Upon reading Petitioner’s unopposed Petition to Vacate Arbitration Award (“Petition“), the Petition is decided as follows.

On August 2, 2019, Arbitrator Taylor awarded Respondent $3,129.75 in No-Fault benefits relating to an alleged motor vehicle accident on October 18, 2017. Master Arbitrator Godson upheld the award in a decision dated December 24, 2019. On February 11, 2020, Petitioner’s filed the Petition. Respondents have not opposed or otherwise appeared in this Petition.

Petitioner sought relief under CPLR 7511(b) which states that the grounds for vacating an arbitration decision are “(i) corruption, fraud or misconduct in procuring the award; or (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or (iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection” [emphasis added].

The Petitioner asserted, having submitted a peer review by Dr. Polavarapu alleging that the disputed services provided by Respondent EXCELL CLINICAL LAB were medically unnecessary, that the “burden” was then on Respondents to establish medical necessity. Respondents allegedly failed to do so. Indeed, they did not offer any IME Report or peer review of their own. Petitioner asserted that Respondents’ “failure” to meet their “burden” meant that the Arbitrators’ decisions were not “final and definite”.

The Court disagrees. Petitioner’s outline of how the evidentiary burden shifts between Petitioner and Respondent properly describes the dynamics during a trial determining entitlement or a motion for summary judgment (see Citywide Social Work & Psychological Servs., PLLC v Allstate Ins. Co., 20 Misc 3d 1124[A], 1124A, 2008 NY Slip Op 51601[U], *1 [Sup Ct, Nassau County 2008]; Amaze Med. Supply, Inc. v Eagle Ins. Co., 2 Misc 3d 128[A], 128A, 2003 NY Slip Op 51701[U], *1 [App Term 2003]; Andrew Carothers, M.D., P.C. v GEICO Indem. Co., 18 Misc 3d 1147[A], 1147A, 2008 NY Slip Op 50456[U], *1 [Civ Ct, Kings County 2008]). However, the same evidentiary standards do not apply to no-fault arbitrations (see Am. Tr. Ins. Co. v Right Choice Supply, Inc., 78 Misc 3d 890, 891 [Sup Ct, Kings County 2023]). “When determining an issue of medical necessity, a No-Fault hearing arbitrator is not required to apply the well-settled case law holding that the health service provider must submit expert opinion evidence which meaningfully refers to and either discusses or rebuts the conclusions of the insurer’s expert witness” (Id.).

“Judicial review of arbitration awards is extremely limited” (Matter of O’Neill v GEICO Ins. Co., 162 AD3d 776, 777 [2d Dept 2018]). “Vacatur of an award pursuant to [CPLR 7511(b)(iii)] is warranted only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power” (Id. [internal citations omitted]). Petitioner here did not allege a violation of strong public policy or that the award clearly exceeded a specifically enumerated limit. The Court does not find either Arbitrator’s reasoning to be irrational. Arbitrator Taylor’s decision indicated a “close examination” of the materials submitted by Petitioner and discussed her reasoning. In particular, she found that an MRI report showing “interstitial tear of the ACL and focal vertical tear medial meniscus . . . reasonably establish a basis to perform surgery to repair the tears of the ACL and medial meniscus” (Exhibit A, Petition). Master Arbitrator Godson concurred.

On the topic of finality: “Nothing in the award would lead the parties to a new controversy or litigation, the rights and obligations of the parties are clearly established, and the controversy between the parties is clearly resolved. Accordingly, the arbitrator’s award is sufficiently final and definite” (Geico Indem. Co. v. Ace USA Grp., 2022 NYLJ LEXIS 1101, *7).

Accordingly, it is

ORDERED that the Petition to Vacate Arbitration Award is DENIED in its entirety.

Denar Balcazar, plaintiff-assignor was involved in a motor vehicle accident on March 10, 2021, and sought medical treatment from Henry Lin Kim (plaintiff). Plaintiff commenced this action against State Farm Insurance Company seeking to recover $2,101.17 representing the balance of alleged first-party no-fault benefits for medical services provided to plaintiff-assignor.

Upon the foregoing papers, defendant moves for summary judgment dismissing the complaint on the grounds that plaintiff failed to appear at an examination under oath (EUO).^[FN1] In [*2]support, defendant submits an attorney affirmation and an affidavit of Richa Sinha, defendant’s claim specialist, which attests to the standard business practices and procedures including processing of claims, the issuances of denials, defendant’s mailing and electronic transmission procedures, and the documents associated with the claims that are the subject of this action.

Plaintiff opposes the motion and cross-moves for summary judgment, arguing the claims were timely submitted and payment is overdue, and that there is a question of fact as to whether the requested examinations before trial were properly scheduled and whether plaintiff’s objection to the examination under oath was reasonable.

The movant on a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by tendering sufficient evidence to eliminate any material issues of fact from the case (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). CPLR 3212 provides that a summary judgment motion must be supported by an affidavit of a person with knowledge of the facts, as well as other admissible evidence (see JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 384-386 [2005]). Once such a showing is made, “the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action” (Alvarez v Prospect Hosp.,68 NY2d 320, 324 [1986], citing Zuckerman v City of New York, 49 NY2d at 562).

The no fault insurance scheme is designed to provide a quick resolution of the reimbursement of claims, avoid litigation, and incentivize an insurer to seek verification of a claim, deny it, or pay it in short order (see Viviane Etienne Med. Care, P.C. v Country Wide Ins. Co., 25 NY3d 498, 506-07 [2015]; Matter of Med. Socy. of State v Serio, 100 NY2d 854, 860 [2003]). The procedure to verify, deny, or pay claims is codified and governed by Insurance Law 5106 (a).

“[A]n appearance at an EUO is a condition precedent to the insurer’s liability on the policy” (see Ultimate Health Prods., Inc. v Travelers Ins. Co., 47 Misc 3d 129(A), 2015 NY Slip Op 50377[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dist 2015], citing 11 NYCRR § 65—1.1; see also GLM Med., P.C. v State Farm Mut. Auto. Ins. Co., 30 Misc 3d 137(A), 2011 NY Slip Op 50194 [U] [App Term, 2d Dept, 2nd, 11th & 13th Jud Dists 2011]).

“To establish its prima facie entitlement to summary judgment dismissing a complaint on the ground that a provider had failed to appear for an EUO, an insurer must demonstrate, as a matter of law, that it had twice duly demanded an EUO from the provider, that the provider had twice failed to appear, and that the insurer had issued a timely denial of the claims” (Oleg’s Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 63 Misc 3d 152(A), 2019 NY Slip Op 50760[U] [App Term, 2d Dept, 2nd, 11th & 13th Jud Dists 2019]).

The First Department has also held that the insurer must demonstrate a specific objective justification for the EUO: “11 NYCRR 65-3.5 (e) requires an EUO request be based on application of objective standards, and that the insurer must have a specific objective justification. Summary judgment is premature under CPLR 3212 where an insurer fails to [*3]provide a medical provider with its objective justification for requesting the EUO” (Country-Wide Ins. Co. v Alicea, 214 AD3d 530 [1st Dept 2023], citing Country-Wide Ins. Co. v Delacruz, 205 AD3d 473, 473 [1st Dept 2022]). “When an insurer requires an examination under oath of an applicant to establish proof of claim, such requirement must be based upon the application of objective standards so that there is specific objective justification supporting the use of such examination” (11 NYCRR 65-3.5). “Th[e] [First Department] has explained that the insurer’s reason for the EUO is essential for medical providers to oppose an insurer’s summary judgment motion, and that information is in the exclusive knowledge and control of the insurer” (Country-Wide Ins. Co. v Alicea, 214 AD3d 530 [1st Dept 2023], citing Am. Tr. Ins. Co. v Jaga Med. Servs., P.C., 128 AD3d 441 [1st Dept 2015]).

In the action at bar, defendant established the timely and proper mailing of the EUO scheduling letters and the denial of claim forms, and that plaintiff did not appear for the EUOs. Several letters were sent attempting to schedule the examination under oath for 4 different dates (see NYSCEF Doc Nos 10-14, consisting of scheduling letters, statement on the record, bills, explanation of review and denial of claim forms, and proof of mailing and affidavits of mailing) (see, e.g., Oleg’s Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 63 Misc 3d 152[A], 2019 NY Slip Op 50760[U] [App Term, 2d Dept, 2nd, 11th & 13th Jud Dists 2019]).

