Supreme Court, Queens County

25257 2008

For the Plaintiffs:

John E. McCormack, P.C., 41 Hilton Ave., Hempstead, NY 11550

For Defendants Bronx Park Medical, P.C., Inwood Hill Medical P.C., Dr. Noel Worrell Howell, Alexander Freed, Innessa Drabkin, Silver Pines Management Corp., Integra CBA Co., Inc., PKH Corp., and Michael Mazur: Lifshutz & Lifshutz, P.C., by Gary Burgoon, 501 Fifth Ave., suite 506, NY, NY 10017

For Defendant Healthbay Medical, P.C.: George T. Lewis, Jr., P.C., 485 Underhill Blvd., suite 101, Syosset, NY 11791

For Defendants Jean D. Miller, D.O., Jean Miller, D.O., P.C., and Acadian Medical P.C.: Kern Augustine Conroy & Schoppman, P.C., by Douglas M. Nadjari, Esq., 1325 Franklin Ave., Garden City, NY 11530

For Defendants Josh Vainer and SVG MGMT., Inc.: Matthew J. Conroy & Associates, P.C., by Matthew J. Conroy and Maria Campese Diglio, Esqs., 350 Old Country Road, suite 106, Garden City, NY 11530

For Defendants Simon Pevzner, ASPG MGNT., Inc., Veritas Management Corp., Group Square I.S. Ltd., Kritek, Inc., Strob, Inc., and Lokh Corp.: Schlam Stone Dolan, LLP, by Thomas A. Kissane and Samuel L. Butt, Esqs., 26 Broadway, NY, NY 10004

Other Defendants are either Pro Se and/or have not appeared.

Charles J. Markey, J.

Defendant Jean D. Miller, D.O., defendant Jean D. Miller, D.O., P.C., and defendant Acadian Medical, P.C. (collectively “the Miller defendants”) have moved for, inter alia, an order pursuant to CPLR 3211(a)(7) dismissing the complaint against them. Defendant Simon Pevzner, defendant ASPG Mgnt Inc., defendant Veritas Management Corp., defendant Group Square I.S. Ltd., defendant Kritek, Inc., defendant Strob, Inc., and defendant Lokh Corp., (collectively “the Pevzner defendants”) have moved for, inter alia, an order pursuant to CPLR 3211(a)(7) [*2]dismissing the complaint against them. Defendant Josh Vainer and defendant SVG Mgmt, Inc. (collectively “the Vainer defendants”) have moved for an order dismissing the complaint against them pursuant to CPLR 3211(a)(7).

The complaint alleges the following: The plaintiffs are domestic and foreign insurance companies which issue automobile policies in New York State providing benefits payable pursuant to the Comprehensive Automobile Insurance Reparations Act (the No-Fault Law) presently codified in article 51 of the Insurance Law. The plaintiffs are required by law to pay an insured’s No-Fault benefits directly to a health care provider who has been assigned his right to benefits covering medically necessary treatments and tests. Some of the defendants, termed “the Management Defendants,” are the true owners of certain medical facilities also named in the complaint and termed “the Provider Defendants.” Some of the defendants, termed “the Licensed Defendants,” hold or did hold medical licenses and fronted as the owners of the provider defendants. The licensed defendants “essentially sold the use of their names and licenses to the Management Defendants.”

There are three groups of defendants each comprised of some of the licensed defendants, provider defendants, and management defendants:
(1) The Pevzner management group allegedly using the licenses of Dr. Miller, Dr. Mukendi, and Dr. Kadianakis (Group 1),
(2) the Kargman management group allegedly using the licenses of Dr. Garcia, Dr. Iroku, Dr. Richie, and Dr. Chiarmonte (Group 2), and
(3) the Drabkin/Freed management group allegedly using the licenses of Dr. Howell and Dr. Iroku (Group 3).

The following chart sets forth the three groups of defendants:

Group 1

Group 2

Group 3

The defendants have allegedly defrauded the plaintiff insurers by submitting bills pursuant to New York State’s No-Fault Law for medical services rendered by corporations not truly owned by holders of medical licenses. On or about October 15, 2008, the plaintiffs, over 20 insurance companies, began this lawsuit asserting six causes of action, the first for common law fraud, the second for unjust enrichment, the third for a declaratory judgment concerning fraudulent incorporation, the fourth for declaratory judgment concerning illegal fee splitting, the fifth for reimbursement based on Public Health Law § 238-a, and the sixth for a declaratory judgment concerning medical services allegedly rendered by independent contractors.

“State law mandates that professional service corporations be owned and controlled only by licensed professionals (see, Business Corporation Law §§ 1503[a], 1507, & 1508), and that licensed professionals render the services provided by such corporations (see, Business Corporation Law § 1504[a])” (One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, 740 [2nd Dept. 2008]).

Business Corporation Law section 1503(a) provides in relevant part: “Notwithstanding any other provision of law, one or more individuals duly authorized by law to render the same professional service within the state may organize, or cause to be organized, a professional service corporation for pecuniary profit under this article for the purpose of rendering the same professional service” (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra).

Business Corporation Law section 1507 provides in relevant part: “A professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice” (see, Sangiorgio v Sangiorgio, 173 Misc 2d 625 [Sup. Ct. Richmond County 1997]). State licensing requirements prohibit non-physicians from owning or controlling medical service corporations (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313 [2005]).

Insurance Law § 5102 et seq. requires no-fault insurers to reimburse patients or their medical provider assignees for “basic economic loss.” However, pursuant to state regulation (11 NYCRR 65-3.16[a][12]): “A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.” (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, [*4]supra).

In State Farm Mut. Auto. Ins. Co. v Mallela (id.), an action for, inter alia, a declaratory judgment brought by an insurer against defendants allegedly operating the same type of scheme allegedly involved in the case at bar, the New York Court of Appeals held that, on the basis of 11 NYCRR 65-3.16(a)(12), insurers may deny no-fault payments to fraudulently incorporated health care providers to which patients have assigned their claims. In One Beacon Ins. Group, LLC v Midland Medical Care, P.C. (54 AD3d at 738, supra), another action similar to the case at bar, the insurers sought damages for common-law fraud and unjust enrichment and a declaration that they had no obligation to pay no-fault claims submitted by fraudulent professional corporations. The Appellate Division, Second Department, affirmed the denial of a motion for summary judgment by a defendant physician and a defendant corporation, finding that material issues of fact existed as to whether the physician’s professional corporation was actually controlled by a management company owned by unlicensed individuals in violation of state law.

That branch of the motion by the Pevzner defendants seeking an order, pursuant to CPLR 3013, dismissing the complaint against them is denied. The complaint adequately provides “the court and parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved and the material elements of each cause of action.” (see, CPLR 3013; Stavisky v Koo, 54 AD3d 432 [2nd Dept. 2008]; Trinity Products, Inc. v Burgess Steel LLC, 18 AD3d 318 [1st Dept. 2005]). The complaint makes factual, not merely conclusory, allegations. (see, Serio v Rhulen, 24 AD3d 1092). The defendants may obtain greater specificity by serving a demand for a bill of particulars or by utilizing the many disclosure devices available under CPLR article 31 (see, Serio v Rhulen, id.; Pernet v Peabody Engineering Corp., 20 AD2d 781 [1st Dept. 1964]).

That branch of the motion by the Pevzner defendants, pursuant to CPLR 3016(b), seeking dismissal of the first cause of action asserted against them, for common law fraud, is denied. Although fraud must be pleaded in “detail” (see, CPLR 3016[b]; 1205-15 First Ave. Associates, LLC v McDonough, 7 AD3d 363 [1st Dept. 1964]), “the standard is simply whether the allegations are set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of” (Caprer v Nussbaum, 36 AD3d 176, 202 [2nd Dept. 2006], quoting Lanzi v Brooks, 43 NY2d 778, 780 [1977]). The complaint in the case at bar meets that standard (see, PDK Labs, Inc. v Krape, 277 AD2d 211 [2nd Dept. 2000]). The complaint makes factual, not merely conclusory, allegations. Just recently, the New York Court of Appeals, in Sargiss v Magarelli (12 NY3d 527 [2009], modifying 50 AD3d 1117 [2nd Dept. 2008]) stated that, while “the basic facts” of the fraud allegedly perpetrated need to be sufficiently stated, they need not be elaborated in exquisite detail or accompanied by “unassailable” proof of pinpoint precision.

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking dismissal of the first cause of action asserted against them, pursuant to CPLR 3211(a)(7), are granted to the extent that the first cause of action seeks damages accruing before April 4, 2002. The Court notes initially that, as the plaintiffs concede, no cause of action for fraud by No-Fault insurers based on 11 NYCRR 65-3.16(a)(12) can be stated to recover payments made before April 4, 2002, the effective date of the regulation (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, supra; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407 [1st Dept. 2006]; Metroscan Imaging, P.C. v Geico Ins. Co., 13 Misc 3d 35 [App. [*5]T. 2nd Dept. 2006]; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, 2007 NY Slip Op. 51154[U] [Sup. Ct., Queens County 2007] [Dollard, J.]). Otherwise, the first cause of action sufficiently states a claim for fraud (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra] [action by no-fault insurer against alleged fraudulently incorporated medical corporations]).

In determining a motion brought pursuant to CPLR 3211(a)(7), the court “must afford the complaint a liberal construction, accept as true the allegations contained therein, accord the plaintiff the benefit of every favorable inference and determine only whether the facts alleged fit within any cognizable legal theory” (1455 Washington Ave. Assoc. v Rose & Kiernan, 260 AD2d 770, 770-771 [3rd Dept. 1999]; Esposito-Hilder v SFX Broadcasting Inc., 236 AD2d 186 [3rd Dept. 1997]).

In order to state a cause of action for fraud, a plaintiff must allege that:

(1) that the defendant made material representations that were false or concealed a material existing fact,

(2) the defendant knew the representations were false and made them with the intent to deceive the plaintiff,

(3) the plaintiff was deceived,

(4) that the plaintiff justifiably relied on the defendant’s representations, and

(5) that the plaintiff was injured as a result of the defendant’s representations (see, Lama Holding Co. v Smith Barney, 88 NY2d 413 [1996]; New York Univ. v Continental Ins. Co., 87 NY2d 308 [1995]; Watson v Pascal, 27 AD3d 459 [2nd Dept. 2006]; Cerabono v Price, 7 AD3d 479 [2nd Dept. 2004], appeal denied, 4 NY3d 704 [2005]; New York City Transit Authority v Morris J. Eisen, P.C., 276 AD2d 78 [1st Dept. 2000]; American Home Assur. Co. v Gemma Const. Co., Inc., 275 AD2d 616 [1st Dept. 2005]; Swersky v Dreyer & Traub, 219 AD2d 321 [1st Dept. 1996], appeal withdrawn, 89 NY2d 983 [1997]).

In the case at bar, the plaintiffs have adequately alleged that the defendants with the requisite intent and scienter concealed material facts and made material misrepresentations concerning the provider defendants’ status as legal professional service corporations and in reliance on the material misrepresentations and concealments the plaintiffs made “substantial payments” to the provider defendants (see, St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). A medical corporation fraudulently incorporated under Business Corporation Law section 1507, moreover, has no right to reimbursement by insurers under the No-Fault Law and its implementing regulations for medical services rendered (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, supra). The complaint adequately alleges fraud in the incorporation and operation of the Provider Defendants with the complicity of the Management Defendants and Licensed Defendants.

