[*1]

Supreme Court, Appellate Term, Second Department, April 26, 2011

APPEARANCES OF COUNSEL

G.H. Chen & Associates, P.C., New York City (Graeme H. Chen and David B. O’Connor of counsel), for appellant. John E. McCormack, P.C., Garden City (Erin M. Crowley of counsel), for respondent.

{**32 Misc 3d at 5} OPINION OF THE COURT

Memorandum.

Ordered that the judgment, insofar as appealed from, is affirmed, without costs.

In this action by a health care provider to recover assigned first-party no-fault benefits, defendant sought discovery of documents and information, and to depose Dr. Solomon, a principal of plaintiff, in relation to the propriety of plaintiff’s incorporation and operation (see State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]). After serving plaintiff with further discovery demands, defendant moved for an order, among other matters, consolidating this action with 201 other actions pending between the parties, compelling Dr. Solomon to appear for a deposition in relation to the consolidated actions, compelling discovery of the documents and information previously sought and authorizing additional discovery with respect to plaintiff’s contractual relationships with other corporate providers and with certain named individuals. Plaintiff opposed defendant’s motion, arguing that defendant had failed to plead a defense based on fraud, and, in any event, that the discovery demands were overbroad, and cross-moved, pursuant to CPLR 3103, for a protective order “denying defendant’s request for further discovery and/or depositions,” and, alternatively, compelling its own discovery. Plaintiff argued that defendant had produced no proof that plaintiff’s incorporation or operation violated state licensing laws, and that defendant’s failure timely to pay or{**32 Misc 3d at 6} deny the claim forfeited all defenses including those based on plaintiff’s alleged fraudulent incorporation or operation. Defendant opposed the cross motion and argued that plaintiff’s January 5, 2009 stipulation, in an unrelated no-fault benefits recovery action, to produce much of the discovery sought by the defendant therein, should be construed to evidence the absence of merit to plaintiff’s opposition to discovery. In an order entered June 11, 2009, the Civil Court denied plaintiff’s cross motion for a [*2]protective order, in part, because “[plaintiff had] stipulated to the exact relief it now wishes to dispute.” The order further granted defendant’s motion to the extent of consolidating the 202 actions “for the limited purpose of determining . . . issues of plaintiff’s fraudulent incorporation within the meaning of Mallela,” and directing that, within 90 days of the order, plaintiff must produce Dr. Solomon for a deposition “to answer questions concerning plaintiff’s fraudulent incorporation within the meaning of Mallela” and that, within 60 days, plaintiff must

“[p]rovide complete responses to defendant’s discovery demands including but not limited to all factoring agreements or assignment of the disputed bills in question, all federal, state and local income tax returns for Radiology Today, P.C. from 2006 to present, the names and addresses of all persons and entities with financial interest in the plaintiff as defined by Public Health Law § 238 . . . , all employee information as demanded . . . [and] all management agreements and personal tax return[s] of Dr. Robert Solomon from the year 2006 to [the] present.”

The order also stated that plaintiff’s failure to provide the discovery granted would “support motions to dismiss.” Plaintiff declined to comply with the order insofar as it granted defendant’s motion to compel discovery, and, by order dated October 9, 2009, the Civil Court dismissed the 202 consolidated actions. A judgment was entered on November 16, 2009. Plaintiff appeals from so much of the judgment as dismissed the complaint in the case at bar.

The defense that plaintiff is ineligible to receive no-fault benefits because it failed to comply with state or local licensing requirements “is not waived by the failure to assert it in a denial of claim form nor is it precluded as a result of an untimely denial” (Multiquest, P.L.L.C. v Allstate Ins. Co., 17 Misc 3d 37, 39 [App Term, 2d & 11th Jud Dists 2007] [citations omitted]).{**32 Misc 3d at 7} No-fault benefits may not be paid to medical service corporations which submit “materially false filings with state regulators” (Mallela, 4 NY3d at 321) or, if properly formed under the “facially valid cover of . . . nominal physician-owners” (id. at 319), are operated by nonphysicians (id. at 321). In the latter case, “carriers may look beyond the face of licensing documents to identify willful and material failure to abide by state and local law” (id.), in particular, “New York State or local licensing requirement[s]” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]).

Plaintiff contends that the discovery order was improper because, in the answer and in support of its motion to compel discovery, defendant failed to “state[ ] in detail” the “circumstances constituting the wrong,” citing CPLR 3016 (b). There is no requirement that a defense predicated upon the failure to comply with “New York State or local licensing requirement[s]” (Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]) be pleaded with particularity pursuant to CPLR 3016 (b) (see generally V.S. Med. Servs., P.C. v Allstate Ins. Co., 25 Misc 3d 39 [App Term, 2d, 11th & 13th Dists 2009]). In addition, while mere conclusory allegations are never sufficient to obtain discovery with respect to a Mallela-based defense, defendant’s motion papers were sufficient to demonstrate that a Mallela-based defense [*3]was potentially meritorious.

Plaintiff’s motion for a protective order, filed nearly four months after defendant had served its supplemental discovery, was untimely (see CPLR 3122 [a]; Fair Price Med. Supply Corp. v ELRAC Inc., 12 Misc 3d 119, 122 [App Term, 2d & 11th Jud Dists 2006]). The failure of a party to timely challenge the propriety of discovery demands normally “obligate[s] [it] to produce the information sought” (New Era Acupuncture, P.C. v State Farm Mut. Auto. Ins. Co., 24 Misc 3d 134[A], 2009 NY Slip Op 51396[U], *2 [App Term, 9th & 10th Jud Dists 2009]; see Fausto v City of New York, 17 AD3d 520, 522 [2005]), with the exception of items which are palpably improper or privileged (see Fausto, 17 AD3d at 522; Marino v County of Nassau, 16 AD3d 628 [2005]). As most of the discovery demands were not palpably improper or privileged, and in light of plaintiff’s failure to provide any discovery, the judgment, insofar as appealed from, dismissing the complaint in the case at bar is affirmed.

In view of the foregoing, we pass on no other issue.

Golia, J.P., Pesce and Steinhardt, JJ., concur.

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.”

[*1]

Supreme Court, Appellate Term, Second Department, April 5, 2011

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn, for appellant. Bruno, Gerbino & Soriano, LLP, Melville (Charles W. Benton of counsel), for respondent.

{**32 Misc 3d at 18} OPINION OF THE COURT

Memorandum.

Ordered that the order is modified by providing that the branches of defendant’s motion seeking to dismiss the $540 claim (dates of service Feb. 1, 2001-Feb. 26, 2001), the $630 claim (dates of service Mar. 2, 2001-Mar. 31, 2001), and the $540 claim (dates of service Apr. 3, 2001-Apr. 24, 2001) are denied; as so modified, the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved, by order to show cause, to dismiss the complaint pursuant to CPLR 3211 (a) (5) on the ground that the action was barred by the statute of limitations. The Civil Court granted the motion, and this appeal by plaintiff ensued.

A defendant moving for dismissal on statute of limitations grounds bears the initial burden of establishing, prima facie, that the time in which to sue has expired (see 6D Farm Corp. v Carr, 63 AD3d 903 [2009]; Island ADC, Inc. v Baldassano Architectural Group, P.C., 49 AD3d 815 [2008]). The time within which an action must be commenced is computed “from the time the cause of action accrued to the time the claim is interposed” (CPLR 203 [a]). In this case, the claim was interposed when the summons and complaint were filed on August 29, 2007 (CCA 400) and not, as defendant alternatively claims, on August 3, 2007 (the date of the summons and complaint) or on November 28, 2007 (the date of service on the New York State Department of Insurance). The parties agree that the six-year statute of limitations for contract actions is applicable to the instant case (CPLR 213 [2]; see Mandarino v Travelers Prop. Cas. Ins. Co., 37 AD3d 775 [2007]). Consequently, the statute of limitations bars any claim that accrued prior to [*2]August 29, 2001.