Defendant’s State Farm EUO scheduling letters of May 4, 2021 (relating to treatment dated March 22, 2021 and March 29, 2021) and May 19, 2021 (relating to treatment date of April 5, 2021) reference several stated reasons for additional verification by EUO: pattern in nature and frequency of services rendered; medical justification for the services; whether the manner and performance of services was medically necessary; whether provider is billing for services not provided; and whether provider is operating in violation of licensing laws (NYSCEF Doc No. 10). Defendant sent these letters to provider in connection with 6 other injured parties in addition to the treatment of the assignor of the instant claim (Denar Balcazar) and did not reference any facts or circumstances specific to the Balcazar claim. Accordingly, the Court finds that defendant State Farm’s scheduling letters failed to state a “specific objective justification” for an EUO with respect to the instant claim (see Country-Wide Ins. Co. v Alicea, 214 AD3d 530 [1st Dept 2023]).

By letters dated June 15, 2021, June 30, 2021, July 12, 2021, July 28, 2021 and August 9, 2021 State Farm’s attorneys also sent EUO scheduling letters and in addition a list of documents to produce at the EUO. Many of the documents sought by State Farm in these letters are of similar nature to the EUO letter sent by State Farm in the action Dynamic Med. Imaging, P.C., as Assignee of Staffa Pasqualino v State Farm Mut. Auto. Ins. Co. (29 Misc 3d 278 [NY Dist Ct, Nassau County, 2010]) that was held by that Court to be essentially an inappropriate pre-action discovery demand regarding a potential Mallela fraudulent incorporation defense and beyond the scope and purpose of a no-fault EUO (see State Farm Mut. Auto Ins. Co. v Mallela, 4 NY3d 313 [2005]). For instance, the documents sought here include those which “evidence ownership of Henry Lin Kim, M.D. and HLK Medical, P.C.,” “original and amended articles of incorporation, corporate by-laws, documentation of the names and addresses of shareholders, stock certificates, and stock ledgers,” “professional credentials for each individual who is an owner, shareholder or member of Henry Lin Kim, M.D. and HLK Medical, P.C.,” “writings relating to the relationship between Henry Lin Kim, M.D. and HLK Medical, P.C. and all entities or individuals from which it leases space and/or obtains patient referrals,” and “writings regarding all entities and/or individuals that provided management, consulting, administrative, billing services or patient [*4]referrals to Henry Lin Kim, M.D. and HLK Medical, P.C. and any payments made to persons or entities that rendered such services” (NYSCEF Doc No. 10).

In the action at bar, plaintiff through counsel by letter dated May 12, 2021 ^[FN2] objected to the EUO request raising specifically the concern that the request appears to be of improper scope addressed towards establishing a Mallela defense, and also raised concerns as to the extent and scope, location and date, and reimbursement for lost wages and transportation costs (NYSCEF Doc No. 19).

The Court agrees that many of the documents sought by defendant in the EUO document request appear directed at pre-action discovery into the provider’s business operations rather than prompt resolution of no-fault benefits to the injured party Denar Balcazar in accordance with the insurance regulations (cf. Repwest Ins. Co. v Advantage Radiology, P.C., 42 Misc 3d 1210[A] [Sup Ct, NY County 2014] [where the EUO request held to be proper included a request for insurance policies, documents related to bodily injuries and photographs of the collision at issue, and not corporate organizational and financial documents]).

In the absence of a specific objection justification for the EUO, a party fails to establish, as a matter of law, that it complied with the governing regulations, and a motion for summary judgment is properly denied (see Country-Wide Ins. Co. v Delacruz, 205 AD3d 473, 474 [1st Dept 2022]). Accordingly, defendant’s motion for summary judgment on the basis that plaintiff failed to appear for the EUO is accordingly denied.

“[A] plaintiff demonstrates prima facie entitlement to summary judgment by submitting evidence that payment of no-fault benefits are overdue, and proof of its claim, using the statutory billing form, was mailed to and received by the defendant insurer” (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 501 [2015]). The Court finds that the cross-motion should be denied on the grounds that it fails to include a party affidavit someone with personal knowledge of the facts constituting its claim as required by CPLR 3212. Accordingly, plaintiff has not met its burden of proof for an award of summary judgment.

Accordingly, it is hereby

ORDERED, defendant’s motion for summary judgment (mot. seq. 001) is denied; and it is further

ORDERED, that plaintiff’s cross-motion for summary judgment (mot. seq. 002) is denied; and it is further

ORDERED, that the parties shall appear for a pre-trial conference in Part 41 at 9:30 a.m. on July 25, 2024.

This constitutes the decision and order of the Court.

NYSCEF doc nos. 58-67 were read on this motion for an order directing the entry of a default judgment.

Plaintiff commenced this action on April 29, 2021, by filing a summons and complaint (see NYSCEF doc no. 1). Plaintiff subsequently filed an amended summons and amended complaint on April 30, 2021 (see NYSCEF doc nos. 2-3). The amended complaint alleges, in sum and substance, that defendant was allegedly injured while a passenger in a vehicle insured by plaintiff (see id. ¶¶ 12-14). The complaint further alleges that the subject insurance policy covers any occupants of the insured vehicle for any medical necessity and causally related medical expenses arising out of the use or operation of the insured vehicle as a result of an accidental collision (see id. ¶ 16). The complaint further alleges that tens of thousands of dollars in no-fault claims for treatment allegedly provided to defendant have been submitted to plaintiff (see id. ¶ 17). The complaint further alleges that defendant’s testimony at an examination under oath raised issues about the legitimacy and necessity of such medical treatments (see id. ¶ 28). [*2]The complaint further alleges that defendant failed to subscribe and return her examination under oath transcript and appear for independent medical examinations, as duly requested by plaintiff (see id. ¶¶ 29-30). The complaint further alleges that, based on plaintiff’s investigation into the collision and defendant’s noncompliance with its requests, plaintiff believes defendant’s alleged injuries and no-fault treatment were not causally related to the subject collision and did not arise from an insured event (see id. ¶ 31). Plaintiff seeks relief in the form of a judgment declaring that it owes no duty to pay the claims regarding the subject collision (see id. ¶¶ 38, 41). The amended complaint is verified by plaintiff’s attorney, only (see id. at 12).

In the court’s September 22, 2023 decision and order on motion seq. no. 002, the court extended the time for plaintiff to serve the complaint on defendant to 60 days from the date of the order (see NYSCEF doc no. 54). On October 26, 2023, plaintiff filed an affidavit of service of process indicating that, on October 6, 2023, a process server delivered the amended summons and amended complaint to a person of suitable age and discretion at defendant’s residence and mailed a copy of process to the residence (see NYSCEF doc no. 56).

On February 5, 2024, plaintiff filed this motion for an order directing the entry of a default judgment in favor of plaintiff and against defendant (see NYSCEF doc no. 58). In support of the merits, plaintiff submits an unsworn statement, styled as an affidavit, allegedly of a senior no-fault adjuster assigned to defendant’s claim number and familiar with the facts of the case based on their personal handling and review of the file (see affirmation of Schreiber, exhibit A ¶¶ 1-2, 6). The statement asserts, in sum and substance, that plaintiff maintains a founded belief that defendant’s injuries and treatment did not arise from an insured event (id. ¶ 16).

CPLR 3215(a) provides, in pertinent part, that “[w]hen a defendant has failed to appear, plead or proceed to trial . . . the plaintiff may seek a default judgment against them.” On a motion pursuant to CPLR 3215, a plaintiff demonstrates entitlement to a default judgment by submitting proof of: (1) service of the summons and complaint; (2) the defendant’s default in answering, appearing, or otherwise responding to the complaint; (3) the facts constituting the claim; and (4) the amount due (see CPLR 3215[f]; Gordon Law Firm, P.C. v Premier DNA Corp., 205 AD3d 416, 417 [1st Dept 2022]; Gantt v N. Shore-LIJ Health Sys., 140 AD3d 418, 418 [1st Dept 2016]; Merchants Mut. Ins. Co. v Dunham Piping & Heating Corp., 203 AD3d 543, 544 [1st Dept 2022]).

The court finds based on the papers submitted that plaintiff has shown prima facie good service of process on defendant pursuant to CPLR 308(2) by means of the affidavit of service, that defendant has failed to answer, appear, or otherwise respond to the amended complaint, and that the time to do so has expired. The court further finds that plaintiff has submitted adequate proof of the facts constituting the claims by means of the unsworn statement submitted.

Effective January 1, 2024, the recently amended CPLR 2106 now provides:

“[t]he statement of any person wherever made, subscribed and affirmed by that person to be true under the penalties of perjury, may be used in an action in New York in lieu of and with the same force and effect as an affidavit. Such affirmation shall be in substantially the following form:

“I affirm this ___ day of ______, ____, under the penalties of perjury under the laws of New York, which may include a fine or imprisonment, that the foregoing is true, and I understand that this document may be filed in an action or proceeding in a court of law.

“(Signature)”

CPLR 2106 concerns the affirmation of the truth of statements. Prior to the recent amendment, the permissible use of unsworn statements with the same force and effect as affidavits was much more limited than it is now. Section (a) concerned only New York attorneys and certain health care practitioners, while section (b) concerned persons “physically located outside the geographic boundaries of the United States, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.” Both deprecated sections required the unsworn statement be subscribed and affirmed by the person making the statement “to be true under the penalties of perjury.” The current statute removes section (a) entirely along with the geographic restrictions in (b), permitting such statements “wherever made.”