That branch of the motion by the Pevzner defendants requesting dismissal of the plaintiffs’ first cause of action to the extent that it seeks punitive damages is granted (see, St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra) Punitive damages will not be awarded unless the fraud “is aimed at the public generally, is gross, and involves high moral culpability.” (Kelly v Defoe Corp., 223 AD2d 529 [2nd Dept. 1996]; see, Ross v Louise Wise Services, Inc., 8 NY3d 478, 489-490 [2007] [punitive damages were not available in a claim of adoption fraud or concealment claim in light of lack of malicious and vindictive intent], [*6]modifying 28 AD3d 272 [1st Dept. 2006]; Crispino v Greenpoint Mtge. Corp., 2 AD3d 478 [2nd Dept. 2003]). In the case at bar, the alleged tortfeasors directed their conduct at No-Fault insurers, not the public generally.

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking, pursuant to CPLR 3211(a)(7), dismissal of the second cause of action, for unjust enrichment, are granted to the extent that the second cause of action seeks damages accruing before April 4, 2002. The plaintiffs cannot successfully state a cause of action for unjust enrichment based on 11 NYCRR 65-3.16(a)(12) to recover payments made before April 4, 2002, the effective date of the regulation (see, State Farm Mut. Auto. Ins. Co. v Mallela,4 NY3d 313, supra; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). Otherwise, the complaint adequately states a cause of action for unjust enrichment (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). “A cause of action for unjust enrichment arises when one party possesses money or obtains a benefit that in equity and good conscience they should not have obtained or possessed because it rightfully belongs to another” (Mente v Wenzel, 178 AD2d 705, 706 [3rd Dept. 1991], appeal denied in part & dismissed in part, 82 NY2d 843 [1993]; see, Strong v Strong, 277 AD2d 533 [3rd Dept. 2000]). The plaintiffs, in the case at bar, have adequately alleged that the defendants fraudulently obtained no-fault payments from them which they were not obligated to pay under the No-Fault Law and its implementing regulations.

That branch of the motion by the Pevzner defendants requesting dismissal of the first and second causes of action to the extent that they seek damages for payments made before April 4, 2002 is granted. No cause of action for fraud or unjust enrichment lies to recover payments made by the carriers before April 4, 2002, the effective date of 11 NYCRR 65-3.16(a)(12) (see, State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313, supra; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra.)

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking, pursuant to CPLR 3211(a)(7), dismissal of the third cause of action for a declaratory judgment concerning alleged fraudulent incorporation, are denied (see, One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738, supra; St. Paul Travelers Ins. Co. v Nandi, 2007 WL 1662050, supra). The plaintiffs allege that the provider defendants have not withdrawn outstanding claims for payment and, on some claims, have begun suit or arbitration even as the plaintiffs continue to deny an obligation to make payment because of alleged fraudulent incorporation. This action, which seeks a judgment declaring that the plaintiffs are “under no obligation to pay any of the no-fault claims of the Provider Defendants, past, present, or future,” presents a justiciable controversy appropriate for declaratory relief (see, Buller v Goldberg, 40 AD3d 333 [1st Dept. 2007]; Long Island Lighting Co. v Allianz Underwriters Ins. Co., 35 AD3d 253 [1st Dept. 2006], appeal dismissed, 9 NY3d 10003 [2007], cited with approval in Liberty Mut. Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 814-816, 967 A.2d 1, 31-32 [2009]).

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants, pursuant to CPLR 3211(a)(7), seeking dismissal of the fourth cause of action, [*7]for a declaratory judgment concerning alleged illegal fee-splitting, are denied. A licensed physician is generally prohibited from sharing fees with non-physicians (see, Education Law § 6530[19]; 8 NYCRR 29.1[b][4]; A.T. Medical, P.C. v State Farm Mut. Ins. Co., 10 Misc 3d 568 [NYC Civ. Ct. Queens County 2005] [Culley, J.] [improperly licensed provider]). The plaintiffs have adequately alleged that the licensed defendants have engaged in unlawful fee-splitting with the management defendants.

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants seeking, pursuant to CPLR 3211(a)(7), dismissal of the fifth cause of action, for reimbursement, are granted. Public Health Law section 238-a(1)(a), “Prohibition of financial arrangements and referrals,” provides: “A practitioner authorized to order clinical laboratory services, pharmacy services, radiation therapy services, physical therapy services or x-ray or imaging services may not make a referral for such services to a health care provider authorized to provide such services where such practitioner or immediate family member of such practitioner has a financial relationship with such health care provider” (see, Ozone Park Medical Diagnostic Associates v Allstate Ins. Co., 180 Misc 2d 105 [App. T. 2nd Dept. 1999]; Stand-Up MRI of the Bronx v General Assur. Ins., 10 Misc 3d 551 [Dist. Ct. Suffolk County 2005]). The statute, in essence, prohibits a medical doctor from ordering specified medical services from an entity in which he or an immediate family member has a financial interest. The plaintiffs cannot successfully invoke the statute against “management defendants [who] control the referral of patients to the medical providers.”

Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants requesting, pursuant to CPLR 3211(a)(7), dismissal of the sixth cause of action, for a declaratory judgment regarding the medical services provided by allegedly independent contractors, are denied. The complaint alleges that “the persons who provided health care services for some or all of the Provider Defendants were not employees of the Provider Defendants, but were independent contractors.” “[W]here a billing provider seeks to recover no-fault benefits for services which were not rendered by it or its employees, but rather by a treating provider who is an independent contractor, it is not a provider’ of the medical services rendered within the meaning of 11 NYCRR 65.15(j)(1) [now 11 NYCRR 65-3.11(a)] and is, therefore, not entitled to recover direct payment’ of assigned no-fault benefits from the defendant insurer” (Rockaway Blvd. Medical P.C. v Progressive Ins., 9 Misc 3d 52, 54 [App. T. 2nd Dept. 2005]). The complaint adequately states a cause of action for a judgment declaring that the plaintiff insurers have no obligation to pay for services billed by the provider defendants, but rendered by independent contractors.

Those branches of the motions by the Miller defendants and Pevzner defendants seeking, pursuant to CPLR 3024, that the plaintiffs serve a more definite statement are denied. The complaint is sufficiently specific for the defendants to frame a response (see, CPLR 3024[a]; Della Villa v Constantino, 246 AD2d 867 [3rd Dept. 1998]; Mirage Rest., Inc. v Majestic Chevrolet, Inc., 75 AD2d 808 [2nd Dept. 1980]).

That branch of the motion by the Miller defendants seeking severance of mis-joined parties and discontinuing the claims against them is granted to the extent that the court orders the severance of the causes of action against each group of defendants denominated herein as Group 1, Group 2, and Group 3. The causes of action asserted against Group 1 shall continue [*8]under this index number. Two separate index numbers shall be purchased for Group 2 and Group 3, and two separate actions shall be maintained against Group 2 and Group 3.

CPLR 1002, “Permissive joinder of parties,” allows the combination of parties as plaintiffs or defendants subject to the conditions that (1) the claims must arise from “the same transaction, occurrence, or series of transactions or occurrences,” and (2) a common question of law or fact is presented (see, Stewart Tenants Corp. v Square Industries, Inc., 269 AD2d 246 [1st Dept. 2000]). It is true that CPLR 1002 and its predecessor under the Civil Practice Act have been given an expansive application (see, Akely v Kinnicutt, 238 NY 466 [1924]; Hempstead General Hosp. v Liberty Mut. Ins. Co., 134 AD2d 569 [2nd Dept. 1987]; Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 1002; 3 Weinstein-Korn-Miller, NY Civ Prac ¶ 1002.05). One text even states that: “If there is a rational connection between the parties and causes of action, CPLR 1002 is satisfied” (3 Weinstein-Korn-Miller, NY Civ Prac ¶ 1002.05).

However, in the case at bar, each group of defendants operated separately from the other groups, and the plaintiffs did not demonstrate that there is a logical connection between the activities of each that suffices to meet the “same transaction . . . or series of transactions” requirement (see, Mount Sinai Hosp. v Motor Vehicle Accident Indemnification Corp., 291 AD2d 536, 536 [2nd Dept. 2002] [“The Supreme Court providently exercised its discretion in severing the remaining five causes of action, asserting claims on behalf of five unrelated assignees, involved in accidents on five different dates, with no common contract of insurance and no relation or similarity to each other, other than the fact that the no-fault benefits were not paid”]).

The Court notes that combining the multitude of claims by the numerous plaintiffs against three different groups of defendants is likely to cause juror confusion (see, Poole v Allstate Ins. Co., 20 AD3d 518 [3rd Dept. 2005] [severance required in action brought against insurer by assignee of 47 no-fault claims to recover unpaid no-fault benefits for medical services he allegedly provided to 47 different patients]; Radiology Resource Network, P.C. v Fireman’s Fund Ins. Co., 12 AD3d 185 [1st Dept. 2004] [insurer’s motion to sever claims into separate actions properly granted in action brought by medical services provider against insurer to recover on 68 claims for no-fault insurance benefits that provider had been assigned by 68 assignors]; Andrew Carothers, M.D., P.C. v GEICO Indem. Co., 14 Misc 3d 92 [App. T. 2nd Dept. 2007]). Finally, although “[m]isjoinder of parties is not a ground for dismissal of an action,” (CPLR 1003), the Court has the authority to order severances (see, CPLR 1002 & 1003).

In sum, upon the foregoing papers, the following branches of the motions are granted in whole or in part:

1. Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants requesting dismissal of the first cause of action asserted against them pursuant to CPLR 3211(a)(7) are granted to the extent that the first cause of action seeks damages accruing before April 4, 2002;

2. That branch of the motion by the Pevzner defendants seeking dismissal of the plaintiffs’ first cause of action to the extent that it seeks punitive damages is granted;

3. Those branches of the motions by the Miller defendants, the Pevzner defendants, and [*9]the Vainer defendants, pursuant to CPLR 3211(a)(7), seeking dismissal of the second cause of action are granted to the extent that the second cause of action seeks damages accruing before April 4, 2002;

4. That branch of the motion by the Pevzner defendants, requesting dismissal of the first and second causes of action to the extent that they seek damages for payments made before April 4, 2002 is granted;

5. Those branches of the motions by the Miller defendants, the Pevzner defendants, and the Vainer defendants, pursuant to CPLR 3211(a)(7), seeking dismissal of the fifth cause of action are granted; and, finally,

6. That branch of the motion by the Miller defendants seeking severance of mis-joined parties and discontinuing the claims against them is granted to the extent that the Court orders the severance of the causes of action against each group of defendants denominated above as Group 1, Group 2, and Group 3. The causes of action asserted against Group 1 shall continue under this index number. Two separate index numbers shall be purchased for Group 2 and Group 3, and two separate actions shall be maintained against Group 2 and Group 3, i.e., a separate action and index number for Group 2 and separate ones for Group 3.

The plaintiffs are directed to serve separate amended complaints within 40 days of the service of a copy of this order, bearing the date stamp of receipt by the Clerk, with notice of entry.

The remaining branches of the motions are all denied.

The foregoing constitutes the decision and order of the Court.