In order to make its prima facie showing, defendant was required, inter alia, to establish the date when the cause of action{**32 Misc 3d at 19} accrued (see Swift v New York Med. Coll., 25 AD3d 686 [2006]), i.e., when plaintiff possessed “a legal right to demand payment” (Matter of Prote Contr. Co. v Board of Educ. of City of N. Y., 198 AD2d 418, 420 [1993]). In the no-fault context, the cause of action accrues when payment of no-fault benefits becomes “overdue” (see Insurance Law § 5106 [a]; see also Benson v Boston Old Colony Ins. Co., 134 AD2d 214 [1987]; New Era Acupuncture, P.C. v MVAIC, 18 Misc 3d 139[A], 2008 NY Slip Op 50353[U] [App Term, 2d & 11th Jud Dists 2008]).

Upon a motion to dismiss pursuant to CPLR 3211 (a) (5), a court must take the allegations in the complaint as true and resolve all inferences in favor of the plaintiff (see Island ADC, Inc., 49 AD3d 815; Sabadie v Burke, 47 AD3d 913 [2008]). While plaintiff did not explicitly set forth in its complaint the date when each claim form was submitted or when each claim sought therein accrued, it averred that the accident occurred “on or about October 23, 2000,” that the claim forms in question were “timely submitted to the Defendant,” and that defendant “did not timely deny” the claims “nor did it timely request verification.” In moving to dismiss, defendant argued that even if all of plaintiff’s assertions are true, the action is untimely.

Defendant was required to “either pay or deny the claims in whole or in part” within 30 days after the claim forms were received (see former Insurance Department Regulations [11 NYCRR] § 65.15 [g] [3]).

There are, therefore, two methods to compute the accrual date in the case at bar: the first is measured, in part, from the last date on which written notice of the accident must be given to the insurer, and the second is measured, in part, from the date the services were rendered. Since the accident occurred on or about October 23, 2000, and the action was commenced on August 29, 2007, it is clear that plaintiff does not benefit by using the first computation method.

Using the second computation method to ultimately arrive at the accrual dates, the calculations begin by determining when, at the latest, a claim form was required to be submitted for each service rendered. We note that the dates of the services for which plaintiff sought reimbursement ranged from October 27, 2000 through April 24, 2001. Plaintiff had 180 days from the date each service was rendered to timely submit a claim seeking reimbursement therefor, and defendant had 30 days from its receipt to either pay or deny such claim. Consequently, accepting the truth of plaintiff’s allegations that it timely submitted{**32 Misc 3d at 20} the claims and that defendant did not timely deny them, the accrual date, or the date that payment of no-fault benefits became overdue for each service for which reimbursement was sought, was, at the very latest, 210 days after each service was rendered, and plaintiff was required to bring its action within six years thereafter (CPLR 213 [2]). Accordingly, since this action was commenced on August 29, 2007, plaintiff was barred from seeking reimbursement for services rendered more than six years and 210 days prior to August 29, 2007. Upon a review of the complaint, we find that, while defendant’s motion to dismiss was properly granted as to the earlier claims, defendant did not meet its initial burden of demonstrating that the action was untimely with respect to the March 8, 2001 claim for $540 (dates of service Feb. 1, 2001-Feb. 26, 2001), the April 6, 2001 claim for $630 (dates of service Mar. 2, 2001-Mar. 31, 2001), and the May 8, 2001 claim for $540 (dates of service Apr. 3, 2001-Apr. 24, 2001). Although the dissenting Justice points to the fact that some of the claim [*3]forms submitted to defendant were “date stamped” as having been received by defendant’s claims management company on a certain date, and that such date should therefore represent the date from which the accrual of the cause of action could be computed, in the absence of an affidavit of defendant’s claims representative or of someone with personal knowledge of defendant’s standard practice and procedure explaining when and by whom such documents were date-stamped, we are not inclined to state definitively that a particular claim form was actually received by defendant on the date stamped and that such date would therefore represent the date from which to measure the accrual date. While under some circumstances, a date stamped on a document might be used to contradict the assertions made by a party offering such document, under the circumstances presented herein, we find no basis, as the dissenting Justice apparently does, to give defendant movant the benefit of using the date stamped on the documents in question in order to bolster defendant’s position. Indeed, a party could readily backdate any document to give the impression that is was received on a certain date were we not to require said party to attest to the underlying facts surrounding the stamping of the document. Furthermore, even if we were to consider such stamped document as indicative of the date of its receipt, we note that there is no date stamped on the March 8, 2001 claim for $540 (dates of service Feb. 1, 2001-Feb. 26, 2001). Accordingly, in our opinion, the order should be modified to the extent indicated.{**32 Misc 3d at 21}

We note that plaintiff’s argument that it was error for defendant to proceed by way of an order to show cause and for the Civil Court to sign the order to show cause is without merit. Nor is there merit to plaintiff’s contention that defendant failed to lay a proper foundation for the exhibits attached to its motion papers, since it was proper for defense counsel to use his affirmation as the vehicle for the submission of the annexed documents in support of the relief requested (see Zuckerman v City of New York, 49 NY2d 557, 563 [1980]).

Golia, J. (dissenting in part and concurring in part and voting to affirm the order of the Civil Court in the following memorandum). While I agree with the majority in its determination that the Civil Court properly granted the branch of defendant’s motion seeking to dismiss the claims submitted by plaintiff which were dated from November 3, 2000 through February 9, 2001, I disagree with the majority in denying the branch of defendant’s motion seeking to dismiss the remaining claims submitted by plaintiff which were dated March 8, 2001, April 6, 2001 and May 8, 2001. My disagreement with the majority centers on the methodology it employed in analyzing this case. A recitation of the facts is necessary in order to understand how the majority reached its decision as well as why I dissent from the majority’s determination that dismissal of the aforementioned claims was not warranted.

The assignor, Mr. Ramirez, was injured in an auto accident on or about October 23, 2000. He was treated by plaintiff medical provider on numerous occasions from October 27, 2000 through April 24, 2001. Incidental to these treatments, plaintiff generated seven separate claim forms, with each claim form demanding payment for several dates of treatment. Each of these claim forms was dated after each month’s course of treatment and listed that month’s treatment on the form. For example, the earliest form was dated November 3, 2000, and contained a list of treatments dated October 27, 2000, October 30, 2000, and October 31, 2000. The last form was dated May 8, 2001, and contained a list of treatments dated April 3, 2001, April 6, 2001, April [*4]10, 2001, April 18, 2001, April 20, 2001, and April 24, 2001, which is apparently the last treatment provided. Defendant made certain payments but did not pay for all the treatments and did not pay at the rate billed.

No action was taken by plaintiff for more than six years. Thereafter, on August 29, 2007, plaintiff filed a summons and complaint dated August 3, 2007 in the Civil Court. Service was{**32 Misc 3d at 22} effectuated upon defendant on November 28, 2007, by service upon the New York State Department of Insurance. Defendant filed a timely answer in which it raised, among other defenses, the affirmative defense of the statute of limitations.

