, P.C., 25 Misc 3d 1214(A), 901 NYS2d 911, 2009 WL 3337597 [Supreme Court, Nassau County 2009]). Indeed, disclosure devices are to be “sparingly used in arbitration proceedings'” (De Sapio v. Kohlmeyer, supra, 35 NY2d 402, 406; Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra, 73 AD3d at 792; Matter of Flood, 157 AD2d 780, 781).

With these principles in mind, the Court agrees that the petitioners have not sustained their [*3]burden of demonstrating that extraordinary circumstances exist (Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra).

Significantly, in opposition to the motion, Kissena has persuasively argued, among other things, that: (1) it has been duly incorporated by a physician licensed to practice medicine in the State of New York; (2) the affidavits submitted by the carriers’ investigators (who are apparently employees of one particular carrier), are inconclusive and lacking in the requisite factual detail; and (3) only two arbitration proceedings (with amounts in issue of $2,670.40 and $878.67) are actually now pending before an arbitrator, which claims have been denied on medical necessity grounds (Caio Aff., ¶¶ 31, 41-45, 48, 50, 52). The record also supports Kissena’s assertions that many of the document demands are excessively broad and unlimited in their temporal scope (cf., Accent Collections, Inc. v. Cappelli Enterprises, Inc., 84 AD3d 1283). The petitioners have not submitted reply papers in which they have responded to, or otherwise materially disputed, the foregoing assertions.

Lastly, there is no dispute that the petitioners possess the right to request that the involved arbitrators direct Kissena to produce materials relating to, inter alia, Kissena’s corporate structure(Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra, 73 AD3d at 791-792). Nor does the evidence indicate “that if a disclosure directive is made during those proceedings, the requested disclosure will, at that point, be unavailable” (Travelers Indem. Co. v. United Diagnostic Imaging, P.C., supra). Surprisingly, during oral argument when this Court struck petitioner’s application for a temporary restraining order, petitioner’s admitted they did not bother seeking the discovery they are requesting herein, in the arbitrary proceeding they request this Court to stay.

Under these circumstances, and upon the exercise of its broad discretion, the Court agrees that the petitioners’ submissions do not establish the existence of extraordinary circumstances warranting the requested, discovery in aid of arbitration.

The Court has considered the petitioners’ remaining contentions and concludes that they are lacking in merit.

According, it is,

ORDERED petitioners’ order to show cause pursuant to CPLR 3102[c], for an order, inter alia, granting a stay and stated discovery in aid of arbitration, is denied.

All matters not decided herein are DENIED.

This constitutes the decision and order of this Court.

Dated: April 23, 2012

Mineola, New YorkE N T E R: [*4]

______________________________

Hon. Robert A. Bruno, J.S.C.

Supreme Court, Nassau County

4399-10

Attorneys for Plaintiffs- McDonnell & Adels, PLLC, 401 Franklin Avenue, Garden City, NY 11530

and Rivkin Radler LLP, 926 RXR Plaza, Uniondale, NY 11556

Attorneys for Defendants- The Zuppa Frim, PLLC, 53 Herbert Street, Brooklyn, NY 11222

Steven M. Jaeger, J.

The following papers read on this motion: [*2]

Notice of Motion, Affirmation, and ExhibitsX

Affirmation in Opposition and ExhibitsX

Memorandum of Law on Behalf of Defendants in OppositionX

Reply Memorandum of LawX

Memorandum of LawX

Motion by plaintiff for judgment pursuant to CPLR 3211(a)(7) dismissing defendants’ second, third, fourth, fifth and sixth counterclaims as alleged in defendants’ [Second] Amended Answer and Counterclaims is granted, with prejudice as to the second, third, fifth, and sixth counterclaims, and without prejudice as to the fourth counterclaim. The first cause of action for breach of contract is severed and continued.

In 2010 plaintiff commenced this action for a declaratory judgment and to recover no-fault payments made to the defendant professional corporations. Defendants asserted six counterclaims in their amended answer. Plaintiff previously sought dismissal of five of the counterclaims, and on that motion this Court directed defendants to serve a second amended answer and counterclaims in compliance with statutory pleading requirements (Order dated August 10, 2011, annexed as Exhibit E to plaintiff’s moving papers).

Plaintiff now seeks dismissal of the same five counterclaims for consequential damages, common law fraud, violation of General Business Law ｧ349, punitive damages, and violation of Judiciary Law ｧ487, as alleged in the [Second] Amended Answer and Counterclaims. Plaintiff contends that defendants’ only sustainable cause of action is for breach of contract based upon State Farm’s allegedly improper failure to pay no-fault benefits.

3211 Dismissal Standard

On a motion to dismiss pursuant to CLR 3211, the facts as alleged must be accepted as true, the pleader must be accorded the benefit of every favorable inference, and the court must determine only whether the facts as alleged fit within any cognizable theory (Samiento v World Yacht Inc., 10 NY3d 70, 79 [2008]; Arnav Industries, Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, LLP, 96 NY2d 300, 303 [2001]). The criterion on a motion pursuant to CPLR 3211(a)(7) is whether the pleader has a cause of action (Leon v Martinez, 84 NY2d 83, 88 [1994]).

Discussion

At the outset the Court notes for the record that defendants’ [Second] [*3]Amended Answer and Counterclaims is 79 pages long and contains 528 paragraphs, as compared to the Amended Answer and Counterclaims which was 172 pages long and contained 981 paragraphs. While this second amended pleading is shorter, it still suffers from “a mass of verbiage and superfluous matter” (Tankoos v Conford Realty Co., 248 AD 614 [2nd Dept 1936]). Nevertheless the Court will review the [Second] Amended Answer and Counterclaims pursuant to the dismissal standard of CPLR 3211(a)(7), to determine if defendants have a cause of action against plaintiff, other than one for breach of contract.