Hon. Charles J. MarkeyJustice, Supreme Court, Queens County

Dated: July 31, 2009

Long Island City, New York

Appearances:

For the Plaintiffs:

John E. McCormack, P.C., 41 Hilton Ave., Hempstead, NY 11550

For Defendants Bronx Park Medical, P.C., Inwood Hill Medical P.C., Dr. Noel Worrell Howell, Alexander Freed, Innessa Drabkin, Silver Pines Management Corp., Integra CBA Co., Inc., PKH Corp., and Michael Mazur: Lifshutz & Lifshutz, P.C., by Gary Burgoon, 501 Fifth Ave., suite 506, NY, NY 10017

For Defendant Healthbay Medical, P.C.: George T. Lewis, Jr., P.C., 485 Underhill Blvd., suite 101, Syosset, NY 11791

For Defendants Jean D. Miller, D.O., Jean Miller, D.O., P.C., and Acadian Medical P.C.: Kern [*10]Augustine Conroy & Schoppman, P.C., by Douglas M. Nadjari, Esq., 1325 Franklin Ave., Garden City, NY 11530

For Defendants Josh Vainer and SVG MGMT., Inc.: Matthew J. Conroy & Associates, P.C., by Matthew J. Conroy and Maria Campese Diglio, Esqs., 350 Old Country Road, suite 106, Garden City, NY 11530

For Defendants Simon Pevzner, ASPG MGNT., Inc., Veritas Management Corp., Group Square I.S. Ltd., Kritek, Inc., Strob, Inc., and Lokh Corp.: Schlam Stone Dolan, LLP, by Thomas A. Kissane and Samuel L. Butt, Esqs., 26 Broadway, NY, NY 10004

Other Defendants are either Pro Se and/or have not appeared.

[*1]

Supreme Court, Appellate Term, Second Department, July 20, 2009

APPEARANCES OF COUNSEL

Law Office of Alden Banniettis, Brooklyn (Jeff Henle of counsel), for appellant. Bruno, Gerbino & Soriano, LLP, Melville (Charles W. Benton of counsel), for respondent.

{**25 Misc 3d at 40} OPINION OF THE COURT

Memorandum.

Judgment affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant argued at trial that there was no coverage for plaintiff’s assignor’s alleged injuries because the injuries were not sustained in a covered accident. Following the nonjury trial, the Civil Court dismissed the complaint, finding that defendant had sustained its burden of proving lack of coverage by a preponderance of the evidence. On appeal, plaintiff contends that defendant had to prove, by clear and convincing evidence, rather than by a mere preponderance of the evidence, that the alleged injuries were the result of an insurance fraud scheme. Plaintiff further argues that even if the Civil Court correctly determined that defendant’s burden could be satisfied by defendant proving its defense by a mere preponderance of the evidence, the evidence presented by defendant was insufficient to satisfy this burden.

In its decision, the Civil Court noted that, while an insurer may put forth evidence of a fraudulent scheme in order to prove that a collision was not an accident, the insurer need not prove fraud (see Matter of Eagle Ins. Co. v Davis, 22 AD3d 846 [2005]). As stated in the court’s decision,

“courts commonly invoke the term ‘fraud’ when discussing the defense of lack of coverage; this may be because so many cases involving allegedly noncovered incidents center on accidents purportedly staged for the purpose of generating fraudulent insurance claims . . . Perhaps the seminal embodiment of this formulation is the Second Department’s pronouncement [in State Farm Mut. Auto. Ins. Co. v Laguerre (305 AD2d 490, 491 [2003])] that ‘[a] deliberate collision caused in furtherance of an insurance fraud scheme is not a covered accident’ ” (V.S. Med. Servs., P.C. v Allstate Ins. Co., 11 Misc 3d 334, 339 [2006]).

However, explained the Civil Court, “it does not matter whether the accident was staged in furtherance of an insurance fraud scheme or was deliberately caused under some other [*2]circumstances” (id. at 335). Rather, the court need only determine “whether the incident was unintentional (i.e., a true accident) or whether at least one driver intended to make contact (i.e., a deliberate event)” (id. at 340). This is because “[i]f the collision{**25 Misc 3d at 41} was an intentional occurrence, then it is outside the scope of the no-fault policy regardless of why or how it occurred or who was behind it” (id. at 341). We agree with the Civil Court’s reasoning regarding this issue.

In Fair Price Med. Supply Corp. v Travelers Indem. Co. (42 AD3d 277, 284 [2007], affd 10 NY3d 556 [2008]), the Appellate Division explained that “[w]hat excuses the insurer’s compliance with the 30-day rule in a staged-accident case is not the egregiousness of the fraud; rather, it is the absence of coverage for something that is not an ‘accident.’ ” As noted by the Appellate Division, “[t]he rationale for such [a] holding[ ] is that a deliberate collision that is caused in furtherance of an insurance fraud scheme is simply not an ‘accident’ covered by the subject insurance policy” (id. at 283). Thus, in the case at bar, defendant could properly premise its defense upon a lack of coverage and could establish this defense by a preponderance of the evidence; defendant was not required to establish that the subject collision was the product of fraud, which would require proof of all of the elements of fraud, including scienter (see Apollo H.V.A.C. Corp. v Halpern Constr., Inc., 55 AD3d 855 [2008]), by clear and convincing evidence (see Simcuski v Saeli, 44 NY2d 442 [1978]; Hutt v Lumbermens Mut. Cas. Co., 95 AD2d 255 [1983]). Upon a review of the record, we agree with the Civil Court’s determination that defendant’s proof, which plaintiff failed to rebut, established by a preponderance of the evidence its defense of lack of coverage (see Praimnath v Torres, 59 AD3d 419 [2009]). Accordingly, the judgment is affirmed.

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

[*1]

Supreme Court, Appellate Term, Second Department, July 9, 2009

APPEARANCES OF COUNSEL

Short & Billy, P.C., New York City (Skip Short of counsel), for appellant. Cohen & Jaffe, LLP, Lake Success, for respondent.

{**25 Misc 3d at 20} OPINION OF THE COURT

Memorandum.

Judgment affirmed without costs.

Plaintiff Dr. Albert Davydov, DDS, commenced the instant action to recover assigned first-party no-fault benefits for dental services rendered. After a nonjury trial, the Civil Court rendered a decision in favor of plaintiff in the principal sum of $6,569.27. This appeal by defendant ensued. A judgment was subsequently entered.

Defendant’s contention that plaintiff lacks standing since the assignment of the no-fault benefits executed by plaintiff’s assignor was in favor of Dr. Albert Davydov, DDS, P.C. rather than Dr. Albert Davydov, DDS is without merit. A copy of the assignment accompanied plaintiff’s claim form, and the discrepancy was apparent on its face. Defendant did not seek verification with respect to the assignment, and its denial of claim form did not deny the claim on the ground that the assignment was defective. As a result, defendant is now precluded from litigating this issue (see Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co., 9 NY3d 312 [2007]; P.L.P. Acupuncture, P.C. v Travelers Indem. Co., 19 Misc 3d 126[A], 2008 NY Slip Op 50484[U] [App Term, 1st Dept 2008]).

A provider establishes a prima facie entitlement to judgment as a matter of law by submitting proof that the prescribed statutory billing forms were mailed and received, and that [*2]payment of no-fault benefits was overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742{**25 Misc 3d at 21} [2004]). In the instant case, Dr. Davydov’s testimony and the exhibits admitted into evidence were sufficient to satisfy plaintiff’s burden. Contrary to defendant’s contention, the elements of a prima facie case to recover assigned first-party no-fault benefits do not differ based upon the nature of the services provided by the plaintiff provider (see Globe Surgical Supply v GEICO Ins. Co., 59 AD3d 129 [2008]; A.B. Med. Servs., PLLC v Liberty Mut. Ins. Co., 39 AD3d 779 [2007]; Mary Immaculate Hosp., 5 AD3d 742 [2004]).

Defendant contends that the trial court improperly curtailed defendant’s cross-examination and direct examination of Dr. Davydov. Defense counsel attempted to question Dr. Davydov regarding the medical necessity of the services rendered and whether the amount charged exceeded the amount set forth in the fee schedule. Since the parties did not stipulate to the timeliness of the denials, it was defendant’s burden to establish that it timely denied plaintiff’s claims so as to demonstrate that defendant’s proffered defenses were not precluded. Inasmuch as defendant called no witnesses and presented no evidence to show that its denials were timely mailed, defendant failed to establish that said defenses were not precluded (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]; Delta Diagnostic Radiology, P.C. v Republic W. Ins. Co., 15 Misc 3d 33 [App Term, 2d & 11th Jud Dists 2007]). Consequently, the court properly curtailed examination of the witness with respect thereto.

Accordingly, the judgment is affirmed.

Golia, J. (dissenting and voting to reverse the judgment and dismiss the complaint in the following memorandum). I find that plaintiff Dr. Albert Davydov, DDS was without standing to prosecute the instant proceeding. I conclude, contrary to the holding by the majority, that the factual circumstances of the instant matter are inapposite to the Court of Appeals’ holding in Hospital for Joint Diseases v Travelers Prop. Cas. Ins. Co. (9 NY3d 312 [2007]).

In Hospital for Joint Diseases, the plaintiff medical provider submitted a claim form along with an assignment of benefits form that did not contain any signature, but which stated that the patient’s signature was “on file.” The insurance carrier in that case did not ask for further verification or demand a copy of the original document containing the signature that was purportedly “on file.” It eventually denied the claim on the{**25 Misc 3d at 22} grounds that such assignment was invalid and therefore the plaintiff did not have standing to prosecute the claim. The Court of Appeals held that inasmuch as the carrier was precluded from raising any affirmative defense as to the validity of the assignment of benefits form due to its failure to timely seek verification, it could not now contest the validity of such assignment. Therefore, the plaintiff therein had standing to bring the action and the assignment was deemed to be valid.

There is, however, a vitally important difference between that case and this one. In Hospital for Joint Diseases, the assignment of benefits form was drawn to the benefit of the [*3]plaintiff “Hospital for Joint Diseases,” whereas in the present case the subject assignment of benefits form is drawn to the benefit of an entirely different entity than this plaintiff who now seeks to benefit from the assignment.

In that case, the Court of Appeals found the assignment cannot be assailed and must be deemed valid. In this case, in light of defendant’s failure to seek appropriate verification, I do not suggest that the subject assignment of benefits form was not valid. Quite the contrary, I accept its validity. Nevertheless, I take exception to the holding of the majority inasmuch as the “valid” assignment of benefits form does not inure to the benefit of the person who is prosecuting this claim, to wit: the named plaintiff herein, Dr. Albert Davydov, DDS, individually.

To overlook this important distinction would be to say that “John Jones,” the Chairman of the Board of the Hospital for Joint Diseases, could properly demand that Travelers Property and Casualty Insurance Company make payment to his personal account merely because the carrier chose not to seek a verification of an assignment made to the benefit of the Hospital for Joint Diseases.

This court should not discount the important distinction that the assignee and the claimant are two very different and independent entities simply because the individual plaintiff/claimant is Dr. Albert Davydov, DDS and the assignee is named Dr. Albert Davydov, DDS, P.C. I would suggest that Dr. Davydov himself would argue vociferously that he as an individual has no obligation to pay the debts or expenses that might be incurred by Dr. Albert Davydov, DDS, P.C. and vice versa. That would be his right, for which fault would not attend. However, since he has chosen to conduct his business affairs in a corporate status, he cannot now choose to prosecute the claims of that corporate entity in favor of himself individually.{**25 Misc 3d at 23}

There is only one assignee herein and that assignee is not the plaintiff.

Pesce, P.J., and Weston, J., concur; Golia, J., dissents in a separate memorandum.

Supreme Court, Westchester County

27003/2008

Kelley Drye & Warren LLP

Attorneys for Plaintiff

101 Park Avenue

New York, New York 10178

Schindel, Farman, Lipsius, Gardner & Rabinovich, LLP

Attorneys for Defendant

14 Penn Plaza, Suite 500

New York, New York 10122

William J. Giacomo, J.