Here, the unsworn submission states, “I affirm this 25th day of January, 2024, under the penalties of perjury under the laws of New York, which may include a fine or imprisonment, that the foregoing is true, and I understand that this document may be filed in an action or proceeding in a court of law” and is signed with the same name as the person identified in the body as making the statement (affirmation of Schreiber, exhibit A, at 4). The court finds that the statement submitted satisfies the requirements of CPLR 2106 as amended and must be regarded as having the same force and effect as an affidavit. The court finds further that the statement submitted is adequate proof of the facts constituting the claims for the purpose of demonstrating entitlement to the entry of a default judgment. As such, plaintiff is entitled to a default judgment.

Accordingly, it is

ORDERED that the motion by plaintiff pursuant to CPLR 3215 for an order directing the entry of a default judgment on the complaint in favor of plaintiff and against defendant Shekima Roberts is granted, there being no opposition submitted; and it is further

ADJUDGED that plaintiff is not required to pay any sums, monies, damages, awards, or benefits to Shekima Roberts, including but not limited to Mandatory Personal Injury Protection (No-Fault), any uninsured, underinsured, supplementary uninsured, or supplementary underinsured motorist benefit claims, any medical payment claims, any property damage claims, and any bodily injury liability benefits, in connection with the alleged incident of July 28, 2020, claim number 91306; and it is further

ORDERED that, within five days of entry, plaintiff shall serve a copy of this order with notice of entry on Shekima Roberts and on the clerk, who shall enter judgment accordingly.

The foregoing constitutes the decision, order, and judgment of the court.

On October 11, 2017, plaintiff Country-Wide Insurance commenced this action against defendant Yao Jian Ping, seeking an adjudication de novo of a no-fault insurance claim pursuant to Insurance Law § 5106 (c), following a master arbitrator’s award in defendant’s favor in excess of $5,000.

Defendant made a pre-answer motion to dismiss the action, arguing that the “trial de novo” was another form of a declaratory judgment action for which the Civil Court lacked subject matter jurisdiction (Seq. No. 001). By a decision and order dated June 13, 2018, another judge of the Civil Court denied defendant’s motion (see Court Exhibit I), which was affirmed on appeal (Country-Wide Ins. Co. v Yao Jian Ping, 62 Misc 3d 144[A], 2019 NY Slip Op 50160[U] [App Term, 1st Dept 2019]).

Issued was joined on or about July 13, 2018.^[FN1] A notice of trial was filed on December 13, 2019.

By a decision and order dated March 2, 2020, another judge of the Civil Court granted [*2]defendant’s motion to strike the notice of trial (Seq. No. 3), only to the extent of directing further discovery and adjourning the trial.

By a decision and order dated August 17, 2020, another judge of the Civil Court granted defendant’s motion to strike the notice of trial (Seq. No. 4), only to the extent of directing further discovery.

By a decision and order dated March 26, 2021, another judge of the Civil Court denied defendant’s motion to amend the answer to assert a counterclaim against plaintiff for $24,938.59 (Seq. No. 005) and denied defendant’s motion to strike the complaint (Seq. No. 006) (see Court Exhibit I), which was affirmed on appeal (Country-Wide Ins. Co. v Ping, 73 Misc 3d 132[A], 2021 NY Slip Op 50997[U] [App Term, 1st Dept 2021]). The Appellate Term reasoned, in relevant part, “the proposed amendment would prejudice plaintiff at this stage of the proceedings, where discovery had been completed, a notice of trial had been filed and defendant previously limited his recovery to $15,251.76 based upon the fee schedule” (id. at *2).

By a decision and order dated March 15, 2022, another judge of the Civil Court denied defendant’s “Motion in Limine for a Directed Verdict” (Seq. No. 007), reasoning, “[a]s trial in this matter has not yet commenced a motion upon these grounds is premature and must be denied” (see Court Exhibit I).

By a so-ordered stipulation dated May 19, 2022, the parties resolved plaintiff’s order to show cause to quash defendant’s trial subpoenas (Seq. No. 008), which was withdrawn (Defendant’s Exhibit B). The so-ordered stipulation provided, in relevant part, “Plaintiff acknowledges that the subject no-fault bill of NY Spine Specialists, LLP, for medical services rendered to defendant on April 20, 2010, in the sum of $63,800.00 that was included with defendant’s arbitration submission to the AAA file on January 20, 2016.”

On June 8, 2022, this court held a nonjury trial of this action on the stenographic record (Robin Lindner, court reporter) in courtroom 419 at 111 Centre Street, New York, New York.

On behalf of plaintiff, Jessica Mena was sworn and testified at the trial. Plaintiff submitted two exhibits which were received in evidence on consent, marked as Plaintiff’s Exhibits 1 and 2 (Tr. 4, lines 6-14).

Defendant did not call any witnesses at trial. Defendant submitted three exhibits that were accepted into evidence, marked as Defendant’s Exhibits A, B, and C.^[FN2] Defendant’s Exhibits A and B were received in evidence on consent (Tr. 4, lines 15-21). Defendant’s Exhibit C was received in evidence over plaintiff’s objection, solely for the purpose of establishing that they were certified business records of non-party New York Spine Specialist (Tr. 8, lines 15-18).

The court also marked, as Court Exhibit I, the prior decision and orders issued in this case, the notices of appeal thereof, and the decisions from the Appellate Term, with notice of entry.

After defendant rested, both plaintiff and defendant moved for directed verdict in their favor, and this court reserved decision (see Vera v Knolls Ambulance Serv. Inc., 160 AD2d 494, 496 [1st Dept 1990] [“it is far better practice to withhold any ruling on an application to dismiss until after the jury has returned a verdict”]).

The matter was adjourned to July 20, 2022, for the parties to submit proposed findings of fact. On December 1, 2022, this court heard post-trial arguments on the digital record (FTR, courtroom 421, 10:12 am-11:15 a.m.). Following the post-trial arguments, this court directed the parties to submit supplemental post-trial memos of law and adjourned the matter to February 17, 2023 for submission of papers only.

On February 17, 2023, the matter was fully submitted.

Jessica Mena credibly testified as follows: she has worked for plaintiff since March 2007, and that she is familiar with the practices and procedures of how no-fault claims are received and processed at Country Wide Insurance Company (Tr. 16, lines 1-9). She started as a claims examiner, responsible for handling and processing all no-fault claims that are assigned to her, including sending out verification request letters to providers and denials (Tr. 18, lines 14-25). She became a litigation arbitration analyst, handling anything litigation/arbitration-related, including preparing documents for court (Tr. 19, lines 1-5). She was then the operations supervisor for two years, overseeing the operations department, which is the mailing room department and scanning department, and the data entry clerk (Tr. 19, lines 6-12). Her current position is Litigation Arbitration Supervisor, overseeing the litigation/arbitration analyst (Tr. 15, lines 24-25, id. at 19 lines 16-17).

Mena admitted on cross examination that plaintiff had received notice that defendant was involved in a motor vehicle accident on October 5, 2006 (Tr. 26, lines 5-8). According to plaintiff’s answer to defendant’s interrogatories, plaintiff learned of the motor vehicle accident “on October 12, 2006 via a letter from the Insurance Broker” (see Defendant’s Exhibit A [answer to interrogatory no. 5]). It is undisputed that plaintiff offered no-fault coverage for the motor vehicle accident (see plaintiff’s proposed findings of fact ¶ 2; see defendant’s proposed findings of fact ¶ 2).

Mena also credibly testified that plaintiff scheduled a medical examination of defendant (Tr. 26, lines 9-11). Mena credibly testified that, based on an orthopedic medical examination, plaintiff issued a denial (NF-10) (Tr. 43, lines 16-19). The NF-10 global denial dated November 29, 2006 states, in relevant part, “Based on the results of the orthopedic independent medical exam you attended on 11/28/06, which indicated that no further medical treatment or other related services are necessary, all no-fault benefits are denied as of 12/04/06” (see Defendant’s Exhibit A).

Mena credibly testified that the claim at issue in this action was not submitted to plaintiff through its standardized procedures (Tr. 16, lines 13-25, id. at 17, lines 11-17). She credibly stated that plaintiff’s first notice that defendant had any involvement with New York Spine Specialist was the statement of account (see Defendant’s Exhibit C), which was received during the arbitration process, as part of the AR-1 demand for arbitration (Tr. 29, lines 4-16).

Mena credibly stated that, when plaintiff received that statement of account, plaintiff then prepared a defense package for arbitration (Tr. 30, lines 14-17). She credibly testified that no verification request was sent to defendant or the provider after plaintiff had received the [*3]statement of account (Tr. 33, lines 21-24; id. at 34, lines 1-3), because the statement of account was not received from the provider through the no-fault department, and was not received by the no-fault examiner (Tr. 36, lines 19-22).