Fraud

The third counterclaim purports to allege a cause of action for common law fraud. Defendants allege that State Farm promised pre-accident policy holders, and by extension the defendants, that it would pay up to $50,000 per eligible injured person (EIP), that these promises were false, and that policy holders purchased insurance from State Farm in reliance upon these false promises. Post-accident misrepresentations included that State Farm would fairly adjust the EIPs’ claims, and timely pay all legitimate claims, and in reliance thereon, the defendants accepted the assignment of claims from EIP assignors who were State Farm policy holders. The post-accident representations include the alleged “predetermined” Independent Medical Examinations (“IMEs”), the alleged use of “fraud mills,” the alleged improper Peer Review Reports, alleged “sham investigations by legally unqualified investigators,” alleged improper use of Examinations Under Oath, alleged routine denial of proper claims, and alleged false and deceptive litigation practices.

A tort obligation is a duty imposed by law to avoid causing injury to others (New York University v Continental Ins. Co., 87 NY2d 308, 316 [1995]). A simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated (Clark-Fitzpatrick, Inc. v Long Is. R. R. Co., 70 NY2d 382, 389 [1987]; Yenrab, Inc v 794 Linden Realty LLC, 68 AD3d 755 [2nd Dept 2009]; Heffez v L & G General Const. Inc., 56 AD3d 526 [2nd Dept 2008]). This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract (Clark-Fitzpatrick, Inc. at 389). Furthermore, the allegation that a party entered into a contract while lacking the intent to perform is insufficient to state a cause of action for fraud (Dune Deck Owners Corp v Liggett, 85 AD3d 1093 [2nd Dept 2011]; Stangel v Chen, 74 AD3d 1050 [2nd Dept 2010]).

Here, both the alleged pre-accident promises and post-accident [*4]misrepresentations arise out of the State Farm’s contractual obligation to honor its policies and make no-fault payments as required by the no-fault regulations. No separate obligation or tort duty to pay no-fault claims exists. On this record defendants have no cause of action against State Farm for fraud, and accordingly dismissal of the third cause of action for common law fraud must be granted.

General Business Law ｧ349

In the fourth counterclaim defendants allege that State Farm has committed multiple violations of General Business Law ｧ349. This statute declares as unlawful “[d]eceptive acts and practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state” (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 24 [1995]). To state a claim under this statute a pleader must allege (1) acts or practices that are “consumer oriented,” (2) that such acts or practices are misleading in a material way, and (3) that the pleader has suffered actual harm by reason of those acts (Gaidon v Guardian Life Ins Co of America, 94 NY2d 330, 344 [1999]). Conduct is “consumer oriented” if it has “a broader impact on consumers at large” and may “potentially affect similarly situated consumers” (Oswego at pp. 25-26).

Here, defendants allege that State Farm has used inaccurate and false information to improperly delay and deny claims, that such conduct is “likely to mislead a reasonable consumer in the Acupuncture PCs’ circumstances,” that consumers at large have been injured by such practices, and that such practices have caused actual harm to the Acupuncture PCs and the public in general (see [Second] Amended Answer and Counterclaims, pars. 505-510). The problem with this pleading is that defendants’ injury is indirect or derivative of that suffered by policy holders whose claims were allegedly delayed or denied, and therefore it appears that defendants lack standing to assert this ｧ349 claim.

An injury is indirect or derivative when the loss arises solely as a result of injuries sustained by another party (Blue Cross & Blue Shield of NJ Inc v Philip Morris USA Inc., 3 NY3d 200, 207 [2004]). If a pleader could avoid the derivative injury bar by merely alleging that its suit would somehow benefit the public, then the “tidal wave of litigation” guarded against in Oswego (85 NY2d at 26) “would loom ominously on the horizon” (City of New York v Smokes-Spirits.Com, Inc., 12 NY3d 616, 623 [2009]). Where, as here, the claimed injury arises wholly as a result of injury to others, and the pleader “is only secondarily damaged” (MVB Collision Inc v Progressive Ins. Co., 2010 WL 3617134 (Sup Ct, Nassau Cty, 2010)), the claimed injury is not compensable under ｧ349.

Defendants attempt to clear the standing hurdle by asserting that they are [*5]assignees of the policy holders whose claims were allegedly delayed or denied, and that as assignees, they stand in the shoes of the assignors ([Second] Amended Answer and Counterclaims, par.16). However the assignment of contractual claims does not automatically entail the right to assert tort claims arising from the contract (Banque Arabe et Internationale D’Investissement v Maryland Nat. Bank, 57 F3d 146, 151 [2d Cir 1995]; State of Ca. Public Employees’ Retirement Sys v Shearman & Sterling, 95 NY2d 427 [2000]; Fox v Hirschfeld, 157 App Div 364 [1st Dept 1913]). Assignments of rights under the no-fault law generally encompass the right of the assignee to sue for payment of the benefits provided tothe assignor. Whether such an assignment includes additional rights depends, inter alia, on the language of the assignment instrument, which has not been submitted to this Court. Under these circumstances dismissal of the fourth counterclaim for violation of General Business Law ｧ349 is granted without prejudice (see State Farm Mut. Auto. Ins Co. v Mallela, 175 F Supp 2d 401 [EDNY 2001]).

Judiciary Law ｧ487

Judiciary Law ｧ487, which governs misconduct by attorneys, provides for the recovery of treble damages from an attorney who is guilty of deceit or collusion, or an alleged chronic, extreme pattern of legal delinquency (Rock City Sound , Inc v Bashian & Farber, LLP, 74 AD3d 1168, 1172 [2nd Dept 2010], lv app dsmd 16 NY3d 826 [2011]; Izko v Sportswear Co, Inc, v Flaum, 25 AD3d 534, 537 [2nd Dept 2006]). This statutory cause of action is only applicable to attorneys and cannot extend derivative liability to a client (Yalkowsky v Century Apts. Assoc., 215 AD2d 214 [1st Dept 1995]).

Defendants’ sixth counterclaim for violation of Judiciary Law ｧ487 is based upon the allegation that State Farm’s General Counsel ratified and encouraged the submission of fraudulent affidavits in litigation involving defendants ([Second] Amended Answer and Counterclaims, par. 521). This does not suffice as a basis for a claim pursuant to Judiciary Law ｧ487 against State Farm, and the sixth counterclaim is summarily dismissed.