Plaintiff John Hancock Life Insurance Company of New York (“John Hancock”) seeks a declaratory judgment that a life insurance policy (the “Policy”) it issued to defendant Shavy Hirsch (“Hirsch”) insuring the life of her stepmother Rivka Landau (“Landau”) is null and void and of no force or effect and that John Hancock has no obligation to pay any benefits or otherwise perform under the Policy. Alternatively John Hancock seeks judgment permitting it to rescind the Policy.

For the reasons set forth below this Court grants the plaintiff’s motion to the extent that the Policy is declared null and void because an express condition precedent to coverage under the Policy was not met.

[*2]FACTUAL & PROCEDURAL BACKGROUND

On December 4, 2006, Landau presented to her personal physician, David M. Ziemba, M.D. (“Dr. Ziemba”) complaining of soreness from a mass on her right breast. Subsequently, on December 11, 2006, Landau had a sonogram on her right breast, which confirmed the presence of a mass “suspicious for a malignancy” and she was referred for a biopsy.

On the same date Landau presented for the sonogram, December 11, 2006, a written application (the “Application”) for the aforementioned Policy was submitted to John Hancock seeking a $10 million life insurance policy on the life of Landau. The Application, as well as a “Health Questionnaire”, were signed by Hirsch, Landau and an independent life insurance broker. Landau and Hirsch acknowledged in the Application and Health Questionnaire the veracity and completeness of all their answers to inquiries in the Application and Health Questionnaire. In response to inquiries regarding Landau’s health, there was no disclosure of Landau’s complaint of pain and soreness to her breast, her visit to her personal physician, or the fact that she had a sonogram done. The Application also contained the following proviso also acknowledged by Landau and Hirsch:

Any life insurance policy issued as a result of this application will be effective on the later of the date the first premium has been paid in full and the date the policy has been delivered. The insurance will not be in effect if there has been any deterioration in the insurability of any proposed life insured(s) since the date of the application. [Application at Declarations ¶2(a).]

On December 14, 2006, Landau, afer undergoing a mammogram and biopsy, was diagnosed with breast cancer, and was immediately referred for a surgical consultation. No document submitted to John Hancock with the Application was ever amended or supplemented.

On December 22, 2006, John Hancock issued the Policy, which Policy was delivered on December 26, 2006 and the first premium was paid on December 28, 2006.

In 2008, as part of internal review, John Hancock procured medical records from Landau’s physicians pursuant to properly executed authorizations and discovered the cancer diagnosis.

On December 15, 2008, John Hancock commenced the instant action by the filing of its summons and complaint and simultaneously forwarded a letter to Hirsch informing that it was rescinding the Policy and requesting its return. John Hancock advised that it would accept no further premium payments and offered to tender all premiums already paid by defendants upon surrender of the Policy and acknowledgment of its rescission. The defendant declined John Hancock’s offer. On February 3, 3009, Hirsch served her answer and issue was joined.

Plaintiff now moves for summary judgment. Defendant opposes the motion. No discovery has been conducted in this matter.

DISCUSSION [*3]

It is well settled that summary judgment is a drastic remedy which should not be granted where there is any doubt about the existence of a triable issue of fact. Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853, 487 NYS2d 316, 476 NE2d 642 (1985).

A party seeking summary judgment bears the initial burden of affirmatively demonstrating its entitlement to summary judgment as a matter of law. Winegrad v. New York Univ. Med. Ctr., 64 NY2d 851, 853, 487 NYS2d 316, 476 NE2d 642 (1985); Alvarez v. Prospect Hospital, 68 NY2d 320, 508 NYS2d 923, 501 NE2d 572 (1986). To obtain summary judgment it is necessary that the movant establish its claim via the tender of evidentiary proof in admissible form sufficient to warrant the court, as a matter of law, in directing judgment in its favor. CPLR 3212(b). Failure of a moving party to tender sufficient evidence to demonstrate as a matter of law its prima facie entitlement to summary judgment requires denial of the motion, regardless of the sufficiency of the opposing papers. McDonald v. Mauss, 38 AD3d 727, 832 NYS2d 291 (2nd Dept., 2007).

After a sufficient prima facie showing is made, the burden of proof then shifts to the the opposing party who must come forward with evidence to demonstrate the existence of a material issue of fact requiring a trial. CPLR 3212(b).

Was an Enforceable Contract of Insurance Created?

It is well settled that to create an enforceable contract of insurance there must be acceptance by the insurance company and communication of that acceptance to the applicant. Goldberg v. Colonial Life Ins. Co. of Am., 284 App.Div. 678, 134 NYS2d 865, (2nd Dept., 1954) app. dismissed, 308 NY 958, 127 NE2d 99(1955). Further, an enforceable contract of insurance also requires compliance with the terms of the application and compliance with the conditions precedent within the application, before the “ripening of the application into a policy of insurance.” Mendel v. U.S. Life Ins. Co. in City of New York, 248 AD2d 873, 875, 670 NYS2d 920, 922 (3rd Dept., 1998), lv. denied 92 NY2d 804, 677 NYS2d 779, 700 NE2d 318(1998); see also, Schmitt v. North American Co. for Life and Health Ins. of New York, 30 AD3d 1007, 817 NYS2d 462(4th Dept., 2006),

lv. denied 7 NY3d 712, 824 NYS2d 604 (2006).

Where an applicant for a life insurance policy knows of even a possible health problem after an application is submitted, but prior to the issuance of the policy, he is under an obligation to inform the insurance company of that information. Id.; see also, Meagher v. Executive Life Ins. Co. of NY, 200 AD2d 720, 721, 607 NYS2d 361(2nd Dept., 1994) and North Atlantic Life Ins. Co. of America v. Katz, 163 AD2d 283, 557 NYS2d 150(2nd Dept.,1990).

In Schmitt v. North American Co. for Life and Health Ins. of New York, it was undisputed that the applications for life insurance did not indicate that decedent had lymphoma and that he had been diagnosed with that condition prior to the delivery and payment of the first premium of the policy. The Court held that the

“decedent failed to comply with a condition precedent inasmuch as he failed to notify defendant of the change in the state of his health prior to the delivery of the respective policies and payment of the first premiums for each policy, and thus the policies never [*4]became effective.” Id. 30 AD3d at 1009, 817 NYS2d at 464.

Similarly, in North Atlantic Life Ins. Co. of America v. Katz, a life insurer brought an action to rescind a life insurance policy after it was discovered that the insured failed to inform the life insurer that he was suffering from a recurrence of lymphoma when he applied for a second policy. The Court held that

An insured cannot remain silent while cognizant that his insurance application contains misleading or incorrect information …In particular, he must notify his insurance company of nonapparent medical conditions which the company probably would consider relevant when deciding whether to issue a policy. Id., citing, Axelroad v. Metropolitan Life Ins. Co., 267 NY 437, 196 N.E. 388(1935); Wageman v. Metropolitan Life Ins. Co., 24 AD2d 67, 263 NYS2d 915(1st Dept., 1965), aff’d 18 NY2d 777, 274 NYS2d 908, 221 NE2d 566(1966).

Furthermore, whether or not Landau or defendant had actual knowledge of a cancer diagnosis is immaterial. All that was necessary was a showing that Landau’s health had “deteriorated” between the time of the submission of the Application and the issuance of the Policy. Levande v. Canada Life Assur. Co., 23 AD2d 669, 257 NYS2d 323 (2nd Dept., 1965) aff’d, 17 NY2d 645, 269 NYS2d 430, 216 NE2d 594 (1966). In Levande v. Canada Life Assur. Co., the Appellate Division held that where, between the time of medical examinations of insured by insurer and delivery of life policies, “the insured had visited doctors by reason of symptoms of disease-symptoms which were not trivial and which would ordinarily act as a warning or notice, even to a layman, that his health might be impaired” there was breach of condition precedent to taking effect of life policies. Id.

Based on the foregoing, the dispositive issue to be determined on this motion is whether (1) Landau and Hirsch failed to disclose material health information at the time of the Application and the submission of the Health Questionnaire, or (2) there had been a deteriorative change in Landau’s health between the time of the Application and the issuance of the Policy which required defendant to notify plaintiff of that information.

Either of the foregoing would constitute a breach of the condition precedent and render the Policy void.

Were the Terms of the Condition Precedent Satisfied?

In the instant matter, in order to prove the medical condition which is the basis for its argument that the Policy is void or should be rescinded, plaintiff submits the medical records of Landau which it obtained via the aforementioned duly executed authorizations. These records include: the illegible handwritten notes of Dr. Ziemba; a December 11, 2006 report of the sonogram performed by Martin I. Elsant, M.D. and addressed to Dr. Ziemba; two (2) December 14, 2006 mammogram reports from Julie Mitnick, M.D. addressed to Alisan Goldfarb, M.D.; and a December 19, 2006 MRI report from Barbara Baskin, M.D. addressed to Alisan Goldfarb, M.D.

These reports and records submitted by plaintiff in support of its motion for summary judgment, and notably without which it cannot meet its prima facie burden, are unsworn or unaffirmed, not certified nor have the requisite statutory foundation [*5]been laid for their admission as business records. Accordingly, defendant argues in opposition that these reports and records lack probative value and thus summary judgment must be denied on account of plaintiff’s failure to meet its initial burden of proof.

This Court rejects defendant’s argument. First, these records and reports are not hearsay^[FN1] because they are not necessarily being offered for the truth of their content, but rather to establish that Landau did have these tests done and sought medical attention. See generally, Spensieri v. Lasky, 94 NY2d 231, 723 NE2d 544(1999)[When the Physicians Desk Reference is admitted into evidence “it is admitted solely to establish the existence of a warning, …the warning is not offered for the truth of its contents.”]; Stern v. Waldbaum, Inc., 234 AD2d 534, 535, 651 NYS2d 187 (2d Dep’t 1996)[Out-of-court statements by unknown declarants are admissible to establish notice of a dangerous condition, even where accuracy of statements is not established]; Oberle v. Caracappa, 133 AD2d 202, 518 NYS2d 989 (2nd Dept., 1987)[Testimony as to what subscribing witnesses said when presenting candidate’s designating petition for signature was not hearsay and was admissible, as it was introduced merely to demonstrate that statements were made, not truth of matter asserted in them]; Novak v. Greater New York Sav. Bank, 35 AD2d 541, 313 NYS2d 425 (2nd Dept., 1970)[In action to recover balance allegedly owing to depositor upon his account in defendant bank, allegedly forged withdrawal slip offered by bank in attempt to prove that it had exercised reasonable care in mistakenly making payment to one other than depositor was not hearsay as the slip was not offered for its truth]; Yee Sing Tung v. Mon-Leang Mui, 260 AD2d 294, 689 NYS2d 46 (1st Dep’t, 1999) [Out-of-court statements not admitted for the truth of their assertions but to explain the defendant’s actions].