According to Mena, receipt of the AR-1 marks the commencement of arbitration, so

“They [bills] are not reviewed for payment the same way a claims examiner would review it. If we determine to settle the case at arbitration, that our—we see if we are going to settle or going to choose a defense. So it’s not a payment like a claims examiner would issue payment. . . .So it’s not the same process as a claim’s examiner receiving a bill through the no-fault”

Mena credibly testified that, for a claim to be considered for reimbursement, a claimant would need to submit certain documents, including proof of payment of the services, and a reversal of the assignment of benefits to the provider who performed the service, and an actual bill (Tr. 48, lines 13-23). Mena admitted that there was a reversal of the assignment of benefits in the AR-1 which plaintiff received (Tr. 48, lines 24-25; id. at 49, line 1).

Mena credibly testified that plaintiff did not receive any proof that defendant had paid the amount reflected on the statement of account (Tr. 49, line 1).

According to Mena, plaintiff did not consider the statement of account to be a no-fault bill because it was not on an NF-3, NF-4 or NF-5 no-fault form (Tr. 49, lines 20-22). Unlike the statement of account, Mena credibly testified that the no-fault form would be signed and dated, have the provider’s information, claimant’s information, the date of loss, who rendered the services, the owner of the facility, CPT codes and modifiers, the total amount, and the tax ID of the provider, among other things (Tr. 50, lines 20-25; id. at 51, lines 1-3).

By an arbitration award dated May 18, 2017, the no-fault arbitrator Phillip Wolf awarded defendant $15,251.75, with prejudgment interest as of January 2, 2016, for a lumbar spine laminectomy, spinal fusion, and pedicle fixation which non-party Sebastian Lattuga, M.D., performed on defendant on April 20, 2010 (see Defendant’s Exhibit A).

Arbitrator Wolf rejected plaintiff’s argument that defendant’s claim was not ripe for arbitration because plaintiff had never received a bill for the April 20, 20210 operative procedure, reasoning,

“Based upon the holding set forth in Domotor [Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219 (2d Dept 1999)], I agree with counsel for Applicant’s argument that Applicant [defendant] was no longer required to submit bills to Respondent [plaintiff] effective December 4, 2006. As the service in dispute took place after December 4, 2006, Applicant [defendant] was not required to submit the subject bill to Respondent prior to commencing arbitration. . . . Accordingly, I find the subject bill ripe for arbitration”

By a master arbitrator award dated August 25, 2016 [sic],^[FN3] Master Arbitrator Robert Trestman affirmed the no-fault arbitration award, stating, “I find that the arbitrator’s application of the Domotor holding was not an error of law” (see Defendant’s Exhibit A, Master Arbitration Award at 2).

“The standard of proof applicable in a civil case is generally that of proving the case by a fair preponderance of the evidence. . . . The evidence must be of such weight as to produce a reasonable belief in the truth of the facts asserted; mere proof of a possibility is insufficient to establish a fact by a preponderance of the evidence”

“The preponderance of the evidence means the greater part of the evidence. It does not mean the greater number of witnesses or the greater length of time taken by any party.

The phrase refers to the quality of the evidence, that is, its convincing quality, the weight and effect it has on [the mind of the trier of fact], not to the quantity. The law requires that for [plaintiff] to prevail on a claim, the evidence that supports [plaintiff’s] claim must appeal to [the trier of fact] as more nearly representing what took place than the evidence opposed to [plaintiff’s] claim. If it does not, or if it weighs so evenly that [the trier of fact is] unable to say there is a preponderance on any side, then [the trier of fact] must decide the question against [plaintiff]”

As plaintiff points out, a de novo adjudication pursuant to CPLR 5106 (c) is “something very different from judicial review of some other entity’s determination” (Matter of Greenberg [Ryder Truck Rental, Inc.], 70 NY2d 573, 577 [1987]). De novo adjudication of the liability issue is not barred, under an estoppel-like theory, by the prior determinations of the arbitrator (id.).

Plaintiff’s Prima Facie Case

As a threshold matter, this court must address the issue of the insurer’s prima facie burden at trial in a de novo adjudication of a no-fault insurance claim, where the insurer is the plaintiff. At trial, the plaintiff bears the burden of proof.

“Generally, the claims process for health service bills for No-Fault compensation begins with the submission by a health service provider of a claim form (usually, but not always, a Form NF-3 verification of treatment by attending physician or other provider of health service). Besides providing information regarding the injured person, diagnoses, [*4]projected treatment, etc., the claim form includes a bill for services performed. The claim form can be submitted directly by the injured person to the No-Fault insurer but over many decades a practice developed by which the health service providers submit the claim forms. . . . The insurer must then either pay or deny the bill within 30 days, or seek additional verification within 15 business days. If it denies payment, it must issue a Form NF-10 denial of claim explaining why the bill was not paid”

In actions seeking the recovery of first-party no-fault benefits, the no-fault plaintiff is generally the provider who rendered services to an eligible injured person, and the defendant is the insurer. There, it is well-settled that “[a]t a trial, a no-fault plaintiff’s prima facie burden is to demonstrate that the claim forms at issue were received by the defendant insurer and that the claims were not paid” (Wave Med. Services, P.C. v Hertz Vehicles, LLC, 76 Misc 3d 131[A], 2022 NY Slip Op 50908[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2022]; see V.S. Med. Servs., P.C. v Travelers Ins. Co., 49 Misc 3d 152[A], 2015 NY Slip Op 51760[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]).

Here, however, the parties are reversed—plaintiff is the insurer who sought de novo adjudication, whereas the defendant is the eligible injured person. It therefore follows that the insurer’s prima facie burden at trial would be to disprove what the provider would have established at trial to be entitled to payment. That is, at trial in a de novo adjudication of a no-fault claim, the prima facie burden of the insurer, as plaintiff, is to establish either that (1) the claim forms were not received by the insurer, or (2) that the claim was paid. For if the insurer’s proof could negate either of those two elements, then the insurer would have defeated the provider/eligible injured person’s entitlement to recovery.

Alternatively, as the plaintiff in a de novo adjudication, the insurer could also meet its prima facie burden by submitting proof of the elements of a valid legal defense to the insurer’s obligation to pay all or part of the submitted claim.

Once the plaintiff-insurer has met its prima facie burden at trial, the burden would then shift to the defendant-provider to prove (1) that the insurer received the claim form, and (2) that the claim was either (a) not paid at all, or (b) not paid in full. If the plaintiff-insurer had proven the elements of a valid legal defense to payment of the claim as part of its case-in-chief, then the defendant-provider would also have the burden of proving that the insurer’s proffered defense was either precluded or without merit in order to obtain a verdict in the provider’s favor (i.e., a money judgment against the insurer for the unpaid or partially paid claim).

Here, it is undisputed that the claim at issue was not paid. The evidence at trial also established that plaintiff did not receive any claim forms from defendant.

The no-fault regulations require that,

“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 [the insurer], 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”

(11 NYCRR 65-1.1 [d] [mandatory personal injury protection endorsement]). Here, the claim at issue was not submitted on the no-fault forms prescribed by the Department of Financial Services (i.e., NF-3, NF-4, NF-5 Forms). However, “[a]n insurer must accept proof of claim submitted on a form other than a prescribed form if it contains substantially the same information as the prescribed form” (11 NYCRR 65-3.5 [f]).

Here, Mena credibly testified that plaintiff’s first notice that defendant had any involvement with New York Spine Specialist was the statement of account included in the AR-1 demand for arbitration which plaintiff had received. Mena credibly testified that the statement of account does not contain substantially the same information as the prescribed forms. Notably, the statement of account does not contain the claimant’s information (i.e., information of the policyholder, policy number, date of accident, claim number) or the treating provider’s name, which the insurer would need to determine whether the particular claim received should be paid.

Because the statement of account was not submitted on a form that contained substantially the same information as the prescribed forms, plaintiff was therefore not required to accept the statement of account as a proof of claim. Because the statement of account was not the functional equivalent of a prescribed form, its receipt by the insurer did not trigger the 30-day period in which the no-fault insurer must pay or deny the claim, or seek additional verification (see Sound Shore Med. Ctr. v New York Cent. Mut. Fire Ins. Co., 106 AD3d 157, 164 [2d Dept 2013] [UB-04 form, which did not include the policy number, a description of the accident, or the admitting and discharge diagnosis, did not trigger 30-day period]).

Thus, the insurer met its prima facie burden.