Defendant moved by order to show cause dated January 23, 2009 to dismiss the complaint pursuant to CPLR 3211 (a) (5) on the ground that the action was barred by the statute of limitations.

The Civil Court granted defendant’s motion by order entered February 18, 2009, which stated: “Upon the foregoing cited papers, the Decision/Order on Defendant’s Order to Show Cause, dismissing Plaintiff’s Summons & Complaint with Prejudice, pursuant to CPLR 3211 (a) (5), is granted, because Plaintiff’s complaint is time-barred by the Statute of Limitations.”

It is plaintiff’s appeal from this order that creates the issues now before us. In order to reverse the motion court’s finding, this court must find that the Civil Court was in error and did not have reasonable grounds to support its decision.

It is uncontested that there were multiple claim forms submitted. Each form was dated, and each dated form contained a list of multiple dates on which the services were performed. These were simply a series of bills.

Clearly, plaintiff sent seven monthly claim forms dated November 3, 2000; December 5, 2000; January 9, 2001; February 9, 2001; March 8, 2001; April 6, 2001; and May 8, 2001. Furthermore, these claim forms billed for the prior month’s treatments and these claims were submitted to defendant on or about the date that they were generated.

This analysis is further supported by examining the claim forms, which were all submitted as an exhibit to defendant’s original motion. These forms were apparently “date stamped” by defendant’s claim management company and those “date stamps” are reasonably related to the date the claim form was generated. In this case, the very last claim form was dated May 8, 2001 for services provided from April 3, 2001 to April 24, 2001. The “date stamp” marking on that document was May 18, 2001, which means that the claim would accrue on June 18, 2001 and that the statute of limitations would expire on June 18, 2007. These are actual dates of service and submission of the claim. There is no reason to add time as to unknown, simply a guess as to what might have been.{**32 Misc 3d at 23}

The majority in its analysis does not address the fact that there are monthly billing statements, and does not acknowledge what actually occurred herein. Instead it chooses to postulate that if a covered service is provided on a certain date and there are no requests for verifications, then the latest date upon which a claim can be submitted to the insurer is 180 days after services are rendered or notice is given (see former Insurance Department Regulations [11 [*5]NYCRR] § 65.12) plus 30 days thereafter to pay or deny the claim (see former Insurance Department Regulations [11 NYCRR] § 65.15 [g] [3]). This totals 210 days before a claim is past due. While such analysis is a correct statement of the law, it fails to acknowledge the reality of the matter before us. Plaintiff, in its opposition papers, did not state that each of these claim forms was submitted on the last possible date. Indeed, plaintiff conveniently failed to address the issue of when the claim forms were submitted. This is an unusual omission, considering the fact that plaintiff’s papers were in opposition to a motion by defendant to dismiss on the specific ground of timeliness, the failure of which should result in this court’s affirmance of the Civil Court’s order.

Under the current very relaxed requirement for no-fault cases, a plaintiff must nevertheless establish that it submitted its claim forms to the defendant. A plaintiff must do so either by affirmatively submitting proof of mailing (which will set a date) or by submitting defendant’s denial of claim form (which will set a date). Plaintiff’s failure to establish such proof of mailing renders this action premature. If a date is set, then the action must be dismissed as untimely.

It is for these reasons that I find the analysis by the majority to be unsupported in fact or law. I further find that the Civil Court had sufficient proof in its examination of the claim forms to warrant a finding that the statute of limitations had expired.

Pesce, P.J., and Steinhardt, J., concur; Golia, J., dissents in part and concurs in part in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, April 5, 2011

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn, for appellant. Bee Ready Fishbein Hatter & Donovan, LLP, Mineola (Michael Krall of counsel), for respondent.

{**32 Misc 3d at 9} OPINION OF THE COURT

Memorandum.

Ordered that the order is reversed, without costs, defendant’s motion to vacate the judgment entered on November 21, 2008 is denied and the judgment is reinstated.

Plaintiff commenced this action to recover assigned first-party no-fault benefits on October 5, 2005 and subsequently moved for summary judgment. Defendant opposed plaintiff’s motion. By order dated November 2, 2007, the Civil Court granted plaintiff’s motion, finding, among other things, that defendant had not established that its denials had been timely mailed. In a judgment entered on November 21, 2008, plaintiff was awarded the principal amount sought plus statutory interest and attorney’s fees. In the judgment, interest was calculated on each of the 12 claims at issue to commence 30 days after defendant’s receipt of each claim, as indicated on defendant’s claim denial forms.

Shortly after entry of the judgment, defendant moved, pursuant to CPLR 5015, to vacate the judgment, arguing that plaintiff was not entitled to the full amount of the judgment because the interest had been improperly calculated. Defendant contended that plaintiff was entitled to interest only from October 5, 2005, the date that plaintiff had commenced the action, and not, as plaintiff had computed, from 30 days after defendant’s receipt of the claim forms at issue. By order entered March 26, 2009, the Civil Court granted defendant’s motion to vacate the judgment and directed that the amount of interest awarded be recalculated to run from October 5, 2005 until November 2, 2007. This appeal by plaintiff ensued. [*2]

Insurance Law § 5106 (a) provides that first-party benefits are overdue “if not paid within thirty days after the claimant supplies proof of the fact and amount of loss sustained . . . [and that] overdue payments shall bear interest at the rate of two percent per month.” If arbitration is not requested or an action is not commenced “within 30 days after the receipt of a denial of claim form or payment of benefits calculated pursuant to Insurance Department regulations, interest shall not accumulate on the disputed claim or element of claim until such action is taken” (Insurance Department Regulations [11 NYCRR] § 65-3.9 [c]). Furthermore, if a dispute has been submitted to arbitration or to the courts, “interest shall accumulate, unless the applicant unreasonably delays the . . . court proceeding” (Insurance Department Regulations [11 NYCRR] § 65-3.9 [d]).{**32 Misc 3d at 10}

Where, as here, a defendant has not established the proper mailing of the denial of claim form, the claim is considered not to have been denied and payment of benefits will therefore be considered to be “overdue” within the meaning of Insurance Law § 5106 (a). Accordingly, interest on the claim will not be tolled (cf. LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217, 223 [2009]), and commences to accrue “30 days after the claim was presented to the defendant for payment until the date the claim was or is paid” (Hempstead Gen. Hosp. v Insurance Co. of N. Am., 208 AD2d 501, 501 [1994]). As plaintiff calculated interest on the claims in question as commencing 30 days after defendant’s receipt of said claims, the Civil Court erred, in its order entered March 26, 2009, in directing that interest be recalculated from the date of the commencement of the action. Similarly, it was error to direct that interest accrue until the date of the order granting plaintiff’s motion for summary judgment, since interest accrues “until the date the claim was or is paid” (id.). It is noted that plaintiff is not entitled to interest pursuant to the Civil Practice Law and Rules, since Insurance Law § 5106 (a) and the regulations promulgated thereunder supersede the provisions for interest contained in the CPLR (Matter of Government Empls. Ins. Co. [Lombino], 57 AD2d 957, 959 [1977]; see also Smith v Nationwide Mut. Ins. Co., 211 AD2d 177 [1995]).

Accordingly, the order is reversed, defendant’s motion to vacate the judgment is denied, and the judgment entered on November 21, 2008 is reinstated.

Golia, J. (concurring in part and dissenting in part and voting to reverse the order and remit defendant’s motion to vacate the judgment to the Civil Court for a determination de novo following a hearing to determine the actual date the denial of claim forms were received by plaintiff).