Second, this Court holds that in this case the plaintiff may submit unsworn medical reports and records to support its motion.A party moving for summary judgment may “submit unsworn medical reports and records of an injured plaintiff’s physicians in support of a motion for summary judgment.”^[FN2] Meely v. 4 G’s Truck Renting Co., Inc., 16 AD3d 26, 789 NYS2d 277(2nd Dept., 2005); see also, Pagano v. Kingsbury, 182 AD2d 268, 587 NYS2d 692(2nd Dept., 1992)[threshold motion]; Arbour v. Commercial Life Ins. Co., 240 AD2d 1001, 659 NYS2d 525(3rd Dept., 1997)[action against insurer to recover permanent and total disability benefits]; A.B. Medical Services PLLC v. Travelers Property Cas. Corp., 5 Misc 3d 214, 783 NYS2d 244 (N.Y.City Civ.Ct., 2004)[action to recover first-party no-fault benefits]. Moreover, in the instant matter, the reports and records that plaintiff relies upon were obtained from Landau’s physicians pursuant to a duly executed authorization accompanied by a [*6]HIPAA release which insured their authenticity. See, Burnett v. Zito,252 AD2d 879, 676 NYS2d 318 (3rd Dept.,1998)[movant’s submission of unsworn medical reports from two of plaintiff’s physicians permitted as plaintiff’s authorization for release insured their authenticity]; Oeffler v. Miles Inc., 241 AD2d 822, 660 NYS2d 897(3rd Dept., 1997)[movant may rely upon records and reports of plaintiff’s own doctors for which it received releases on summary judgment motion].

Accordingly the court will consider all the medical reports and records submitted by the plaintiff in support of its motion for summary judgment.

Starting with the records of Dr. Ziemba, this Court will not consider the handwritten notes of Dr. Ziemba since they are illegible. No “translation” of these notes is included with the papers. It is not the Court’s obligation to decipher illegible documents or to guess as to what the meaning of the “shorthand” entries contained therein mean. Simply “a notation in a physician’s office record which is illegible is not admissible”. Wilson v. Bodian, 130 AD2d 221, 232, 519 NYS2d 126, 133 (2nd Dept., 1987), citing, Campbell v. Manhattan & Bronx Surface Tr. Operating Auth., 81 AD2d 529, 438 NYS2d 87(1st Dept., 1981).

The remaining medical reports and records, i.e. the December 11, 2006 report of the sonogram performed by Martin I. Elsant, M.D., the two (2) December 14, 2006 mammogram reports from Julie Mitnick, M.D., and the December 19, 2006 MRI report from Barbara Baskin, M.D. are legible.

The reports, all of which were issued prior to the issuance of the Policy, indicate that Landau and Hirsch knew at the very least of a possible health problem after the Application was submitted, but prior to the issuance of the policy, and thus they were under an obligation to inform the Plaintiff of that information. Schmitt v. North American Co. for Life and Health Ins. of New York, supra ; Meagher v. Executive Life Ins. Co. of NY, supra and North Atlantic Life Ins. Co. of America v. Katz, supra .

Based on the foregoing, plaintiff has established its prima facie entitlement to summary judgment as a matter of law.

In opposition, defendant fails to raise a triable issue of fact that would defeat the motion. Addressing defendant’s claim that summary judgment is inappropriate because there has been no discovery, the Court notes the defendant does not make any showing that facts sufficient to defeat the motion would be revealed during discovery; the mere hope that discovery may reveal such facts is insufficient to defeat a summary judgment motion. Companion Life Ins. Co. v. All State Abstract Co., 35 AD3d 519, 829 NYS2d 536 (2d Dept., 2006). Moreover, mere speculation cannot serve to defeat the motion. Leggio v. Gearhart, 294 AD2d 543, 743 NYS2d 135(2nd Dept., 2002).

On account of the foregoing, the motion for summary judgment is GRANTED. The Policy is hereby declared VOID.

Plaintiff is directed to return all premium paid pursuant to the Policy to defendant within thirty (30) days.

The foregoing shall constitute the decision, order and judgment of the Court.

Dated: White Plains, New York

July 8, 2009 [*7]

HON. WILLIAM J. GIACOMO, J.S.C.

cc:

Footnotes

Footnote 1:Hearsay is an out-of-court statement offered for the truth of the fact asserted. Richardson, Evidence [Prince, 10th ed.], § 200, p. 176.

Footnote 2:While the use of unsworn and unaffirmed medical reports and records by a defendant moving for summary judgment in a threshold case is well settled, this Court sees no reason why the same rule does not apply herein.

[*1]

Supreme Court, Appellate Term, First Department, June 19, 2009

APPEARANCES OF COUNSEL

Law Offices of Teresa M. Spina & Edward Satran, Woodbury (Edward Satran of counsel), for appellant. Baker, Sanders, Barshay, Grossman, Fass, Muhlstock & Neuwirth, Mineola, for respondent.

{**24 Misc 3d at 44} OPINION OF THE COURT

Per Curiam.

Judgment, entered on or about February 15, 2007, affirmed, with $25 costs.

Plaintiff, a health services provider, commenced this action to recover first-party no-fault benefits for health services rendered to plaintiff’s assignor (Burgos), who was involved in a motor vehicle accident on August 4, 2003. At the time of the accident, Burgos was driving a rental car owned by nonparty Manhattan Ford Lincoln Mercury, Inc. and allegedly insured by nonparty Fidelity and Guaranty Insurance Company. Burgos’ insurer, defendant Government Employees Insurance Company (GEICO), denied plaintiff’s no-fault claim on the ground that no-fault benefits were payable by Fidelity. GEICO stipulated to plaintiff’s prima facie case and raised as its sole defense that it was not obligated to pay plaintiff’s claim since Burgos’ insured vehicle was not involved in the accident and the payment of first-party benefits was the sole responsibility of Fidelity, as Manhattan Ford’s insurer. After trial, the court awarded judgment to plaintiff, holding that GEICO’s objection to payment did not raise an issue of coverage, but rather one of priority of payment, which under Insurance Law § 5105 (b) and applicable regulations must be submitted to arbitration.

Civil Court properly determined that it could not adjudicate the threshold issue raised at trial by GEICO, viz., whether it or Fidelity was primarily responsible for the payment of the first-party benefits sought by plaintiff. Under Insurance Law § 5105 (b), arbitration shall be “utilized to resolve all disputes arising between insurers concerning their responsibility for the payment of first party benefits” (Matter of Pacific Ins. Co. v State Farm Mut. Auto. Ins. Co., 150 AD2d 455, 456 [1989]). GEICO’s argument that its denial of benefits raised an issue of coverage because it was not “otherwise liable” for the payment of first-party benefits (see 11 NYCRR 65-3[*2].12 [b]) is unavailing, since it ignores the endorsements contained in its own insurance policy, which expressly provided Burgos with rental and substitute{**24 Misc 3d at 45} automobile coverage. Where, as here, more than one insurance policy provides coverage for a no-fault claim, the issue becomes one of priority of payment. 11 NYCRR 65-4.11 (a) (6) pertinently provides that “any controversy between insurers involving the responsibility or the obligation to pay first-party benefits (i.e., priority of payment or sources of payment as provided in section 65-3.12 of this Part) is not considered a coverage question and must be submitted to mandatory arbitration under this section.” GEICO, as “the first insurer to whom notice of proof of claim [was] given” (11 NYCRR 65-3.12 [b]), was obligated to pay the no-fault benefits for the health services provided by plaintiff, irrespective of any issues relating to the priority or source of payment. Since GEICO denied payment of plaintiff’s claim on the stated ground that no-fault benefits were payable by Fidelity, its denial raised a question concerning the responsibility or obligation to pay first-party benefits, an inter-company dispute which must be resolved through mandatory arbitration (see Paramount Ins. Co. v Miccio, 169 AD2d 761 [1991]; Pacific Ins. Co. v State Farm, 150 AD2d at 456), not by way of a defense to plaintiff’s plenary no-fault action.

McKeon, P.J., and Heitler, J., concur.

[*1]

Supreme Court, Appellate Term, Second Department, June 18, 2009

APPEARANCES OF COUNSEL

Amos Weinberg, Great Neck, for appellants. Daniel J. Tucker, New York City, and Thomas Torto, New York City, for respondent.

{**24 Misc 3d at 76} OPINION OF THE COURT

Memorandum.

Order, insofar as appealed from, modified by striking the provision denying without prejudice plaintiffs’ motion for summary judgment and by remitting plaintiffs’ motion to the District Court to be held in abeyance pending a prompt application to the Workers’ Compensation Board for a determination of the parties’ rights under the Workers’ Compensation Law. In the event plaintiffs fail to file proof with the District Court of such application within 90 days of the date of the order entered hereon, the District Court shall deny plaintiffs’ motion and grant reverse summary judgment in favor of defendant dismissing the complaint unless plaintiffs show good cause why the complaint should not be dismissed. As so modified, order, insofar as appealed from, affirmed without costs.

In this action by providers to recover assigned first-party no-fault benefits, plaintiffs moved for summary judgment. Defendant opposed the motion and cross-moved for summary judgment dismissing the complaint on the ground that it had timely denied plaintiffs’ claims [*2]based upon the assignor’s eligibility for workers’ compensation benefits, and that there was an issue as to whether plaintiffs’ assignor was injured during the course of employment, thereby requiring that the matter be submitted to the Workers’ Compensation Board. The District Court denied the motion and cross motion without prejudice and held the action in abeyance pending a determination by the Board, finding that there were mixed questions of law and fact regarding the availability of workers’ compensation benefits, over which the Board had primary jurisdiction. Plaintiffs appeal from so much of the order as denied without prejudice their motion for summary judgment and held the action in abeyance.

Defendant’s proof was sufficient to raise a question of fact as to whether the assignor was acting as an employee at the time of the accident (cf. Westchester Med. Ctr. v American Tr. Ins. Co., 60 AD3d 848 [2009]), which issue must be resolved in the first instance by the Board (see O’Rourke v Long, 41 NY2d 219, 225 [1976]; Santigate v Linsalata, 304 AD2d 639, 640 [2003]; see also Infinity Health Prods., Ltd. v New York City Tr. Auth., 21{**24 Misc 3d at 77} Misc 3d 136[A], 2008 NY Slip Op 52218[U] [App Term, 2d & 11th Jud Dists 2008]; Response Equip., Inc. v American Tr. Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op 51176[U] [App Term, 2d & 11th Jud Dists 2007]; cf. A.B. Med. Servs. PLLC v American Tr. Ins. Co., 8 Misc 3d 127[A], 2005 NY Slip Op 50959[U] [App Term, 2d & 11th Jud Dists 2005]). Accordingly, plaintiffs’ motion should not have been denied without prejudice but, rather, held in abeyance pending Board resolution. A prompt application to the Board, as set forth above, is required in order to determine the parties’ rights under the Workers’ Compensation Law.

Rudolph, P.J., Tanenbaum and LaCava, JJ., concur.

[*1]

Supreme Court, Appellate Term, Second Department, June 12, 2009

APPEARANCES OF COUNSEL

Gullo & Associates, LLP, Brooklyn (Anthony DeGuerre of counsel), for appellant.

{**24 Misc 3d at 69} OPINION OF THE COURT

Memorandum.

Order modified by adding thereto the provision that the acknowledgment of service annexed to defendant’s moving papers is deemed timely filed; as so modified, affirmed without costs.

In this action by a provider to recover assigned first-party no-fault benefits, defendant moved pursuant to CPLR 3211 to dismiss the action without prejudice because plaintiff failed to file the summons with proof of service as required by former section 409 of the New York City Civil Court Act or, in the alternative, for summary judgment dismissing the complaint on the ground that the action was premature since defendant never received the claim forms at issue. In opposition, plaintiff asked for nunc pro tunc relief pursuant to CCA former 411. The Civil Court denied defendant’s motion. This appeal by defendant ensued.