Defendant’s Case in Chief

Citing Matter of State Farm Insurance Company v Domotor (266 AD2d 219, 220 [2d Dept 1999]), defendant argues that, in light of plaintiff’s global denial of no-fault benefits for all future orthopedic treatment, defendant was not required to submit any claims forms to defendant in advance of the arbitration. Rather, defendant contends that the statement of account which plaintiff admittedly received in the AR-1 demand for arbitration was sufficient to trigger plaintiff’s obligation to pay or deny the claim.

Plaintiff argues that Domotor is distinguishable and would not excuse defendant from a submitting a claim to plaintiff, which is required under the no-fault regulations, and which plaintiff contends is a condition precedent to coverage. Plaintiff counters that, following defendant’s logic, “a claimant can write up a bill on a napkin, doesn’t have to submit it to a claim rep and can wait years and can then commence lawsuits based on that napkin written bill and they’re entitled to payment” (Tr. at 63, lines 13-17).

As defendant pointed out at trial, if a prescribed claim form was missing any information, the insurer could seek additional verification within 15 business days of receipt of the prescribed forms, pursuant to 11 NYCRR 65-3.5 (b). Indeed, the Appellate Term rejected the argument that an illegible claim form was a valid ground for the insurer’s failure to process the claim, noting, “defendant did not timely deny this claim, seek verification or otherwise notify plaintiff of why defendant believed it could not process the claim” (New Way Med. Supply Corp. v State Farm Mut. Auto. Ins. Co., 49 Misc 3d 147[A], 2015 NY Slip Op 51678[U] [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]).

Defendant correctly points out that the facts of this case are almost identical to the facts in Domotor. However, this court is persuaded that Domotor does not apply here.

“An insured’s failure to comply with its obligations under an insurance policy is generally a defense to an action on the policy. However, ‘an insurer cannot insist upon cooperation or adherence to the terms of its policy after it has repudiated liability on the claim … by sending a letter denying liability.’ Thus, ‘[o]nce an insurer repudiates liability … the [in]sured is excused from any of its obligations under the policy'”

(American Ref-Fuel Co. of Hempstead v Resource Recycling, Inc., 281 AD2d 573, 574 [2d Dept 2001] [internal citations omitted]). “Such a repudiation excuses the filing of proofs of loss, the production of books and documents, the submission to examination, and the taking of any other preliminary steps by the insured” (Beckley v Otsego County Farmers Co-op. Fire Ins. Co., 3 AD2d 190, 194 [3d Dept 1957]).

In Domotor, the insurer had notified the appellant that it was denying all no-fault benefits, based upon the opinion of its medical expert that the appellant no longer required treatment (266 AD2d at 220). “The appellant nevertheless continued under medical care although she submitted no further claims to the petitioner” (id.). Like defendant in this case, the appellant then demanded arbitration to resolve the issue of the insurer’s liability (id.). The no-fault arbitrator denied the appellant’s claim for failure to file timely proof of loss, but the master arbitrator vacated the award (id.). Supreme Court vacated the master arbitrator’s award, and the Appellate Division, Second Department reversed and reinstated the master arbitrator’s award.

The Appellate Division reasoned,

“This disclaimer of coverage excused the appellant from further compliance with conditions precedent regarding time limitations for submitting medical proofs of loss for the treatments she nevertheless continued to undergo. An insurance carrier may not, after repudiating liability, create grounds for its refusal to pay by demanding compliance with proof of loss provisions of the policy. Rather, the insurance carrier must stand or fall upon the defense upon which it based its refusal to pay … i.e., because no treatment [was] necessary. Accordingly, inasmuch as the master arbitrator possessed the authority to vacate the initial arbitrator’s legally incorrect award denying the appellant’s claims for failure to file timely proof of loss, the Supreme Court erred in vacating the master arbitrator’s award”

Plaintiff points out that, after Domotor was decided on November 1, 1999, proposed Insurance Department regulations, which required submission of a claim to the insurer within 45 days after the date when services were rendered, became effective February 1, 2000 (see Matter of Medical Socy. of State of NY v Serio, 100 NY2d 854, 862 [2003] [discussing amended Regulation 68]). Plaintiff reads Domotor to hold that, once the insurer disclaimed coverage, the eligible injured person was no longer required to comply with policy obligations of coverage, but is still required to comply with statutory obligations. Plaintiff cites an opinion from the Department of Insurance dated September 2, 2004, which concluded that a no-fault applicant [*5]must timely submit claims for no-fault benefits even when the insurance carrier has previously denied future benefits based upon a negative medical exam (Ops Gen Counsel NY Ins Dept No. 04-09-03 [Sept 2004]), available at https://www.dfs.ny.gov/insurance/ogco2004/rg040903.htm [last accessed Jan. 22, 2024]).

In this court’s view, the Department of Insurance’s opinion is of limited value, because it does not discuss or even mention Domotor. Neither is this court required to defer to the agency’s interpretation of case law.

There appears to be only two reported cases involving the failure to submit claims which applied Domotor after the regulations became effective (Greater Forest Hills Physical Therapy, PC v State Farm Mut. Auto. Ins. Co., 45 Misc 3d 1215[A], 2014 NY Slip Op 51594[U] [Nassau Dist Ct 2014]; Matter of NY Med. Health, P.C. v New York City Tr. Auth., 24 Misc 3d 1219[A], 2009 NY Slip Op 51526[U] [Civ Ct, King County 2009]). Both cases ruled in favor of the provider/eligible injured person.

In Matter of NY Medical Health P.C., the New York City Transit Authority (TA) notified the provider’s assignor that it was denying all no-fault benefits based upon its contention that the accident did not arise out of the use and operation of a TA bus (Matter of NY Med. Health, P.C. v New York City Tr. Auth., 24 Misc 3d 1219[A], 2009 NY Slip Op 51526[U]). The provider’s assignor continued treatment, and the provider demanded no-fault arbitration. As part of its arbitration submission, the provider had annexed the medical bills for which it was seeking payment, which had never been submitted to the TA beforehand (id.). The no-fault arbitrator found that the provider had established that the accident was due to the use or operation of a TA motor vehicle and issued an award in the provider’s favor (id.). Citing Domotor, Supreme Court denied vacatur of the master arbitrator’s award affirming the no-fault arbitration award.

In Greater Forest Hills Physical Therapy, PC, the court ruled, “this court is constrained to follow the Second Department that plaintiffs are not obligated to timely submit claims for no-fault benefits once an insurance carrier denies coverage” (45 Misc 3d 1215[A], 2014 NY Slip Op 51594[U] [Nassau Dist Ct 2014]).

However, Equilibrium of Life Acupuncture, P.C. v MVAIC (74 Misc 3d 129[A], 2022 NY Slip Op 50113[U] [App Term, 1st Dept 2022]) appears to support plaintiff’s reading of Domotor. There, the defendant moved for summary judgment on the ground that, among other things, plaintiff had not timely filed a notice of intention to make claim with defendant, as required by Insurance Law § 5208(a), so as to be entitled to no-fault benefits. Relying upon Domotor, the Civil Court denied the defendant’s motion. The Appellate Term ruled that the Civil Court erred in relying upon Domotor, stating, “Matter of State Farm Ins. Co. v Domotor, 266 AD2d 219 (1999), relied upon by Civil Court, involved a waiver of a condition precedent to payment of claims as required under an insurance policy, not a condition precedent to coverage under Insurance Law § 5208″ (id.).

Thus, based on the Appellate Term’s decision in Equilibrium of Life Acupuncture, P.C., the court agrees with plaintiff’s reading of Domotor—that the insurer’s repudiation of liability does not excuse the provider/eligible injured person from compliance with regulatory or statutory requirements of notice of the loss.

In this court’s view, the regulatory requirement of submission of a claim to a no-fault insurer on a prescribed claim form (or its substantial equivalent) is not identical to the policy [*6]requirement of submission of a proof of loss.^[FN4] If no claim form is submitted to the insurer, the insurer has no notice of the loss at all.

Accepting defendant’s reading of Domotor would lead to absurd results, as illustrated by the facts of this case.

Defendant acknowledges that, under defendant’s own reading of Domotor, plaintiff would not have any right to seek additional verification from defendant for any information missing from the statement of account which would have been required on the claim forms prescribed by the Department of Financial Services. To accept defendant’s argument would, in effect, expand 11 NYCRR 65-3.5 (f) to require the insurer to accept any form that did not contain substantially the same information as the prescribed forms, even if the information was illegibly scribbled on a crumpled cocktail napkin, as plaintiff illustrated. This would be fundamentally unfair to the insurer, which would be left almost completely in the dark as to whether or not such a claim ought to be paid or denied.