Although I disagree with the majority in finding that the accumulation of interest will not be tolled until after a denial of claim (NF-10) was received by plaintiff, I am constrained to accept that analysis in view of a recent opinion letter issued by the Superintendent of the Insurance Department.

Opinions of General Counsel of the New York Insurance Department No. 10-09-05 (Sept. 14, 2010) states:

“2 . . . Interest is not tolled during the period that a claim becomes overdue until the insurer issues to the insured a denial of claim. Interest is only{**32 Misc 3d at 11} suspended or tolled from the date the claimant fails [*3]to commence an action within 30 days of the receipt of the denial of claim form until an action is actually commenced.”

Nevertheless, I find that the majority’s holding here that, “[w]here, as here, a defendant has not established the proper mailing of the denial of claim form[s], the claim is considered not to have been denied” is inappropriate.

A careful reading of the November 2, 2007 order of the Civil Court does not indicate, as the majority states, that defendant failed to establish “the proper mailing of the denial of claim form[s]” (emphasis added). The Civil Court simply found that “the affidavits proffered by defendant’s agents . . . did not establish . . . that defendant’s denials were timely mailed” (emphasis added). There is a distinction.

A defendant’s failure to prove timely mailing may well result in summary judgment for the plaintiff. However, as was made abundantly clear by the Court of Appeals in LMK Psychological Servs., P.C. v State Farm Mut. Auto. Ins. Co. (12 NY3d 217 [2009]), the untimely mailing of a denial of claim form will not stop the tolling of interest.

Thus, by the confusion raised in this distinction, I further recommend that the Insurance Department revisit and clarify this issue. The punitive interest assessed against a carrier for failing to timely pay a valid claim was meant to serve as a strong incentive to pay claims in a timely manner and to punish those that do not. It would be inappropriate to allow a plaintiff to intentionally choose not to prosecute its claim in hopes that the carrier would not be able to establish mailing or that the court simply finds that it has not. Under those circumstances, the plaintiff would be receiving a windfall in excess of 24% interest per year for up to six years.

If the stated purpose of the No-Fault Law is to resolve claims expeditiously, then it must apply equally to the claimant as well as the carrier.

Weston, J.P., and Rios, J., concur; Golia, J., concurs in part and dissents in part in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, February 8, 2011

APPEARANCES OF COUNSEL

Gary Tsirelman, P.C., Brooklyn (Max Velerio of counsel), for appellant. Jaffe & Koumourdas, LLP, New York City (Jean H. Kang of counsel), for respondent.

{**31 Misc 3d at 22} OPINION OF THE COURT

Memorandum.

Ordered that the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court denied plaintiff’s motion for summary judgment, finding that plaintiff had failed to establish its prima facie entitlement to that relief. We agree.

A no-fault provider establishes its prima facie entitlement to summary judgment by proof of the submission to the defendant of a statutory claim form, setting forth the fact and the amount of the loss sustained, and that the defendant had failed to either pay or deny the claim within the requisite 30-day period (see Insurance Law § 5106 [a]; New York & Presbyt. Hosp. v Allstate Ins. Co., 31 AD3d 512 [2006]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]; see also Westchester Med. Ctr. v Nationwide Mut. Ins. Co., 78 AD3d 1168 [2010]). In order for the claim forms to constitute prima facie proof of the fact and the amount of the loss sustained, the affidavit submitted by the plaintiff in support of its motion for summary judgment must lay a sufficient foundation to establish that the claim forms annexed thereto are admissible under the business records exception to the hearsay rule, which allows a document to be used as proof of the “act, transaction, occurrence or event” recorded in the document (CPLR 4518 [a]; see Art of Healing Medicine, P.C. v Travelers Home & Mar. Ins. [*2]Co., 55 AD3d 644 [2008]; Dan{**31 Misc 3d at 23} Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]).

In the case at bar, plaintiff sought to lay the requisite foundation for the admission of its claim forms by submitting an affidavit executed by the owner of its third-party billing company, who alleged that plaintiff had provided its medical records to his billing company, that his company had used those records to create the claim forms at issue and that his company had then mailed those claim forms to defendant. The affiant further asserted that, pursuant to the business relationship existing between his company and his no-fault provider clients, those clients have a business duty to provide the medical records. He alleged, moreover, that the medical records his company relies on are “created near the time in which the events therein described occurred; they are created in the course of the providers’ business; and it is the providers’ business to create these documents as evidence of the services they have rendered.”

In Matter of Carothers v GEICO Indem. Co. (79 AD3d 864 [2d Dept 2010]), where a third-party billing company merely printed no-fault claim forms, which had been created by the healthcare provider, and mailed them to the insurance company, the Appellate Division held that the testimony of an employee of the billing company failed to provide the requisite foundation to demonstrate that the claim forms should be considered under the business records exception to the{**31 Misc 3d at 24} hearsay rule, since the billing company did not create the records and there was no showing that its employee was familiar with the plaintiff’s record-keeping procedures. In this case, unlike in Matter of Carothers (id.), the billing company demonstrated that it had actually created the claim forms at issue. However, the analysis cannot end there because here the billing company used the information contained in the medical records furnished by plaintiff to create the claim forms. As noted by the Court of Appeals, in order for a document, such as the claim forms that are the subject of this lawsuit, to be considered for the truth of the assertions contained therein, “each participant in the chain producing the record, from the initial declarant to the final entrant, must be acting within the course of regular business conduct or the declaration must meet the test of some other hearsay exception” (Matter of Leon RR, 48 NY2d 117, 122 [1979]).

In the case at bar, plaintiff sought to demonstrate, through an affidavit of the owner of its billing company, that its medical records met the test of the business records exception to the hearsay rule in two different ways. First, the owner of its billing company claimed that plaintiff’s medical records were made in a manner consistent with CPLR 4518 (a). However, his affidavit failed to demonstrate that he has personal knowledge of plaintiff’s practices and procedures and that he is competent to testify about those practices and procedures (see CPLR 4518 [a]; Matter of Carothers v GEICO Indem. Co., 79 AD3d 864 [2010]; see also Reiss v Roadhouse Rest., 70 AD3d 1021, 1024-1025 [2010]).

Plaintiff also sought to demonstrate, through the affidavit, that plaintiff’s medical records were incorporated into its billing company’s records and that its billing company relied upon the medical records in its regular course of business (see Matter of Carothers v GEICO Indem. Co., 79 AD3d 864 [2010]). In People v DiSalvo (284 AD2d 547 [2001]) and Plymouth Rock Fuel Corp. v Leucadia, Inc. (117 AD2d 727 [1986]), the Appellate Division allowed documents into evidence under the business records exception to the hearsay rule, even though the witness laying the foundation for their admission was a recipient of the records and did not have personal knowledge of the maker’s practices and procedures, because there was a showing of meaningful [*3]incorporation and reliance. In each of those cases, an entity sought to admit a third party’s records into evidence, pursuant to the business records exception to the hearsay rule, through the testimony of the entity’s own employee. In the case at bar, however, it was plaintiff that sought to admit its own claim forms, pursuant to the business records exception to the hearsay rule, through the testimony of an employee of its third-party biller. Further, it appears that, in DiSalvo and Plymouth Rock Fuel Corp., the third party had a business duty to report accurate information to the entity seeking to use those records. In this case, although plaintiff’s biller asserted that plaintiff had a contractual duty to provide accurate information to its billing company, plaintiff did not submit any evidence of such a duty (cf. Hochhauser v Electric Ins. Co., 46 AD3d 174 [2007]). Furthermore, in DiSalvo and Plymouth Rock Fuel Corp., the truthfulness of the documents was of paramount importance to the entities claiming to have incorporated them into their own records and to have relied upon them, because those entities relied upon the third party’s documents either to allocate waste-disposal costs or bill their clients for oil deliveries, respectively. Here, there has been no demonstration that the truthfulness or accuracy of plaintiff’s medical records has any relevance to{**31 Misc 3d at 25} whether its billing company is compensated for its services or that the information contained in plaintiff’s medical records was otherwise of paramount importance to its billing company’s business.