Dismissal of the action without prejudice due to a violation of CCA former 409, which required that a copy of the summons with proof of service be filed within 14 days after service of the summons, is not warranted where, as here, plaintiff requested nunc pro tunc relief (see CCA former 411). Under the circumstances presented, such nunc pro tunc relief should have been granted. Further, while defendant asserts that the action is premature since it never received the claims which are at issue, the affidavit of defendant’s claims examiner was insufficient to establish such assertion as a matter of law (Zuckerman v City of New York, 49 NY2d 557[*2][1980]; see generally Top Choice Med., P.C. v New York Cent. Mut. Fire Ins. Co., 22 Misc 3d 133[A], 2009 NY Slip Op 50230[U] [App Term, 2d Dept, 11th & 13th Jud Dists 2009]). Accordingly, defendant’s motion was properly denied and the order is modified to provide for nunc pro tunc relief.

Golia, J. (dissenting and voting to reverse the order and grant defendant’s motion to dismiss in the following memorandum). Here, plaintiff previously filed a motion for summary judgment, which included misrepresentations and questionable fraudulent billing, and which demonstrated an intentional failure to comply with requirements of the Civil Court Act, and refusal to affirmatively move to correct such failure. This motion for summary judgment was then withdrawn for reasons that are not contained in the record.{**24 Misc 3d at 70}

Those papers which are in this file contain an affirmation from plaintiff’s attorney, and certain documentary proof which the plaintiff’s attorney argued was sufficient to warrant summary judgment in favor of plaintiff.

The documentary proof that was annexed was not a doctor’s office records or a doctor’s affirmation relating to treatment. It was not even an NF-2 claim form. The submitted document was a “Health Insurance Claim Form” which set forth a list of dates representing an extensive series of more than 30 treatments performed by the claimant Dr. Dugo upon the alleged eligible injured insured Judy Nieves during the time period at issue in this no-fault case. A problem arises in that this “form” specifically asserts that the patient’s condition is not related to an auto accident or for that matter also not related to employment or any “other accident.” Clearly, this document is not sufficient to establish proof of treatment as a result of a covered automobile accident. Nevertheless, this document does raise the question as to whether or not these medical treatments were submitted for payment to both this no-fault carrier as well as to a different health insurance carrier with conflicting statements. To me, there appears to be grounds to question whether the provider submitted a claim to this “no-fault” carrier that the alleged injury was caused by an auto accident and another claim to a “health insurance” carrier that the injury was not caused by an auto accident.

Inasmuch as that motion was withdrawn, it is not part of this appeal and plays no part in my dissent.

What is part of this appeal is plaintiff’s failure to comply with the requirements of the Civil Court Act that were in effect at the time the underlying action was commenced.

The Civil Court action below was commenced on or about September 24, 2004, the defendant acknowledging that it was served and whereupon it served an answer upon plaintiff dated October 13, 2004.

Despite the fact that section 409 of the Civil Court Act, which was in effect at the time, required that a copy of the summons with proof of service be filed within 14 days of service, to wit: October 8, 2004, this plaintiff did not file those documents until March 12, 2007, nearly 2½ years later.

Indeed, it cannot even be argued that it was a mere oversight that was corrected as soon as [*3]the plaintiff became aware of the error. On May 3, 2005 the defendant served the plaintiff with a demand that it purchase an index number and file its papers in{**24 Misc 3d at 71} court. It then took the plaintiff another 22 months before it deigned to comply with either the court rule, or the defendant’s demand.

Furthermore, I disagree with the representation presented by the majority that “[i]n opposition, plaintiff asked for nunc pro tunc relief pursuant to CCA form 411.” In fact, what the plaintiff stated in its opposition papers was “[i]f this court deems it necessary, I would request the filing of the summons and complaint be accepted nunc pro tunc.” This inchoate statement was not even a precatory “request” but rather a conditional offer to make such request only “if this court deems it necessary.” This failure to file an application for relief is important because if plaintiff had made an affirmative request for nunc pro tunc relief, then it would have been required to argue why it was entitled to such relief. That would have necessitated an explanation of why it took more than 800 days to comply with a simple requirement that should have been done in 14 days, and why this plaintiff apparently ignored the defendant’s demand that plaintiff comply some two years before it did so.

I do not deem it necessary or even advisable to grant plaintiff’s or its counsel’s unsupported request for nunc pro tunc relief for counsel’s failure to comply with well-established rules which were knowingly disregarded for approximately 2½ years. I would simply dismiss the action without prejudice.

Weston, J.P., and Steinhardt, J., concur; Golia, J. dissents in a separate memorandum.

[*1]

Supreme Court, Appellate Term, Second Department, May 19, 2009

APPEARANCES OF COUNSEL

Law Office of Alden Banniettis, Brooklyn (Jeff Henle of counsel), for appellant. Law Office of Karen C. Dodson, Melville (William Angstreich of counsel), for respondent.

{**24 Misc 3d at 33} OPINION OF THE COURT

Memorandum.

Judgment affirmed without costs.

Plaintiff commenced the instant action to recover $8,275.66 in first-party no-fault benefits for health care services rendered to plaintiff’s assignor. Defendant filed a notice of trial on May 6, 2005. Following two adjournments, the case was dismissed on March 13, 2006 because of plaintiff’s lack of readiness to proceed. Plaintiff’s counsel served proof of the dismissal on defendant’s attorney on August 21, 2007, with notice of its entry on March 13, 2006.

On November 6, 2007 plaintiff moved to vacate the order of dismissal and restore the matter to the trial calendar. Plaintiff’s counsel submitted an affidavit from counsel’s employee Polina Shvartsberg, who stated that she is responsible for calendaring counsel’s trial dates and that she failed to do so in this matter. Consequently, plaintiff’s counsel was unprepared for trial.

Plaintiff’s counsel also submitted an affidavit from Leonid Rosin, M.D., plaintiff’s “corporate operating officer,” who stated that he was personally familiar with plaintiff’s [*2]procedures concerning the creation and maintenance of plaintiff’s business records and that the claim forms attached to his affidavit were such records. Dr. Rosin stated, among other things, that the forms pertained to treatment rendered, that they had been made contemporaneously to such treatment, and that they had been submitted to defendant, but that no payment had been received. Based on these submissions, plaintiff maintained that it had a reasonable excuse for counsel’s failure to proceed, as well as a meritorious cause of action sufficient to vacate the default.

The Civil Court denied plaintiff’s motion, concluding that plaintiff “has failed to show a reasonable excuse for its delay, as well as a meritorious cause of action, lack of prejudice to the defendant and a lack of intent to abandon this action.” The court added that plaintiff’s motion was untimely, as the matter had been marked off the calendar for more than a year.

Plaintiff now appeals, claiming that the Civil Court should have granted its motion to vacate the default pursuant to CPLR 2005 and 5015. We affirm.

Although both defendant and the Civil Court appear to rely on Uniform Rules for the New York City Civil Court (22 NYCRR) § 208.14 (c) to support the denial of plaintiff’s motion, we conclude that this provision is inapplicable under the circumstances{**24 Misc 3d at 34} of this case. Section 208.14 (c) governs restoration of cases within one year after the action has been stricken from the calendar. Here, since the case was never stricken from the trial calendar, but rather was dismissed, section 208.14 (c) is inapplicable.

Although the Civil Court, in dismissing the case, did not specifically note a default, it is clear from the record that the case was dismissed on default. Uniform Rules for the New York City Civil Court (22 NYCRR) § 208.14 (b) provides, in relevant part, that

“[a]t any scheduled call of a calendar . . . if all parties do not appear and proceed or announce their readiness to proceed immediately . . . the judge presiding may note the default on the record and enter an order as follows: . . .

“(2) If the defendant appears but the plaintiff does not, the judge may dismiss the action . . . .”

In this case, a card attached to the notice of trial clearly states that the case was dismissed because plaintiff was not ready to proceed. Indeed, plaintiff—both in the Civil Court and on appeal—refers to the dismissal as being entered on default and maintains that its motion to vacate the default should have been granted pursuant to CPLR 5015. In these circumstances, it was incumbent upon plaintiff to demonstrate a reasonable excuse for the default and a meritorious cause of action (see CPLR 5015 [a]; Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141 [1986]). Plaintiff failed to sustain this burden.

The sole explanation offered by plaintiff for its default is that plaintiff’s counsel’s office failed to calendar the trial date. Such conclusory and factually devoid allegations are insufficient to constitute a reasonable excuse (see Juarbe v City of New York, 303 AD2d 462 [2003]). On this basis alone, plaintiff’s motion was properly denied. [*3]

Accordingly, the judgment is affirmed.

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

Supreme Court, Queens County

230912008

Allan B. Weiss, J.

Upon the foregoing papers it is ordered that the motion is determined as follows:

Plaintiff, a provider of automobile insurance policies which include coverage under the Comprehensive Automobile Insurance Reparations Act (the No-Fault Law) (presently codified in article 51 of the Insurance Law), commenced this action to recover damages for common-law fraud and unjust enrichment, and for a judgment declaring that the plaintiff has no obligation to pay no-fault claims submitted by the professional corporation defendants as assignees of policyholders. Plaintiff alleges, among other things, that defendant professional services corporations were fraudulently incorporated in the name of defendant Manuel Farescal, M.D., a physician, while, in fact, the professional corporations were owned, operated, and controlled by defendants Adnan Munawar and P. Clifford LoBrutto, unlicensed persons, in violation of applicable statutes and regulations. Plaintiff also alleges defendant professional corporations are not, and were not, entitled to receive such payments because they are not owned and controlled solely by a licensed medical physician and the services provided were not rendered by employees but, rather, by independent contractors in violation of state law (see State Farm Mut. Auto. Ins. Co. v Robert Mallela, 4 NY3d 313 [2005]; One Beacon Ins. Group, LLC v Midland Medical Care, P.C., 54 AD3d 738 [2008]).

In the third cause of action of the complaint, plaintiff alleges that defendants All Family and [*2]Universal billed it under the No-Fault Law for professional health services provided by independent contractors having no employment relationship with the respective defendants, and in the fourth cause of action, plaintiff alleges that defendant Painpro likewise billed it under the No-Fault Law for professional health services provided by independent contractors having no employment relationship with defendant Painpro. Plaintiff also alleges that these defendant professional corporations are not legally entitled to collect payment for no-fault benefits for professional health services not actually provided by an employee of defendants All Family, Universal and Painpro, respectively. Plaintiff further alleges that it is entitled to a declaration that it is not obligated to pay defendants All Family, Universal and Painpro no-fault benefits for charges submitted to it where professional health services were rendered by independent contractors.

The Farescal defendants and defendant P. Clifford LoBrutto each served an answer denying the material allegations of the complaint, and asserting various affirmative defenses.

It is well established that the proponent of a summary judgment motion “must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact,” (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557 [1980]).

To the extent the Farescal defendants move for partial summary judgment declaring that six opinion letters authored by the Insurance Department are irrational and not entitled to deference, the Farescal defendants have failed to assert any counterclaim for such affirmative relief.

Furthermore, a ruling, in the context of this case, that the opinion letters are irrational and not entitled to deference would constitute an advisory opinion. A state court lacks subject matter jurisdiction in cases when no justiciable controversy is presented (see Matter of New York State Inspection, Security & Law Enforcement Employees, Dist. Council 82, AFSCME, AFL-CIO v Cuomo, 64 NY2d 233, 241, n 3 [1984]; Morrison v Budget Rent A Car Systems, Inc., 230 AD2d 253, 258-259 [1997]). It is well settled law that “[t]he courts of New York do not issue advisory opinions for the fundamental reason that in this State [t]he giving of such opinions is not the exercise of the judicial function’ (Matter of State Indus. Commn., 224 NY 13, 16 [1918]) . . .,” (Cuomo v Long Island Light Co., 71 NY2d 349, 354 [1988]).