Accepting defendant’s expansive reading of Domotor would up-end the processing of no-fault claims, and undermine the aims of no-fault, which includes reducing the burden on the courts (Viviane Etienne Med. Care, P.C. v Country-Wide Ins. Co., 25 NY3d 498, 504-05 [2015]). Following defendant’s logic, where Domotor would apply (i.e., where the insurer had repudiated coverage), a provider could commence action to recover no-fault benefits without ever having to submit any claim form in advance to the insurer, so long as something less than substantially similar to the information on a prescribed claim form was attached as an exhibit to the complaint. Because the insurer has received such a claim, the insurer would then have to start and finish claims processing by the time the answer to the complaint was due. Every no-fault claim that would have been submitted in advance to the insurer could now be filed with the courts instead, because the provider would not be required to submit the claim to the insurer before the lawsuit.

For all the reasons above, Domotor does not apply.

Because defendant has not successfully challenged any part of plaintiff’s prima facie case, the verdict, after trial, is granted in plaintiff’s favor.

Plaintiff’s and Defendant’s Motions for Directed Verdict

Plaintiff’s motion for a directed verdict in its favor is denied as academic.

Defendant’s motion for a directed verdict in defendant’s favor is denied. Affording plaintiff every inference which may properly be drawn from the facts presented and considering the facts in a light most favorable to plaintiff—that no claim form or its substantial equivalent was ever submitted to plaintiff—this court cannot conclude that “there is no rational process by which the fact trier could base a finding in favor of plaintiff” (Szczerbiak v Pilat, 90 NY2d 553, [*7]556 [1997]). As discussed above, Domotor does not apply.

The Appropriate Relief to Be Granted to the Prevailing Party

The relief to be granted to plaintiff presents a novel issue.

Had a provider or eligible injured person been the plaintiff, the answer would be simple—a money judgment would be granted in the provider’s or eligible injured person’s favor against the insurer for the amount of the claim, plus statutory interest (see 11 NYCRR 65-3.9 [c]; East Acupuncture, P.C. v Allstate Ins. Co., 61 AD3d 202, 205 [2d Dept 2009]), and attorneys’ fees (11 NYCRR § 65-4.10 [j]). However, where the insurer is the plaintiff in an adjudication de novo and did not pay the submitted claim, there would be no money judgment to grant to plaintiff.^[FN5] As defendant did not assert a formal counterclaim,^[FN6] there is no counterclaim to be dismissed.

Plaintiff argues that this court should issue a declaration in plaintiff’s favor that it has no obligation to pay the claim at issue (see Matter of Gersten v American Tr. Ins. Co., 161 Misc 2d 57, 60 [Sup Ct, NY County 1994] [“There is some authority which suggests that the insurer commences a declaratory judgment action seeking a declaration that the insured is not entitled to no-fault benefits”]; see also Liberty Mut. Ins. Co. v Bayside Pain & Rehabilitation Medicine, P.C., 39 Misc 3d 148[A], 2013 NY Slip Op 50906[U][App Term, 2d Dept, 9th & 10th Jud Dists 2013] [action for de novo adjudication commenced by an insurer “seeks, in essence, a declaratory judgment and not monetary damages”]).

However, the Civil Court has jurisdiction to issue a declaratory judgment in only two instances:

“(a) any controversy involving the obligation of an insurer to indemnify or defend a defendant in an action in which the amount sought to be recovered does not exceed $50,000; and

(b) actions commenced by a party aggrieved by an arbitration award rendered pursuant to part 137 of the rules of the chief administrator in which the amount in dispute does not exceed $50,000″

As defendant points out, another judge of the Civil Court denied defendant’s motion to dismiss the action for an adjudication de novo on the grounds that plaintiff was seeking, in essence, a declaratory judgment action, which the Appellate Term had affirmed. Thus, defendant argues that the Appellate Term implicitly affirmed that the Civil Court could issue a declaratory judgment in a de novo adjudication pursuant to Insurance Law § 5106 (c).

Contrary to defendant’s contention, the Appellate Term, First Department ruled only that that action was within the monetary jurisdiction of the Civil Court, and ruled that “defendant’s remaining argument has been rendered academic” (Ping, 62 Misc 3d 144[A], 2019 NY Slip Op 50160[U] [App Term 2019]).

The Civil Court has jurisdiction to confirm or vacate an arbitration award that is within the $50,000 monetary jurisdiction of the Civil Court, which appears to be the only non-monetary relief that the Civil Court can grant to plaintiff. Although the complaint did not seek vacatur of the master arbitration, the court here “may grant any type of relief within its jurisdiction appropriate to the proof whether or not demanded, imposing such terms as may be just,” so long as the judgment to be awarded is not a default judgment (CPLR 3017 [a]).

Thus, in an adjudication de novo commenced in Civil Court, where the insurer is the plaintiff and the prevailing party, and defendant has not asserted a counterclaim, the appropriate relief to be granted is vacatur of the underlying master arbitrator’s award for which de novo adjudication was sought.

The court finds in favor of plaintiff.

Accordingly, it is hereby ORDERED that plaintiff’s and defendant’s motions for directed verdict are denied; and it is further

ORDERED and ADJUDGED that, after trial, the award of Master Arbitrator Robert Trestman dated August 25, 2016 [sic], which affirmed the no-fault arbitration award of Arbitrator Phillip Wolf dated May 18, 2017, is vacated.

This constitutes the decision, verdict, order, and judgment of the court.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 16, 17, 18, 19, 20, 27, 28, 29, 30, 31, 32, 33, 34, 35, 39, 40, 41, 42, 43, 44, 45, 54, 55, 56, 57, 58 were read on this motion to DISMISS.

This declaratory-judgment action arises from a construction-related property damage action pending in this court. (See Board of Managers of the A Building Condominium v 13th & 14th St. Realty, LLC, Index No. 100061/2011 [Sup Ct, NY County] [Leslie Stroth, J.].) Plaintiffs, Utica Mutual Insurance Company and Utica National Assurance Company (collectively, Utica), issued insurance policies to defendants Crystal Curtain Wall System Corp. and Crystal Window and Door Systems, Ltd. (collectively, the Crystal Entities). Utica does not dispute that it has a duty to defend the Crystal Entities in the underlying action. But it seeks a declaration that it has no duty to indemnify the Crystal Entities for any judgment or settlement reached in that action.^[FN1]

The Crystal Entities move to dismiss under CPLR 3211 (a) (2) and (a) (7) or, alternatively, move under CPLR 2201 to stay this action pending the outcome of the underlying [*2]action. The Crystal Entities also seek their attorney fees incurred in defending this action. Utica cross-moves under CPLR 3212 for partial summary judgment. The Crystal Entities’ motion to dismiss is granted. Utica’s cross-motion for summary judgment is denied. The Crystal Entities’ fee request—which implicates an issue of law on which there is little New York appellate precedent—is granted.

A. The Underlying Action

The underlying action concerns the construction of two mixed use residential and commercial buildings, one of which, “Building A,” was located at 425 East 13th Street, New York, New York. (NYSCEF Doc No. 1 ¶ 83.) Crystal Window entered into a subcontract with the project’s general contractor (Hudson Meridian Construction Group, LLC) to design and install window and curtain systems as well as various other items, such as terrace doors and a glass parapet for Building A.^[FN2] (Id. ¶ 85.) On March 22, 2007, Crystal Window assigned to Crystal Curtain some or all of its rights and obligations under the subcontract. (Id. ¶ 90.) In connection with this project, Utica issued various insurance policies to the Crystal Entities for the period from February 28, 2008, through February 28, 2012. (Id. at 13-15.)

Gordon H. Smith Corp (GHSC) was retained by 13th & 14th Street Realty LLC (13th & 14th), the owner of Building A, as a consultant in connection with the construction of Building A. (Id. ¶ 93.) Allegedly on August 29, 2006, GHSC wrote that it had serious concerns with the curtain wall system’s performance, and in 2007, GHSC reported leaking conditions. (Id. ¶¶ 93, 97.) In 2008, GHSC allegedly made extensive remediation recommendations to fix the curtain wall, with which Crystal Window and Crystal Curtain claim to have complied. (Id. ¶ 98.) In January 2008, unit owners began taking possession of individual units. However, after a significant rainstorm on May 28, 2008, water infiltration during the storm caused property damage in the building including moldy conditions. (Id. ¶¶ 99-100.)

In January 2011, the underlying action was commenced in connection with the alleged construction defects that led to the water damage. The complaint asserted claims against the Crystal Entities for the cost of repair or replacement of the allegedly defective curtain wall, damage to unit owners’ personal property, diminution in value of the unit owners’ units, and delay damages consisting of increasing interest and carrying costs that allegedly resulted from delays in completion of the construction work. (Id. ¶ 106.)

The parties to the underlying action—which includes numerous third-party actions—remain engaged in motion practice.

B. This Action

Utica brought this action in 2022. It seeks various forms of declaratory relief defining the parameters of its duty to indemnify the Crystal Entities in the underlying action. (See id. at ¶ 216 [a]-[m].) The Crystal Entities now move to dismiss under CPLR 3211 (a) (2) on the ground that the scope and parameters of Utica’s indemnification obligations are not yet ripe for determination. And the Crystal Entities request an award of attorney fees, should they prevail in this action. Utica cross-moves for partial summary judgment under CPLR 3212 on its request for a declaration that it has no duty to indemnify the Crystal Entities in connection with the costs of [*3]repair or replacement of the curtain wall. (NYSCEF Doc No. 28.)