Consequential Damages

In the second counterclaim defendants seek consequential damages based upon “State Farm’s multiple breaches of contract” ([Second] Amended Answer and Counterclaims, par. 464). They seek damages for the loss of defendant Anikeyeva’s business, allegedly caused by the State Farm’s failure to pay no-fault benefits under its policies.

Consequential damages are recoverable for breach of contract in limited [*6]circumstances, where such damages were within the contemplation of the parties as the probable result of a breach at the time of, or prior to, contracting (Bi-Economy Market, Inc v Harleysville Ins Co of New York, 10 NY3d 187, 192 [2008], citing Kenford Co v County of Erie, 73 NY2d 312, 319 [1989]). Defendants were not yet on the scene at the time that the subject insurance policies were issued by State Farm to its policy holders. Therefore, there could have been no contemplation of defendants’ consequential damages at the time the policies were issued. In short, defendants simply have no cause of action for consequential damages based upon the allegations of State Farm’s multiple breaches of contract. Accordingly dismissal of the second counterclaim for consequential damages must be granted.

Punitive Damages

The fifth counterclaim purports to allege a cause of action for punitive damages, based upon State Farm’s “far reaching pattern of false, deceptive and fraudulent conduct,” which “has harmed and will continue to harm, the public at large” ([Second Amended Answer and Counterclaims, par. 515).

New York does not recognize an independent cause of action for punitive damages (Rocanova v. Equitable Life Assur. Society. of U.S., 83 NY2d 603, 616, [1994]; Muniz v Mount Sinai Hosp. of Queens, 91 AD3d 612 [2nd Dept 2012]). Punitive damages are not recoverable for an ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights (Rocanova at 613). Punitive damages are available where the conduct constituting or associated with the breach of contract is (1) actionable as an independent tort for which compensatory damages are ordinarily available, and (2) sufficiently egregious to warrant the additional imposition of exemplary damages (Rocanova at 613).

On this record defendants do not have an independent tort claim against State Farm, and for this reason there is no need for the Court to address the egregiousness of the alleged conduct by State Farm. Dismissal of the fifth counterclaim for punitive damages must be granted.

It is so Ordered.

Dated: March 13, 2012

__________________________________________

STEVEN M. JAEGER, A.J.S.C.

Supreme Court, Nassau County

020352/10

Plaintiffs Attorney:

Joseph Henig, P.C.

516-785-3116

Defendants Attorney:

Bruno, Gerbino & Soriano, LLP

631-390-0010

F. Dana Winslow, J.

The motion of plaintiff NEW YORK HOSPITAL MEDICAL CENTER OF QUEENS (“NY HOSPITAL”) a/a/o DOLLY RAHIMA a/k/a BEBE JEBO KHAIRULLAH (“KHAIRULLAH”) for summary judgment pursuant to CPLR §3212 is determined as follows. All other claims in this matter have been settled.

This is an action pursuant to Insurance Law §5106 to compel payment of a no-fault bill. Plaintiff NY HOSPITAL is the assignee for health services rendered to DOLLY RAHIMA a/k/a BEBE JEBO KHAIRULLAH (“KHAIRULLAH”) during the period from August 4, 2010 through August 9, 2010 arising out of an automobile accident [*2]that occurred on August 4, 2010. On August 24, 2010, NY HOSPITAL sent to the defendant a Hospital Facility Form (Form N-F 5) and a UB-04, constituting its claim for payment of a hospital bill in the amount of $12,991.42. Defendant received the claim on August 27, 2010. It is undisputed that NY HOSPITAL mailed and that defendant received the hospital facility form and uniform billing form within the statutory time frame.

NY HOSPITAL moves for summary judgment pursuant to CPLR §3212 in the sum of $12,991.42 upon the ground that defendant is precluded from interposing a defense because of its failure to pay or issue a timely denial of the claim. See Presbyterian Hospital in the City of NY v. Maryland Casualty Co., 90 NY2d 274; Montefiore Medical Center v. New York Central Mutual Fire Insurance Co., 9 AD3d 354. In support of its motion, NY HOSPITAL proffers an affidavit of Peter Kattis, employed by a third party biller and account representative for NY HOSPITAL, sworn to on January 6, 2011, attesting to personal knowledge of mailing of the billing forms to defendant and the receipt by defendant on specific dates. NY HOSPITAL also submits copies of the bills and signed return receipt requested receipts demonstrating that defendant received same. It is undisputed that NY HOSPITAL mailed and that defendant received the hospital facility form and uniform billing form within the statutory time frame.

An insurer is required to either pay or deny a claim within thirty (30) calendar days after proof of the claim is received. 11 NYCRR 65-3.8 (a)(1). NY HOSPITAL asserts that defendant has neither paid nor issued a timely denial of the claim and as a result is precluded from interposing a defense. Presbyterian Hospital in the City of New York v. Maryland Casualty Co., supra. It is undisputed that defendant issued a denial on October 28, 2010, beyond the time prescribed by the applicable regulations. The Court finds NY HOSPITAL made a prima facie showing of entitlement to judgment as a matter of law with respect to its claim by establishing that defendant received the requisite no fault billing forms and that neither payment nor a timely denial was made.

In opposition, defendant claims that investigation of the accident reveals that the losses claimed were not caused by the accident but rather were the result of intentional acts. In support, defendant proffers the affidavit of Bill Wynne, Special Investigative Unit Investigator, employed by defendant, sworn to on February 15, 2011 (the “Wynne Affidavit”). The Wynne Affidavit concludes that upon his investigation, including review of documents in defendant’s file, KHAIRULLAH was not involved in a covered accident. Defendant argues that KHAIRULLAH’s injuries are unrelated to the accident, and as such, its denial is based on lack of coverage rather than a denial based on exclusion from coverage. Central General Hospital v. Chubb Group of Insurance Cos., 90 [*3]NY2d 195. Despite NY HOSPITAL’s arguments to the contrary, the Court finds that the Wynne Affidavit constitutes evidentiary proof in admissible form.

An “insurer [is] not subject to preclusion in the lack of coverage situation where there never was any insurance in effect.’ ” Presbyterian Hospital in the City of NY v. Maryland Casualty Co., supra, at 283 quoting Zappone v. Home Insurance Co., 55 NY2d 131 at 138. Accordingly, even when an insurer fails to reject a claim within the thirty day period mandated by 11 NYCRR 65-3.8, the insurer “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.” Central General Hospital v. Chubb Group of Insurance Cos., supra at 199. See Fair Price Medical Supply Corp. v. Travelers Indemnity Co., 42 AD3d 277.