Any ruling by the court herein regarding the opinion letters would not be dispositive of a cause of action asserted by plaintiff (see New York Pub. Interest Research Group v Carey, 42 NY2d 527, 531 [1977]; State Farm Fire & Cas. Co. v LiMauro, 103 AD2d 514, 517-518 [1984], affd 65 NY2d 369 [1985]; see generally Joint Queensview Housing Enterprise, Inc. v Grayson, 179 AD2d 434 [1992] [advisory opinion letters did not constitute final determinations of tax liability by city for purposes of article 78 proceeding, and cooperatives were not aggrieved by advisory opinion letters so as to make controversy ripe for judicial determination]; see also Matter of New York State Assn. of Life Underwriters v New York State Banking Dept., 190 AD2d 338 [1993], affd 83 NY2d 353 [1994] [article 78 proceeding to annul opinion letters and to declare that the sale of annuities is not an “incidental power” contemplated by Banking Law § 96(1)]; cf. Medical Society of State v Serio, 100 NY2d 854 [*3][2003] [article 78 proceeding to annul regulation altering no-fault system]). Nothing about the opinion letters themselves constitutes a final determination by the State regarding the propriety of plaintiff’s actions, and the Farescal defendants are not aggrieved by their issuance. Rather, the question of whether plaintiff properly may withhold payments of no-fault benefits to defendants All Family, Universal and Painpro in instances where professional health services were rendered by independent contractors, as opposed to their employees, is one of law, which must be decided based upon interpretation of statute and regulation, and case law.

“In matters of statutory and regulatory interpretation, legislative intent is the great and controlling principle, and the proper judicial function is to discern and apply the will of the [enactors]’ (Matter of ATM One v Landaverde, 2 NY3d 472, 476-477 [2004], quoting Mowczan v Bacon, 92 NY2d 281, 285 [1998] [internal quotation marks omitted]). Legislative intent may be discerned from the face of a statute, but an apparent lack of ambiguity is rarely, if ever, conclusive . . . . Generally, inquiry must be made of the spirit and purpose of the legislation, which requires examination of the statutory context of the provision as well as its legislative history’ (Matter of Sutka v Conners, 73 NY2d 395, 403 [1989]; see Matter of ATM One v Landaverde, 2 NY3d at 477; Mowczan v Bacon, 92 NY2d at 285). Moreover, regulations . . . should be construed to avoid objectionable results’ (Matter of ATM One v Landaverde, 2 NY3d at 477)” East Acupuncture, P.C. v Allstate Ins. Co., AD3d , 873 NYS2d 335 [2009]). Such interpretation may also be informed by opinion letters regarding the interpretation of applicable regulations, issued by the agency which promulgated them, so long as the interpretation comports with the statute and is not irrational or unreasonable (see generally LMK Psychological Services, P.C. v State Farm Mut. Auto. Ins. Co., 12 NY3d 217 [2009]; Matter of Council of City of NY v. Public Service Comm., 99 NY2d 64, 74 [2002]; 90 NY2d 545, 551-552 [1997]). Thus, that branch of the motion by the Farescal defendants for partial summary judgment declaring the six opinion letters authored by the Insurance Department to be irrational and not entitled to deference is denied.

The Farescal defendants seek partial summary judgment dismissing the third and fourth causes of action on the ground they fail to state a claim. The Farescal defendants assert an insurer may not deny payment for no-fault benefits on the ground that the professional health services billed to plaintiff were performed by independent contractors. The Farescal defendants, therefore, argue plaintiff cannot obtain a judgment declaring that defendants All Family, Universal and Painpro are not entitled to collect no-fault benefits for charges submitted to it when such professional health services were rendered by independent contractors. The court notes that the Farescal defendants make no factual argument that the professional health services billed to plaintiff were performed by their employees, or that they exercised a particular level of control over the independent contractors. Their motion raises purely legal arguments regarding the propriety of plaintiff’s withholding of payments to the professional corporations based upon the rendering of services by independent contractors.

CPLR 3001, in relevant part, provides: “The supreme court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed.” “An action is [*4]justiciable when the controversy presented touches the legal relations of the parties having adverse interests from which harm is presently flowing or could flow in the future in the absence of a court determination of the parties’ rights” (Initiative For Competitive Energy v Long Is. Power Auth., 178 Misc 2d 979, 989 [1998]). “The controversy must be capable of disposition and be presented in an adversarial context with a set of concrete facts” (Goodwill Adv. Co. v State Liq. Auth., 14 AD2d 658 [1961]). The complaint herein demonstrates the existence of a controversy between the parties regarding plaintiff’s withholding of payments to defendant professional corporations to the extent the services were rendered by independent contractors, and the practical need for its resolution.

The No-Fault Law, which supplants common-law tort actions for most victims of automobile accidents with a system of no-fault insurance, has as its primary aims to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists (see Medical Society of State v Serio, 100 NY2d 854, 860 [2003]). The Superintendent has promulgated regulations implementing the No-Fault Law, currently contained in 11 NYCRR Part 65. Section 65-3.11(a) of that part (formerly section 65.15[j][1]), in relevant part, provides, “An insurer shall pay benefits for any element of loss, . . ., directly to the applicant or . . . upon assignment by the applicant . . ., shall pay benefits directly to providers of health care services . . . .”

11 NYCRR 65-3.11(a) and its precursor, 11 NYCRR 65-3.15(j)(1), have been interpreted to mean that a medical provider cannot recover assigned no-fault benefits if services were provided by an independent contractor rather than by it or its employees (see Health & Endurance Medical, P.C. v Liberty Mut. Ins. Co., 19 Misc 3d 137[A], 2008 NY Slip Op 50864(U) [NY Sup App Term, 2d and 11th Jud Dists (2008)]). In Health & Endurance, a provider sought to recover assigned first-party no-fault benefits for services which were not rendered by it or its employees, but rather by a treating provider who was an independent contractor. The Appellate Term held that the plaintiff was not a “provider” of the medical services rendered within the meaning of Insurance Department Regulations (11 NYCRR) § 65-3.11[a]), and, therefore, was not entitled to recover “direct payment” of assigned no-fault benefits from the defendant insurer. Such holding is consistent with the holdings in A.M. Medical Services, P.C. v Progressive Cas. Ins. Co., (22 Misc 3d 70, 2008 NY Slip Op 28528, [App Term, 2d, 11th and 13th Jud Dists (2008)]); Health & Endurance Med. P.C. v State Farm Mut. Auto. Ins. Co., (12 Misc 3d 134[A], 2006 NY Slip Op 51191[U] [App Term, 2d and 11th Jud Dists 2006]); Craig Antell, D.O., P.C. v New York Cent. Mut. Fire Ins. Co., (11 Misc 3d 137[A], 2006 NY Slip Op 50521[U] [App Term, 1st Dept 2006]); Rockaway Blvd. Medical P.C. v Progressive Ins., (9 Misc 3d 52, 2005 NY Slip Op 25278 [App Term, 2d Dept 2005]); A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., (9 Misc 3d 36 [App Term, 2d and 11th Jud Dists 2005]); A.B. Med. Servs. PLLC v New York Cent. Mut. Fire Ins. Co., (8 Misc 3d 132[A], 2005 NY Slip Op 51111[U] [App Term, 2d and 11th Jud Dists 2005]). These opinions of the Appellate Term are persuasive authority, and the court is convinced of their reasoning. Under such circumstances, the third and fourth causes of action asserted by plaintiff state viable claims for declaratory relief. [*5]

That branch of the motion by the Farescal defendants for summary judgment dismissing the third and fourth causes of action asserted against them is denied.

Dated: May 13, 2009

J.S.C.

[*1]

Supreme Court, Appellate Term, Second Department, May 8, 2009

APPEARANCES OF COUNSEL

Jaffe & Koumourdas, LLP, New York City (Jean H. Kang of counsel), for appellant.

{**26 Misc 3d at 59} OPINION OF THE COURT

Memorandum.

Judgment modified by reducing the amount of the award to the principal sum of $2,627.90 and by providing that plaintiff’s claim for $228.55 for services rendered on February 22, 2006 is severed, so much of the order entered January 23, 2008 as granted plaintiff’s motion for summary judgment on the claim for $228.55 is vacated, and the branch of plaintiff’s motion which sought summary judgment on that claim is denied; as so modified, judgment affirmed without costs, and matter remanded to the Civil Court for all further proceedings.

In this action by a provider to recover assigned first-party no-fault benefits, the court granted plaintiff’s motion for summary judgment on the ground that defendant’s verification requests failed to toll the 30-day claim determination periods. With the exception of the claim for $228.55 for medical services provided on February 22, 2006, we agree.

A provider generally establishes its prima facie entitlement to summary judgment by proof of the submission of a statutory claim form, setting forth the fact and the amount of the loss sustained, and that payment of no-fault benefits was{**26 Misc 3d at 60} overdue (see Insurance Law § 5106 [a]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742 [2004]). In the instant case, any deficiency in plaintiff’s moving papers regarding proof of mailing of the claim forms was cured by defendant’s claim denial forms, and the affidavit of defendant’s claims representative in which receipt of the claims in question was conceded (see East Acupuncture, P.C. v Electric Ins. Co., [*2]16 Misc 3d 128[A], 2007 NY Slip Op 51281[U] [App Term, 2d & 11th Jud Dists 2007]; Oleg Barshay, D.C., P.C. v State Farm Ins. Co., 14 Misc 3d 74 [App Term, 2d & 11th Jud Dists 2006]). In addition, a review of the record indicates that plaintiff’s affidavit sufficed to establish that the annexed claim forms constituted evidence in admissible form (see CPLR 4518; Dan Med., P.C. v New York Cent. Mut. Fire Ins. Co., 14 Misc 3d 44 [App Term, 2d & 11th Jud Dists 2006]). Consequently, the record establishes plaintiff’s prima facie entitlement to summary judgment.

In opposition, defendant argued that it timely denied plaintiff’s claim seeking to recover the sum of $228.55 for services rendered on February 22, 2006 on the ground that the fee sought was in excess of the amount permitted by the workers’ compensation fee schedule because the services for which payment was sought were part of another service and, thus, were not separately reimbursable. Defendant established that it timely denied this claim (see 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]). Accordingly, plaintiff was not entitled to summary judgment upon this claim.

Defendant also opposed plaintiff’s motion for summary judgment on the ground that its verification and follow-up verification requests tolled defendant’s claim determination periods. However, since defendant mailed its follow-up requests for verification on the 30th calendar day after it mailed its verification requests, the follow-up requests were premature and without effect (see General Construction Law § 20; Insurance Department Regulations [11 NYCRR] § 65-3.6 [b]; Infinity Health Prods., Ltd. v Eveready Ins. Co., 21 Misc 3d 1 [App Term, 2d & 11th Jud Dists 2008]). Accordingly, as to the remaining claims, defendant failed to timely deny same and is precluded from raising most defenses, with exceptions not here relevant (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997]). Thus, plaintiff was properly granted summary judgment as to the remaining claims. For the foregoing{**26 Misc 3d at 61} reason, defendant’s cross motion for summary judgment was properly denied.