CPLR 3001 provides that the court “may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed.” A declaratory-judgment action “thus requires an actual controversy between genuine disputants with a stake in the outcome, and may not be used as a vehicle for an advisory opinion” (Long Is. Light. Co. v Allianz Underwriters Ins. Co., 35 AD3d 253, 253 [1st Dept 2006] [internal quotation marks omitted]). Absent a ripe, justiciable controversy, this court lacks subject-matter jurisdiction to render a declaratory judgment. The Crystal Entities argue that no justiciable controversy exists here, and therefore that the action should be dismissed under CPLR 3211 (a) (2). This court agrees.

A. Whether Utica’s Declaratory-Judgment Claim Implicates a Justiciable Controversy

An insurance-coverage declaratory-judgment action is “premature”—and therefore subject to dismissal—”where the complaint in the underlying action alleges several grounds of liability, some of which invoke the coverage of the policy, and where the issues of indemnification and coverage hinge on facts which will necessarily be decided in that underlying action.” (Hout v Coffman, 126 AD2d 973, 973 [4th Dept 1987]; accord Allstate Ins. Co. v Santiago, 98 AD2d 608, 608 [1st Dept 1983] [reversing denial of motion to dismiss declaratory-judgment action] [“[T]he policy in this State has been to deny the declaratory judgment where the matter in dispute can be determined in the basic negligence action. . . .”].) If, on the other hand, the coverage question can be resolved as a matter of law in advance of fact-finding in the underlying action, a declaratory-judgment action about the scope of the duty to indemnify may be maintained. (See Brookhaven Mem. Hosp. Med. Ctr. v County of Suffolk, 155 AD2d 404, 406 [2d Dept 1989] [holding that when the policy language at issue is clear, such that “the matter in dispute does not depend upon any fact that may be determined in the underlying action, there is no reason to suspend resolution of this matter until after its adjudication”].)

The question, then, is whether the current record permits this court to determine now either that Utica’s policies do not extend coverage to the Crystal Entities’ claimed losses for which coverage disputes exist, or that exclusions within the policies oust otherwise-applicable coverage for those losses.

The Crystal Entities argue that Utica’s entitlement (or not) to the various sub-declarations requested in the complaint (see NYSCEF No. 1 at ¶ 216) turns on unresolved factual questions with respect to each of those declarations.^[FN3] (See NYSCEF No. 17 at 16-19.) Utica effectively concedes that all but one of the requested declarations “depend on facts developed in the Underlying Action,” such that their declaratory-judgment claim is, to that extent, not ripe for resolution. (NYSCEF No. 44 at 3-4; see also id. at 7 [“Utica recognizes that its obligations with respect to other claims cannot be determined now, because they depend on facts to be [*4]determined in the underlying case.”].) The sole declaratory-judgment claim that Utica insists is ripe now for decision is its request for a declaration that “no coverage is available under the Utica policies for the cost of repair or replacement of the curtain wall.” (Id. at 7.) This request is not justiciable.^[FN4]

Utica advances three reasons why this court can conclude now that no coverage is available for curtain-wall replacement or repair costs: (i) those costs do not qualify as a covered “occurrence” under the policies; (ii) coverage for the costs is barred by the “your work” policy exclusion; and (iii) coverage for the costs is barred by the “your product” policy exclusion. None of these reasons are persuasive.

With respect to whether the curtain-wall costs are a covered occurrence, Utica relies on a line of Appellate Division cases holding that policies like the ones at issue here “do not insure against faulty workmanship in the work product itself, but rather faulty workmanship in the work product which creates a legal liability by causing bodily injury or property damage to something other than the work product.” (George A. Fuller Co. v United States Fid. & Guar. Co., 200 AD2d 255, 259 [1st Dept. 1994].) Because the glass curtain wall at issue is the Crystal Entities’ own work product, Utica argues, the Crystal Entities do not have coverage for the costs to repair or replace the wall. But this argument begs the crucial question: Whether the damage to the curtain wall necessitating its repair or replacement stemmed from defective design or installation of the wall itself (by the Crystal Entities or their subcontractors), or instead from defective work on other components of the building carried out by other parties. As the Crystal Entities point out (see NYSCEF No. 54 at 24), Utica has not identified evidence that answers that question in advance of fact-finding in the underlying action.

The “your product” exclusion ousts coverage for “‘[p]roperty damage’ to ‘your product’ arising out of it or any part of it.” (NYSCEF No. 3 at 45.) This exclusion does not necessarily oust coverage for the costs of repairing or replacing the curtain wall, for the same reasons just discussed. The record does not (yet) establish whether the damage to the curtain wall requiring its repair/replacement “ar[ose] out of it”—i.e., from defects in the wall itself—or arose instead from defects in other components of the building.

The “your work” exclusion bars coverage for “[p]roperty damage’ to ‘your work’ arising out of it or any part of it”—but not “if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.” (Id.) Again, it is not yet clear how the damage to the curtain wall arose; or what part of the work on the curtain wall was performed by the Crystal Entities themselves, and what part by one or more subcontractors. Absent that information, this court cannot now determine the applicability of the “your work” exclusion.

In short, like the other coverage issues raised by Utica’s declaratory-judgment complaint, whether coverage exists for curtain-wall-related costs depends on further fact-finding. That issue is not ripe for decision now.

Utica asserts that a justiciable controversy nonetheless exists because it needs to assess properly their obligations to accept or reject any possible settlement offer that may be within the limits of plaintiff’s policies. (See NYSCEF No. 44 at 3.) But the relevance of coverage for the costs to repair/replace the curtain wall is contingent: it will arise only if (i) a settlement demand [*5]is made against the Crystal Entities in the underlying action that includes curtain-wall-related costs and is within the limit of the applicable Utica policies; and (ii) the Crystal Entities then demand that Utica pay to settle the claims against them. Utica provides no information on the likelihood of this contingent possibility being realized, nor when that might occur. In these circumstances, a declaratory judgment would be premature. (See Murad v Russo, 74 AD3d 1823, 1824 [4th Dept 2010] [holding that plaintiff’s request for a declaratory judgment about the extent of her entitlement to insurance proceeds is not ripe for adjudication because “although the record establishes that defendant’s insurer was amenable to settling the actions for the limits of the policy in question, it cannot be said with certainty that such settlements would occur”].)

Utica’s declaratory-judgment claims, therefore, are unripe and not justiciable at this time. Utica’s cross-motion for partial summary judgment on its curtain-wall claim is denied.^[FN5]

B. Whether Utica’s Declaratory-Judgment Claim Should be Dismissed or Stayed

Utica contends that this court should stay, rather than dismiss, any declaratory-judgment claims that the court concludes are unripe, because the “factual predicate that will be necessary to resolve these other issues may be developed in the underlying case before that case is concluded, and those issues would therefore become ripe for determination in this case.” (NYSCEF No. 44 at 18.) Although a court lacks jurisdiction to issue a declaratory judgment absent a justiciable controversy, a court does have discretion, in appropriate circumstances, to stay an unripe declaratory-judgment action, instead of dismissing it altogether. (See Allstate Ins. Co. v Kemp, 144 AD2d 853, 854 [3d Dept 1988] [affirming order that stayed a premature declaratory-judgment action].) This court concludes, however, that staying Utica’s action would not be appropriate here. The underlying action is complex and slow-moving. It is unclear to this court—and Utica does not attempt to provide clarity—when the factual questions bearing on Utica’s potential duty to indemnify the Crystal Entities will be resolved in that action. This court declines to leave the current action in a holding pattern for an open-ended (and presumably lengthy) period. This action is therefore dismissed without prejudice to its renewal once it is no longer premature.

The Crystal Entities seek reimbursement of their reasonable attorney fees incurred in defending this declaratory-judgment action. (See NYSCEF No. 16 [notice of motion]; NYSCEF No. 17 at 21-22 [mem. of law].) This attorney-fee request implicates a legal question about the parameters of a prevailing insured’s entitlement to attorney fees from its insurer that New York appellate courts appear not to have considered. For the reasons set forth below, the request is granted.

A. Reasons Why the Crystal Entities Should be Entitled to Reimbursement of Defense Costs

When an insured “is cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations,” and the insured then prevails, it may recover attorney fees “incurred in defending against the insurer’s action.” (U.S. Underwriters Ins. Co. v [*6]City Club Hotel, LLC, 3 NY3d 592, 597-598 [2004].) This principle is not a policy-based “exception to the American rule,” under which each party bears its own litigation costs unless a statute or contract shifts the obligation to pay fees. (Chase Manhattan Bank v Each Individual Underwriter Bound to Lloyd’s Policy No. 790/004A89005, 258 AD2d 1, 5 [1st Dept 1999] [emphasis added].) Rather, it derives from the insurer’s duty as a matter of contract to defend its insured—akin, analytically, to a fee-shifting contractual indemnity provision.^[FN6] (See id.)