The term “accident” is broadly defined, and is construed according to the meaning understood by the average person. See Agoado Realty Corp. et al. v. United International Insurance Co., 95 NY2d 141. In deciding whether an injury is the result of a covered accident in the context of an alleged intentional tort precluding coverage under the policy, the Court finds that it is relevant to determine whether the incident was the result of reflective or reflexive actions from the insured’s perspective. There can be no accident when the injuries were the expected or the anticipated result of the alleged conduct and thereby a reflective action. In circumstances, however, where injuries were caused by a reflexive action on the part of the insured, the injuries sustained do not “flow directly and immediately from an intended act” and would be considered an accident. Cf. Allstate Fire & Cas. Co. v. Torio, 250 AD2d 833, 834 (citing Continental Ins. Co. v. Colangione, 107 AD2d 978, 979).

In the case at bar, based on the deposition testimony ofKHAIRULLAH, particularly her testimony that she saw blood on her hand, unhooked her seat belt, was frightened and started to panic and wanted to be out of the car, the Court finds that her actions were reflexive and therefore arose out of a motor vehicle accident. Such reflexive actions were sufficiently unexpected, unusual or unforeseen as to warrant a determination that they arose from an accident and did not “flow directly and immediately from an intended act.” Allstate Fire & Cas. Co. v. Torio, supra.

Based on the foregoing, it is

ORDERED, that the motion of plaintiff NEW YORK HOSPITAL a/a/o DOLLY RAHIMA a/k/a BEBE JEBO KHAIRULLAH (“KHAIRULLAH”) for summary judgment pursuant to CPLR §3212 is granted.

This constitutes the Order of the Court. [*4]

Dated:June 24, 2011______________________

J.S.C.

Supreme Court, Nassau County

9018/04

Michele M. Woodard, J.

Papers Read on this Motion:

Plaintiff’s Amended Notice of Motion06

Defendants’ Oppositionxx

Plaintiffs’ Replyxx

Defendant’s Notice of Supplemental Authorityxx

Defendant’s Notice of Motion08

Defendant’s Memorandum of Lawxx

Plaintiff’s Affirmation in Oppositionxx

Plaintiff’s Memorandum of Lawxx

Defendant’s Reply Memorandumxx

Plaintiff’s Reply Memorandum of Lawxx

In motion sequence number six, Plaintiff-Intervenors, Amer-A-Med Products, Inc., [hereinafter Amer-a-Med] and Meditek, Inc. [hereinafter Meditek], move pursuant to CPLR §3211(a)(5), (6), (7) and (10), as well as CPLR §3211(b), for an order dismissing the counterclaims and certain affirmative defenses as are asserted by defendant, Allstate Insurance Company [hereinafter Allstate].

Defendant, Allstate, moves pursuant to CPLR §902, for an order dismissing the plaintiffs’ [*2]class allegations (Sequence No.08).

Factual & Procedural Background

Globe Surgical Supply [hereinafter Globe], is a provider of Durable Medical Equipment [hereinafter DME] (see Bell Affirmation in Support at ¶4). Globe is the former proposed class representative in the underlying putative class action, the substance of which is alleged breach of contract due principally to Allstate’s “illegal reduction of reimbursements made to Globe and putative class members who submitted No-Fault claims” (see Bell Affirmation in Support at ¶4). Said reductions were allegedly in violation of Insurance Law §5101, as well as 11 NYCRR 65.10, the latter of which was the relevant insurance regulation in effect at the time of the purported illegal reductions (id.).

By order dated April 24, 2007, this Court denied an application interposed by Globe, which sought class certification pursuant to Article 9 of the CPLR (id. at ¶5; see also Exh. A). On April 21, 2009, the Appellate Division, Second Department, held that “Globe Surgical Supply, as assignee of Charles Charlotin, met all of the class certification prerequisites in the instant matter except adequacy of representation” (id. at Exh. A). Accordingly, the Appellate Division modified this Court’s decision dated, April 24, 2007, and held that the branch of Globe’s application for class certification “should have been denied without prejudice to renewal” (id.).

Thereafter, Allstate moved for summary judgment dismissing the complaint in response to which Amer-a-Med and Meditek cross-moved for an order granting leave to intervene so as to facilitate a renewal application for class certification (id. at ¶8; see also Exh. F). Simultaneously with their cross-application, Amer-a-Med and Meditek served an Amended Class Action Complaint [hereinafter the Complaint] (id. at ¶8; see also Exh. E). On December 15, 2009, this Court denied Allstate’s application and granted the motion interposed by Amer-a-Med and Meditek, for leave to intervene and ordered that said intervenors be substituted as party plaintiff’s so as to permit renewal of the application for class certification (id. at ¶9; see also Exh. F).

A review of the Complaint indicates that Amer-a-Med and Meditek are each suppliers of DME and provided same to their respective assignors (see Bell Affirmation in Support at Exh. E at ¶¶3, 4, 22). In connection therewith, Amer-a-Med and Meditek each obtained assignments from the assignors and together with same filed various claims with Allstate for reimbursement in relation to the DME provided (id. at ¶¶23-32). The plaintiffs allege that notwithstanding the submission of the requisite documentation, Allstate did not reimburse them for the amounts claimed and rather unilaterally reduced same by adjusting the amounts to conform to the “prevailing rates in the geographic location of the provider” (id.). The plaintiffs further allege that these unilateral reductions undertaken by Allstate are in direct contravention of “Part E of the Twenty-Third Amendment to Regulation No. 83 (11 NYCRR 68)”^[FN1] (id. at ¶¶ 10, 20).

On January 28, 2010, Allstate filed an Answer in response to the within Complaint, the contents of which did not contain any counterclaims (id. at ¶10). Thereafter, on February 16, [*3]2010, Allstate filed an Amended Answer, which contained various affirmative defenses and counterclaims (id. at ¶11; see also Exh. G). The instant applications, respectively interposed by the moving parties herein, thereafter ensued and are determined as set forth hereinafter.