Golia, J. (dissenting and voting to reverse the judgment, vacate the order entered January 23, 2008, deny plaintiff’s motion for summary judgment and grant defendant’s cross motion for summary judgment, in the following memorandum). I need not discuss the factual and procedural history of this case as it has, for the most part, been addressed by the majority. Instead, I submit that the majority has erred in its judgment as to a matter of law. It has, in my opinion, misconstrued established principles of common law as well as the Appellate Division’s decision in New York & Presbyt. Hosp. v American Tr. Ins. Co. (287 AD2d 699 [2001]). In addition, the majority has misinterpreted Insurance Department Regulations (11 NYCRR) § 65-3.6 (b), the contents and purposes of which will be discussed below.

I should first, however, address the majority’s reluctance to require that plaintiff submit a proper and complete motion upon which summary judgment could be granted. I submit that the majority’s grant of summary judgment in favor of plaintiff is contrary to the Court of Appeals’ holding in Alvarez v Prospect Hosp. (68 NY2d 320 [1986]). In that case, the Court found that a[*3]“[f]ailure to make . . . [a] prima facie showing [of entitlement to judgment as a matter of law] requires a denial of the motion, regardless of the sufficiency of the opposing papers” (id. at 324). This well-established principle, with its roots at common law, provides that all assertions made in a summary judgment motion remain unsubstantiated unless they are accompanied by sufficient evidence in admissible form contained within the four corners of the motion papers (see e.g. Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 [1957]). In the present case, that principle was not met.

The current state of the law in no-fault cases requires that a plaintiff establish (1) that it mailed a claim, and (2) that payment is overdue. Nothing else. This plaintiff’s motion for summary judgment, however, should have been denied inasmuch as its moving papers failed to establish, by a proper affidavit, the mailing of plaintiff’s claim forms. The majority of the Appellate Term has often held that the inclusion of an NF-10 denial of claim form in the moving papers is sufficient to establish the mailing of a claim, a proposition with which I have previously disagreed. In the present case, the majority states that “any deficiency in plaintiff’s moving papers regarding proof of mailing of the claim forms was cured by defendant’s claim denial forms,{**26 Misc 3d at 62} and the affidavit of defendant’s claims representative.” What it does not state is that the NF-10 denial of claim forms were not attached to the moving papers, despite the fact that the moving plaintiff, intentionally or otherwise, asserted that such documents were, in fact, included. The majority then searches the record in order to establish mailing and found the NF-10 denial of claim forms in defendant’s opposing papers. Indeed, the Court of Appeals, in Winegrad v New York Univ. Med. Ctr. (64 NY2d 851, 853 [1985]), unanimously found that “bare conclusory assertions . . . do not establish that the cause of action has no merit so as to entitle defendants to summary judgment.” Clearly, if the moving papers fail to warrant granting summary judgment, then the court should not look to the opposing papers, as was done here. I have found no opposition to this principle except in relation to the no-fault line of cases. Yet, notwithstanding controlling law and the principles outlined in the above-mentioned cases, the majority chooses to establish an exception thereto by finding that while the moving papers are clearly deficient, nevertheless summary judgment should be awarded to the moving plaintiff based upon information obtained from a search of the opposing papers.

I further disagree with the majority’s interpretation of Insurance Department Regulations (11 NYCRR) § 65-3.6 (b) (the regulation). This provision states, as relevant here:

“At a minimum, if any requested verifications has [sic] not been supplied to the insurer 30 calendar days after the original request, the insurer shall, within 10 calendar days, follow up with the party from whom the verification was requested, either by telephone call, properly documented in the file, or by mail.”

In the underlying case, it is uncontroverted that defendant sent timely and properly mailed initial requests for verification and that on the 30th day after the first mailing, not having received the information requested, defendant mailed second requests for verification. There is no assertion that the mailing procedure was insufficient or that defendant actually received the [*4]requested items on the 30th day just after the second requests issued. Clearly, defendant did not receive the items requested on the 30th day, or the 31st day, or the 60th day, or at any time, to my knowledge. The issue that we are presently addressing then is: Whether or not defendant’s mailing of follow-up requests on the 30th day constitutes a fatal violation{**26 Misc 3d at 63} of the language of the regulation, while plaintiff’s failure to ever provide the material sought by the requests for verification as required by the regulation is properly excused? I do not believe that form over substance is to be exalted.

I agree with the majority in that there is no dispute regarding the fact that the follow-up requests were mailed to plaintiff on the 30th day after the initial requests were sent. Pursuant to General Construction Law § 20, the 30-day computation period is exclusive of the initial day of sending, i.e., the first day of computation begins on the day after the initial notice was mailed. This said, in judicial decision making, it is imperative that judges give effect to the laws and regulations that have been created or sanctioned by the democratically elected representatives of the people and that it be done in accordance with the intentions behind their creation insofar as such enforcement does not occasion “great inconvenience, or produce inequality, injustice or absurdity” (Zappone v Home Ins. Co., 55 NY2d 131, 137 [1982]). To selectively choose segments of the body of no-fault regulations and then to enforce them solely against the defendant and not the plaintiff is to eviscerate the doctrine of the separation of powers as enshrined in the State Constitution. Under the rubric of that doctrine, this court is bound to give effect to the disputed regulation as intended by the Insurance Department and not according to its own interpretation.

In addition, Zappone also elucidates what should always be the very essence of the judicial prerogative, i.e., the promotion of justice, the cornerstone of which is fairness. In expressing this principle, the majority in Zappone held that it is “always presumed that no unjust or unreasonable result was intended and the statute must be construed consonant with that presumption” (id.). Therefore, we should not create additional hurdles for a defendant to traverse that are not already included in the regulation, as promulgated by the Insurance Department, or in legislation.

In further support of this proposition, it is instructive to examine the intent of the Insurance Department in drafting Insurance Department Regulations (11 NYCRR) § 65-3.6 (b). I ardently believe that the Insurance Department’s reasoning behind section 65-3.6 (b) was to ensure that a claimant be given adequate notice of, and the opportunity to respond to, a verification request, inasmuch as a claim is not considered complete until the verification request is answered (Insurance Department{**26 Misc 3d at 64} Regulations [11 NYCRR] § 65-3.8 [b] [3]). The follow-up request serves as a reminder to the provider that the actual initial request remains open and unanswered. Otherwise, the insurance company would be pleased to wait forever to receive a response to the verification request. If there is no response, the 30-day time limit to pay or deny a claim never begins. I believe that the regulation was never intended to add another layer of judicial interpretation, a default of which would result in an automatic judgment given to a plaintiff who has utterly failed or refused to provide any verification of the genuineness of its claim. This is particularly so when one casts one’s mind back to the reason behind the creation of the no-fault system in the first instance, which was to speed up the resolution of all claims as well as the undeniable and inexcusable level of unchecked and unchallenged fraudulent no-fault claims. [*5]

The latest available New York State Insurance Department Annual Report to the Governor and the Legislature of the State of New York on the Operations of the Insurance Frauds Prevention Act (Report), dated January 15, 2008, states that of the 22,079 Insurance Frauds Bureau (IFB) insurance fraud reports received in 2007, 11,242 of those claims were no-fault-related. This is particularly staggering considering that there were 34 different categories of insurance fraud recorded and included in that data. Excluding the no-fault related IFB reports, the average number of reports of fraud per different category of insurance fraud was approximately 328. In simpler terms, out of the 34 possible categories of insurance fraud, approximately 51% of those reports received by the Insurance Department in 2007 pertained to the singular category of no-fault auto insurance (see Report). The disparity between the numbers of fraudulent no-fault reports in comparison to other categories of insurance fraud in 2007 is both unambiguous, inexcusable and unsustainable. I suggest that the number for the year 2008 will be no less damning.

The Comprehensive Automobile Insurance Reparations Act of 1973 was enacted to force downward pressure on insurance premiums and alleviate the already overburdened court system through stemming what was then considered a rampant tide of insurance claims. Due to an unexpected and exponential rise in no-fault fraud since the system’s inception, that flood has now grown into a tsunami of fraudulent activity. Those fraudulent claims cannot be discouraged, or indeed stopped, by awarding summary judgment in favor of plaintiff providers without them{**26 Misc 3d at 65} first having to satisfy the conditions precedent required of them by law. More specifically, and with reference to the case in point, despite plaintiff’s failure to tender any adequate and admissible evidence to prove defendant’s receipt of the initial claim form, the majority herein searched the opposing papers to satisfy plaintiff’s evidentiary burden in lieu of plaintiff satisfying the burden itself as required by statute or Court of Appeals’ precedent and indeed common sense. My colleagues’ willingness to discount plaintiff’s complete disregard of its obligation to provide verification of the claim and then to award plaintiff summary judgment, notwithstanding an initial and timely request for verification in admissible form by defendant, can, I submit, further encourage the rise of fraudulent claims.

Anyone who has even a modicum of familiarity with the no-fault regulations will note the distinction between the strict protocols for filing claims and issuing denials on the proper forms, and this particular regulation, which provides for a follow-up verification by a “telephone call” which need only be “documented in the file.” I am unaware of any other set of protocols in the no-fault regulations which provide for a follow up by a telephone call and which need only be documented in the insurer’s own file. Such comparative leniency lends support, at least to me, to the view that the sole purpose of Insurance Department Regulations (11 NYCRR) § 65-3.6 (b) is to ensure that the claimant is made aware that there is an outstanding unsatisfied request for verification so that it might supply such information to the insurer in order to complete the claim and begin the 30-day time limit for payment, denial or a further request for verification.

When consideration is given to the justness and reasonableness of the state of the No-Fault Law in New York as it currently stands, one must be struck by the inequality of responsibilities between provider and insurer. The double standard that currently exists in relation to time limits is neither hidden nor excused. Currently, pursuant to Insurance Department Regulations (11 NYCRR) § 65-1.1, “Conditions,” the period of time in which a [*6]claimant provider has to file a claim after the date of treatment is not strictly enforced provided there is a “clear and reasonable justification” for the delay. Indeed, if the insurer denies the claim without informing the claimant of its right to present such excuse, the denial is deemed invalid. This is in stark contrast to the majority’s contention that defendant should be liable to compensate plaintiff for unverified, unsubstantiated{**26 Misc 3d at 66} claims for medical services because it sent follow-up verification requests on the 30th, instead of the 31st day after sending its initial requests. This is so despite the first requests being legitimate, in that they were both sent on time and in proper form. This is so despite the fact that the clear and sole intention of the disputed regulation was to ensure that the provider is made aware of the pending request for verification and not, as the majority would have it, to have defendant suffer a preclusion and an award of summary judgment in favor of the plaintiff because defendant, arguably, sent follow-up requests less than 24 hours earlier than what was stipulated in the regulation.

In effect, the early service of a follow-up request causes no prejudice to a plaintiff as it is not bound by any time restraints similar to those that burden a defendant. Had the regulation required a plaintiff claimant to respond to verification requests within 30 days of receipt, it is conceivable that the early mailing of a follow-up request would deny a plaintiff the full period of time to which it was entitled. Consequently, it could constitute unfair grounds for summary judgment to be entered in favor of a defendant. However, the no-fault regulations, as written, impose no time limit on a plaintiff to respond to the verification request. The obvious reason is that it is in a plaintiff’s best interest to provide the verification as quickly as practicable so as to trigger the 30-day clock in which the insurer must pay or deny the claim. In the present circumstances, however, plaintiff, who still reasonably received the second notice of the pending verification, as was the original intention of the regulation, suffered no detriment and no prejudice as a result of the early mailing.

Pesce, P.J., and Rios, J., concur; Golia, J., dissents in a separate memorandum.