As we find that plaintiff failed to make the necessary showing that its billing company incorporated plaintiff’s medical records into its own and relied upon them (see Matter of Carothers v GEICO Indem. Co., 79 AD3d 864 [2010]), plaintiff’s medical records do not meet the test of the business records exception to the hearsay rule. As a result, the claim forms created by plaintiff’s biller from the medical records do not fall within the business records exception to the hearsay rule (see Matter of Leon RR, 48 NY2d 117 [1979]). Consequently, to the extent plaintiff relies on the claim forms to prove the fact and the amount of the loss sustained, plaintiff has failed to demonstrate that they are any more trustworthy than the claim forms in Matter of Carothers v GEICO Indem. Co. (79 AD3d 864 [2010]). We note that, simply because a document has not been shown to be admissible pursuant to the business records exception to the hearsay rule, so that it can be used as proof of the matter asserted therein, this does not mean that the document could not be admissible for another purpose (see Prince, Richardson on Evidence § 4-105 [Farrell 11th ed]).

Plaintiff further argues on appeal that the claim forms are inherently reliable. According to plaintiff, the trustworthiness of the subject claim forms can be established by the fact that plaintiff’s owner’s signature appears on each form. Moreover, plaintiff argues that the claim forms are prescribed by regulation, and, if fraudulently submitted, carry a sanction, making them particularly reliable and trustworthy.

While the statutory NF-3 verification of treatment forms at issue herein contain a statement setting forth the consequences for anyone who “knowingly and with intent to defraud any insurance company” files a claim, the claim forms are not sworn to by one with personal knowledge. (Furthermore, when the owner of plaintiff’s third-party billing company described in his affidavit the procedures his office uses for preparing and mailing claim forms, he did not assert that the claim forms are presented to Dr. Etienne for her signature. This incidentally raises questions about how the instant claim forms ever came to be signed in the first instance.) Finally, the fact that the claim forms are prescribed by regulation does not render them inherently [*4]trustworthy or reliable. As recognized by the Court of Appeals,{**31 Misc 3d at 26} incidents of no-fault fraud are prevalent in New York, including instances where corrupt medical clinics “generate stacks of medical bills for each passenger, detailing treatments and tests that were unnecessary or never performed” (see Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 861 [2003]).

Since the Civil Court properly determined that plaintiff failed to demonstrate its prima facie entitlement to summary judgment, the order is affirmed.

Pesce, P.J., Weston and Rios, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, January 10, 2011

Lincoln Gen. Ins. Co. v Alev Med. Supply Inc., 25 Misc 3d 1019, reversed.

APPEARANCES OF COUNSEL

Rivkin Radler LLP, Uniondale (Stuart M. Bodoff of counsel), for appellant.

{**30 Misc 3d at 61} OPINION OF THE COURT

Memorandum.

Ordered that the order is reversed, without costs, the complaint is reinstated, and plaintiff’s motion for leave to enter a default judgment is granted.

Plaintiff insurer commenced this action against defendant, a provider of durable medical equipment, seeking to recover, based on a theory of unjust enrichment, $2,846.18 in assigned first-party no-fault benefits which had been paid to defendant as assignee of Andrey Armstrong on December 4, 2008. Before commencing this action, plaintiff conducted an examination under oath of defendant’s assignor on December 18, 2008, in connection with the treatment rendered to him by various health care providers, and concluded that defendant’s assignor had never been supplied with the equipment for which defendant had billed and been reimbursed. After defendant failed to appear or answer the complaint, plaintiff moved, pursuant to CPLR 3215, for leave to enter a default judgment. In support of its motion, plaintiff submitted a copy of the summons and complaint; proof of service thereof on the Secretary of State, pursuant to Business Corporation Law § 306; additional proof of service in compliance with CPLR 3215 (g) (4) (i); an affirmation of counsel; an affidavit of the no-fault supervisor of plaintiff’s managing general agent, which was responsible for processing and paying no-fault claims; and numerous exhibits. There was no opposition to the motion. The District Court denied the motion based on plaintiff’s failure to have raised the fraudulent billing issue in a timely denial of claim. The instant appeal by plaintiff ensued.

With very limited exceptions, an insurer’s failure to pay or deny a claim within the 30-day claim determination period (see Insurance Law § 5106) precludes the insurer from interposing most defenses to payment of no-fault benefits, including the fact that medical services or medical [*2]equipment billed for were never actually provided (see Fair Price Med. Supply Corp. v Travelers Indem. Co., 10 NY3d 556 [2008]). If an insurer is precluded from asserting a defense due to its failure to pay or deny a claim within the 30-day claim determination period, it may not{**30 Misc 3d at 62} later seek to recover amounts it paid on the claim based on a theory of unjust enrichment (see e.g. Cornell Med., P.C. v Mercury Cas. Co., 24 Misc 3d 58 [App Term, 2d, 11th & 13th Jud Dists 2009]). However, where, as here, an insurer timely pays a claim within the 30-day claim determination period, the insurer is not foreclosed from affirmatively commencing an action to recover the amounts paid on the claim when the insurer later discovers that the claim is fraudulent (see State Farm Mut. Auto. Ins. Co. v Grafman, 655 F Supp 2d 212, 223-224 [ED NY 2009]; State Farm Mut. Auto. Ins. Co. v James M. Liguori, M.D., P.C., 589 F Supp 2d 221 [ED NY 2008]; see also Carnegie Hill Orthopedic Servs. P.C. v GEICO Ins. Co., 19 Misc 3d 1111[A], 2008 NY Slip Op 50639[U] [Sup Ct, Nassau County 2008, Austin, J.]; Progressive Northeastern Ins. Co. v Advanced Diagnostic & Treatment Med., NYLJ, Aug. 2, 2001, at 18, col 2 [Sup Ct, NY County, Gammerman, J.]). The fact that the insurer chose to pay first-party no-fault benefits within the 30-day claim determination period, at a point when the insurer had no reason to deny the claim, “cannot in any sense be taken as a concession that the claim is legitimate” (Dermatossian v New York City Tr. Auth., 67 NY2d 219, 224 [1986]). Indeed, an opinion issued by the New York State Department of Insurance specifically states that the No-Fault Law “is in no way intended and should not serve as a bar to subsequent actions by an insurer for the recovery of fraudulently obtained benefits from a claimant, where such action is authorized under the auspices of any statute or under common law” (Ops Gen Counsel NY Ins Dept [Nov. 29, 2000]). The rationale behind this interpretation is that

“payment of fraudulently obtained No-Fault benefits, without available recourse, serves to undermine and damage the integrity of the No-Fault system, which was created as a social reparations system for the benefit of consumers . . . To conclude that the No-Fault statute bars the availability of other legal remedies, where the payment of benefits [was] secured through fraudulent means, renders the public as the ultimate victim of such fraud, in the form of higher premiums based upon the resultant increased costs arising from the fraudulent actions” (id.).