Application by Amer-a-Med and MeditekThe Court initially addresses the application interposed by Amer-a-Med and Meditek, which seeks dismissal of the counterclaims and affirmative defenses interposed by Allstate.

A review of the Amended Answer dated, February 16, 2010, reveals that Allstate has asserted five counterclaims, the first of which sounds in common law fraud, the second and third of which are predicated upon the federal Rackateer Influenced and Corrupt Organizations statute, the fourth of which is predicated upon §349 of the General Business Law, and the fifth of which is for unjust enrichment (see Bell Affirmation in Support at Exh. G).

Fraud

With respect to Allstate’s first counterclaim, sounding in fraud, counsel for the plaintiffs contend, inter alia, that the applicable statute of limitations has expired warranting dismissal thereof (see Plaintiffs’ Memorandum of Law in Support at pp.13-15; see also Plaintiffs’ Reply Memorandum of Law at pp. 4-11).

In order to allege a cause of action sounding in common law fraud, the complaint must allege the following: the defendants made a material representation; the material representation was false; the defendants knew it was false and made it with the intention of deceiving the plaintiff; the plaintiff believed the representation to be true and justifiably acted in reliance thereon; and the plaintiff is damaged as a result thereof (Small v Lorillard Tobacco Co., Inc., 94 NY2d 43 [1999]). “In order to plead a prima facie case of fraud, a plaintiff must allege each of the elements of fraud with particularity and must support each element with an allegation of fact” (Fink v Citizens Mortg. Banking Ltd., 148 AD2d 578 [2d Dept 1989]; CPLR §3016[b]).

A cause of action sounding in fraud must be commenced within the six years following the date upon which the cause of action accrued or within the two years after the time during which the plaintiff could have discovered the fraud withdue diligence (Town of Poughkeepsie v Espie, 41 AD3d 701 [2d Dept 2007]; see also Espie v Murphy, 35 AD3d 346 [2d Dept 2006]). A cause of action which alleges fraud accrues at that point in time when the plaintiff is in possession of knowledge of the facts from which the alleged fraud “could have been discovered with reasonable diligence” (id.; see also Northridge Ltd. Partnership v Spence, 246 AD2d 582 [2d Dept 1998]). The party seeking the benefit of the discovery exception to the six-year statute of limitations bears the burden of demonstrating that the fraud could not have been previously discovered (Siler v Lutheran Social Services of Metropolitan NY, 10 AD3d 646 [2d Dept 2004]; Hillman v City of New York, 263 AD2d 529 [2d Dept 1999]; Lefkowitz v Appelbaum, 258 AD2d 563 [2d Dept 1999]).

In the instant matter, a review of the Amended Answer reveals that Allstate sets forth numerous allegations of fraudulent activity undertaken by the plaintiffs herein, the last of which was on November 7, 2003. Relying upon this date, counsel for the plaintiffs argues that as the within counterclaim was not commenced until February 16, 2010, same is barred by the applicable statute of limitations (see Plaintiffs’ Memorandum of Law at pp. 13-15; see also Plaintiffs’ Reply Memorandum of Law at pp.4-11). [*4]

In opposing this branch of the plaintiffs’ application, counsel for Allstate initially argues that said defendant has sufficiently alleged facts which detail an “ongoing scheme,” which resulted in Allstate remitting payments to the plaintiffs between 1999 through 2008, and accordingly the fraud-based claims are within the applicable statute of limitations (see Allstate’s Memorandum of Law at pp. 10-15; see also Allstate’s Amended Answer at ¶163). Counsel further posits that it was not cognizant of the plaintiffs’ fraudulent scheme until they sought leave to intervene herein, at which time Allstate “was able to piece together facts regarding the ownership and interrelationship between plaintiffs, their owners and other entities and individuals, and the general nature of plaintiffs’ conduct” (see Allstate’s Memorandum of Law at p. 11).

In addition to the foregoing, counsel for Allstate further argues that as the subject counterclaims “arise out of the same transactions that form the basis of the claims asserted in plaintiff’s complaint” interposed in March of 2004, by operation of CPLR §203(f), said counterclaims are deemed timely (id. at p. 15).

In the instant matter, a review of the voluminous allegations contained in Allstate’s Amended Answer indeed demonstrates that the most recent date upon which the plaintiffs engaged in fraudulent conduct was November 7, 2003, clearly more than six years prior to the interposition of the counterclaim sounding in fraud (Town of Poughkeepsie v Espie, 41 AD3d 701 [2d Dept 2007], supra; CPLR §213[8]). Here, while Allstate asserts that it was unaware of the plaintiff’s fraudulent activities until they sought leave to intervene, this Court finds said argument unavailing (id.; Northridge Ltd. Partnership v Spence, 246 AD2d 582 [2d Dept 1998], supra). Allstate itself asserts that since 1999 through 2008, it paid the plaintiffs substantial payments. Accordingly, that Allstate did not detect any indicia of fraudulent conduct on the part of either of the plaintiffs during those ensuing nine years demonstrates, in this Court’s view, that Allstate did not exercise any diligence in attempting to discover the alleged fraud ( Town of Poughkeepsie v Espie, 41 AD3d 701 [2d Dept 2007], supra; see also Espie v Murphy, 35 AD3d 346 [2d Dept 2006], supra).

Finally, with respect to Allstate’s opposition arguments predicated upon CPRL §203[f], said statute provides that “[a] claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading.”

Here, Allstate’s original Answer does not contain any counterclaims against either Amer-A- Med, Meditk, or the particular assignors upon which the plaintiffs’ claims are predicated. Thus, the original answer could not have given any notice to the plaintiffs as to the “the transactions, occurrences, or series of transactions or occurrences, to be proved pursuant to the amended pleading (id.; Padua v Falow, 230 AD2d 834 [2d Dept 1996]; In Re David Nelson, M.D., 303 AD2d 499 [2d Dept 2003]).

Based upon the foregoing, Allstate’s counterclaim sounding in common law Fraud is hereby dismissed.