In this case, Utica’s declaratory-judgment action cast the Crystal Entities in a defensive posture by asserting that Utica need not indemnify them for various increments of their potential obligations under a judgment or settlement in the underlying action. And, for the reasons given above, this court concludes that the Crystal Entities should prevail, because the action is subject to dismissal as premature.

It would appear to follow straightforwardly, therefore, that the Crystal Entities are entitled to attorney fees. Utica claims, however, that the answer is not so simple. As noted at the outset of this decision, Utica did not, and does not, dispute its duty to defend the Crystal Entities in the underlying action. Utica argues that in this unusual scenario, the Crystal Entities’ fee request falls outside the scope of the holding of the Court of Appeals’s decision in City Club Hotel and its forerunner precedents. That is, Utica contends, “[w]hen it is only the duty to indemnify that an insurer has placed at issue,” not also the duty to defend, a prevailing “policyholder is not entitled to attorney fees.” (NYSCEF No. 44 at 17 [emphasis added].)

The parties do not cite, and this court has not found, any decision of the Court of Appeals or the Appellate Division discussing whether a prevailing policyholder is entitled to attorney fees when the insurer has acknowledged a duty to defend but contested the duty to indemnify.^[FN7] At [*7]most, in Public Service Mutual Insurance Co. v Jefferson Towers, Inc. (186 AD2d 10, 11 [1st Dept 1992]), the First Department held that the insured was entitled to attorney fees, after the insurer had paid defense costs in the underlying action but challenged, unsuccessfully, its obligation to pay the judgment rendered against the insured in that action. (See Jefferson Towers, Inc. v Public Serv. Mut. Ins. Co., 195 AD2d 311, 312 [1st Dept 1993] [discussing the background of the Court’s decision on the prior appeal].) But the Jefferson Towers Court did not consider whether the insurer’s duty-to-defend/duty-to-indemnify split in that case should affect the insurer’s obligation to pay the insured’s attorney fees. Nor can one tell from the decision whether the insurer even raised an argument on that point.^[FN8] (See Jefferson Towers, 186 AD2d at 11.)

Absent binding appellate precedent considering the question, this court concludes for itself that a policyholder is entitled to attorney fees when it prevails in the defense of an action brought by an insurer to challenge only the insurer’s duty to indemnify. New York doctrine in this area rests on the insurer’s duty to defend its insured in “any action arising out of the occurrence, including a defense against an insurer’s declaratory-judgment action.” (City Club Hotel, 3 NY3d at 598 [emphasis added].) This is true when an insurer contests both the duty to defend and to indemnify. (See id.) No logical reason exists why it should be different—why an insurer’s duty to defend its insured should suddenly cease—when the insurer disputes only the duty to indemnify. And the Court of Appeals’s holdings in this area have always been phrased in broad terms that would encompass an insurer’s indemnification-only challenge: They permit recovery by the insured that prevails against “the legal steps an insurer takes in an effort to free itself from its policy obligations,” period—not merely the insurer’s policy obligation to defend. (Id. at 597 [emphasis added].)

B. Utica’s Counter-Arguments

In arguing otherwise, Utica relies on decisions of the U.S. Court of Appeals for the Second Circuit. Those decisions hold, Utica says, that “if the insurer has not placed the duty to defend at issue, the insurer need not reimburse the policyholder’s attorney’s fees, even if the policyholder is successful.” (NYSCEF No. 44 at 17, citing New York Marine & Gen Ins. Co. v Lafarge N. Am., 599 F3d 102 [2d Cir 2010]; Liberty Surplus Ins. Co. v Segal Corp., 420 F3d 65 [2d Cir 2005]; see Employers Mut. Cas. Co. v Key Pharmaceuticals, 75 F3d 815, 824 [2d Cir 1996]).) This court concludes, though, that these Second Circuit decisions misapprehend the governing precedents in this area of the Court of Appeals and the Appellate Division.

In Key Pharmaceuticals, the Second Circuit’s holding rested on its reading of the First [*8]Department’s decision in Aetna Casualty & Surety Co. v Dawson (84 AD2d 708, 709 [1st Dept 1981]), in which the First Department declined to require the insurer to pay attorney fees. The Key Pharmaceuticals court understood Dawson to hold that the a “fundamental” reason for its decision “was that the insurer’s duty to defend was not at issue” in the case. (75 F3d at 824.) Thus, the Second Circuit concluded, the New York doctrine “does no more than carve out a narrow exception to the general rule that litigation costs are not recoverable by a winning litigant” that arises only “when a policyholder has been cast in a defensive posture by its insurer in a dispute over the insurer’s duty to defend,” in particular. (Id., citing Mighty Midgets Inc. v Centennial Ins. Co., 47 NY2d 12, 21-22 [1979].) But Dawson did not rest its holding on the absence of a dispute between insurer and insured over the duty to defend. It held, instead, that in the particular context of the parties’ dispute (which rested on the uninsured-motorist endorsement to an automotive insurance policy), the parties seeking attorney fees were not owed a duty to defend by the insurer. (84 AD2d 708, 709.) Instead, “[w]hat is essentially in dispute here is a contract claim,” not an insurance claim invoking an insurer’s duty to defend. (Id. [emphasis added].) No duty to defend, no defense-based obligation to pay attorney fees incurred in the coverage action.

In Segal, the Second Circuit declined to revisit its decision in Key Pharmaceuticals. The Segal court stated that although the New York Court of Appeals had described its doctrine in “broad language” that permitted an insured to recover fees whenever it is defending an insurer’s “‘effort to free itself from its policy obligations,'” Key Pharmaceuticals had instead glossed the doctrine as applying only when the insured “has been cast in a defensive posture by its insurer in a dispute over the insurer’s duty to defend.” (Segal, 420 F3d at 67, quoting Mighty Midgets, 47 NY2d at 21 [internal quotation marks and emphasis omitted].) The insured in Segal argued that the Court of Appeals’s decision in City Club Hotel had undermined the holding of Key Pharmaceuticals, because the insurer’s declaratory-judgment claims in City Club Hotel contested the duty to indemnify. (Segal, 420 F3d at 68.) The Second Circuit rejected this argument. Because City Club Hotel clearly involved a dispute over both the duty to defend and the duty to indemnify, the award of fees to the insured in that case did not call into question the ruling in Key Pharmaceuticals. (See id.)

Curiously, the Segal Court recognized that the rationale of Mighty Midgets and City Club Hotel “is that an insurer with a duty to defend must provide a defense (or reimburse the insured’s litigation expenses) for any action arising out of the claim or occurrence that triggers the duty to defend, including an action brought by the insurer itself.” (Id. at 69 [emphasis added].) But Segal refused to accept that “any action” means “any action”—that the duty to defend, where one exists, is triggered even when the insurer’s action against the insured challenges only the duty to indemnify. This refusal may have stemmed from the concern expressed by the Second Circuit in Segal that ruling that “attorneys’ fees are due whenever an insurer brings suit to disclaim the duty to indemnify, or whenever an excess insurance policy incorporates a primary policy with a duty to defend,” would “dramatically expand” the “Mighty Midgets exception to the point that it swallows the rule.” (Id. at 70.) But the solution to that problem would be for courts to consider carefully, before awarding fees, whether an insurer bringing the unsuccessful coverage action [*9]has a duty to defend its insured in the particular circumstances of the case.^[FN9] It is not to hold instead, as the Second Circuit has done, that where a duty to defend does exist, an insurer need not pay fees if it has unsuccessfully challenged only the duty to indemnify.

Finally, in Lafarge North America, the Second Circuit simply applied its holdings in Key Pharmaceuticals and Segal, without considering those holdings fresh. (See 599 F3d at 128.) The objections raised to those two prior decisions thus apply equally to Lafarge North America.

In short, this court is not persuaded by the Second Circuit decisions applying New York law on which Utica relies, and declines to follow them here.

Accordingly, it is

ORDERED that the branch of the Crystal Entities’ motion seeking dismissal of the complaint is granted, and the action is dismissed, with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that Utica’s cross-motion for partial summary judgment is denied; and it is further

ORDERED that the branch of the Crystal Entities’ motion seeking an award of its reasonable attorney fees incurred in defending this action is granted; and it is further

ORDERED that the Crystal Entities may enter a supplemental judgment for the amount of their reasonable attorney fees, with the amount of those fees to be determined by motion made on notice; and it is further

ORDERED that the Crystal Entities serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk, which shall enter judgment accordingly.