Moreover, “[t]here is nothing in the legislative history or case law interpretations of the statute or in Insurance Department regulations, opinions or interpretations of the statute that supports the argument that the statute bars such actions” (id.).{**30 Misc 3d at 63}

Accordingly, contrary to the conclusion of the District Court, plaintiff is not barred from bringing this action seeking recovery of the amount it paid to defendant. As plaintiff demonstrated its compliance with CPLR 3215 (f) and (g) (4) (i), the District Court should have granted plaintiff’s motion for leave to enter a default judgment.

Tanenbaum, J.P., Molia and Iannacci, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, January 10, 2011

Allstate Social Work & Psychological Servs., PLLC, 22 Misc 3d 723, affirmed.

APPEARANCES OF COUNSEL

Bruno, Gerbino & Soriano, LLP, Melville (Charles W. Benton of counsel), for respondent. Gary Tsirelman, P.C., Brooklyn, for appellant.

{**30 Misc 3d at 91} OPINION OF THE COURT

Memorandum.

Ordered that the order is affirmed, without costs.

In this action by a provider to recover assigned first-party no-fault benefits for psychological services rendered to its assignors, defendant moved for summary judgment dismissing the complaint based upon, among other things, the failure of plaintiff’s assignors to attend independent medical examinations (IMEs) by a psychologist, which were scheduled by Hudson Valley Medical Consultants (HVMC). The Civil Court granted defendant’s motion, and this appeal by plaintiff ensued.

It is uncontested that defendant established that the IME requests were timely mailed in accordance with HVMC’s standard office practices and procedures and that the assignors failed to appear for the IMEs (see St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]; Stephen Fogel Psychological, P.C. v Progressive Cas. Ins. Co., 35 AD3d 720 [2006]; Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679 [2001]; Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [App Term, 2d & 11th Jud Dists 2007]). However, plaintiff contends that defendant’s insurance policy, which incorporates the language of the mandatory personal injury protection endorsement (Insurance Department Regulations [11 NYCRR] § 65-1.1), requires that IMEs of eligible injured persons (EIPs) be conducted only by physicians, to the exclusion of other health care providers, even when the health services for which first-party no-fault benefits are sought were provided by nonphysicians. In rejecting [*2]plaintiff’s contention, the Civil Court relied on an opinion of the State Insurance Department, dated March 12, 2004 (see 2004 Ops Gen Counsel NY Ins Dept No. 04-03-10). We find that the Insurance Department Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act (11 NYCRR part 65), read as a whole, in accordance with the rules of construction, and the State Insurance Department’s opinion, to which we accord great{**30 Misc 3d at 92} deference, lead to the conclusion that the requirement that an EIP submit to medical examinations, as set forth in the mandatory personal injury protection endorsement (Insurance Department Regulations [11 NYCRR] § 65-1.1), should not be limited strictly to examinations by physicians. Thus, in the instant matter, we find that the psychologist retained by defendant could properly have conducted the IMEs of plaintiff’s assignors, who had received psychological treatment (see generally Stephen Fogel Psychological, P.C., 35 AD3d at 722; Meridian Acupuncture Care v Geico Ins. Co., 31 AD3d 509 [2006]). A contrary conclusion would frustrate the core objective of the no-fault scheme by limiting the universe of health care providers who can perform IMEs to physicians, thereby delaying the processing of no-fault claims (see also Stephen Fogel Psychological, P.C., 35 AD3d at 722). Therefore, we find that defendant properly denied plaintiff’s claims based on its assignors’ failure to satisfy a condition precedent to coverage.

Accordingly, the Civil Court’s order granting defendant’s motion for summary judgment dismissing the complaint is affirmed.

Golia, J.P., Pesce and Steinhardt, JJ., concur.

[*1]

Supreme Court, Appellate Term, First Department, December 30, 2010

APPEARANCES OF COUNSEL

Corigliano, Geiger & Verrill, Jericho, for appellant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, LLC, Mineola, for respondent.

{**31 Misc 3d at 14} OPINION OF THE COURT

Per Curiam.

Judgment, entered on or about September 9, 2008, reversed, with $30 costs, and complaint dismissed.

Upon the trial of this action to recover payment of first-party no-fault benefits arising from plaintiff’s performance of four separate MRIs of plaintiff’s assignors, Civil Court awarded judgment in plaintiff’s favor in the principal amount of $4,390.16. The principal defense advanced by defendant insurer at trial was that plaintiff’s claims were premature because plaintiff had failed to respond to defendant’s verification requests (see 11 NYCRR 65-3.5 [b]; New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2004]). Upon review of the record, we conclude that defendant presented evidence of its office mailing practice sufficient to establish that the verification requests had been mailed and presumably received by plaintiff. In this posture, and in the absence of any claim or showing that plaintiff ever responded to defendant’s timely requests for verification, we reverse the judgment appealed from and dismiss the action as premature.

At trial, defendant presented the testimony of an experienced claims examiner, Jennifer Piccolo, who both personally prepared the initial and follow-up verification requests here at issue and possessed firsthand knowledge of defendant’s standard office mailing practice. The witness’s credible and consistent account of the mailing procedures generally followed by defendant, including how the mail was systematically picked up during the workday, when it would “go out,” and what steps would be taken if a verification letter was returned as undeliverable (an event which, the witness noted, did not occur here), “obviated the necessity of producing a witness with personal knowledge of the actual mailing” of defendant’s verification letters (see Badio{**31 Misc 3d at 15} v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230 [2004]). Nor was it incumbent upon defendant to produce a witness, such as a mail clerk or other clerical employee, whose duty [*2]it was to ensure compliance with its mailing procedures or who possessed personal knowledge of such compliance (see Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [2007]).

Having established its routine and reasonable office practice, defendant met its burden to establish that the verification letters were mailed to (and presumably received by) plaintiff. Plaintiff not only failed to produce any countervailing evidence to rebut the presumption of receipt, but has not at any time affirmatively denied receipt of the verification letters.

Before concluding, we would be remiss in failing to note that the facts and circumstances of this action do much to illustrate the disturbing reality that first-party no-fault benefits litigation has become the antithesis of what was supposed to be an expeditious and simplified process for the payment of medical costs for injuries sustained in motor vehicle accidents (see Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211, 214 [1996]). Too often, lawsuits with a value akin to a small claims action become bogged down by an insistence by one party or another that mailing of routine forms be established with scientific precision, asking judges, already burdened to the breaking point with the veritable legion of no-fault cases overflowing from our court dockets (while very able arbitrators remain underutilized), to require multiple witnesses to be summoned to the courthouse, merely to establish a presumption of mailing, even in the absence of an express denial of receipt of the disputed correspondence. Unfortunately, this class of cases has spawned a body of “gotcha” jurisprudence, marked by a near manic preoccupation with form over substance.

How we have reached this sorry state is of little moment. Perhaps all branches of government need to call a “time out” and, working together, endeavor to construct a workable process to achieve what the framers of the no-fault statute had in mind when they sought to establish a simplified and expeditious process to reimburse those of our citizenry injured in automobile accidents. For sure, the system now in place is not achieving that laudable aim.

Schoenfeld, J. (dissenting). I fully agree with the majority’s sentiment that it is time for a change in no-fault litigation, which has become overly protracted and wasteful. Clearly, a{**31 Misc 3d at 16} streamlined process that yields timely, substantive results to ensure reimbursement, when appropriate, is needed. In the present case, all that was required at trial was the testimony of an individual with knowledge of defendant’s standard mailing practice. As this was not done, however, I respectfully dissent and would affirm the trial judge’s finding in favor of plaintiff.