RICO Statute

The defendants’ Second and Third counterclaims are predicated upon violations of 18 USC §1962[c] and 18 USC §1962[d] of the Racketeer Influenced and Corrupt Organizations statute [hereinafter the RICO statute]. The elements which comprise civil RICO claims are “(1) conduct (2) of an enterprise (3) through a pattern * * * (4) of racketeering activity” Podraza v Carriero, 212 AD2d 331 [4th Dept 1995] quoting Sedima, S.P.R.L. v Imrex, Co., 473 US 479 [1985] at 496). The statute of limitations applicable to civil RICO actions is four years (Niagra Mohawk Power Corporation v Freed, 265 AD2d 938 [4th Dept 1999]). Such an action does not accrue “until a plaintiff both knows, or should have known, of the injury to business or property, and that the predicate act causing injury is part of a pattern of racketeering activity” (id. quoting Podraza v Carriero, 212 AD2d 331 [4th Dept 1995], supra). The term enterprise is defined by the statute as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity” (18 USC §1961[4]). The term “racketeering activity” includes various offenses including, mail fraud, in which Allstate has accused the plaintiffs of having engaged (id.).In support of the instant application, counsel for the plaintiffs sets forth numerous arguments including that the actions predicated upon the RICO statute are barred by the applicable statute of limitations (see Plaintiffs’ Memorandum of Law at pp. 16-17; see also Plaintiffs’ Reply Memorandum of Law at pp. 12-13).

In opposing the application, Allstate asserts that it has sufficiently alleged an ongoing scheme engaged in by the plaintiffs so as to defraud Allstate and that such scheme continued “at least until 2008”, which is well within the statutory period (see Defendant’s Memorandum of Law at pp. 19-23). Allstate additionally argues that whether the RICO claims are timed barred is a factual determination not susceptible to resolution herein (id. at pp.20, 21). To this point, Allstate posits that it could not have discovered the fraudulent scheme until the ensuing investigation, which occurred after the plaintiffs intervened herein (id. at p23).

Having reviewed Allstate’s voluminous Amended Answer, this Court finds that said defendant has sufficiently alleged an ongoing scheme undertaken by the plaintiffs and has raised factual questions vis a vis when it knew or should have known of the purported existence of a pattern of racketeering (Niagra Mohawk Power Corporation v Freed, 265 AD2d 938 [4th Dept 1999], supra; Podraza v Carriero, 212 AD2d 331 [4th Dept 1995], supra). Accordingly, that branch of the plaintiffs’ application which seeks dismissal of the defendant’s counterclaims predicated upon the RICO statute is hereby denied.

General Business Law §349

General Business Law §349 (a) declares as unlawful “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” In order for a plaintiff to establish a prima facie case under the statute, he or she must demonstrate that the challenged act or practice of the defendant was consumer-oriented, that it was misleading in a material way, and that the plaintiff suffered injury as a result of the deceptive act (Oswego Laborers’ Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20 [1995]). A cause of action alleging violations of the statute is governed by a three-year statute of limitations (Gaidon v Guardian Life Insurance Company of America, 96 NY2d 201 [2001] ). Such an action accrues “when all of the factual circumstances necessary to establish a right of action have occurred, so that the plaintiff would be entitled to relief” (id.). [*6]

As extrapolated from the Amended Answer, Allstate alleges that the plaintiffs herein engaged in deceptive acts in violation of the statute and that “each separate bill, invoice, letter and report submitted to Allstate [by the plaintiffs] constituted a separate violation” of the statute (see Verified Answer at ¶¶172,173). The defendant further alleges that it “has been damaged by the actions of Meditek and Amer-A-Med in that Allstate has made substantial payments to Meditek totaling $305,000 and to Amer-A-Med totaling $56,229” (id. at ¶177).

In moving for dismissal thereof, counsel for the plaintiff again argues for dismissal on several bases including that said claims are barred by the applicable statute of limitations (see Plaintiffs’ Memorandum of Law at pp. 17; see also Plaintiffs’ Reply Memorandum of Law at p.13 -14).

In the instant matter, while Allstate generally asserts that between 1999 and 2008 it paid the sums of $305,000 and $56,229 to Meditek and Amer-A-Med, respectively a careful review of the factual allegations contained in the Amended Answer indicates that the last bill received by either of these plaintiffs was on November 7, 2003, which is clearly more than three years prior to the commencement of the subject counterclaim (Gaidon v Guardian Life Insurance Company of America, 96 NY2d 201 [2001], supra). Accordingly, the counterclaim is hereby dismissed (id.).

Unjust Enrichment

A cause of action sounding in unjust enrichment is governed by a six-year statute of limitations and accrues “upon the occurrence of the wrongful act giving rise to a duty of restitution” (Congregation Yetev Lev D’Satmar v 26 Adar N.B. Corp., 192 AD2d 501 [2d Dept 1993]; CPLR §213[1]). As noted above, the most recent allegation of wrongdoing undertaken by the plaintiff’s herein was on November 7, 2003 and more than six years prior to the commencement of the subject counterclaim (id.). Accordingly, the counterclaim is hereby dismissed.

Affirmative Defenses

The Court now addresses that branch of the plaintiff’s application which seeks dismissal of Allstate’s affirmative defenses numerically denominated ¶¶53, 54, 55, 61, 62, 63, 76, 77, 78, 81 and 82 (see Bell Affirmation in Support at ¶2).

CPLR §3211(b) provides that a party may move for judgment dismissing one or more defenses on the basis that a defense is not stated or has no merit. When entertaining such an application, “the defendant is entitled to the benefit of every reasonable intendment of the pleading, which is to be liberally construed” (Abney v Lunsford, 254 AD2d 318 [2d Dept 1998]). Where there is any doubt as to the availability of the defense, it should not be dismissed (Warwick v Cruz, 270 AD2d 255 [2d Dept 2000]; Fireman’s Fund Ins. Co. v Farrell, 57 AD3d 721 [2d Dept 2008]).