At trial, defendant did not dispute that it received plaintiff’s bills, but averred that plaintiff failed to respond to its request for verification. In support thereof, defendant offered the testimony of Jennifer Piccolo, an experienced claims examiner.

Ms. Piccolo testified to having reviewed plaintiff’s claims, and stated why further verification was needed. As a result, she prepared verification letters and placed them in “a bin slot . . . within the department,” to be “picked up by the clerical department.” She further testified that if mail was not delivered and came back to her office, the address would be checked, and if it was wrong, it would be corrected and re-mailed. However, Ms. Piccolo candidly admitted to not knowing the mailroom procedure:

“Q: Do you have personal knowledge of the actual policies of the people who handle that mail that’s returned?

“A: Personal knowledge, yes.

“Q: Personal knowledge as in you observe them do their day to day job with respect to . . . receipt of mail returned?

“A: No.

“Q: Nor with any of their other responsibilities with respect to mailing, correct?

“A: Correct.”

It is well established that the decision of the fact-finding court should not be disturbed unless it is obvious that the court’s conclusion could not be reached under any fair interpretation of the evidence. (Frame v Maynard, 78 AD3d 508 [1st Dept 2010].) Further, the burden is on the insurer to establish proper and timely mailing of verification requests. (Westchester Med. Ctr. v Progressive Cas. Ins. Co., 6 Misc 3d 1039[A], 2005 NY Slip Op 50348[U] [Nassau Dist Ct 2005]; see Lehrer McGovern Bovis, Inc. v Public Serv. Mut. Ins. Co., 268 AD2d 388 [1st Dept 2000].)

As noted in Badio v Liberty Mut. Fire Ins. Co. (12 AD3d 229, 230 [1st Dept 2004]): “An insurer is entitled to a presumption that a [request] was received when the proof exhibits an office practice and procedure . . . which shows that the [request has]{**31 Misc 3d at 17} been duly addressed and mailed.” (Emphasis added and internal quotation marks omitted.) In that case, “Liberty Mutual did present the testimony of an employee who possessed personal knowledge of the office mailing practice, including how the mail was picked up and counted, and how the names and addresses on each item were confirmed.” (Id.)

Clearly Ms. Piccolo, who placed her letters in a bin slot within her own particular department, did not know whether such letters were put in a postal box that day. Nor did she have personal knowledge regarding even the basic mailing practice and procedure of her company. In Westchester Med. Ctr. v Countrywide Ins. Co. (45 AD3d 676 [2d Dept 2007]), defendant contended that a claim for payment was premature because plaintiff failed to respond to its verification requests. However, the Court, in holding that the statements by a supervisor employed in defendant’s claims department were insufficient, noted that she “had no personal knowledge that the verification requests were actually mailed on the dates they were issued.” (Id. at 676.) The Court further stated that “her conclusory allegations regarding the defendant’s office practice and procedure failed to establish that [it] was designed to ensure that the verification requests were . . . properly mailed.” (Id. at 676-677; accord Modern Psychiatric Servs. P.C. v Progressive Ins. Co., 10 Misc 3d 145[A], 2006 NY Slip Op 50143[U] [App Term, 2d Dept 2006]; Careplus Med. Supply Inc. v Travelers Home & Mar. Ins. Co., 7 Misc 3d 133[A], 2005 NY Slip Op 50648[U] [App Term, 2d Dept 2005].)

Accordingly, the judgment in favor of plaintiff should not be disturbed.

McKeon, P.J., and Shulman, J., concur; Schoenfeld, J., dissents in a separate opinion.

[*1]

Supreme Court, Nassau County, December 17, 2010

APPEARANCES OF COUNSEL

Joseph Henig, P.C., Bellmore, for plaintiff. Gullo & Associates, LLP, Brooklyn, for defendant.

{**30 Misc 3d at 498} OPINION OF THE COURT

Daniel Palmieri, J.

This motion by the plaintiff for summary judgment is denied, with leave to renew upon the completion of discovery. The cross motion by the defendant for a stay of trial pending the outcome of criminal proceedings against the plaintiff’s assignor and for a [*2]preliminary conference to schedule dates for discovery, or, in the alternative, granting defendant summary judgment on the ground that it made a timely denial, is granted to the limited extent that a preliminary conference shall be had at the date and time indicated herein. Defendant is also granted leave to renew its motion for summary judgment upon the completion of discovery. The cross motion is otherwise denied.

In this action for first-party no-fault benefits, the court finds that the plaintiff has presented prima facie proof that it timely rendered a bill to the defendant insurance company on the proper no-fault form, and that the defendant failed either to pay or issue a denial of the claim within the prescribed 30-day time period. (Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [a] [1].)

In response, however, the defendant has shown that within 30 days of receipt it issued a request for verification, in this case a request for laboratory tests and/or X-ray results, and for an acceptable assignment form. The request for verification therefore tolled the 30-day period to pay or deny the claim until the records were received. (11 NYCRR 65-3.5 [a], [b]; 65-3.8; see New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568 [2d Dept 2004].)

There is no dispute that the records were provided. The defendant thereafter timely issued a denial on the ground that the plaintiff’s assignor was intoxicated at the time of the accident, which may constitute a ground for denial pursuant to Insurance Law § 5103 (b) (2) or (3) (if a felony), and under defendant’s policy. The plaintiff contends that because there is no proof of intoxication presented, and, relatedly, no proof that the injury-causing accident was the result of such intoxication, the defense{**30 Misc 3d at 499} is without merit. It relies primarily on a recent Appellate Division, Second Department, case, Westchester Med. Ctr. v Government Empls. Ins. Co. (77 AD3d 737 [2d Dept 2010]). However, in the present matter the defendant has asked for a stay of the trial pending discovery on this issue. Plaintiff’s response has been that under summary judgment jurisprudence the motion opponent must lay bare its proof, and proof is absent.

The court finds that there is a basis for applying CPLR 3212 (f). This subdivision provides that if it appears from affidavits submitted in opposition that facts essential to justify opposition may exist but cannot then be stated, a court may deny the motion, order a continuance to permit needed disclosure to be undertaken, or “make such other order as may be just.” (CPLR 3212 [f].)

A party who raises a defense that has not yet been fully developed, but appears to exist, must be able to make some showing that such facts do in fact exist for CPLR 3212 (f) to apply; mere hope that discovery may reveal those facts is insufficient. (Companion Life Ins. Co. of N.Y. v All State Abstract Corp., 35 AD3d 519 [2d Dept 2006].) Nor can mere speculation serve to defeat the motion. (Pluhar v Town of Southampton, 29 AD3d 975 [2d Dept 2006]; Ciccone v Bedford Cent. School Dist., 21 AD3d 437 [2d Dept 2005].) However, denial of the motion on the ground that necessary disclosure is lacking is appropriate if there is some basis in the record for finding that evidence sufficient to defeat the motion may exist, [*3]especially where the facts appear to lie within the knowledge of the opposing party and discovery is in its early stages. (See Adler v City of New York, 52 AD3d 549 [2d Dept 2008]; Baron v Incorporated Vil. of Freeport, 143 AD2d 792 [2d Dept 1988].)