Within the context of the no fault statutory scheme, upon receipt of the requisite claims forms, an insurance carrier is required to pay or deny the claim within 30 calendar days thereafter (Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007]; Fair Price Medical Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008] ). If an insurance company fails to properly deny a claim within this 30-day period, is it “generally precluded from asserting [*7]a defense against payment of the claim” (Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007], supra; see also Presbyterian Hosp. in City of New York v Maryland Cas. Co., 90 NY2d 274 [1997] at 283-283). However, the Courts have set forth a narrowly circumscribed exception to the rule of preclusion where the insurance carrier has raised a defense sounding in lack of insurance coverage (Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d 195 [1997]). Under such circumstances, “an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed'”(Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007], supra at 318 quoting Matter of Worcester Ins. Co., v Bettenhauser, 95 NY2d 185 [2000]).

Informed by the foregoing general legal principles, the Court now turns to the various affirmative defenses alleged by Allstate. In paragraph denominated “53”, Allstate alleges that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery to the extent that they failed to provide the DME prescribed to the claimants, yet billed Allstate for that equipment” (see Bell Affirmation in Support at Exh. G).

In Fair Price Medical Supply Corp. v Travelers Indemnity Company, the Appellate Division, Second Department, held that a defense predicated upon a providers failure to furnish the supplies for which it billed is not one grounded in lack of coverage and “is more akin to a claim of overbilling (albeit an extreme form thereof)” (42 AD3d 277 [2d Dept 2007] at 283 affd 10 NY2d 556 [2008]). That Court went on to hold that while a defendant is entitled to challenge such a claim as being fraudulent, it was required to do so within the 30 days following submission of the claim (id. at 286; Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008]; see also Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d 195 [1997], supra). Here, as Allstate failed to raise the defense within the 30 days following the receipt of the relevant claim forms, it is therefore precluded from asserting same herein (id.). Based upon the foregoing, the affirmative defense as is alleged in paragraph “53”, is hereby dismissed.

In the paragraph denominated “54”, the defendant alleges that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery to the extent that they have failed to document their costs as required by Regulation 83, codified at 11 NYCRR §68.3, Appendix 17-C, Part E(b)(1).” Here, in this Court’s view, the substance of Allstate’s defense is that of overbilling in connection to the costs attendant to the DME provided. The courts have held that overbilling is not the equivalent of a defense predicated upon lack of coverage and to preserve such a defense, an insurer must raise same within the 30 days following receipt of the claim (Fair Price Medical Supply Corp. v Travelers Indemnity Company, 10 NY3d 556 [2008] at 564-565; Central General Hospital v Chubb Group of Ins. Cos., 90 NY2d 195 [1997], supra at 199). Thus, as Allstate failed to raise this defense within the 30-day time frame, it is precluded from doing so herein and accordingly this defense is dismissed.

In the paragraph denominated “55”, Allstate claims that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery, to the extent alleged assignments to them from the alleged Allstate insureds are invalid or non-existent.” The [*8]Court of Appeals has specifically held that “any defect in [an] assignment * * * simply does not implicate a lack of coverage defense warranting exemption from the exclusion rule” (Hospital for Joint Diseases v Travelers Property Cas. Ins. Co., 9 NY3d 312 [2007], supra at 319). Therefore, as Allstate failed to assert said defense within the statutorily required time frame following the submission of the claims, it is precluded from raising said defense herein and accordingly same is dismissed (id.).

In paragraph “61”, Allstate alleges that “[s]ome or all of plaintiffs’ claims are barred by the doctrine of unclean hands.” Here, said defense is essentially one which alleges fraudulent conduct undertaken by the plaintiffs. While the Court is cognizant that an insurance carrier may indeed challenge suspected fraudulent activity, it must nonetheless do so with in the time period prescribed by the no fault statutory scheme ( Fair Price Medical Supply Corp. v Travelers Indemnity Company, 42 AD3d 277 [2d Dept 2007] at 286). Accordingly, as Allstate failed to allege said defense within the 30 days following receipt of the relevant claims, it is precluded from raising same herein and the defense is dismissed (id; Presbyterian Hosp. In City of New York v Maryland Cas. Co., 90 NY2d 274 [1997]).

In the paragraph denominated “62”, Allstate alleges that “[p]laintiff’s and other members of the purported class may be barred, in whole or in part, from recovery to the extent that the costs do not arise from a bona fide, arm’s-length transaction and for failure to document costs as required by the New York State Insurance Department.” As with the foregoing, the defense alleged herein essentially claims fraudulent conduct on the part of the plaintiffs. However, as noted above, given Allstate’s failure to allege same within the 30 days following receipt of the relevant claim forms, it is precluded from asserting said defense herein (id.). Accordingly, the affirmative defense is hereby dismissed.

In paragraph “63”, Allstate sets forth that the “[p]laintiffs and other members of the purported class may be barred, in whole or in part, from recovery to the extent they have engaged in fraud against defendants, by, inter alia: (1) charging grossly inflated prices for DME they purportedly sold to claimants, often up to three times the price for which the equipment could have been purchased in a bona fide, arm’s-length transaction in the commercial market place, (2) submitting false documentation’ of their costs for DME supplied to Allstate’s insured for the sole purpose of supporting grossly inflated prices charged for DME and collecting fraudulent charges from Allstate, (3) relying on recycled invoices from wholesale supplies to support claims that specific items of DME were purportedly provided to specific claimants, when, in fact, those specific items of DME were not provided to the specific claimant; and (4)staging accidents.”

With respect to those allegations surrounding overbilling and recycling of invoices, same have been held not to constitute a defense predicated upon lack of coverage (Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008], supra at 142). Accordingly, as Allstate has failed to previously raise same, it is precluded from asserting said defenses herein (id.). With respect to the assertions that various of the accidents were “staged,” such an allegation must be “premised on the fact or founded belief that the alleged injury does not arise out of an insured incident” (see Mount Sinai Hospital v Triboro Coach Inc., 263 AD2d 11 [2d Dept 1999]at 19). The burden is on the insurance carrier to come forth with admissible evidence, which either demonstrates that there is in fact no coverage or evidence which supports the insurer’s [*9]belief that there is no coverage (id.). Here, Allstate has failed to meet this burden (id.). The Court notes that in opposing the plaintiffs’ instant application, counsel for Allstate provides an affidavit from a Mr. D’Amato, who is employed as a claims examiner for the defendant (see Short Affirmation in Opposition at Exh.4 at ¶2). However, the substance of said affidavit does not support the “staging” of accidents but rather chronicles various instances in which the plaintiffs herein purportedly utilized fraudulent invoices (id. at ¶¶7, 10, 14, 16, 17). Accordingly, based upon the foregoing, the affirmative defense as set forth in paragraph “63”, is hereby dismissed.

In paragraph “76”, Allstate alleges that “[t]here is no coverage under the No Fault law for the DME at issue in this matter.” Initially, the Court notes that such a defense is contradicted by the record given that Allstate partially reimbursed the plaintiff for some of the equipment provided (CPLR §3211[b]). Moreover, said defense essentially asserts that the DME provided was excepted from the coverage provided under the no fault statute. However, an exception from coverage is not the equivalent of a lack of coverage, and accordingly as Allstate failed to assert same within the 30 days following the receipt of claim, it is hereby precluded from asserting same herein and the defense is dismissed (Fair Price Medical Supply Corp. v Travelers Indemnity Company, 42 AD3d 277 [2d Dept 2007], supra at 283-284).

In paragraph “77”, Allstate states that “[a]ny benefits available to the plaintiffs and other members of the putative class are expressly conditioned and limited by the terms, conditions, limits and provisions of the insurance policies at issue, which may preclude recovery on such claims.” Here again, the essence of this defense appears to be that certain of the DME provided may be accepted from the insurance polices is issue. However, as noted above, an exception to coverage is not the equivalent to a lack of coverage and thus given Allstate’s failure to assert same within the statutory time frame, it is precluded from raising same herein and the defense is dismissed (id.).

In paragraph “78”, Allstate alleges that “Amer-A-Med and Meditek engaged in misrepresentations and fraud in an effort to conceal the true wholesale cost of the DME they billed to Allstate” and that “Amer-A-Med and Meditek set forth invoices from Impact and Nutekmed, identifying Impact and Nutekmed as the wholesalers, and Amer-A-Med and Meditek, then based their markup upon these invoices.” Allstate further alleged that “Amer-A-Med and Meditek, however, did not engage in arm’s-length transactions with Nutekmed and Impact.” This defense alleges overbilling on the part of the plaintiff’s. However, as noted herein above, overbilling is not equivalent to a defense predicated upon lack of coverage and accordingly as Allstate failed to allege same within the 30 days following the receipt of the claims, the defense is dismissed (Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008], supra at 142).

Paragraph 81 states the “[p]laintiffs engaged in improper self-referrals and referrals between affiliated entities” Such potential fraudulent action on the part of the plaintiff’s, even if true, is not a defense-based lack of coverage for the subject incidents in which the assignors were involved (Fair Price Medical Supply Corp. v Travelers Indemnity Company, 42 AD3d 277 [2d Dept 2007], supra). According, the failure of Allstate to assert same within the 30 days after receipt of the relevant claims, requires dismissal thereof.

Finally, with respect to paragraph denominated “82”, Allstate alleges that it “specifically [*10]asked plaintiffs for verification by requesting copies of original invoices and/or manufacturer’s invoices.” Here again, said defense goes to issues surrounding overbilling and recycling of invoices, both of which must be asserted within the 30 days following receipt of the relevant claims ( Globe Surgical Supply v Geico Insurance Company, 59 AD3d 129 [2008], supra at 142). Given Allstate’s failure to do so, the defense is dismissed (id.).

Allstate’s Cross-Application

The Court now addresses Allstate’s cross-application for an order pursuant to CPLR §902 dismissing the plaintiffs’ class allegations. In support thereof, counsel contends that as the plaintiffs have failed to move for class certification within the sixty days following Allstate’s service of its responsive pleading, the class allegations must be dismissed (see Zevgaras Affirmation in Support at ¶5;see also Defendant’s Memorandum of Law in Support).

CPLR §902 provides, in relevant part: “within sixty daysafter the time to serve a responsive pleading has expired for all persons named as defendants in an action brought as a class action, the plaintiff shall move for an order to determine whether it is to be so maintained.” In interpreting the statute, the Court of Appeals stated that “[t]he explicit design of Article 9 * * *, is that a determination as to the appropriateness of class action relief shall be promptly made at the outset of the litigation.” (O’Hara v Del Bello, 47 NY2d 363[1979] at 368; Alexander, Practice Commentaries, McKinney’s Cons Law of NY, Book 7B, CPLR C902:1).

In opposing the application, counsel for Amer-a-Med and Meditek contends that given the status of said plaintiffs as named defendants vis a vis the counterclaims asserted against them by Allstate, their time in which to interpose a responsive pleading has yet to begin as their dismissal applications are still pending (see Bell Affirmation in Opposition at ¶¶10, 11, 12). Counsel further argues that as the plaintiffs time in which to serve an Answer has yet to commence, the sixty-day period for moving for class certification has not yet expired (id.).

In the matter sub judice, the Court finds the argument posited by plaintiffs’ counsel unpersuasive and notes that no legal authority has been provided to support his position. Moreover, the counterclaims interposed by Allstate do not seek class relief and, as such, neither Amer-A-Med nor Meditek are defendants in a class action (CPLR§ 902). Accordingly, pursuant to CPLR §902, the plaintiffs were required to move for class certification within the sixty days following the service of Allstate’s Amended Answer (id.). As they have failed to do so, Allstate’s instant application, which

seeks an order dismissing the plaintiffs’ class allegations, is hereby Granted.

All applications not specifically addressed herein are Denied. It is hereby

ORDERED, that the previously issued stay is hereby vacated. It is further

ORDERED, that the parties are directed to appear for a Compliance Conference on May 10, 2011 at 11:00 a.m.

This constitutes the Decision and Order of the Court.

DATED:April 18, 2011

Mineola, NY 11501 [*11]

ENTER:_______________________________

HON. MICHELE M. WOODARD

J.S.C.

Footnotes

Footnote 1: Former Part E regulated and prescribed the amount of reimbursement to providers of DME and stated the following: “For medical equipment and supplies (e.g. TENS units, soft cervical collars) provided by a physician or medical equipment supplier, the maximum permissible charge is 150 percent of the documented costs of the equipment to the provider.”