The court finds that this is the case here. There is no direct proof of intoxication submitted, or that such intoxication caused the accident. However, the defendant presents the affidavit of the office manager of defendant’s law firm, Christopher Roselli, who states that the police report revealed that plaintiff’s assignor, Luis Vargas, was arrested at the accident scene on charges of driving while intoxicated. He further states that he spoke to Orange County Assistant District Attorney Steven Goldberg, who informed him that Vargas was indicted on 34 charges, including two counts of driving while intoxicated. A formal request for a copy of the indictment was made, and the results of that request, a copy of the indictment, is annexed to defendant’s reply papers. Among other things, the indictment{**30 Misc 3d at 500} contains not only a charge of driving while intoxicated, but also of vehicular manslaughter in the first degree, as a passenger in Vargas’s vehicle was ejected and killed as a result of his operation of the vehicle while under the influence of alcohol. Other felony counts are based on injuries to other passengers. Thus, in addition to allegedly driving while intoxicated, his operation of the vehicle may have resulted in his having been injured while committing a felony.

While the foregoing clearly is in part hearsay, the indictment does verify the key information referred to by Roselli. For purposes of plaintiff’s motion, it is sufficient for the court to find that evidence sufficient to defeat the motion may exist, and that disclosure should be permitted. (See Westchester Med. Ctr. v Progressive Cas. Ins. Co., 51 AD3d 1014 [2d Dept 2008].) This is especially so where information regarding the alleged intoxication, and its role in causing the injury-producing accident, lies in part within the knowledge of plaintiff’s assignor, and this action is in its early stages. The court understands that Vargas may not be available for a deposition, or may choose to invoke his Fifth Amendment rights, which will of necessity slow discovery here. Further, the criminal case also appears to be in its early stages. However, possible difficulties in moving the present civil case forward is not a reason to prejudice the defendant’s ability to defend itself given the factors described in this decision.

The record here also distinguishes this matter from Westchester Med. Ctr. v Government Empls. Ins. Co. (77 AD3d 737, 738 [2010], supra) as in that case

“the defendant failed to submit any evidence whatsoever from which the circumstances of the accident could be ascertained, the nature of the accident is unknown, and, thus, the defendant’s evidence . . . was insufficient by itself to raise a triable issue of fact as to whether the plaintiff’s assignor was ‘injured as a result of operating a motor vehicle while in an intoxicated condition.’ “

Here, the nature of the accident is known, and there is some evidence that discovery may reveal that plaintiff’s assignor was injured as a result of operating a vehicle while in an intoxicated condition.

Accordingly, the plaintiff’s motion is denied pursuant to CPLR 3212 (f), but may be [*4]renewed upon the completion of discovery. Counsel are directed to appear for a preliminary conference in{**30 Misc 3d at 501} the basement of the courthouse on January 24, 2011, at 9:30 a.m. Failure to appear for such conference or upon an adjourned date may result in the imposition of sanctions pursuant to 22 NYCRR 202.27.

No stay of trial is being issued, as such a request by the defendant is premature. Further, the alternative relief of summary judgment the defendant seeks is also denied. This determination is made based upon the same reason summary judgment is denied to the plaintiff, i.e., the need for disclosure—the absence of which prevents the defendant from establishing a prima facie showing that plaintiff’s assignor was, in fact, intoxicated, and the cause of his injuries. However, defendant is also granted leave to renew its application for summary judgment on the completion of discovery.

[*1]

Supreme Court, Appellate Term, Second Department, December 3, 2010

APPEARANCES OF COUNSEL

Gullo & Associates, LLP, Brooklyn (Cristina Carollo of counsel), for appellant. Law Office of Alden Banniettis, Brooklyn (Jeff Henle of counsel), for respondent.

{**30 Misc 3d at 43} OPINION OF THE COURT

Memorandum.

Ordered that the judgment is reversed, without costs, so much of the order dated August 8, 2006 as provided that the trial was limited to the issue of whether the charges were excessive is vacated and the matter is remitted to the Civil Court for a new trial.

In this action by a provider to recover assigned first-party no-fault benefits, plaintiff moved for summary judgment and defendant cross-moved for summary judgment dismissing the complaint. By order dated August 8, 2006, the Civil Court denied both the motion and the cross motion, found that the only triable issue of fact was whether the fees charged were excessive and stated that the trial was limited to that issue, citing CPLR 3212 (g).

In accordance with the August 8, 2006 order, the nonjury trial began with defendant’s presentation of its defense. Defendant’s attorney sought to present evidence to demonstrate, in effect, that plaintiff was not eligible for reimbursement under the No-Fault Law because plaintiff’s sole shareholder was not licensed or certified to practice acupuncture at the time that the acupuncture services at issue were rendered (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; Quality Med. Care, P.C. v New York Cent. Mut. Fire Ins. Co., 26 [*2]Misc 3d 139[A], 2010 NY Slip Op 50262[U] [App Term, 2d, 11th & 13th Jud Dists 2010]; see also State Farm Mut. Auto. Ins. Co. v Mallela,{**30 Misc 3d at 44} 4 NY3d 313 [2005]). The Civil Court would not allow defendant to present this evidence because, the court found, it was barred by the August 8, 2006 order, which limited the issue for trial to the excessiveness of the fee schedule. When defendant failed to proffer any evidence as to its fee schedule defense, plaintiff moved for a directed verdict and the court granted plaintiff’s motion. Subsequently, a judgment was entered in favor of plaintiff, and the instant appeal by defendant ensued.

On appeal, defendant argues, in effect, that the August 8, 2006 order improperly barred defendant from asserting its defense that plaintiff was not eligible for reimbursement under the No-Fault Law pursuant to Insurance Department Regulations (11 NYCRR) § 65-3.16 (a) (12). Defendant also argues, in effect, that to the extent said order could be interpreted to read that plaintiff did not have to prove its case at trial, the order was improper.

The CPLR authorizes a court, on a motion for summary judgment, to limit issues of fact for trial where it is able to “ascertain what facts are not in dispute or are incontrovertible” (CPLR 3212 [g]). Under that circumstance, the court is directed to “make an order specifying such facts,” which will then “be deemed established for all purposes in the action.” In addition, the court is permitted to “make any order as may aid in the disposition of the action.”

Upon a review of the record, we find that there was no basis in this case for the Civil Court to have limited issues for trial pursuant to CPLR 3212 (g). First, the record does not demonstrate that there is no dispute, or that it is incontrovertible, that plaintiff had submitted “proof of the fact and amount of loss sustained” to defendant and that defendant had failed to pay the claim within 30 days of receipt of such proof (see Insurance Law § 5106 [a]). Furthermore, the record does not demonstrate that, of the 31 defenses raised by defendant in its answer, none were viable except for the excessiveness of the fee schedule, which is the implication of an order limiting the trial to this defense. Indeed, it is noted that, in opposition to plaintiff’s motion, defendant submitted sufficient evidence to raise a triable issue of fact as to whether plaintiff was certified to practice acupuncture at the time that the acupuncture services at issue were rendered (see Insurance Department Regulations [11 NYCRR] § 65-3.16 [a] [12]; Quality Med. Care, P.C. v New York Cent. Mut. Fire Ins. Co., 26 Misc 3d 139[A], 2010 NY Slip Op 50262[U] [2010]; see also State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).{**30 Misc 3d at 45}

Accordingly, the judgment is reversed, so much of the order dated August 8, 2006 as stated that the trial was limited to the issue of whether the charges were excessive is vacated and the matter is remitted to the Civil Court for a new trial.

Weston, J.P., Golia and Rios, JJ., concur.